IBEX Ltd 10-Q

Item 1. Financial Statements 2 Table of Contents IBEX LIMITED AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) (in thousands, except share data) March 31, 2024 June 30, 2023 Assets Current assets Cash and cash equivalents $ 50,665 $ 57,429 Accounts receivable, net 103,317 86,364 Prepaid expenses 5,885 6,616 Due from related parties 164 43 Tax advances and receivables 9,133 5,965 Other current assets 2,187 2,190 Total current assets 171,351 158,607 Non-current assets Property and equipment, net 31,465 41,151 Operating lease assets 62,157 70,919 Goodwill 11,832 11,832 Deferred tax asset, net 3,998 4,585 Other non-current assets 8,782 6,230 Total non-current assets 118,234 134,717 Total assets $ 289,585 $ 293,324 Liabilities and stockholders' equity Current liabilities Accounts payable and accrued liabilities $ 17,538 $ 18,705 Accrued payroll and employee-related liabilities 30,791 29,360 Current deferred revenue 5,396 6,413 Current operating lease liabilities 13,073 13,036 Current maturities of long-term debt 585 413 Due to related parties 61 2,314 Income taxes payable 3,320 3,020 Total current liabilities 70,764 73,261 Non-current liabilities Non-current deferred revenue 1,302 1,383 Non-current operating lease liabilities 55,660 64,854 Long-term debt 820 600 Other non-current liabilities 1,728 3,262 Total non-current liabilities 59,510 70,099 Total liabilities 130,274 143,360 Commitments and contingencies (Note 7) Stockholders' equity Common stock: par value $ 0.0001 , 108,057,967 shares authorized, 17,214,446 and 18,280,419 shares outstanding as of March 31, 2024 and June 30, 2023, respectively 2 2 Additional paid-in capital 209,062 204,734 Treasury stock at cost: 1,370,323 and 245,447 shares as of March 31, 2024 and June 30, 2023, respectively ( 22,233 ) ( 3,682 ) Accumulated other comprehensive loss ( 6,552 ) ( 6,312 ) Accumulated deficit ( 20,968 ) ( 44,778 ) Total stockholders' equity 159,311 149,964 Total liabilities and stockholders' equity $ 289,585 $ 293,324 See accompanying notes to unaudited consolidated financial statements. 3 Table of Contents IBEX LIMITED AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (Unaudited) (in thousands, except per share data) Three Months Ended March 31, Nine Months Ended March 31, 2024 2023 2024 2023 Revenue $ 126,795 $ 131,557 $ 384,038 $ 398,687 Cost of services (exclusive of depreciation and amortization presented separately below) 87,083 91,693 271,163 287,636 Selling, general and administrative 23,565 22,139 71,462 64,946 Depreciation and amortization 4,865 4,674 14,853 13,933 Total operating expenses 115,513 118,506 357,478 366,515 Income from operations 11,282 13,051 26,560 32,172 Interest income 431 205 1,529 391 Interest expense ( 124 ) ( 105 ) ( 339 ) ( 553 ) Income before income taxes 11,589 13,151 27,750 32,010 Provision for income tax expense ( 1,279 ) ( 1,872 ) ( 3,940 ) ( 4,938 ) Net income $ 10,310 $ 11,279 $ 23,810 $ 27,072 Other comprehensive income / (loss) Foreign currency translation adjustments $ ( 288 ) $ ( 1,039 ) $ ( 310 ) $ ( 2,162 ) Unrealized (loss) / gain on cash flow hedging instruments, net of tax ( 131 ) 216 70 769 Total other comprehensive loss ( 419 ) ( 823 ) ( 240 ) ( 1,393 ) Total comprehensive income $ 9,891 $ 10,456 $ 23,570 $ 25,679 Net income per share Basic $ 0.59 $ 0.62 $ 1.33 $ 1.49 Diluted $ 0.57 $ 0.59 $ 1.29 $ 1.44 Weighted average common shares outstanding Basic 17,468 18,230 17,880 18,179 Diluted 18,036 19,065 18,458 18,861 See accompanying notes to unaudited consolidated financial statements. 4 Table of Contents IBEX LIMITED AND SUBSIDIARIES Consolidated Statements of Stockholders’ Equity (Unaudited) (in thousands) Three months ended March 31, 2023 and 2024 Common shares Treasury Stock Additional Paid-in Capital Accumulated Other Comprehensive Income / (Loss) Accumulated Deficit Total Stockholders' Equity Shares Amount Amount Balance, December 31, 2022 18,298 $ 2 $ ( 3,682 ) $ 201,102 $ ( 5,132 ) $ ( 60,567 ) $ 131,723 Net income — — — — — 11,279 11,279 Foreign currency translation adjustment — — — — ( 1,039 ) — ( 1,039 ) Changes in fair value of cash flow hedges — — — — 216 — 216 Provision for common stock warrants — — — 260 — — 260 Issuance of common shares 34 — — 618 — — 618 Forfeiture of restricted common shares ( 68 ) — — — — — — Share-based compensation expense — — — 1,311 — — 1,311 Balance, March 31, 2023 18,264 $ 2 $ ( 3,682 ) $ 203,291 $ ( 5,955 ) $ ( 49,288 ) $ 144,368 Common shares Treasury Stock Additional Paid-in Capital Accumulated Other Comprehensive Income / (Loss) Accumulated Deficit Total Stockholders' Equity Shares Amount Amount Balance, December 31, 2023 17,681 $ 2 $ ( 14,116 ) $ 207,638 $ ( 6,133 ) $ ( 31,278 ) $ 156,113 Net income — — — — — 10,310 10,310 Foreign currency translation adjustment — — — — ( 288 ) — ( 288 ) Changes in fair value of cash flow hedges — — — — ( 131 ) — ( 131 ) Purchase of treasury shares ( 502 ) — ( 8,117 ) — — — ( 8,117 ) Provision for common stock warrants — — — 299 — — 299 Issuance of common shares 35 — — 351 — — 351 Share-based compensation expense — — — 774 — — 774 Balance, March 31, 2024 17,214 $ 2 $ ( 22,233 ) $ 209,062 $ ( 6,552 ) $ ( 20,968 ) $ 159,311 5 Table of Contents Nine months ended March 31, 2023 and 2024 Common shares Treasury Stock Additional Paid-in Capital Accumulated Other Comprehensive Income / (Loss) Accumulated Deficit Total Stockholders' Equity Shares Amount Amount Balance, June 30, 2022 18,247 $ 2 $ ( 3,406 ) $ 197,785 $ ( 4,562 ) $ ( 76,360 ) $ 113,459 Net income — — — — — 27,072 27,072 Foreign currency translation adjustment — — — — ( 2,162 ) — ( 2,162 ) Changes in fair value of cash flow hedges — — — — 769 — 769 Purchase of treasury shares ( 18 ) — ( 276 ) — — — ( 276 ) Provision for common stock warrants — — — 856 — — 856 Issuance of common shares 103 — — 1,827 — — 1,827 Forfeiture of restricted common shares ( 68 ) — — — — — — Share-based compensation expense — — — 2,823 — — 2,823 Balance, March 31, 2023 18,264 $ 2 $ ( 3,682 ) $ 203,291 $ ( 5,955 ) $ ( 49,288 ) $ 144,368 Common shares Treasury Stock Additional Paid-in Capital Accumulated Other Comprehensive Income / (Loss) Accumulated Deficit Total Stockholders' Equity Shares Amount Amount Balance, June 30, 2023 18,280 $ 2 $ ( 3,682 ) $ 204,734 $ ( 6,312 ) $ ( 44,778 ) $ 149,964 Net income — — — — — 23,810 23,810 Foreign currency translation adjustment — — — — ( 310 ) — ( 310 ) Changes in fair value of cash flow hedges — — — — 70 — 70 Purchase of treasury shares ( 1,125 ) — ( 18,551 ) — — — ( 18,551 ) Provision for common stock warrants — — — 893 — — 893 Issuance of common shares 59 — — 362 — — 362 Share-based compensation expense — — — 3,073 — — 3,073 Balance, March 31, 2024 17,214 $ 2 $ ( 22,233 ) $ 209,062 $ ( 6,552 ) $ ( 20,968 ) $ 159,311 See accompanying notes to unaudited consolidated financial statements. 6 Table of Contents IBEX LIMITED AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) (in thousands) Nine Months Ended March 31, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 23,810 $ 27,072 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 14,853 13,933 Noncash lease expense 9,908 10,946 Warrant contra revenue 893 856 Deferred income tax 586 3,018 Share-based compensation expense 2,741 3,973 Allowance of expected credit losses 62 105 Impairment losses 1,257 — Gain on sale of subsidiaries — ( 246 ) Change in assets and liabilities: Increase in accounts receivable ( 16,941 ) ( 17,846 ) (Increase) / decrease in prepaid expenses and other current assets ( 5,350 ) 2,242 Decrease in accounts payable and accrued liabilities ( 2,336 ) ( 6,077 ) Decrease in deferred revenue ( 1,098 ) ( 2,721 ) Decrease in operating lease liabilities ( 9,907 ) ( 10,831 ) Net cash inflow from operating activities 18,478 24,424 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment ( 6,635 ) ( 15,231 ) Cash outflow from sale of subsidiaries, net of cash received — ( 85 ) Net cash outflow from investing activities ( 6,635 ) ( 15,316 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from line of credit 153 43,390 Repayments of line of credit ( 205 ) ( 54,541 ) Repayment of debt — ( 3,795 ) Proceeds from the exercise of options 362 1,827 Principal payments on finance leases ( 342 ) ( 353 ) Purchase of treasury shares ( 18,551 ) ( 276 ) Net cash outflow from financing activities ( 18,583 ) ( 13,748 ) Effects of exchange rate difference on cash and cash equivalents ( 24 ) ( 515 ) Net decrease in cash and cash equivalents ( 6,764 ) ( 5,155 ) Cash and cash equivalents, beginning 57,429 48,831 Cash and cash equivalents, ending $ 50,665 $ 43,676 Supplemental cash flow disclosures Cash paid for interest $ 339 $ 553 Cash paid for income taxes $ 5,428 $ 2,927 Supplemental non-cash disclosures Change in accounts payable related to fixed assets $ ( 786 ) $ ( 21 ) See accompanying notes to unaudited consolidated financial statements. 7 Table of Contents IBEX LIMITED AND SUBSIDIARIES Notes to the Consolidated Financial Statements (Unaudited) (in thousands, except per share amounts) 1. OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES OVERVIEW IBEX Limited (“IBEX” and together with its subsidiaries, the “Company,” “ibex,” “we,” “us,” or “our”) was incorporated on February 28, 2017 in Hamilton, Bermuda. Our registered office in Bermuda is Crawford House, 50 Cedar Avenue, Hamilton HM 11, Bermuda. We are a “controlled company” within the meaning of the rules of Nasdaq, with The Resource Group International Limited (“TRGI”) being our controlling shareholder. TRG Pakistan Limited holds a controlling interest in TRGI. On August 7, 2020, the Company was admitted to trade on the Nasdaq Global Market under the ticker symbol “IBEX.” The Company is an end-to-end provider of technology-enabled customer lifecycle experience (“CLX”) solutions. Through the Company’s integrated CLX platform, a comprehensive portfolio of solutions is offered to optimize customer acquisition, engagement, expansion and experience for clients. The Company leverages sophisticated technology and proprietary analytics, in combination with its global footprint and business process outsourcing expertise, to protect and enhance clients’ brands. Our services cover three main areas: • ibex Connect: Our Connect business lies at the core of our offerings and generates the majority of the Company’s revenue. This business unit delivers differentiated customer service (assisting our clients’ customers with information about our clients and their products or services), technical support (providing specialized teams to provide information, assistance and technical guidance to our clients’ customers on a specific product or service), revenue generation (upselling and cross selling) and other value-added outsourced back office services (finance and accounting, marketing support, sales operations, and human resources administration) to our clients. We deploy these capabilities through a true omni-channel CX model, which integrates voice, email, chat, SMS, social media and other communication applications. • ibex Digital: Our ibex Digital suite of solutions works with consumer-facing businesses to help them build, grow and scale technology-driven customer acquisition solutions, while helping drive digital transformation. We offer digital marketing, e-commerce technology, and platform solutions for our clients, helping them build new customer acquisition channels, increase acquired customers, and often do both at a reduced cost. • ibex CX: Our CX business measures, monitors and manages our clients’ holistic customer experiences. By offering a 360-degree CX approach, our clients can harness the power of data and customer feedback to differentiate themselves within today’s “customer expectation economy.” We enable our clients to improve retention of their customers, identify and manage service issues in real time, predict future behavior and outcomes, derive impact analysis scenarios and assign “action plans” throughout the enterprise. Operating segments An operating segment is defined as a component of a company for which separate financial information is available and which is regularly evaluated by the chief operating decision maker (“CODM”) for the purpose of making decisions regarding resource allocation and performance assessment. The Company’s CODM is the chief executive officer (“CEO”). The Company’s CODM reviews consolidated financial results to make decisions, allocate resources and assess performance. Therefore, the Company has determined that it operates in a single operating and reportable segment. 8 Table of Contents SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation and principles of consolidation The Company’s interim consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and include the financial results of all wholly-owned subsidiaries. When the Company does not have majority ownership in an entity but exerts significant influence over that entity, the Company accounts for the entity under the equity method of accounting. All intercompany balances and transactions have been eliminated in consolidation. These unaudited consolidated financial statements and accompanying notes have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements and should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2023 (the “Annual Report”) as filed with the SEC. There have been no changes to the Company’s significant accounting policies described in the Annual Report that have had a material impact on the Company’s consolidated financial statements and related notes. In the opinion of the Company, these unaudited consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of March 31, 2024, its results of operations, comprehensive income, and shareholders’ equity for the three and nine months ended March 31, 2024 and 2023, and cash flows for the nine months ended March 31, 2024 and 2023. The consolidated balance sheet as of June 30, 2023, was derived from the audited annual financial statements included in the Annual Report. Use of estimates The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. Significant items subject to such estimates and assumptions include useful lives for property and equipment; impairment of long-lived assets, operating lease assets and liabilities, goodwill, and other intangible assets; allowance for credit losses; valuation allowances for deferred tax assets and other receivables; fair value of share-based compensation, warrants, and derivatives, and legal provisions. The Company bases its estimates on historical experience and other assumptions it believes are reasonable, including the use of outside experts as necessary, and updates these estimates on an ongoing basis and as new events occur, more experience is acquired and/or more information is obtained. Actual results could differ materially from these estimates. Concentration of credit risk The Company is exposed to credit risk in the normal course of business, primarily related to accounts receivable and derivative instruments. Historically, the losses related to credit risk have been immaterial. The Company regularly monitors its credit risk to mitigate losses. The Company evaluates the creditworthiness of its clients prior to and throughout the life of the client relationship. The Company does not believe it is exposed to more than a nominal amount of credit risk in its derivative instruments as all of its counterparties are investment-grade financial institutions. Property and equipment Property and equipment and assets leased under financing leases are carried at cost at the acquisition date and are depreciated using the straight-line method over their estimated useful lives. Property and equipment assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is assessed by a comparison of the carrying amount of the asset to the estimated future undiscounted net cash flows expected to be generated by the asset. If estimated future undiscounted net cash flows are less than the carrying value of the asset, an impairment loss is recognized to the extent its carrying value exceeds its estimated fair value. 9 Table of Contents During quarter ended March 31, 2024 , we determined that the estimated fair value for certain assets at two of our delivery locations no longer exceeded their carrying value. The fair value of these assets was based on various assumptions including our ability to redeploy and utilize the assets at other sites. We recognized impairment losses related to leasehold improvements, furniture & fixtures, and computer equipment of $ 1.3 million during both the three and nine months ended March 31, 2024, which is included in selling, general and administrative expense in the consolidated statements of comprehensive income. There were no impairment closses recognized during the three and nine months ended March 31, 2023 . Leases The Company determines whether an arrangement contains a lease at inception in accordance with the provisions of Accounting Standards Codification (“ASC”) 842, Leases . Operating leases are included in operating lease assets and current and non-current operating lease liabilities, and assets leased under finance leases are included in property and equipment and current and long-term debt in the consolidated balance sheets. Operating lease assets represent the Company’s right to use an underlying asset for the lease term, and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease expense is recognized on a straight-line basis over the lease term in cost of services or selling, general and administrative expense, as applicable. Interest on finance leases is included in interest expense in the consolidated statements of comprehensive income. Share-based compensation plans The Company accounts for its share-based awards in accordance with provisions of ASC 718, Compensation - Stock Compensation . The Company calculates the fair value of option awards using the Black-Scholes model. For equity-classified awards, total compensation cost is based on the grant date fair value. For liability-classified awards, total compensation cost is based on the fair value of the award on the date the award is granted and is subsequently re-measured at each reporting date until settlement. The Company recognizes share-based compensation expense over the requisite vesting period using a graded vesting model. Awards to employees and directors may contain service, performance and/or market vesting conditions. For unvested awards with performance conditions, the Company assesses the probability of attaining the performance conditions at each reporting period. Awards that are deemed probable of attainment are recognized in expense over the requisite service period. The Company accounts for forfeitures as they occur. Share repurchase programs The board of directors may authorize share repurchases of the Company’s common shares. Purchases made pursuant to these authorizations may be carried out through open market transactions at prevailing market prices, in privately negotiated transactions, in block trades and/or through other legally permissible means, depending on the market conditions and in accordance with applicable rules and regulations, at times and in such amounts as the Company deems appropriate. Shares repurchased under such authorizations are held in treasury for general corporate purposes, including issuances under various employee share-based award plans. When Company shares are repurchased, the amount of the consideration paid (including directly attributable costs, net of any tax effects) is recognized as a deduction of additional paid in capital. Repurchased shares are classified as treasury shares and are presented as a deduction from total equity. When treasury shares are subsequently sold or reissued, the amount received is recognized as an increase in additional paid in capital, and any resulting surplus or deficit on the transaction is reclassified to accumulated deficit. 10 Table of Contents Cloud Computing Software Implementation Costs The Company incurs costs to implement cloud computing arrangements that are hosted by a third-party vendor. In accordance with ASC 350-40, Goodwill and Other, Internal-Use Software, for cloud computing arrangements that meet the definition of a service contract, the Company capitalizes qualifying implementation costs incurred during the application development stage in other non-current assets. Capitalized costs are primarily comprised of third-party consulting fees, direct labor, and related expenses. Capitalization of these costs concludes once the project is substantially complete and the software is ready for the Company's intended use. Once available for its intended use, the capitalized costs will be amortized on a straight-line basis over the term of the associated hosting arrangement including periods covered by an option to extend, and are included in selling, general and administrative expenses in the consolidated statements of comprehensive income. Costs related to data conversion, overhead, general and administrative activities, and training are expensed as incurred. Post-configuration training and maintenance costs are expensed as incurred. The Company capitalized $ 1.2 million and $ 2.4 million during the three and nine months ended March 31, 2024, respectively. There were no costs capitalized during the three and nine months ended March 31, 2023 . Other postemployment benefits During the three and nine months ended March 31, 2024, the Company eliminated certain positions that it considered redundant and incurred approximately $ 1.5 million in severance costs, of which $ 1.3 million is recorded in selling, general and administrative expense and $ 0.2 million is recorded in cost of services in the consolidated statements of comprehensive income. As of March 31, 2024, $ 1.0 million was accrued and is expected to be paid by July 30, 2025. Emerging Growth Company The Company currently qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Accordingly, the Company has the option to adopt new or revised accounting guidance either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods as private companies pursuant to Section 13(a) of the Exchange Act. The Company has elected to use the extended transition period until we are no longer an emerging growth company or until we choose to opt out of the extended transition period affirmatively and irrevocably. Recently Issued Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The amendments in ASU No. 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact of the new guidance on the disclosures to our consolidated financial statements. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign), and (3) the income tax expense or benefit from continuing operations (separated by federal, state and foreign). This update also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The amendments in ASU No. 2023-09 are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact of the new guidance on the disclosures to our consolidated financial statements. 11 Table of Contents In March 2024, the SEC issued its final climate disclosure rules, which require the disclosure of climate-related information in annual reports and registration statements. The rules require disclosure in the audited financial statements of certain effects of severe weather events and other natural conditions above certain financial thresholds, as well as amounts related to carbon offsets and renewable energy credits or certificates, if material. Disclosure requirements will begin phasing in for fiscal years beginning on or after January 1, 2025. On April 4, 2024, the SEC determined to voluntarily stay the final rules pending certain legal challenges. We are currently evaluating the impact of the new rules on the disclosures to our consolidated financial statements. 2. REVENUE FROM CONTRACTS WITH CUSTOMERS The Company recognizes revenues for services for which control has transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring the promised services. This process involves identifying the customer contract, determining the performance obligations in the contract, determining the transaction price, allocating the transaction price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it (a) provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and (b) is separately identified in the contract. The Company considers a performance obligation satisfied as it provides services to a customer, meaning the customer has the ability to direct the use and obtain the benefit of the service. Revenues from contact center services, which consist of customer service, technical support and other value-added outsourced back-office services, are recognized as the services are performed on the basis of the number of billable minutes or hours, contractual rates, and other contractually agreed metrics, if applicable. Certain of our client contracts include bonus and penalty provisions. Revenues related to training that occurs upon commencement of a new client contract or statement of work are deferred and recognized on a straight-line basis over the estimated life of the client program, as it is not considered to have a standalone value to the customer. The related expenses are expensed as incurred. Revenues are recognized over time as performance obligations are satisfied and in the period in which the Company has a right to invoice, net of discounts, incentives, and/or penalties as per contractual terms. Bonuses and penalties accrue for the current billing period and do not depend on future performance. In some cases, we may estimate these bonuses or penalties using the “most likely amount” method based on actual data and historical experience. Revenues from digital services are recognized at a point in time upon the successful consumer activation or purchase of clients’ services. We utilize third parties in the satisfaction of this performance obligation; however, because we retain control over these third parties and are solely responsible for the risk and reward associated with this performance obligation, we have determined that we are the principal in these transactions and therefore recognize revenue on a gross basis. Revenues from CX software-as-a-service products are recognized over time based on the term of the subscription. Set-up fees to customize the customer experience solution for client’s specific needs are deferred and recognized on a straight-line basis over the term of the subscription. Revenues related to additional consulting services are recognized over the period as the related services are performed on a per hour basis. All of our contracts include the right to invoice for services on a monthly basis. None of our contracts include significant termination penalties, and generally may be terminated for convenience at any time with a short notice period (generally 30 to 120 days). The Company generally does not incur significant upfront costs to fulfill or obtain a contract that would qualify for capitalization under ASC 606, Revenue from Contracts with Customers . Disaggregation of Revenue The majority of the Company’s revenues are derived from contracts with customers who are located in the United States of America (the "United States" or "U.S."). However, the Company delivers most of its services from regional customer experience delivery centers that are located in geographies outside of the United States. Our global delivery model is built on regional customer experience delivery centers and includes a unique ability to support work-at-home capabilities in any region that we currently operate. 12 Table of Contents The Company generated approximately 97 % of its revenue from clients based in the United States for both the three and nine months ended March 31, 2024, as follows: Three Months Ended March 31, Nine Months Ended March 31, ($000s) 2024 2023 2024 2023 Revenue United States $ 122,822 $ 128,184 $ 372,612 $ 387,694 Other countries 3,973 3,373 11,426 10,993 Total $ 126,795 $ 131,557 $ 384,038 $ 398,687 The following table presents the breakdown of the Company’s revenues by geographical location, based on where the services are provided: Three Months Ended March 31, Nine Months Ended March 31, ($000s) 2024 2023 2024 2023 Revenue Onshore (United States) $ 30,748 $ 37,264 $ 92,195 $ 112,864 Offshore (Philippines, Pakistan) 60,840 56,242 183,109 166,690 Nearshore (Jamaica, Nicaragua, Honduras) 35,207 38,051 108,734 119,133 Total $ 126,795 $ 131,557 $ 384,038 $ 398,687 The following table presents the breakdown of the Company’s revenue by pattern of revenue recognition: Three Months Ended March 31, Nine Months Ended March 31, ($000s) 2024 2023 2024 2023 Pattern of Revenue recognition Services transferred over time $ 120,029 $ 124,001 $ 360,168 $ 373,869 Services transferred at a point in time 6,766 7,556 23,870 24,818 Total $ 126,795 $ 131,557 $ 384,038 $ 398,687 The movement in the Company's deferred revenue is as follows: Three Months Ended March 31, Nine Months Ended March 31, ($000s) 2024 2023 2024 2023 Beginning balance $ 8,097 $ 9,688 $ 7,796 $ 12,593 Revenue recognized ( 2,368 ) ( 1,840 ) ( 7,301 ) ( 9,789 ) Revenue deferred 969 2,024 6,203 7,068 Ending balance $ 6,698 $ 9,872 $ 6,698 $ 9,872 13 Table of Contents 3. ACCOUNTS RECEIVABLE AND SIGNIFICANT CLIENTS Accounts receivable, net in the accompanying consolidated balance sheets consists of the following: March 31, June 30, ($000s) 2024 2023 Accounts receivable $ 103,424 $ 86,484 Less: Allowance for credit losses ( 107 ) ( 120 ) Accounts receivable, net $ 103,317 $ 86,364 The Company estimates its expected credit losses using the lifetime expected credit loss model. The allowance for credit losses is calculated quarterly based on the Company’s historical loss percentages, net of recoveries. In addition to the evaluation of historical losses, the Company considers current and future economic conditions and events such as changes in customer credit quality and liquidity. The Company will write-off accounts receivable against the allowance when it determines a balance is uncollectible. Activity in the Company’s allowance for credit losses consists of the following: Three Months Ended March 31, Nine Months Ended March 31, ($000s) 2024 2023 2024 2023 Beginning balance $ 117 $ 424 $ 120 $ 1,290 Provision for credit losses 69 17 93 155 Reversal of provision for credit losses ( 13 ) ( 29 ) ( 31 ) ( 50 ) Uncollectible receivables written off ( 67 ) ( 4 ) ( 78 ) ( 955 ) Effect of foreign exchange 1 ( 37 ) 3 ( 69 ) Ending balance $ 107 $ 371 $ 107 $ 371 Significant Client During the nine months ended March 31, 2024 and 2023 , the Company had one client that contributed approximately 12.8 % and 13.0 % of total revenue, respectively. To limit the Company’s credit risk with its clients, management regularly monitors the aging of customer receivables, maintains allowances for credit losses and may require prepayment for services from certain clients. Based on currently available information, management does not believe significant credit risk exists as of March 31, 2024. 14 Table of Contents 4. LEASES The Company has operating lease obligations primarily for our delivery centers and finance lease obligations primarily for vehicles and other equipment. Leases typically have initial terms of two to fifteen years , and may include renewal options if the Company is reasonably certain to exercise such options. The components of lease cost are as follows: Three Months Ended March 31, Nine Months Ended March 31, ($000s) 2024 2023 2024 2023 Operating lease cost: Operating lease cost $ 5,045 $ 5,487 $ 14,923 $ 16,360 Variable lease cost 787 1,043 2,353 3,244 Total operating lease cost $ 5,832 $ 6,530 $ 17,276 $ 19,604 Finance lease cost: Amortization of right of use assets $ 147 $ 85 $ 361 $ 254 Interest on lease liabilities 64 32 154 75 Total finance lease cost $ 211 $ 117 $ 515 $ 329 The following table presents supplemental balance sheet information related to leases: March 31, June 30, ($000s) 2024 2023 Operating lease assets $ 62,157 $ 70,919 Operating lease liabilities, current 13,073 13,036 Operating lease liabilities, non-current 55,660 64,854 Total operating lease liabilities $ 68,733 $ 77,890 Finance lease assets, net $ 1,339 $ 929 Finance lease liabilities, current 585 361 Finance lease liabilities, non-current 820 600 Total finance lease liabilities $ 1,405 $ 961 The following table presents supplemental cash flow information related to leases: Nine Months Ended March 31, ($000s) 2024 2023 Cash paid for amounts included in the measurement of lease liabilities $ 9,907 $ 10,831 Operating cash flows paid for interest portion of finance leases 154 75 Financing cash flows paid for principal portion of finance leases 342 353 15 Table of Contents The following table presents supplemental noncash information related to leases: Nine Months Ended March 31, ($000s) 2024 2023 Right-of-use assets obtained in exchange for lease obligations Operating leases $ 4,684 $ 11,174 Finance leases $ 753 $ 726 Reduction due to reassessment of lease renewal options Right-of-use assets $ ( 3,656 ) $ — Operating lease liabilities $ ( 3,689 ) $ — March 31, June 30, 2024 2023 Weighted average remaining lease term (in years) Operating leases 5.2 5.7 Finance leases 2.3 2.6 Weighted average discount rate Operating leases 10.3 % 9.2 % Finance leases 21.6 % 13.4 % The following table presents the maturities of our lease liabilities as of March 31, 2024: ($000s) Operating Leases Finance Leases 2024-remainder of year $ 4,951 $ 213 2025 17,692 786 2026 16,340 570 2027 16,114 201 2028 13,257 — Thereafter 22,097 — Total undiscounted lease payments 90,451 1,770 Less: liability accretion ( 21,718 ) ( 365 ) Total lease liabilities $ 68,733 $ 1,405 16 Table of Contents 5. DERIVATIVES Cash flow hedges Interest rate swap In March 2020, the Company entered into a three-year $ 15 million notional floating to fixed interest rate swap to hedge the interest rate risk on the first $ 15 million of the balance outstanding under our $ 80 million revolving credit facility (as amended, the "PNC Credit Facility") with PNC Bank, N.A. ("PNC"). At the time the hedge was executed, all critical terms matched between the hedge and the hedged item. Hedge effectiveness was assessed prospectively at inception, and on an ongoing basis by confirming that the critical terms continue to match. Any hedge ineffectiveness is recorded in interest expense in the consolidated statements of comprehensive income. For the three and nine months ended March 31, 2023, there was no hedge ineffectiveness. The hedge expired in March 2023 and was not replaced. Foreign exchange contracts From time to time, the Company enters into foreign currency exchange contracts, consisting of offsetting foreign exchange option contracts (“collars”), to mitigate foreign exchange fluctuations on the Philippine Peso (“PHP”) within a certain range and on a certain percentage of its PHP operating costs. The collars are designated as cash flow hedges upon inception, in accordance with ASC 815, in order to match the financial results of the hedges with the forecasted transactions. These contracts cover periods commensurate with the expected exposure, generally three to twelve months . We execute our contracts with our primary banking partner, PNC. The Company has not experienced any material issues related to derivative counterparty defaults. The following tables show the notional amount and fair value of our foreign exchange cash flow hedging instruments as of March 31, 2024 and June 30, 2023 : Settlement date Hedged currency Foreign currency rate Notional amount ($000s) Fair Value ($000s) Foreign currency option contracts - liabilities April 8, 2024 through December 19, 2024 PHP 53.50 - 57.60 $ 19,759 Fair value as of June 30, 2023 $ 100 Fair value as of March 31, 2024 $ 95 The fair value of the collars is included in accounts payable and accrued liabilities in the consolidated balance sheets. Changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognized in accumulated other comprehensive income ("AOCI"). Amounts previously recognized in AOCI are reclassified to cost of services in the periods in which the hedged expenses occur. Refer to Note 12. "Stockholders' Equity" for further details on the change in fair value of our cash flow hedges and the net gain or loss reclassified to earnings from effective hedges during the three and nine months ended March 31, 2024 and 2023. 17 Table of Contents 6. DEBT Debt consists of the following: March 31, June 30, ($000s) 2024 2023 Debt PNC Credit Facility $ — $ 52 Finance leases 1,405 961 Total debt $ 1,405 $ 1,013 Less: Current maturities of long-term debt and finance leases ( 585 ) ( 413 ) Total long-term debt $ 820 $ 600 As of March 31, 2024, the Company had $ 80.0 million of borrowing available under the PNC Credit Facility based on eligible collateral. The PNC Credit Facility contains certain financial, operating, and other covenants, including, among other things, covenants restricting additional borrowings, paying any dividends and making certain investments. The Company was in compliance with all debt covenants as of March 31, 2024. On May 6, 2024, the Company's subsidiaries, Ibex Global Solutions, Inc., Digital Globe Services, LLC, TelSatOnline, LLC, 7 Degrees, LLC, and iSky, LLC (collectively the "Ibex US Entities") entered into the Seventeenth Amendment to the Revolving Credit and Security Agreement and Consent (the "Amendment") with PNC Bank, National Association ("PNC"). The Amendment provides PNC's consent to the assignment of certain customer contracts (the "Contract Assignments") by the Ibex US Entities to the Company's subsidiary, Ibex Global FZ-LLC, provided that (i) the contract revenues associated with such Contract Assignments, upon the effectiveness of such Contract Assignments, shall not in the aggregate be greater than $ 175 million and (ii) the Ibex US Entities comply with additional reporting requirements. 7. COMMITMENTS AND CONTINGENCIES The Company is subject to claims and lawsuits filed in the ordinary course of business. Although management does not believe that any such proceedings will have material adverse effect on its consolidated financial position, results of operations, or cash flows, no assurances to that effect can be given based on the uncertainty of litigation and demands of third parties. The Company records a liability for pending litigation and claims where losses are both probable and can be reasonably estimated. Indemnification In addition, in the ordinary course of business, we enter into agreements of varying scope and terms pursuant to which we agree to indemnify clients, vendors and other business partners with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, cybersecurity breach, services to be provided by us or from intellectual property infringement claims made by third parties. Historically, we have not experienced significant losses on these types of indemnification obligations. 8. WARRANT On November 13, 2017, and as subsequently amended, the Company issued to Amazon.com NV Investment Holdings LLC, a subsidiary of Amazon.com, Inc. (“Amazon”), a 10-year warrant to acquire approximately 1,674,017 common shares (the "warrant shares"), representing 10.0 % of our equity on a fully diluted basis at the time of the warrant's issuance. The warrant is exercisable at a price per share of $ 9.42 . The warrant provides for net share settlement, that if elected by the holder, will reduce the number of shares issued upon exercise to reflect the net settlement of the exercise price. The warrant is classified as an equity instrument in accordance with ASU No. 2019-08, which was adopted retroactively on July 1, 2020. The Company determined the grant date fair value of the warrant using the Black-Scholes option pricing model. 18 Table of Contents The warrant shares vest on the satisfaction of specified milestones tied to Amazon’s purchase of services from the Company during a seven-and-a-half-year period ending on June 30, 2024. The vesting is partially accelerated in the event of a reorganization transaction (as defined in the warrant). Amazon is entitled to customary shelf and piggy-back registration rights with respect to the shares issued upon exercise of the warrant. Amazon may not transfer the warrant except to a wholly-owned subsidiary of Amazon. As of March 31, 2024 and June 30, 2023, 1,171,812 and 1,004,410 warrant shares were vested, respectively. To date, the warrant has not been exercised, expired or cancelled. The Company recorded contra revenue of approximately $ 0.3 million and $ 0.9 million, respectively, during the three and nine months ended March 31, 2024 and 2023, respectively . 9. SHARE BASED COMPENSATION Share-based compensation expense The following tables summarize the components of share-based compensation expense recognized in the Company’s consolidated statements of comprehensive income, both by line item and by plan: Three Months Ended March 31, Nine Months Ended March 31, ($000s) 2024 2023 2024 2023 Cost of services $ ( 62 ) $ ( 3 ) $ 7 $ 380 Selling, general and administrative 528 1,321 2,734 3,593 Total share-based compensation expense $ 466 $ 1,318 $ 2,741 $ 3,973 Three Months Ended March 31, Nine Months Ended March 31, 2024 2023 2024 2023 Phantom Stock Plans $ ( 308 ) $ 7 $ ( 332 ) $ 1,150 2018 Restricted Stock Award Plan — — — ( 7 ) 2020 Long term Incentive Plan 774 1,311 3,073 2,830 Total share-based compensation expense $ 466 $ 1,318 $ 2,741 $ 3,973 As of March 31, 2024, there was $ 6.7 million of total unrecognized compensation expense related to non-vested share-based awards, which is expected to be recognized over a weighted-average period of 3.23 years . 10. FAIR VALUE The fair value hierarchy prioritized the input to valuation techniques used to measure fair value. The hierarchy requires that the Company maximize the use of observable inputs and minimize the use of unobservable inputs. The levels of the fair value hierarchy are as follows: Level 1: Quoted prices for identical instruments traded in active markets. Level 2: Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. Level 3: Unobservable inputs that cannot be supported by market activity and that are significant to the fair value of the asset, liability, or equity such as the use of certain pricing models, discounted cash flow models and similar techniques that use significant unobservable inputs. 19 Table of Contents The carrying value of our cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, accrued payroll and employee-related liabilities, approximate fair value because of their short-term nature. The Company measures its debt at carrying value including accrued interest, which approximates fair value because of its short-term nature. Derivatives designated as cash flow hedges The values of our derivative instruments are derived from pricing models using inputs based upon market information, including contractual terms, market prices and yield curves. The inputs to the valuation pricing models are observable in the market, and as such the derivatives are classified as Level 2 in the fair value hierarchy. Phantom stock awards The Company uses the Black-Scholes option pricing model to value our phantom stock awards. All inputs to the model are derived from active market information for identical or similar instruments, including stock price, volatility, and interest rates. The inputs to the valuation pricing models are observable in the market, and as such the phantom stock awards are classified as Level 2 in the fair value hierarchy. The following is a summary of the Company’s fair value measurements on a recurring basis as of March 31, 2024 and June 30, 2023: As of March 31, 2024 Fair Value Measurements Using ($000s) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Liabilities Cash flow hedge - foreign currency collars, net $ — $ 95 $ — Phantom stock options $ — $ 834 $ — Total liabilities $ — $ 929 $ — As of June 30, 2023 Fair Value Measurements Using ($000s) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Liabilities Cash flow hedge - foreign currency collars, net $ — $ 100 $ — Phantom stock options $ — $ 1,173 $ — Total liabilities $ — $ 1,273 $ — These balances are included in accounts payable and accrued liabilities and other non-current liabilities in the consolidated balance sheets. There were no transfers between the different hierarchy levels in the three and nine months ended March 31, 2024 and 2023 . 20 Table of Contents 11. INCOME TAXES In determining its interim provision for income taxes, the Company used an estimated annual effective tax rate, which is based on expected income before taxes, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the period in which they occur and can be a source of variability in the effective tax rate from quarter to quarter. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The Company records valuation allowances against its deferred tax assets based on whether it is more likely than not that the deferred tax assets will be realized. The Company’s income tax provision includes the results of the Company’s U.S. operations and its various foreign operations including subsidiaries based in the United Kingdom, European Union, Canada, Jamaica, Nicaragua, Pakistan, Senegal, Honduras, and the Philippines. Historically, the Company’s Bermuda-based companies are not subject to income tax as there was no corporate income tax in Bermuda. On December 27, 2023 the Bermuda Corporate Income Tax Act 2023 was passed which provides for a 15% corporate tax rate beginning on or after January 1, 2025 for companies with revenue in excess of 750 million Euros. The Company is evaluating the impact of this legislation, but it does not anticipate that it will have a material impact on the Company’s operations. The Company recorded provision for income taxes of $ 1.3 million and $ 3.9 million in the three and nine months ended March 31, 2024, respectively. The effective tax rate was 11.0 % and 14.2 % for the three and nine months ended March 31, 2024, respectively. The Company recorded provision for income taxes of $ 1.9 million and $ 4.9 million in the three and nine months ended March 31, 2023, respectively. The effective tax rate was 14.2 % and 15.4 % for the three and nine months ended March 31, 2023, 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 recorded in the quarter. The difference between the effective tax rate and the 21% federal statutory rate in the three and nine months ended March 31, 2024 was primarily due to "Tax Holidays" in certain countries in which we operate and the distribution of taxable income in countries with differing tax rates. We have been granted Tax Holidays as an incentive to attract foreign investment by the governments of Nicaragua, Pakistan, Honduras, Jamaica, and certain qualifying locations in the Philippines. Generally, a Tax Holiday is an agreement between us and a foreign government under which we receive certain tax benefits in that country. The aggregate reduction in income tax expense due to the above Tax Holidays were $ 0.8 million and $ 3.4 million for the three and nine months ended March 31, 2024, respectively. The aggregate reduction in income tax expense per diluted share was $ 0.04 and $ 0.18 for the three and nine months ended March 31, 2024, respectively. The aggregate reduction in income tax expense due to the above Tax Holidays were $ 1.0 million and $ 2.8 million for the three and nine months ended March 31, 2023, respectively. The aggregate reduction in income tax expense per diluted share was $ 0.05 and $ 0.15 for the three and nine months ended March 31, 2023, respectively. As of March 31, 2024, we had no unrecognized tax positions and do not expect changes to our uncertain tax positions within the next 12 months. In April 2024, one of our foreign jurisdictions received an assessment relating to a fiscal year 2020 audit. Based on the Company's analysis, we have not recorded any of the assessment amount as an unrecognized tax benefit liability as management has determined that the entire amount is contestable and subject to dispute. Management is challenging the assessment. 12. STOCKHOLDERS’ EQUITY AOCI The following table presents changes by component for the three months ended March 31, 2024 and 2023 : 21 Table of Contents ($000s) Foreign Currency Translation Adjustment Derivative Valuation Defined Benefit Plan Total Balance as of December 31, 2022 $ ( 5,149 ) $ ( 86 ) $ 103 $ ( 5,132 ) Foreign currency translation ( 1,039 ) — — ( 1,039 ) Unrealized gain on cash flow hedges — 188 — 188 Reclassifications to earnings — 28 — 28 Balance as of March 31, 2023 $ ( 6,188 ) $ 130 $ 103 $ ( 5,955 ) ($000s) Foreign Currency Translation Adjustment Derivative Valuation Defined Benefit Plan Total Balance as of December 31, 2023 $ ( 6,282 ) $ 77 $ 72 $ ( 6,133 ) Foreign currency translation ( 288 ) — — ( 288 ) Unrealized loss on cash flow hedges — ( 165 ) — ( 165 ) Reclassifications to earnings — 34 — 34 Balance as of March 31, 2024 $ ( 6,570 ) $ ( 54 ) $ 72 $ ( 6,552 ) The following table presents changes by component for the nine months ended March 31, 2024 and 2023 : ($000s) Foreign Currency Translation Adjustment Derivative Valuation Defined Benefit Plan Total Balance as of June 30, 2022 $ ( 4,026 ) $ ( 639 ) $ 103 $ ( 4,562 ) Foreign currency translation ( 2,162 ) — — ( 2,162 ) Unrealized loss on cash flow hedges — ( 299 ) — ( 299 ) Reclassifications to earnings — 1,068 — 1,068 Balance as of March 31, 2023 $ ( 6,188 ) $ 130 $ 103 $ ( 5,955 ) ($000s) Foreign Currency Translation Adjustment Derivative Valuation Defined Benefit Plan Total Balance as of June 30, 2023 $ ( 6,260 ) $ ( 124 ) $ 72 $ ( 6,312 ) Foreign currency translation ( 310 ) — — ( 310 ) Unrealized loss on cash flow hedges — ( 35 ) — ( 35 ) Reclassifications to earnings — 105 — 105 Balance as of March 31, 2024 $ ( 6,570 ) $ ( 54 ) $ 72 $ ( 6,552 ) Share buyback 22 Table of Contents On September 18, 2023, the Company announced that the board of directors (the "Board") had authorized a share repurchase program under which the Company may repurchase up to $ 30 million of its shares over the next six months beginning September 18, 2023 (the “Share Repurchase Program”). During the three and nine months ended March 31, 2024, we repurchased 501,549 and 1,124,876 shares of our common shares under the Share Repurchase Program for $ 8.1 million and $ 18.6 million, respectively, which the Company funded with available cash. The Share Repurchase Program expired on March 18, 2024. During the nine months ended March 31, 2023, we repurchased 17,558 shares of our common shares under our previous share repurchase program for $ 0.3 million. The previous share repurchase program was announced in December 2021 and expired a year later. 13. WEIGHTED AVERAGE SHARE COUNTS The following table sets forth the components of the computation from basic to diluted earnings per share for net income for the three and nine months ended March 31, 2024 and 2023: Three Months Ended March 31, Nine Months Ended March 31, (000s) 2024 2023 2024 2023 Shares used in basic earnings per share calculation 17,468 18,230 17,880 18,179 Effect of dilutive securities: Employee share-based compensation 70 293 92 210 Warrant 498 542 486 472 Total effects of dilutive securities 568 835 578 682 Shares used in dilutive earnings per share calculation 18,036 19,065 18,458 18,861 Shares considered anti-dilutive using the treasury method ( 565 ) ( 272 ) ( 555 ) ( 354 ) 14. RELATED PARTY TRANSACTIONS The Company has agreements with multiple companies under the control of our controlling shareholder, TRGI, and with companies which have common directors with us, in the normal course of business. These transactions were executed on mutually agreed terms and include contact center services, back office support services and an office lease. During the three and nine months ended March 31, 2024, the Company recognized revenue of $ 0.02 million and $ 0.04 million, respectively, with these related parties. During the three and nine months ended March 31, 2023, the Company recognized revenue of $ 0.01 million and $ 0.04 million, respectively, with these related parties. As of March 31, 2024 and June 30, 2023, the Company had accounts receivable of $ 0.2 million and $ 0.04 million, respectively, and accounts payable of $ 0.06 million and $ 2.3 million, respectively, with these related parties. 15. INVESTMENT IN JOINT VENTURE The Company has an investment in Lake Ball, LLC to procure and sell commercial leads for its customers. The Company’s ownership interest is 47.5 % and is accounted for under the equity method. The Company’s investment of $ 0.4 million at March 31, 2024 and June 30, 2023, respectively, is included in other non-current assets in the consolidated balance sheets, while net earnings from the joint venture is included in selling, general and administrative expense in the consolidated statements of comprehensive income. 23 Table of Contents The table below presents our investment in the joint venture : Three Months Ended March 31, Nine Months Ended March 31, ($000s) 2024 2023 2024 2023 Beginning balance $ 370 $ 380 $ 372 $ 382 Dividends received ( 322 ) ( 280 ) ( 849 ) ( 607 ) Share of profit 382 276 907 601 Ending balance $ 430 $ 376 $ 430 $ 376 24 Table of Contents