What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-09-11 compared with 2024-09-12 · 150 added, 140 removed, 324 unchanged (47% of the section changed)

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Discussion and analysis for the fiscal year ended June 30, 2024 compared to the fiscal year ended June 30, 2023 may be found in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024 filed with the SEC on September 12, 2024.

1 The Average Price Paid per Share excludes broker commissions.

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 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.

Today, ibex operates a global customer experiences (“CX”) delivery center model consisting of 30 delivery centers around the world, while deploying next-generation technology to drive superior customer experiences for many of the world’s leading companies across various verticals, including Retail & E-commerce, HealthTech, FinTech, Utilities, and Travel, Transportation & Logistics.

ibex leverages its diverse global team of approximately 33,000 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, 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.

During the fiscal year ended June 30, 2025, the Company delivered strong financial results, and experienced growth with leading clients in our Retail & E-commerce, HealthTech, Travel, Transportation & Logistics, and Other verticals, partially offset by decreases in our FinTech and Telecommunications verticals.

We increased capacity in our offshore and nearshore regions and expanded into two new sites.

The business performed well in several important areas during the current year, including total revenues and profitability.

Our sales pipeline remained strong and we had sixteen new client wins during the fiscal year ended June 30, 2025, consistent with eighteen in the prior year.

Recent Financial Highlights

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.

The Company delivered revenues of $558.3 million during the fiscal year ended June 30, 2025, a 9.8% increase compared to the prior year due to growth from existing and new clients launched throughout fiscal 2024 and fiscal 2025.

Net income during the fiscal year ended June 30, 2025 was $36.9 million, a 9.5% increase from $33.7 million during the prior year.

Fully diluted earnings per share for the fiscal year ended June 30, 2025 of $2.36, increased from $1.84 in the prior year.

The increase in net income was driven by revenue growth in our higher margin offshore regions and improved gross margin performance.

The increase in fully diluted earnings per share was driven by higher net income during the current year and fewer diluted shares outstanding compared to the prior year period.

Trends and Factors Affecting our Performance

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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 during fiscal year 2025.

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.

Some of our customers have increased their focus on cost reduction, resulting in decisions to shift work from onshore sites to offshore sites, which may impact our revenues and operations in the near term.

However, we also believe that they present opportunities with both new and existing clients, as companies maintain a focus on cost reduction and look for new solutions and delivery options.

Artificial Intelligence (“AI”)

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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 Wave iX technology has a three-pronged AI strategy, which continues to keep ibex at the forefront of digital transformation.

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

We believe we are well positioned to leverage our leadership position in adopting 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.

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 us to not only be a fast-mover in the market, but also to capture an outsized share of AI-impacted future revenue, and to help minimize risk to our overall revenue and provide opportunities for future profitability enhancement.

Client’s Underlying Business Performance

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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 outsourcing providers.

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.

The correlation between a client's 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 outsourcing providers.

Demand during the fiscal year ended June 30, 2025 was higher when compared to the prior year due to increased demand for our digital-first solutions, growth in our existing clients, and recent new client wins in strategic verticals.

Capacity Utilization

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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.

As demand for delivery locations has continued to shift towards lower cost geographies during the fiscal year ended June 30, 2025, we have filled up existing capacity and are in the process of building additional capacity in our offshore regions.

In addition, we continue to realize cost savings as we geographically optimize our delivery centers in higher cost regions.

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

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”).

We continued to see increasing wage pressure in all of our geographies, in part brought on by the current global inflation and labor shortage, which is increasing competition for contact center agents from other sectors of the economy during the fiscal year ended June 30, 2025.

We were able to offset some of these wage increases with higher agent quality and increased productivity, higher agent retention, and increased client prices under contractual cost of living adjustments (“COLA”).

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

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 onshore locations in the United States.

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

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

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

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

Our percentage of workstations in nearshore and offshore geographies is approximately 97% as of June 30, 2025.

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.

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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

We have a strong track record of winning key new client accounts and as a result of our land and expand strategy, we have been successful in winning an increasing number of new client engagements, and subsequently increasing our revenues with these clients year over year.

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 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.

New Client Wins

We have a strong track record of winning key new client accounts, and as a result of our land and expand strategy, we have been successful in subsequently increasing our revenues with these clients year over year.

Historically, our in-year new client wins have generated approximately 2.0x to 3.0x revenue in the second and third years of the engagement.

Client Concentration

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.

During fiscal year 2025, our largest client accounted for 11% while our three largest clients accounted for 26% of our consolidated revenues.

We now have over 60 clients with greater than $1 million in annual revenue and over 25 clients with greater than $5 million in annual revenue.

We believe our client diversification is a strength in a challenging market.

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

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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;

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.

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Increased Up-Front Costs Driven by Increased Demand

Aside from short-term increases in demand for which we tend to delay increases in headcount, an increase in demand for customer interaction services typically results in an up-front increase in employee compensation expenses, due to the in-advance need to hire and train additional employees, predominantly delivery center agents, to service client campaigns.

Aside from short-term increases in demand for which we tend to delay increases in headcount, an increase in demand for customer interaction services typically results in an up-front increase in employee compensation expenses, due to the need to hire and train additional employees in advance.

As these expenses for hiring and training our employees are typically incurred in a period before the revenues associated with the increase in demand are recognized, it has the effect of causing an initial decrease in our operating profit margins prior to the full impact of the profitability from the additional demand.

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dollars, a significant portion of our operating expenses are incurred outside of the United States and paid for in the respective foreign currencies, principally the local currencies of the Philippines, Jamaica and Pakistan.

During the fiscal year ended June 30, 2024, out of our total employee benefits expenses, 30.9% were incurred in the Philippine Pesos, 15.5% were incurred in the Jamaican Dollar and 8.7% were incurred in Pakistani Rupee.

During the fiscal year ended June 30, 2025, out of our total employee salaries and benefit expenses, 32.7% were incurred in the Philippine Pesos, 12.3% were incurred in the Jamaican Dollar and 9.7% were incurred in Pakistani Rupee.

As a result, our operations are subject to the effects of changes in exchange rates against the U.S.

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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.

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We define Capacity Utilization as the number of on-site workstations in use plus the number of work at home seats divided by the number of on-site workstations, for the period under consideration, across all facilities in the region.

This metric may help investors seeking to better understand how much room for revenue growth there is within the existing site footprint, as well as what future needs to capital expenditures may be associated with a need to support revenue growth.

This metric may help investors seeking to better understand how much room for revenue growth there is within the existing site footprint, as

well as what future needs to capital expenditures may be associated with a need to support revenue growth.

This metric also serves as a relative proxy for efficiency in terms of usage of existing space.

During fiscal year 2024, capacity utilization increased from 77% in the prior year to 84% as we continue to utilize capacity in nearshore and offshore geographies and optimize our onshore capacity.

During fiscal year 2025, capacity utilization increased to 88% from 84% in the prior year as we continue to utilize capacity in nearshore and offshore geographies and optimize our onshore capacity.

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

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The following summarizes the results of our operations for the fiscal years ended June 30, 2025 and 2024:

Fiscal Year ended June 30,

Year ended June 30,

($000s) 2025 2024

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Fiscal Years Ended June 30, 2025 and 2024

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.

Our revenue was $558.3 million for the fiscal year ended June 30, 2025, an increase of $49.7 million, or 9.8%, compared to the prior year.

This increase was primarily driven by increases in our Retail & E-commerce vertical of $16.2 million, or 12.6%, HealthTech vertical of $15.5 million, or 23.2%, Travel, Transportation & Logistics vertical of $9.4 million, or 13.7%, and Other vertical of $20.3 million, or 37.6%, largely due to growth in our digital acquisition business, compared to the prior year.

These increases were partially offset by decreases in the FinTech vertical of $8.7 million, or 12.2% and Telecommunications vertical of $3.5 million, or 4.6%, compared to the prior year.

As a percentage of total revenue, the revenue from our Retail & E-commerce vertical increased to 26.0% for the fiscal year ended June 30, 2025 compared to 25.4% in the prior year, the revenue from our HealthTech vertical increased to 14.7% compared to 13.1%, the revenue from our Travel, Transportation & Logistics vertical increased to 13.9% compared to 13.4%, and the revenue from our Other vertical increased to 13.3% compared to 10.6%.

Conversely, the revenue from our FinTech vertical decreased to 11.2% for the fiscal year ended June 30, 2025 compared to 14.0% in the prior year, and the revenue from our Telecommunications vertical decreased to 13.1% compared to 15.0%.

Operating Expenses

Cost of services

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.

Cost of services was $385.7 million during the fiscal year ended June 30, 2025, an increase of $29.2 million, or 8.2%, compared to the prior year.

The increase in cost of services was primarily due to increases in payroll and related costs, reseller commissions and lead expenses, IT expenses, telecom, local transportation and other site related expenses, and stock-based compensation.

Payroll and related costs were $291.0 million during the fiscal year ended June 30, 2025, an increase of $16.6 million, or 6.0%, compared to the prior year, due to increased revenues during the current year.

As a percent of revenue, payroll costs decreased to 52.1% during the fiscal year ended June 30, 2025 compared to 54.0% during the prior year, reflecting our continuing trend towards lower cost regions.

Reseller commissions and lead expenses were $20.7 million during the fiscal year ended June 30, 2025, an increase of $8.7 million, or 72.7%, 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.

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

IT expenses were $6.8 million during the fiscal year ended June 30, 2025, an increase of $1.7 million or 32.8%, compared to the prior year, primarily due to additional software license fees.

Telecom, local transportation and other site related expenses were $15.3 million during the fiscal year ended June 30, 2025, an increase of $1.7 million, or 12.2%, compared to the prior year, driven primarily by increased activity corresponding to our increased revenues during the current year.

Stock-based compensation was $0.5 million during the fiscal year ended June 30, 2025, an increase of $0.4 million compared to the prior year, primarily due to a higher share price impacting liability-based grants.

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

SG&A expense was $108.7 million during the fiscal year ended June 30, 2025, an increase of $15.6 million, or 16.7%, 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.

The increase was driven by higher payroll and related costs of $10.0 million due to higher performance-based incentives and new hires to support growth, stock-based compensation of $1.2 million primarily due to new grants issued and a higher share price impacting liability-based grants, IT expenses of $1.2 million due to continued investments in core business management systems and additional

software license fees, increased site related expenses of $0.9 million, driven by growth in our higher margin offshore regions, and increases in net foreign currency losses of $2.5 million year over year.

Depreciation and amortization expense (“D&A”)

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.

D&A expense was $17.2 million during the fiscal year ended June 30, 2025, a decrease of $2.2 million or 11.5%, compared to the prior year.

The decrease was primarily due to lower depreciation expense due to an increase in fully depreciated assets.

As a percentage of revenue, D&A decreased to 3.1% during the fiscal year ended June 30, 2025 compared to 3.8% in the prior year.

Income from operations

Income from operations was $46.6 million during the fiscal year ended June 30, 2025 compared to $39.4 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.

The operating margin was 8.3% for the fiscal year ended June 30, 2025, up from 7.8% for the prior year.

The increase was primarily driven by margin expansion as we continued to realize growth in our higher margin offshore regions and realize site optimization efforts undertaken in the prior year.

Interest 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 income during the fiscal year ended June 30, 2025 was $1.0 million compared to $2.1 million for the prior year, and consisted primarily of income from invested funds.

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.

Interest expense during the fiscal year ended June 30, 2025 was $1.6 million, an increase of $1.1 million when compared to the prior year, and consisted of interest on borrowings of $0.6 million, interest on finance leases of $0.3 million, amortization of deferred debt issuance costs of $0.2 million, interest of $0.2 million on the TRGI convertible promissory note (as defined and described below), and a loss on extinguishment of $0.2 million related to the termination of our credit facility with PNC.

Provision for Income Taxes

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.

Income tax expense was $9.1 million during the fiscal year ended June 30, 2025, an increase of $1.7 million when compared with the prior year, primarily due to a higher pre-tax income and a higher effective tax rate in the current year.

The effective tax rate was 19.7% and 17.9% for the fiscal years ended June 30, 2025 and 2024, 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.

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 during the prior year.

Non-GAAP Financial Measures

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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 U.S.

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

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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 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.

severance costs, impairment losses, warrant contra revenue, foreign currency gains and losses, and stock-based compensation expense, net of the tax impact of such adjustments.

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

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

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:

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

Year ended June 30,

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Net income margin 6.6 % 6.6 %

Non-recurring expenses — 2,224

Severance costs 558 1,621

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Warrant contra revenue — 1,183

Foreign currency gains (1,815) (801)

Share-based compensation expense 3,765 4,606

Gain on sale of subsidiaries — (246)

Loss on lease terminations — 251

Foreign currency losses / (gains) 693 (1,815)

Stock-based compensation expense 5,432 3,765

Total adjustments $ 8,112 $ 6,286

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Weighted average diluted shares outstanding 15,725 18,255

2 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, income tax expense, and depreciation and amortization.

interest expense, income tax expense, and D&A.

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

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.

severance costs, impairment losses, interest income, warrant contra revenue, foreign currency gains and losses, and stock-based compensation expense.

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

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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.

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

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:

• although depreciation and amortization expense is a non-cash charge, the assets being depreciated and amortized may have to be replaced in the future.

• although D&A is a non-cash charge, the assets being depreciated and amortized may have to be replaced in the future.

EBITDA, adjusted EBITDA and a djusted EBITDA margin do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

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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 and net income margin to EBITDA, adjusted EBITDA and a djusted EBITDA margin for the years presented:

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

Year ended June 30,

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EBITDA $ 64,798 $ 60,961

Non-recurring expenses — 2,224

Severance costs 558 1,621

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Warrant contra revenue — 1,183

Foreign currency gains (1,815) (801)

Share-based compensation expense 3,765 4,606

Gain on sale of subsidiaries — (246)

Loss on lease terminations — 251

Foreign currency losses / (gains) 693 (1,815)

Stock-based compensation expense 5,432 3,765

Adjusted EBITDA $ 71,955 $ 65,176

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Net income margin

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.

Net income margin was 6.6% for the fiscal year ended June 30, 2025, consistent with 6.6% during the prior year.

Adjusted EBITDA margin

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.

Adjusted EBITDA margin was 12.9% for t he fiscal year ended June 30, 2025, consistent with 12.8% during the prior year.

Free cash flow

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Net cash provided by operating activities during the fiscal year ended June 30, 2025 was $45.7 million compared to $35.9 million during the fiscal year ended June 30, 2024.

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.

The increase was primarily driven by an increase in revenue and a lower use of working capital.

Free cash flow during the fiscal year ended June 30, 2025 was $27.3 million, consistent with the prior year due to an increase in capital expenditures of $9.5 million.

The increase in capital expenditures during the current year was driven by expansions in our offshore regions and purchases of IT and telecommunications equipment.

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

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Net cash $ 13,731 $ 61,193

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.

The decrease in cash and cash equivalents and net cash as of June 30, 2025 is primarily due to the Company’s increased share repurchases and capital expenditures, offset by higher operating cash flow cash from operating activities, compared to the prior year.

JOBS Act Accounting Election

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

We qualify as an EGC pursuant to the provisions of the JOBS Act until, at the latest, our status expires on June 30, 2026.

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.

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Liquidity and Capital Resources

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, 2025, our principal sources of liquidity were cash and cash equivalents totaling $15.4 million, cash flows from operations, and the unused availability under our HSBC Credit Facilities (as defined and described in more detail below) of $71.4 million.

As of June 30, 2025, our total indebtedness was $1.6 million, consisting of our finance leases.

We were in compliance with all debt covenants as of June 30, 2025.

Refer to Note 8.

“Debt”, included in Item 8.

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

Refer to Note 8, “Debt” in the consolidated financial statements included in this Form 10-K for additional information on our debt.

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

We believe that our existing cash balance together with cash

generated from our operations will be sufficient to meet our liquidity requirements for at least the next twelve months.

To the extent additional funds are necessary to meet our long-term liquidity needs as we execute on our business strategy, we anticipate that they will be obtained through the utilization of current availability under our HSBC Credit Facilities (as defined and described below), additional indebtedness, additional equity financings or a combination of these potential sources of funds;

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

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

The Board may authorize share repurchases of the Company’s common shares and the Company had multiple share repurchase plans during the 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.

The Board may authorize share repurchases of the Company’s common shares and the Company had multiple share repurchase plans during the fiscal years ended June 30, 2025 and 2024.

On May 1, 2025, the Board authorized the Company’s current share repurchase program, which commenced on May 12, 2025, of $15 million in share repurchases for the next twelve months.

For the years ended June 30, 2025 and 2024, the Company repurchased 385,510 and 1,322,105 shares, respectively, of its common shares totaling $7.2 million, and $21.7 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.

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

Year ended June 30,

($000s) 2025 2024

Net cash inflow / (outflow) from

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Effects of exchange rate difference on cash and cash equivalents (3) (21)

Net increase / (decrease) in cash and cash equivalents $ 5,291 $ 8,598

Net (decrease) / increase in cash and cash equivalents $ (47,370) $ 5,291

Cash and cash equivalents at beginning of the period 62,720 57,429

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As of June 30, 2024, we had cash and cash equivalents of $62.7 million, including $5.1 million located outside of the United States, and $2.5 million that is subject to certain local regulations on repatriation.

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.

The decrease in our cash position as of June 30, 2025 is primarily due to the Company’s increased expenditures on share repurchases and capital expenditures, partially offset by higher operating cash flow cash from operating activities, compared to the prior year.

Cash Flows from Operating Activities

Net cash inflow from operating activities during the fiscal year ended June 30, 2025 was $45.7 million compared to $35.9 million during the fiscal year ended June 30, 2024.

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.

The increase was primarily driven by an increase in our revenues driving improved profitability and a lower use of working capital.

Cash Flows from Investing Activities

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.

During the year ended June 30, 2025, we incurred expenditures of $18.4 million on investing activities primarily driven by expansions in our offshore regions to meet demand and purchases of IT and telecommunications equipment.

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

Cash Flows from Financing Activities

During the year ended June 30, 2025, we expended a total of $74.7 million on financing activities, of which $78.0 million related to purchases our common shares, offset by $4.3 million in stock option proceeds.

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.

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

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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 arrangement.

The following is a summary of our principal financing arrangements.

PNC Credit Facility

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

(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.

In March 2021, the PNC Credit Facility was amended to join Digital Globe Services, LLC, TelSatOnline, LLC and 7 Degrees, LLC as borrowers, with the maximum revolving advance amount increased to $60 million.

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 Secured Overnight Financing Rate (“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, 2024 and 2023 was $0.0 million and $0.1 million, respectively.

In November 2013, the Company’s subsidiary, Ibex Global Solutions, Inc.

entered into an agreement, as amended, with PNC Bank, National Association (“PNC”), for a revolving credit facility (“PNC Credit Facility”).

The PNC Credit Facility provided a maximum revolving advance amount of $80 million.

The PNC Credit Facility was terminated and repaid in full on October 29, 2024, and replaced by the HSBC Credit Facilities (as defined below).

In connection with the termination of the PNC Credit Facility, the Company recognized a loss on extinguishment of $0.2 million during the year ended June 30, 2025.

HSBC Credit Facilities

Credit Agreement

On the Effective Date, the Company's subsidiaries, Ibex Global Solutions, Inc.

("Ibex US") and Digital Globe Services, LLC, as borrowers, together with the Company and Ibex Global Limited, as guarantors, and the other loan parties and guarantor parties party thereto from time to time, entered into a credit agreement with HSBC Bank USA, National Association ("HSBC U.S.") (the “U.S.

Credit Agreement”), which provides for a $25 million secured revolving credit facility (the “U.S.

Credit Facility”).

Credit Facility matures on the earlier of October 29, 2027 and the termination or maturity of the obligations under the UAE Credit Agreement (as defined and described below).

Borrowings under the U.S.

Credit Facility bear interest at a per annum rate equal to term Secured Overnight Financing Rate ("SOFR") plus 2%, or equal to alternate base rate plus 1%.

Credit Facility is secured by substantially all of the assets of Ibex US and its wholly owned subsidiaries and guaranteed by the wholly owned U.S.

subsidiaries of Ibex US, with an additional guaranty by the Company and Ibex Global Limited.

UAE Credit Agreement

On the Effective Date, the Company's subsidiary, Ibex Global FZ-LLC (the “UAE Company”) entered into:

(i) a revolving loan agreement (committed) together with (ii) a facility offer letter (“FOL”);

(iii) a general terms and conditions applicable to corporate banking credit facilities;

and (iv) a letter of deviation (collectively, the “UAE Credit Agreement”), in each case, with HSBC Bank Middle East Limited ("HSBC UAE”).

The UAE Credit Agreement provides for a committed $50 million post shipment seller revolving loan credit facility (the “UAE

Loan Facility”) and a $50,000 credit card facility (the “Commercial Card Facility” and collectively with the UAE Loan Facility, the “UAE Facilities”).

The final repayment date for the UAE Credit Agreement is two years from the Effective Date.

The UAE Loan Facility is secured by the accounts receivable of the UAE Company and an irrevocable and unconditional guarantee provided by the Company in favor of HSBC UAE with respect to all monies and liabilities owing or incurred by the UAE Company to or in favor of HSBC UAE.

On May 22, 2025, the FOL was amended to add an additional $119,809 to the UAE Facilities for bid and performance bond guarantees issued by HSBC UAE (“Bond Guarantees”).

The Bond Guarantees are secured by cash collateral provided by the UAE Company.

Borrowings under the UAE Loan Facility bear interest at a per annum rate equal to 3-month term SOFR plus 2%.

The Commercial Card Facility is subject to HSBC UAE’s standard commercial card terms and conditions.

The Bond Guarantees are subject to HSBC UAE’s standard terms and conditions.

The U.S Credit Agreement and UAE Credit Agreement contain certain financial and non-financial covenants, including, among other things, covenants in respect of a total net leverage ratio, fixed charge coverage ratio, and restrictions on incurring additional debt and liens, making certain restricted payments and investments, engaging in certain transactions with affiliates, and disposal of assets.

As of June 30, 2025, the Company did not have any outstanding balances on the HSBC Credit Facilities.

In connection with the HSBC Credit Facilities, the Company deferred debt issuance costs of $0.9 million, which are included in other current assets and other non-current assets in the consolidated balance sheets as of June 30, 2025.

Contractual obligations

As of June 30, 2025, we have no material off-balance sheet transactions and we are not a guarantor of any other entities’ debt or other financial obligations.

For further discussion of contractual obligations, such as debt, leases, and purchase obligations, please refer to our audited consolidated financial statements included in Item 8.

For further discussion of contractual obligations, such as debt, leases, and purchase obligations, refer to our audited consolidated financial statements included in Item 8.

“Financial Statements and Supplementary Data.”

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Total Within 12 months 13 months and after

Debt obligations $ 1,527 $ 660 $ 867

Finance lease obligations $ 1,619 $ 823 $ 796

Operating lease obligations 68,136 14,332 53,804

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We expect capital expenditures in fiscal year 2026 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 2025 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 50% of fiscal year 2026 capital expenditures will be directed to additional growth in the business while 50% 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.

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Although management believes that its estimates and assumptions are reasonable, they are based on information available when they are made and, therefore, may differ from estimates made under different assumptions or conditions.

The Company’s significant accounting policies are discussed in Note 1.

“Overview and Summary of Significant Accounting Policies” and Note 2.

“Revenue from Contracts with Customers”, included in Item 8.

“Financial Statements and Supplementary Data” and should be reviewed in connection with the following discussion.

The Company’s significant accounting policies are discussed in Note 1, “Overview and Summary of Significant Accounting Policies” in the consolidated financial statements included in this Form 10-K and should be reviewed in connection with the following discussion.

The Company recognizes revenues in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers.

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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 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.

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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.

2019-08, Compensation – Stock Compensation (Topic 718) and ASC 606, Revenue from Contracts with Customers, which requires entities to measure and classify stock-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.

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The timing of any additional estimated vesting and the related fair value at the time of the change in estimate could have a material impact on the transaction price and therefore revenue recorded related to the Amazon contract.

Share-based compensation plans

The Company accounts for its share-based awards in accordance with provisions of ASC 718, Compensation - Stock Compensation .

The vesting period ended June 30, 2024.

Stock-based compensation plans

The Company accounts for its stock-based awards in accordance with provisions of ASC 718, Compensation - Stock Compensation .

For equity-classified awards, total compensation cost is based on the grant date fair value.

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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).

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

The Company has certain restricted stock units with service and market conditions (“TSR Awards”) and calculates the fair value of these awards using a Monte Carlo model.

The assumptions used in our Monte Carlo

model are (1) remaining performance period based on the remaining period at time of the grant, (2) the risk-free interest rate which is based on the U.S.

Treasury yield curve, (3) expected volatility based on the historical stock price volatility of the Company with a look back period commensurate with a term of the award, 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 stock-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.

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Changes in recognition or measurements are reflected in the period in which the change in estimate occurs.

Public Law No:

119-21, the One Big Beautiful Bill Act (the “Act”) was signed on July 4, 2025, which marks the date of enactment for the tax provisions included in the Act.

The Company is evaluating the impact of this enactment.

Commitment and Contingencies

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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