What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2024-09-12 compared with 2023-09-13 · 172 added, 213 removed, 292 unchanged (57% of the section changed)

5 unchanged sentences

Our actual results may differ materially from those contained in any forward-looking statements .

This Form 10-K includes certain historical consolidated financial and other data for IBEX (“ibex,” “we,” “us,” “our” or the “Company”).

The following discussion provides a narrative of our financial condition and results of operations for the fiscal year ended June 30, 2023 compared to the fiscal year ended June 30, 2022 and fiscal year ended June 30, 2022 compared to fiscal year ended June 30, 2021.

This Form 10-K includes certain historical consolidated financial and other data for IBEX Limited (“ibex,” “we,” “us,” “our” or the “Company”).

The following discussion provides a narrative of our financial condition and results of operations for the fiscal year ended June 30, 2024 compared to the fiscal year ended June 30, 2023.

Discussion and analysis for the fiscal year ended June 30, 2023 compared to the fiscal year ended June 30, 2022 may be found in the Company’s Annual Report on Form 10-K for the year ended June 30, 2023 filed with the SEC on September 13, 2023.

ibex delivers innovative business process outsourcing (“BPO”), smart digital marketing, online acquisition technology, and end-to-end customer engagement solutions to help companies acquire, engage, and retain valuable customers.

Today, ibex operates a global CX delivery center model consisting of 31 delivery centers around the world, while deploying next-generation technology to drive superior customer experiences for many of the world’s leading companies across retail, e-commerce, healthcare, fintech, utilities and logistics.

leverages its diverse global team of approximately 30,000 employees together with industry-leading technology, including its WaveX platform, to manage nearly 176 million critical customer interactions, adding over $2.2B in lifetime customer revenue each year and driving a truly differentiated customer experience.

Today, ibex operates a global customer experiences (“CX”) delivery center model consisting of 29 delivery centers around the world, while deploying next-generation technology to drive superior customer experiences for many of the world’s leading companies across various verticals, including Retail & E-commerce, HealthTech, FinTech, Utilities and Logistics.

ibex leverages its diverse global team of approximately 30,000 employees together with industry-leading technology, including its Wave iX platform, to manage nearly 169 million customer interactions on behalf of our clients, driving a truly differentiated customer experience.

Business Highlights

During the fiscal year ended June 30, 2023, the Company continued to deliver strong financial growth, in particular, growth in our digital first solutions with leading clients in our HealthTech, e-commerce, and retail verticals, while optimizing on our geographic diversity for delivery of services to our clients.

Despite macroeconomic trends modestly slowing our historical growth trends, the business performed well in several important metrics, including profit and margin expansion, strong free cash flows, new client wins with key clients in strategic verticals, and continued client and vertical diversification.

Our thoughtful and deliberate changes in geographic strategy and investing in partnerships with digitally-focused clients continues to deliver results.

Our integrated omni-channel and digital-first business represents 73% of our total business.

During the fiscal year ended June 30, 2024, the Company continued to deliver a solid financial performance, in particular, growth in our digital-first solutions with leading clients in our Retail & E-commerce, HealthTech and Travel, Transportation & Logistics verticals.

We closed two sites during the year to optimize utilization in our onshore and nearshore geographies.

Despite macroeconomic conditions impacting our historical growth trends, as well as the unfavorable impact on our revenue from shifting mix from onshore to offshore geographies, the business performed well in several important areas, including profitability, strong free cash flows, new client wins with key clients in strategic verticals, and continued client and vertical diversification.

As expected, our new sales pipeline and wins have picked up pace, with eighteen new clients during the fiscal year ended June 30, 2024 compared to ten in the prior year.

Recent Financial Highlights

The Company delivered revenues of $523.1 million, for 6% growth over the prior year, driven by increases in the HealthTech and Retail and E-commerce verticals, offset by the impact of the exit of a low margin legacy client in the Technology vertical;

net income of $31.6 million increased from $21.5 million, driven by improved operational delivery, geographic mix, and the impact of pricing, which all positively impacted margins;

and fully diluted earnings per share of $1.67 was up from $1.15.

Despite the current macroeconomic uncertainty, these results were the strongest in our history.

The Company delivered revenues of $508.6 million during the fiscal year ended June 30, 2024, a 2.8% decline compared to the prior year, largely due to the year over year migration of delivery from onshore to higher margin offshore regions, macroeconomic conditions, and external factors impacting the FinTech and Telecommunication verticals, partially offset by growth in the Retail & E-commerce, HealthTech, and Travel, Transportation & Logistics verticals.

Net income during the year ended June 30, 2024 was $33.7 million, a 6.6% increase from $31.6 million during the prior year.

The increase was driven by improved operational delivery, increased interest income on invested funds, and lower income tax expense which is attributed to changes in geographic mix, compared to the prior year.

Fully diluted earnings per share of $1.84 was up from $1.67 in the prior year.

Trends and Factors Affecting our Performance

1 unchanged sentence

Macroeconomic Trends

Macroeconomic factors, including but not limited to, increasing inflation and interest rates, global economic and geopolitical uncertainty, changes in foreign currency exchange rates, and the impact that these factors are having on our clients and their customers, have also impacted our financial results in fiscal year 2023.

Some of our customers have increased their focus on cost reduction, resulting in decisions to shift work from onshore sites to offshore sites, which has contributed to a lower revenue growth rate in fiscal year 2023 compared to prior years.

We expect that these factors to continue to impact our operations in the near term;

Some of our customers have increased their focus on cost reduction, resulting in decisions to shift work from onshore sites to offshore sites, which has contributed to a modest decline in revenue during fiscal year 2024 compared to prior years.

We expect that these factors will continue to impact our operations in the near term;

however, we also believe that they present opportunities with both new and existing clients, as companies maintain a focus on cost reduction.

Artificial Intelligence (“AI”)

With the increasing applicability of AI in enhancing business processes, the BPO industry is increasingly evaluating and starting to integrate AI into its range of solutions to improve the customer experience and efficiencies.

We are moving aggressively to leverage generative AI in our business.

We introduced our Wave iX technology on January 30, 2024.

We have created a three-pronged AI strategy, which continues to keep ibex at the forefront of digital transformation.

Our solutions are focused on increasing agent productivity, providing deeper customer insights to elevate the customer experience and putting AI in front of the customer journey with voice and chat bots.

We believe we are well positioned to leverage our leadership position in adopting new technology in the CX sector and to create significant value for our clients through the application of AI.

We believe that our approach to bringing a combination of our AI-enabled solutions plus a robust set of third-party AI-enabled solutions to our clients positions the company to not only be a fast-mover in the market, but also to capture an outsized share of AI-impacted future revenue, and to help minimize risk to our overall revenue and provide opportunities for future profitability enhancement.

While the initial implementation of some AI-solutions may impact revenue directly derived from traditional agent-driven activities, it is our belief that by remaining on the forefront and bringing these solutions to our clients, we will be able to capture a greater share of AI-enabled revenue work and maintain and grow our overall business and results.

Client’s Underlying Business Performance

2 unchanged sentences

Conversely, a decline in a client’s business generally results in a decrease in demand for our customer engagement solutions, shifting volume to lower cost geographies, and potential increases in demand for our customer acquisition and expansion solutions.

The correlation between business performance and demand for outsourced customer interaction solutions can therefore be complex, and depends upon several factors, such as industry consolidation, client investments in growth, and overall macroeconomic environment, all of which can result in short term revenue volatility for providers.

Demand during the fiscal year ended June 30, 2023 was constrained as compared in prior fiscal years, due in large part to the aforementioned macroeconomic conditions and uncertainty around future impacts of generative AI on our industry.

Demand during the fiscal year ended June 30, 2024 was constrained when compared to prior fiscal years, due in large part to the aforementioned macroeconomic conditions.

Capacity Utilization

As a significant portion of our customer interaction services are performed by customer-facing agents located in delivery facilities, our margins are impacted by the level of capacity utilization in those facilities.

We incur substantial fixed expenses in operating such facilities.

The greater the volume of interactions handled, the

higher the utilization level of workstations within those facilities and the revenues generated to cover those fixed costs, thus the greater the percentage operating margin.

As our geographic delivery location mix has continued to shift towards lower cost geographies in the last year, we have continued to invest in additional capacity in our nearshore and offshore regions, and expect this capacity to be absorbed quickly as we continue to see demand for these regions, as buyers look to relocate work to cost advantageous markets in the near term.

As a significant portion of our customer interaction services are performed by customer-facing agents located in delivery centers, our margins are impacted by the level of capacity utilization in those facilities.

We incur substantial fixed costs in operating such facilities.

The greater the volume of interactions handled, the higher the utilization level of workstations within those facilities and the revenues generated to cover those fixed costs, thus the greater the percentage operating margin.

As demand for delivery locations has continued to shift towards lower cost geographies during the year ended June 30, 2024, we have continued to fill the additional capacity in our offshore region and expect this capacity to be absorbed quickly as clients and prospective clients look to relocate work to cost advantageous markets in the near term.

We continue to realize cost savings as we optimize the number of onshore and nearshore delivery centers.

When compensation levels of our employees increase, we may not be able to pass on such increased costs to our clients or do so on a timely basis, which tends to depress our operating profit margins if we cannot generate sufficient offsetting productivity gains.

In fiscal 2023, we continued to see increasing wage pressure in all of our geographies, in part brought on by the current global inflation and labor shortage, which is increasing competition for contact center agents from other sectors of the economy.

During the year ended June 30, 2023, we have offset some of these wage increases with higher agent quality and increased productivity, higher agent retention, and increased client prices under contractual cost of living adjustments (“COLA”) leading to financial improvements.

Furthermore, our overall labor cost as a percentage of revenue is impacted by the aforementioned shift in delivery location from onshore delivery centers to nearshore and offshore centers.

During fiscal year 2024, we continued to see increasing wage pressure in all of our geographies, in part brought on by the current global inflation and labor shortage, which is increasing competition for contact center agents from other sectors of the economy.

During fiscal year 2024, we have offset some of these wage increases with higher agent quality and increased productivity, higher agent retention, and increased client prices under contractual cost of living adjustments (“COLA”).

Furthermore, our overall labor cost as a percentage of revenue is impacted by the aforementioned shift in delivery location from onshore delivery centers to offshore centers.

Delivery Location

We generate greater profit margins from our work carried out by agents located in offshore and nearshore geographies compared to our work carried out from locations in the United States.

We generate greater profit margins from our work carried out by agents located in offshore and nearshore geographies compared to our work carried out from onshore locations in the United States.

As a result, our operating margins are influenced by the proportion of our work delivered from these higher margin locations.

Over time we have expanded and further diversified our delivery network by adding facilities in these locations, offering a significant relative cost advantage.

Our percentage of workstations in nearshore and offshore centers increased to 94% as of June 30, 2023, up from 89% as of June 30, 2022.

We regularly evaluate new markets to continue to service our clients.

Our percentage of workstations in nearshore and offshore centers is approximately 95% as of June 30, 2024.

We regularly evaluate whether to procure additional space or enter into new markets as we continue to add employees and expand geographically to meet the demands of our business.

Provider Performance

1 unchanged sentence

Such re-allocation of spend can either take place on a short-term basis as higher performing providers are shielded by the client against demand volatility, or on a longer term basis as the client shifts more and more of its overall outsourcing spend and volume to higher performing providers.

Our revenues have generally increased with our existing clients as a result of performance-based market share gains, as well as through new client wins.

Our revenues have generally increased as a result of performance-based market share gains with our existing clients, as well as due to our new client wins.

Sales Cycles and New Client Wins

1 unchanged sentence

Historically, our in-year new client wins have generated 2.5x to 3.0x revenue in the second and third years of the engagement.

However, in the current slowing economic environment, sales cycles have lengthened recently resulting in growth slowing in our second half of fiscal year 2023.

We believe that the sales activity will pick up pace throughout our fiscal year 2024.

However, in the slowing economic environment, our sales cycles lengthened in fiscal year 2023 and the first two quarters of fiscal year 2024.

We experienced a faster pace of sales activity during the second half of fiscal year 2024.

Client Concentration

As a result of our track record of winning key new clients and rapidly expanding with them, we have been successful at diversifying our client base.

In fiscal year 2023, our largest client accounted for 12.6% while our three largest clients accounted for 27.0% of our consolidated revenue.

During the fiscal year 2024, our largest client accounted for 12% while our three largest clients accounted for 29% of our consolidated revenue.

We now have over 55 clients with greater than $1 million in annual revenue.

We believe client diversification is an important attribute in a challenging market.

Our revenues are dependent upon both volumes and unit pricing for our various CLX services.

Our revenues are dependent upon both volumes and unit pricing for our services.

Client pricing is often expressed in terms of a base price per minute or hour as well as, in limited cases, with bonuses and occasionally penalties depending upon our achievement of certain client objectives.

In fiscal year 2023, the tightening in the global labor market and corresponding wage inflation, as well as additional facilities expenses due to and increase in costs post-Pandemic, has resulted in us pursuing and successfully negotiating price increases or cost of living adjustments with many of our clients.

Within our customer engagement solution, pricing for services delivered from onshore locations is higher than pricing for services delivered from offshore locations, largely driven by higher wage levels in onshore locations.

Accordingly, a shift in service delivery location from onshore to offshore locations results in a decline in absolute revenues;

however, margins tend to increase, in percentage and often in absolute terms, as compared to onshore service delivery.

During fiscal year 2024, the tightening in the global labor market and corresponding wage inflation, as well as increasing facilities expenses have resulted in us pursuing and successfully negotiating price increases or COLA with many of our clients.

The current economic environment is also encouraging our clients to consider locating more of their support offshore.

Within our customer engagement solutions, pricing for services delivered from onshore locations is higher than pricing for services delivered from offshore locations, largely driven by higher wage levels in onshore locations.

Accordingly, a shift in service delivery location from onshore to offshore locations results in a

lower price for our clients and a decline in our absolute revenues;

however, our margins tend to increase, in percentage and often in absolute terms, as compared to onshore service delivery.

Attrition Among Customer Facing Agents

19 unchanged sentences

Our business performance is subject to seasonal fluctuations.

Within our customer engagement solution, some of our retail-facing clients undergo an increase in activity during the calendar year-end holiday period.

These seasonal effects cause differences in revenues and expenses among the various quarters of any financial year, which means that the individual quarters should not be directly compared with each other or be used to predict

annual financial results.

This intra-year seasonal fluctuation is common in the BPO industry, with increased volumes during the fourth calendar quarter of the year.

Within our customer acquisition solution, our revenues may increase during the summer period when households tend to move and activate telecommunications services in their new homes, as well as during the final quarter of the calendar year when the year-end holiday season begins.

Key Operational Metrics

2 unchanged sentences

It is defined as the number of physical workstations at a delivery center location used for production (excluding, for example, workstations in training rooms or those used by supervisors).

A single workstation will typically be used for multiple shifts, and therefore there will typically be more delivery center agents than utilized workstations.

A single workstation will typically be used for

multiple shifts, and therefore there will typically be more delivery center agents than utilized workstations.

This metric can be used by investors as an indicator of how much capacity for work the Company has overall and in a certain region.

10 unchanged sentences

Capacity utilization was over 100% in the United States as we continued to migrate towards a work at home model.

The following table displays our capacity utilization by region for the fiscal years ended June 30, 2023, 2022, and 2021, respectively.

As of June 30, 2023

Total Production

Workstations In Use Utilization %

Offshore 10,777 9,121 85 %

Nearshore 8,491 5,111 60 %

United States 1,290 1,580 122 %

Total 20,558 15,812 77 %

The following table displays our capacity utilization by region for the fiscal years ended June 30, 2024 and 2023:

As of June 30, 2024

21 unchanged sentences

Income from operations $ 39,429 $ 40,478

Interest expense, net (152) (1,246) (1,892)

Interest income 2,071 640

Interest expense (514) (792)

Income before income taxes $ 40,986 $ 40,326

Provision for income tax (expense) benefit (8,744) 2,077 (2,064)

Provision for income tax expense (7,331) (8,744)

Net income $ 33,655 $ 31,582

Fiscal Years Ended June 30, 2024 and 2023

Our revenue was $523.1 million in fiscal year 2023, an increase of $30.3 million, or 6.1%, compared to the prior year.

This increase was driven by strong growth in the HealthTech vertical, which increased by $27.7 million, or 85.8% over the prior year, followed by the Retail and E-commerce vertical, which increased $26.3 million, or 27.7% over the prior year, offset by a decrease in the Technology vertical of $21.1 million, or 30.9% compared to the prior year, primarily due to the exit of a low margin legacy client.

As a percentage of total revenue, Retail and E-commerce increased to 23.2%, compared to 19.3% in the prior year.

HealthTech, where we made strategic investments in early fiscal year 2020, increased to 11.5%, compared to 6.6% in the prior year.

Conversely, telecommunications decreased to 16.3% compared to 18.1% in the prior year.

Operating Expenses

Cost of services

Cost of services was $375.0 million in fiscal year 2023, an increase of $1.0 million, or 0.3%, compared to last year.

The increase in cost of services was primarily due to an increases in payroll and related costs, facilities, IT and telecom expenses, partially offset by decreases in reseller commissions and lead expenses and local transportation expense.

Payroll and related costs were $287.2 million in fiscal year 2023, an increase of $0.4 million, or 0.1%, compared to the prior year.

As a percent of revenue, payroll costs decreased to 54.9% compared to 58.2% in the prior year and is a reflection of the increasing utilization and higher margins in our nearshore and offshore regions.

Rent and utilities expenses were $33.2 million in fiscal year 2023, an increase of $2.3 million, or 7.3%, compared to the prior year.

The increase was primarily due to the full year impact of delivery center expansions over the last two years and increased utilization of these expanded delivery centers in a post-Pandemic business model.

IT and telecom expenses were $11.6 million, an increase $0.9 million which was also driven by facilities expansions.

Local transportation expenses were $6.8 million, a decrease of $1.2 million, or 14.6% compared to the prior year as regional transportation service was restored to pre-Pandemic operations.

Reseller commissions and lead expenses were $11.4 million in the fiscal year ended June 30, 2023, a decrease of $1.5 million, or 11.4%, compared to the prior year.

The decrease was primarily related to lower year-over-year revenue associated with this expense.

Selling, general, and administrative expense (“SG&A”)

SG&A was $88.7 million in fiscal year 2023, an increase of $8.5 million, or 10.6%, compared to last year.

The increase in SG&A was primarily due to an increase in payroll and related costs, an increase in share-based compensation expense, an increase in IT expense, an increase in travel expense, an increase in legal and professional fees, offset by a decrease in insurance expense.

The increases in payroll and related costs of $2.5 million were driven by our continuing investments in our sales and marketing teams as we continue to drive revenue growth in our growth verticals such as HealthTech and FinTech.

The increase in share-based compensation expense of $2.6 million is primarily due to the full year impact of performance grants made at the end of fiscal year 2022.

Our IT expenses increased $1.3 million year over year as we continued to invest in our IT infrastructure related to cybersecurity and a scalable platform that will be capable of supporting the growth of the business.

With Pandemic-era travel restrictions lifted, we saw an increase in travel expense of $1.7 million as our teams returned to pre-Pandemic travel levels.

In fiscal year 2023, an increase in legal and professional fees of $2.3 million was primarily related to strategic project consulting expense.

These increases were partially offset by a decrease in insurance expenses of $1.6 million.

Depreciation and amortization expense (“D&A”)

D&A expense increased $0.9 million or 4.9%, to $19.0 million in the current year compared to the prior year due to the full year impact of delivery center expansions in prior years.

As a percentage of revenue, depreciation and amortization expense was 3.6%, down from 3.7% in the prior year.

Income from operations

Income from operations was $40.5 million compared to $20.6 million in the fiscal year ended June 30, 2022.

The increase was primarily driven by margin expansion as we utilized available capacity in our nearshore and offshore regions, as well as geographical mix shifts from lower-margin onshore locations to more profitable nearshore and offshore locations.

The operating margin was 7.7% for fiscal year 2023 compared to 4.2% for fiscal year 2022.

Interest expense, net

Interest expense, net was $0.2 million in the fiscal year ended June 30, 2023, a decrease of $1.1 million compared to last year, primarily due to the payoff of our remaining debt.

Provision for Income Taxes

Income tax expense was $8.7 million in fiscal year ended June 30, 2023, an increase of $10.8 million compared to a $2.1 million income tax benefit in the prior year, primarily due to higher pre-tax income in the current year and approximately $4.1 million one-time benefit in the prior year related to previously unrecognized net operating losses.

Fiscal Years Ended June 30, 2022 and 2021

Our revenue was $492.9 million in fiscal year 2022, an increase of $49.5 million, or 11.2%, compared to the prior year.

This increase was driven by strong growth in the FinTech vertical, which increased by $48.8 million, or 103.5% over the prior year, followed by the Travel and logistics vertical, which increased by $20.9 million, or 46.3% over the prior year.

HealthTech, where we made strategic investments in early fiscal year 2020, increased by $14.8 million, or 84.5%, compared to the prior year, while Retail and E-commerce increased $15.3 million, or 19.3% over the prior year.

The growth in these verticals was offset by a decline in the Telecommunications vertical of $40.5 million, or 31.2%, compared to the prior year.

As a percentage of total revenue, Retail and E-commerce increased to 19.3%, compared to 18.0% in the prior year.

FinTech and HealthTech, increased to 19.5% and 6.6%, respectively, compared to 10.6% and 4.0%, respectively, in the prior year.

Conversely, telecommunications decreased to 18.1%, compared to 29.3% in the prior year.

Our revenue was $508.6 million for the fiscal year ended June 30, 2024, a decrease of $14.5 million, or 2.8%, compared to the prior year.

This decrease was primarily driven by macroeconomic factors impacting the FinTech and Telecommunication verticals, which decreased $26.0 million, or 26.8%, and $9.0 million, or 10.5%, respectively, compared to the prior year.

These decreases were partially offset by increases in the Retail & E-commerce vertical of $7.8 million, or 6.4%, HealthTech vertical of $6.8 million, or 11.3%, and Travel, Transportation & Logistics vertical of $6.2 million, or 10.0% from the prior year.

As a percentage of total revenue, the revenue from our Retail & E-commerce vertical increased to 25.4% for the fiscal year ended June 30, 2024 compared to 23.2% in the prior year, the revenue from our HealthTech vertical increased to 13.1% compared to 11.5%, and the revenue from our Travel, Transportation & Logistics vertical increased to 13.4% compared to 11.9%.

Conversely, the revenue from our FinTech vertical decreased to 14.0% for the fiscal year ended June 30, 2024 compared to 18.5% in the prior year, and the revenue from our Telecommunication vertical decreased to 15.0% compared to 16.3% in the prior year.

Operating Expenses

Cost of services

Cost of services was $374.0 million in fiscal year 2022, an increase of $38.7 million, or 11.6%, compared to fiscal year 2021.

Payroll and related costs were $286.8 million in fiscal year 2022, an increase of $39.1 million, or 15.8%, compared to the prior year.

As a percentage of revenue, payroll costs increased to 58.2% compared to 55.9% in the prior year, and was primarily driven by upfront costs associated with ramping new clients during the year.

Reseller commissions and lead expenses were $12.9 million in the fiscal year ended June 30, 2022, a decrease of $0.8 million, or 6.1%, compared to the prior year.

The decrease was primarily due to lower year-over-year revenue associated with this expense.

Rent and utilities expenses were $31.0 million in fiscal year 2022, an increase of $4.8 million, or 18.4%, compared to the prior year.

The increase was primarily due to the expansion of existing and opening of new delivery centers primarily in the nearshore region.

IT and telecom expenses were $10.7 million, an increase $1.1 million, which was also driven by facilities expansions.

Local transportation expenses were $7.9 million, a decrease of $5.7 million compared to the prior year as the Pandemic impact on regional transportation services lessened significantly.

Cost of services was $356.5 million during the fiscal year ended June 30, 2024, a decrease of $18.5 million, or 4.9%, compared to the prior year.

The decrease in cost of services was primarily due to decreases in payroll and related costs, facilities, telecom, local transportation and other site related expenses, partially offset by increases in reseller commissions and lead expenses.

Payroll and related costs were $274.4 million during the fiscal year ended June 30, 2024, a decrease of $12.7 million, or 4.4%, compared to the prior year.

As a percent of revenue, payroll costs decreased to 54.0% during the fiscal year ended June 30, 2024 compared to 54.9% in the prior year, reflecting the continuing trend of migrating volume to lower cost regions.

Facilities expenses, including rent and utilities, were $48.9 million during the fiscal year ended June 30, 2024, a decrease of $3.9 million, or 7.3%, compared to the prior year.

Telecom, local transportation and other site

related expenses were $11.9 million during the fiscal year ended June 30, 2024, a decrease of $1.7 million, or 12.6%, compared to the prior year.

These decreases were primarily due to the site optimization efforts completed in the fourth quarter of fiscal year 2023.

Reseller commissions and lead expenses were $12.0 million during the fiscal year ended June 30, 2024, an increase of $0.6 million, or 5.0%, compared to the prior year.

These increases were primarily due to increases in the utilization of our third-party affiliates for inbound inquiries as well as search engine costs in connection with our digital sales and marketing efforts.

Selling, general, and administrative expense (“SG&A”)

SG&A was $80.2 million in fiscal year 2022, an increase of $3.2 million, or 4.1%, compared to last year.

The increase in SG&A was primarily due to increases in payroll and related costs, IT and telecom, an increase in

travel and other expenses, partially offset by decreases in legal and professional fees and share-based compensation expense.

Payroll and related costs were $55.8 million in fiscal year 2022, an increase of $6.4 million, or 13.0%, compared to the prior year.

As a percentage of revenue, SG&A payroll costs increased slightly to 11.3% compared to 11.1% in the prior year, and was primarily driven by investments in sales and marketing.

IT and telecom expenses were $6.8 million, an increase of $1.3 million, due to additional investments in technology.

Travel expenses were $1.5 million, an increase of $0.9 million, as Pandemic restrictions began to lift in fiscal year 2022.

Finally, other SG&A costs increased $0.7 million in conjunction with revenue growth.

These increases were partially offset by decreases of $3.5 million in share-based compensation expense and $2.6 million in legal expenses due to higher expense in the prior year because of the initial public offering.

SG&A expense was $93.1 million during the fiscal year ended June 30, 2024, an increase of $4.5 million, or 5.1%, compared to the prior year.

The increase in SG&A expense was primarily due to impairment losses, increases in payroll and related costs (including severance), IT expenses, and facilities expenses, partially offset by decreases in share-based compensation expense and insurance expense.

The increase in payroll and related costs of $1.9 million was primarily driven by severance costs of $1.4 million related to the elimination of certain positions that we considered redundant, and investments in our technology, sales and marketing, and client service teams as we continue to focus on revenue growth.

IT expenses increased $1.6 million due to continued investments in cybersecurity and core business management systems.

During the fiscal year ended June 30, 2024, we determined that the estimated fair value of the operating lease asset and certain assets at two of our delivery centers no longer exceeded their carrying value, and recorded total impairment losses of $1.5 million.

These increases were partially offset by decreases in share-based compensation.

Depreciation and amortization expense (“D&A”)

Depreciation and amortization expense increased $4.0 million, or 28.2%, to $18.1 million in the current year compared to the prior year.

The increase in depreciation and amortization was related to the expansion of existing and opening of new delivery centers primarily in the nearshore region.

As a percentage of revenue, depreciation and amortization expense has increased to 3.7% in the current year compared to 3.2% in the prior year, as we have expanded capacity to meet the growing demand in our revenue pipeline.

D&A expense was $19.5 million during the fiscal year ended June 30, 2024, an increase of $0.5 million or 2.5%, compared to the prior year.

The increase was primarily driven by the timing of additions resulting in higher D&A for our onshore and offshore regions, partially offset by decreases in our nearshore regions.

As a percentage of revenue, D&A increased to 3.8% during the fiscal year ended June 30, 2024 compared to 3.6% in the prior year.

Income from operations

Income from operations was $20.6 million compared to $17.0 million in the fiscal year ended June 30, 2021.

Higher revenue in fiscal year 2022 was largely offset by higher operating expenses.

The operating income increase which did occur was primarily due to lower costs related to the Pandemic and a decrease in share-based compensation expense offset by higher D&A related to our capacity expansion.

The operating margin was 4.2% for fiscal year 2022 compared to 3.8% for fiscal year 2021.

Interest expense, net

Interest expense, net was $1.2 million in the fiscal year ended June 30, 2022, a decrease of $0.7 million compared to last year, primarily due to decreasing debt year-over-year.

Income from operations was $39.4 million during the fiscal year ended June 30, 2024 compared to $40.5 million during the prior year.

The operating margin was 7.8% during the fiscal year ended June 30, 2024, consistent with the prior year despite the aforementioned macroeconomic factors impacting our historical growth trends, as well as the impairment losses and severance costs recorded during the current year.

Interest income

Interest income during the fiscal year ended June 30, 2024 was $2.1 million compared to $0.6 million for the prior year as income from invested funds increased compared to the same period in the prior year.

Interest expense

Interest expense during the fiscal year ended June 30, 2024 was $0.5 million, down from $0.8 million during the prior year, driven by lower borrowings.

Provision for Income Taxes

Income tax benefit was $2.1 million in fiscal year ended June 30, 2022, a decrease of $4.2 million compared to the $2.1 million income tax expense in the prior year, primarily due to a tax restructuring that allowed the Company to recognize approximately $4.1 million in tax benefits from previously unrecognized net operating losses.

Income tax expense was $7.3 million during the fiscal year ended June 30, 2024, a decrease of $1.4 million when compared with the prior year, primarily due to a lower effective tax rate in the current year.

The effective tax rate was 17.9% and 21.7% for the fiscal years ended June 30, 2024 and 2023, respectively.

The changes in effective tax rate between these periods was primarily attributable to changes in revenue mix across our taxable jurisdictions and discrete items recorded in the prior year.

Non-GAAP Financial Measures

1 unchanged sentence

We also use these measures internally to establish forecasts, budgets and operational goals to manage and monitor our business, as well as evaluate our underlying historical performance, as we believe that these non-GAAP financial measures provide a more helpful depiction of our performance of the business by encompassing only relevant and manageable events, enabling us to evaluate and plan more effectively for the future.

The non-GAAP financial measures may not be comparable to other similarly titled measures of other companies, have limitations as analytical tools, and should not be considered in isolation or as a substitute for analysis of our operating results as reported in accordance with accounting principles generally accepted in the United States (“U.S.

Non-GAAP financial measures and ratios are not measurements of our performance, financial condition or liquidity under U.S.

GAAP and should not be considered as alternatives to operating profit or net income / (loss) or as alternatives to cash flow from operating, investing or financing activities for the period, or any other performance measures, derived in accordance with U.S.

Adjusted net income and adjusted earnings per share

Adjusted net income, adjusted net income margin, and adjusted earnings per share

Adjusted net income is a non-GAAP profitability measure that represents net income before the effect of the following items:

non-recurring expenses (including domestic filer conversion, severance, legal and settlement, Pandemic, and listing costs, as applicable), warrant contra revenue, foreign currency gain or loss, share-based compensation expense, and gain or loss on lease terminations, net of the tax impact of such adjustments.

non-recurring expenses (including domestic filer conversion and legal and settlement costs), severance costs, impairment losses, warrant contra revenue, foreign currency gains, share-based compensation expense, gain on sale of subsidiaries, and loss on lease terminations, net of the tax impact of such adjustments.

We define adjusted net income margin as adjusted net income divided by revenue.

We define adjusted earnings per share as adjusted net income divided by weighted average diluted shares outstanding.

We use adjusted net income and adjusted earnings per share internally to establish forecasts, budgets and operational goals to manage and monitor our business, as well as evaluate our underlying historical performance.

We believe that adjusted net income and adjusted earnings per share are meaningful indicators of performance as it reflects what we believe is closer to the actual results of our business performance by removing items that we believe are not reflective of our underlying business.

We also believe that adjusted net income and adjusted earnings per share may be widely used by investors, securities analysts and other interested parties as a supplemental measure of performance.

Adjusted net income and adjusted earnings per share may not be comparable to other similarly titled measures of other companies and has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our operating results as reported under U.S.

Because of these limitations, you should consider adjusted net income and adjusted earnings per share in conjunction with other U.S.

We use adjusted net income, adjusted net income margin, and adjusted earnings per share internally to establish forecasts, budgets and operational goals to manage and monitor our business, as well as evaluate our underlying historical performance.

We believe that adjusted net income, adjusted net income margin, and adjusted earnings per share are meaningful indicators of performance as it reflects what we believe is closer to the actual results of our business performance by removing items that we believe are not reflective of our underlying business.

We also believe that adjusted net income, adjusted net income margin, and adjusted earnings per share may be widely used by investors, securities analysts and other interested parties as a supplemental measure of performance.

Adjusted net income, adjusted net income margin, and adjusted earnings per share may not be comparable to other similarly titled measures of other companies and have limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our operating results as reported under U.S.

Because of these limitations, investors should consider adjusted net income, adjusted net income margin, and adjusted earnings per share in conjunction with other U.S.

GAAP financial performance measures, including net income from operations and net income, among others.

The following table provides a reconciliation of net income to adjusted net income and diluted earnings per share to adjusted earnings per share for the periods presented:

The following table provides a reconciliation of net income and net income margin to adjusted net income and adjusted net income margin, and diluted earnings per share to adjusted earnings per share for the years presented:

Year ended June 30,

3 unchanged sentences

Non-recurring expenses — 2,224

Severance costs 1,621 —

Impairment losses 1,532 —

Warrant contra revenue 1,183 1,090

Foreign currency (gain) / loss (801) (57) 131

Foreign currency gains (1,815) (801)

Share-based compensation expense 3,765 4,606

Gain on sale of subsidiaries — (246)

Loss / (gain) on lease terminations 251 — (634)

Loss on lease terminations — 251

Total adjustments $ 6,286 $ 7,124

6 unchanged sentences

Weighted average diluted shares outstanding 18,255 18,893

1 The tax impact of each adjustment is calculated using the effective tax rate in the relevant jurisdictions.

EBITDA, adjusted EBITDA, and adjusted EBITDA margin

EBITDA is a non-GAAP profitability measure that represents net income before the effect of the following items:

interest expense, net, income tax expense, and depreciation and amortization.

interest expense, income tax expense, and depreciation and amortization.

Adjusted EBITDA is a non-GAAP profitability measure that represents EBITDA before the effect of the following items:

non-recurring expenses ( including domestic filer conversion, severance, legal and settlement, Pandemic, and listing costs, as applicable), warrant contra revenue, foreign currency gain or loss, share-based compensation expense, gain on sale of subsidiaries, and gain or loss on lease terminations.

non-recurring expenses ( including domestic filer conversion and legal and settlement costs), severance costs, impairment losses, interest income, warrant contra revenue, foreign currency gains, share-based compensation expense, gain on sale of subsidiaries, and loss on lease terminations.

Adjusted EBITDA margin is a non-GAAP profitability measure that represents adjusted EBITDA divided by revenue.

1 unchanged sentence

We may use adjusted EBITDA as a vesting trigger in some performance-based restricted stock units.

We believe that EBITDA, adjusted EBITDA and a djusted EBITDA margin are meaningful indicators of the health of our business as they reflect our ability to generate cash that can be used to fund capital expenditures and growth.

EBITDA, adjusted EBITDA and a djusted EBITDA margin also disregard non-cash or non-recurring charges that we believe are not reflective of our long-term performance.

We also believe that EBITDA, adjusted EBITDA and a djusted EBITDA margin may be widely used by investors, securities analysts, and other interested parties as a supplemental measure of performance.

EBITDA, adjusted EBITDA and a djusted EBITDA margin may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our operating results as reported under U.S.

We believe that EBITDA, adjusted EBITDA and a djusted EBITDA margin are meaningful indicators of the health of our business as they provide additional information to investors about certain non-cash or non-recurring charges that we believe may not continue at the same level in the future or be reflective of our long-term performance.

We also believe that EBITDA, adjusted EBITDA and a djusted EBITDA margin are widely used by investors, securities analysts, and other interested parties as a supplemental measure of performance.

2 The tax impact of each adjustment is calculated using the effective tax rate in the relevant jurisdictions.

or as a substitute for analysis of our operating results as reported under U.S.

Some of these limitations are as follows:

6 unchanged sentences

and (iv) other cash costs that may recur in the future;

• other companies, including companies in our industry, may calculate similarly titled measures differently, which reduces its usefulness as comparative measures.

Because of these and other limitations, you should consider EBITDA, adjusted EBITDA and a djusted EBITDA margin in conjunction with other U.S.

• other companies, including companies in our industry, may calculate similarly titled measures differently, which reduces their usefulness as comparative measures.

Because of these and other limitations, investors should consider EBITDA, adjusted EBITDA and a djusted EBITDA margin in conjunction with U.S.

GAAP financial performance measures, including cash flows from operating activities, investing activities and financing activities, net income, net income margin, and other financial results.

The following table provides a reconciliation of net income to EBITDA, adjusted EBITDA and a djusted EBITDA margin for the years presented:

The following table provides a reconciliation of net income and net income margin to EBITDA, adjusted EBITDA and a djusted EBITDA margin for the years presented:

Year ended June 30,

2 unchanged sentences

Net income margin 6.6 % 6.0 %

Interest expense, net 152 1,246 1,892

Income tax expense / (benefit) 8,744 (2,077) 2,064

Interest expense 514 792

Income tax expense 7,331 8,744

Depreciation and amortization 19,461 18,985

1 unchanged sentence

Non-recurring expenses — 2,224

Severance costs 1,621 —

Impairment losses 1,532 —

Interest income (2,071) (640)

Warrant contra revenue 1,183 1,090

Foreign currency loss / (gain) (801) (57) 131

Foreign currency gains (1,815) (801)

Share-based compensation expense 3,765 4,606

Gain on sale of subsidiaries — (246)

Loss / (gain) on lease terminations 251 — (634)

Loss on lease terminations — 251

Adjusted EBITDA $ 65,176 $ 66,587

1 unchanged sentence

Net income margin

Net income margin was 6.0% for the year ended June 30, 2023 compared to 4.4% in the prior year.

The improvement was primarily driven by stronger operating results from higher capacity utilization and an increased mix of higher margin nearshore and offshore delivery.

Net income margin was 4.4% for the year ended June 30, 2022 compared to 3.0% in the prior year.

The improvement was primarily due to decreases in Pandemic related costs, share-based payments expense, and a deferred tax benefit, partially offset by higher depreciation related to our capacity expansion over the last two years.

Net income margin increased to 6.6% for the fiscal year ended June 30, 2024 compared to 6.0% during the prior year.

The increase was driven by improved margins due to client migration to higher margin offshore regions, increased interest income on invested funds, and lower income tax expense which is attributed to changes in geographic mix, compared to the prior year.

Adjusted EBITDA margin

Adjusted EBITDA margin is a non-GAAP profitability measure that represents adjusted EBITDA divided by revenue.

Adjusted EBITDA margin was 12.7% for the year ended June 30, 2023 compared to 9.1% in the prior year, and increased primarily due to stronger operating results from higher capacity utilization and an increased mix of higher margin nearshore and offshore delivery.

Adjusted EBITDA margin was 9.1% for the fiscal year ended June 30, 2022 compared to 10.6% in the prior year primarily due to upfront hiring and training costs associated with ramping new business during the year.

Despite the aforementioned macroeconomic factors impacting our historical growth trends, a djusted EBITDA margin increased slightly to 12.8% compared to the prior year, primarily due to the site optimization efforts completed in the fourth quarter of fiscal 2023 a nd the migration of clients to higher margin offshore locations.

Free cash flow

Free cash flow is a non-GAAP liquidity measure that represents net cash provided by operating activities less capital expenditures.

While we believe that free cash flow provides useful information to investors in understanding and evaluating our liquidity position in the same manner as our management, our use of free cash flow has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S.

Further, other companies, including companies in our industry, may adjust their cash flows differently, which may reduce the value of free cash flow as a

comparative measure.

While we believe that free cash flow provides useful information to investors in understanding and evaluating our liquidity position in the same manner as our management, our use of free cash flow has limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S.

Further, other companies, including companies in our industry, may adjust their cash flows differently, which may reduce the value of free cash flow as a comparative measure.

The following table reconciles net cash provided by operating activities to free cash flow, for the years presented:

4 unchanged sentences

Free cash flow $ 27,045 $ 22,907

Free cash flow between fiscal years 2023 and 2022 increased t o $22.9 million from $14.1 million in t he prior year, due to increased operating margins and decreased capital expenditures as we utilize capacity built out over the last two years.

Free cash flow between fiscal years 2022 and 2021 increased to $14.1 million from ($4.7) million in the prior year, driven by an increase in net cash provided by operating activities partially offset by an increase in capital expenditures as we continued to invest in primarily nearshore capacity expansion.

Net cash provided by operating activities during the fiscal year ended June 30, 2024 was $35.9 million compared to $41.9 million during the fiscal year ended June 30, 2023.

The decrease was primarily driven by a decline in absolute revenue due to client migration to offshore locations, lower training revenue recognized, i nvestments in our technology, sales and marketing, and client service functions, and higher use of working capital of $3.6 million.

Free cash flow during the fiscal year ended June 30, 2024 was $27.0 million, an increase of $4.1 million from the prior year.

The increase is due to decreased capital expenditures during the fiscal year ended June 30, 2024 as we utilized capacity built out over the last two years, partially offset by a decrease in net cash inflow from operating activities.

Net cash is a non-GAAP liquidity measure that represents cash and cash equivalents less total debt.

We believe that net cash provides useful information to investors in understanding and evaluating our ability to pay off debt.

Our use of net cash has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP.

Our use of net cash has limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP.

Further, other companies, including companies in our industry, may adjust their cash or debt differently, which may reduce the value of net cash as a comparative measure.

7 unchanged sentences

Net cash $ 61,193 $ 56,416

The increase in net cash is primarily due to stronger operating results and operating cash flow which has allowed us to significantly pay down our debt in fiscal year 2023.

The increase in cash and cash equivalents as of June 30, 2024 is primarily due to lower capital expenditures and debt repayments, offset by an increase in share repurchases and lower operating cash flow, compared to the prior year.

The increase in net cash as of June 30, 2024 is primarily due to lower capital expenditures and debt repayments, partially offset by an increase in share repurchases and lower operating cash flow compared to the prior year.

JOBS Act Accounting Election

We qualify as an emerging growth company pursuant to the provisions of the JOBS Act.

The JOBS Act permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies.

We have 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.

We qualify as an EGC pursuant to the provisions of the JOBS Act.

The JOBS Act permits an EGC like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies.

We have elected to use the extended transition period until we are no longer an EGC or until we choose to opt out of the extended transition period affirmatively and irrevocably.

As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements applicable to public companies.

Liquidity and Capital Resources

Our principal sources of liquidity are cash and cash equivalents, cash flows from operations, and the availability under our revolving line of credit, described in more detail below in “Financing Arrangements.” We use these resources to finance our operations, expand current delivery centers, open new delivery centers, invest in upgrades of technology, service offerings, and for other strategic initiatives, such as acquiring or investing in complementary businesses or intellectual property rights.

Our future liquidity requirements will depend on many

factors, including our growth rate and the timing and extent of spending to engage in the activities mentioned above.

We believe that our existing cash balance together with cash generated from our operations, and availability under our existing credit facilities will be sufficient to meet our liquidity requirements for at least the next twelve months.

To the extent additional funds are necessary to meet our long-term liquidity needs as we execute on our business strategy, we anticipate that they will be obtained through the utilization of current availability under our revolving line of credit, additional indebtedness, additional equity financings or a combination of these potential sources of funds;

Our principal sources of liquidity are cash and cash equivalents, cash flows from operations, and the unused availability under our existing credit facility, described in more detail below in “Financing Arrangements.” As of June 30, 2024, the unused availability under our existing credit facility was $79.0 million.

As of June 30, 2024, our total indebtedness was $1.5 million, consisting of our finance leases.

We were in compliance with all debt covenants as of June 30, 2024.

Refer to Note 8.

“Debt”, included in Item 8.

“Financial Statements and Supplementary Data” for further information on our debt.

We use these resources to finance our operations, expand current delivery centers, open new delivery centers, invest in upgrades of technology, service offerings, and for other strategic initiatives, such as acquiring or investing in complementary businesses or intellectual property rights, or share repurchases.

Our future liquidity requirements will depend on many factors, including our growth rate and the timing and extent of spending to engage in the activities mentioned above.

We believe that our existing cash balance together with cash generated from our operations will be sufficient to meet our liquidity requirements for at least the next twelve months.

To the extent additional funds are necessary to meet our long-term liquidity needs as we execute on our business strategy, we anticipate that they will be obtained through the utilization of current availability under our $80.0 million revolving credit facility (as amended, the “PNC Credit Facility”) with PNC Bank, N.A.

(“PNC”), additional indebtedness, additional equity financings or a combination of these potential sources of funds;

however, such additional financing may not be available on favorable terms, or at all.

If we are unable to raise additional funds when desired, our business, financial condition and results of operations could be adversely affected.

As of June 30, 2023 and 2022, the unused availability under our revolving credit facilities and line of credit was $71.9 million and $50.5 million, respectively.

The Board may authorize share repurchases of the Company’s common shares and the Company had multiple share repurchase plans during the years ended June 30, 2024 and 2023.

On May 1, 2024, the Board authorized the Company’s current share repurchase program of $30 million in share repurchases during the next twelve months.

For the years ended June 30, 2024 and 2023, the Company repurchased 1,322,105 and 17,558 shares, respectively, of its common shares totaling $21.7 million, and $0.3 million, respectively.

All repurchases under these programs were funded with our existing cash balance.

The following discussion highlights our cash flow activities durin g the last three fiscal years.

Year ended June 30,

2023 2022 2021

Net cash inflow / (outflow) from

16 unchanged sentences

As of June 30, 2023, we had cash and cash equivalents of $57.4 million, including $5.6 million located outside of the United States, and $1.7 million that is subject to certain local regulations on repatriation.

Our cash position as of June 30, 2023 increased primarily due to higher cash flow from operations and lower capital expenditures which have allowed us to pay down our debt and further increase our cash balances.

Our cash position as of June 30, 2024 increased primarily due to lower capital expenditures and debt repayments, offset by an increase in share repurchases and lower operating cash flow, compared to the prior year.

Cash Flows from Operating Activities

Net cash inflow from operating activities during the fiscal year ended June 30, 2024 was $35.9 million compared to $41.9 million during the fiscal year ended June 30, 2023.

The increase in net cash inflow from operating activities was primarily driven by stronger operating results offset by higher working capital requirements, primarily driven by an increase in days sales outstanding year over year.

Net cash inflow from operating activities during the fiscal year ended June 30, 2022 was $40.0 million compared to $16.1 million during the fiscal year ended June 30, 2021.

The increase in net cash inflow from operating activities was primarily driven by stronger operating results, improved working capital, and lower cash taxes paid in fiscal year 2022.

The decrease in net cash inflow from operating activities was primarily driven by a decline in absolute revenue due to client migration to offshore locations, lower training revenue recognized, i nvestments in our technology, sales and marketing, and client service functions, and higher use of working capital of $3.6 million.

Cash Flows from Investing Activities

During the year ended June 30, 2023, we had net expenditures of $19.0 million on investing activities primarily related to capacity expansion in Jamaica and Pakistan and investments in information technology.

During the year ended June 30, 2022, we had expenditures of $25.9 million on investing activities as we continued to invest heavily in nearshore and offshore capacity expansion.

During the year ended June 30, 2021, we expended $20.8 million on investing activities, a significant portion of which related to the expansion of two existing delivery centers in Nicaragua and the Philippines and the opening of four new delivery centers in Jamaica, Nicaragua, and the Philippines.

During the year ended June 30, 2024, we had net expenditures of $8.9 million on investing activities primarily related to purchases of IT and telecommunications equipment, and capacity expansion in Pakistan.

During the year ended June 30, 2023, we had expenditures of $19.0 million on investing activities primarily related to capacity expansion in Jamaica and Pakistan and investments in information technology.

Cash Flows from Financing Activities

During the year ended June 30, 2024, we expended a total of $21.7 million on financing activities, of which $21.6 million related to purchasing our common shares under the share repurchase programs.

During the year ended June 30, 2023, we expended $13.6 million on financing activities, primarily related to the repayment of debt, both term and revolving, offset by net cash receipts from stock transactions of $1.8 million.

During the year ended June 30, 2022, we expended $22.1 million on financing activities, primarily related to the repayment of debt, both term and revolving, in addition to $3.4 million in share buybacks.

Net cash inflow from financing activities of $40.9 million during the fiscal year ended June 30, 2021 was primarily related to net proceeds of $63.1 million from our IPO, payments of $1.1 million in listing costs, a net repayment of debt of $10.1 million, finance lease payments of $7.4 million and a dividend distribution of $4.0 million to our principal shareholder prior to the IPO.

Our cash resources could also be affected by various risks and uncertainties.

For additional information, please see the section entitled “Risk Factors.”

Dividend to TRGI

On July 21, 2020, our board of directors approved a one-time dividend of $4.0 million to our shareholders reflecting a portion of the cash generation from the business during fiscal year 2020.

The dividend was paid on July 24, 2020 to TRGI, the holder of our Series A preferred share (outstanding prior to its automatic conversion into common shares in connection with our initial public offering), which was entitled to a dividend preference that expired upon conversion of the Series A preferred share to common shares upon the completion of our initial public offering.

Financing Arrangements

We are party to a number of financing arrangements with banks, financial institutions and lessors that serve to meet our liquidity requirements.

The following is a summary of our principal financing arrangements.

The following is a summary of our principal financing arrangement.

PNC Credit Facility

In November 2013, our subsidiary Ibex Global Solutions, Inc.

(formerly known as TRG Customer Solutions, Inc.) entered into a three-year $35.0 million revolving credit facility (as amended, the “PNC Credit Facility”) with PNC Bank, N.A.

(formerly known as TRG Customer Solutions, Inc.) entered into the PNC Credit Facility with PNC Bank, National Association (“PNC”), which was a three-year $35.0 million revolving credit facility.

Between June 2015 and March 2021, the PNC Credit Facility was amended multiple times for increases to the maximum revolving advance amount and extension of the maturity date.

1 unchanged sentence

In September 2021, the PNC Credit Facility was amended to join iSky, LLC as a borrower.

In June 2022, the PNC Credit Facility was amended to increase the maximum revolving advance amount to $80 million, with the ability to request increases, up to a maximum revolving advance amount of $95 million (contingent upon lender approval), change the reference rate used from LIBOR to Term SOFR and extend the maturity date to May 2026.

In May 2024, the PNC Credit Facility was amended for PNC's consent to the assignment of certain customer contracts (the "Contract Assignments") by the borrowers 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 borrowers comply with additional reporting requirements to PNC.

Borrowings under the PNC Credit Facility bear interest at SOFR plus a margin of 1.75% and/or negative 0.5% of the PNC Commercial Lending Rate for domestic loans.

The PNC Credit Facility also requires a commitment fee of 0.25% per annum of undrawn commitments to be paid quarterly in arrears.

The PNC Credit Facility is guaranteed by IBEX Global Limited and secured by substantially all the assets of Ibex Global Solutions, Inc.,

Digital Globe Services, LLC, TelSatOnline, LLC, 7 Degrees, LLC, and iSky, LLC.

The PNC Credit Facility balance as of June 30, 2023, 2022, and 2021 was $0.1 million, $11.2 million, and $22.3 million, respectively.

JS Bank Limited Loans

In May 2020, the Company’s subsidiary, IBEX Global Solutions (Pvt) Limited entered into a loan agreement with JS Bank Limited for a loan of $1.0 million (PKR165 million) under a government-initiated wage and salary loan fund.

The loan bore 3% interest per annum with a two-year term.

Repayment of the loan commenced in January 2021, and was paid in full in December 2022.

The balance of the loan was $0.2 million and $0.8 million as of June 30, 2022 and 2021, respectively.

In May 2020, the Company’s subsidiary, Virtual World (Pvt) Limited entered into a loan agreement with JS Bank Limited for a loan of $0.8 million (PKR 120 million) under a government-initiated wage and salary loan fund.

The loan bore 3% interest per annum with a two-year term.

Repayment of the loan commenced in January 2021, and was paid in full in December 2022.

The balance of the loan was $0.1 million and $0.6 million, as of June 30, 2022 and 2021, respectively.

The PNC Credit Facility is guaranteed by IBEX Global Limited and secured by substantially all the assets of Ibex Global Solutions, Inc., Digital Globe Services, LLC, TelSatOnline, LLC, 7 Degrees, LLC, and iSky, LLC.

The PNC Credit Facility balance as of June 30, 2024 and 2023 was $0.0 million and $0.1 million, respectively.

Contractual obligations

13 unchanged sentences

We expect capital expenditures in fiscal year 2025 to be between 3.0% and 4.0% of revenue.

Because we have heavily invested in capacity expansion and growth over the last few years, we are expecting approximately 40% of fiscal year 2024 capital expenditures will be directed to additional growth in the business while 60% will be directed towards maintenance of existing assets.

Because we have heavily invested in capacity expansion and growth over the last few years, we are expecting approximately 40%

of fiscal year 2025 capital expenditures will be directed to additional growth in the business while 60% will be directed towards maintenance of existing assets.

Our capital expenditure requirements could increase materially in the event of an acquisition or the launch of large new client contracts, which generally require increased capital expenditures for equipment and working capital to support hiring and training activities.

Critical accounting estimates

The Company’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States.

Preparation of these financial statements requires the Company to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues

and expenses, and related disclosure of contingent assets and liabilities.

Critical Accounting Policies and Estimates

The Company’s consolidated financial statements are prepared in accordance with U.S.

Preparation of these financial statements requires the Company to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

The Company’s most critical accounting estimates are those most important to the portrayal of its financial condition and results of operations which require the Company to make its most difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain.

20 unchanged sentences

The incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

Interest on finance leases is included in interest expense, net, in the consolidated statements of comprehensive income.

Interest on finance leases is included in interest expense, net, in the consolidated

statements of comprehensive income.

The Company applies judgment in estimating the incremental borrowing rate including considering the term of the lease, the currency in which the lease is denominated, the impact of collateral, and our credit risk on the rate.

7 unchanged sentences

Warrant to purchase common shares

The Company accounts for a warrant to purchase its common shares as an equity instrument in accordance with the provisions of ASU No.

2019-08, Compensation – Stock Compensation (Topic 718) and ASC 606, which requires entities to measure and classify share-based payment awards granted to a customer by applying the guidance under Topic 718, as of January 1, 2019.

The Company accounts for a warrant to purchase its common shares as an equity instrument in accordance with the provisions of Accounting Standards Update (“ASU”) No.

2019-08, Compensation – Stock Compensation (Topic 718) and ASC 606, Revenue from Contracts with Customers, which requires entities to measure and classify share-based payment awards granted to a customer by applying the guidance under Topic 718, as of January 1, 2019.

On the grant date, the Company estimated the value of the warrant using a Black-Scholes option pricing model.

15 unchanged sentences

Treasury yield curve, (3) expected volatility which we estimate based on peer group volatility, and (4) an expected dividend yield based on our anticipated future dividends on our common stock (currently estimated at zero).

Changes in any of the estimates mentioned above could have a material impact on the share based compensation expense recorded in any period.

any of the estimates mentioned above could have a material impact on the share based compensation expense recorded in any period.

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.

4 unchanged sentences

In making such a determination, we consider all available positive and negative evidence, including future reversals of existing temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations.

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.

If we determine that we are able to realize our deferred tax assets in the future in excess of their net recorded amount, we will make an adjustment to the valuation allowance.

7 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-K

Item 7. Management’s Discussion and Analysis