TaskUs, Inc. 10-K

Item 8. Financial Statements and Supplementary Data TASKUS, INC. Index to Consolidated Financial Statements Page(s) Report of Independent Registered Public Accounting Firm ( KPMG LLP ; Los Angeles, California ; PCAOB ID 185 ) 63 Consolidated Balance Sheets 64 Consolidated Statements of Income 65 Consolidated Statements of Comprehensive Income 66 Consolidated Statements of Shareholders’ Equity 67 Consolidated Statements of Cash Flows 68 Notes to Consolidated Financial Statements 69 62 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors TaskUs, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of TaskUs, Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023 , the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024 , and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023 , and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024 , in conformity with U.S. generally accepted accounting principles. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ KPMG LLP We have served as the Company’s auditor since 2015. Los Angeles, California March 6, 2025 63 Table of Contents TASKUS, INC. Consolidated Balance Sheets (in thousands, except share data) December 31, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 192,166 $ 125,776 Accounts receivable, net of allowance for credit losses of $ 1,299 and $ 1,978 , respectively 198,996 176,812 Income tax receivable 912 2,021 Prepaid expenses and other current assets 43,278 23,909 Total current assets 435,352 328,518 Noncurrent assets: Property and equipment, net 66,775 68,893 Operating lease right-of-use assets 47,334 44,326 Deferred tax assets 8,431 4,857 Intangibles 172,525 192,958 Goodwill 216,791 218,108 Other noncurrent assets 6,090 6,542 Total noncurrent assets 517,946 535,684 Total assets $ 953,298 $ 864,202 Liabilities and Shareholders’ Equity Liabilities: Current liabilities: Accounts payable and accrued liabilities $ 53,403 $ 26,054 Accrued payroll and employee-related liabilities 54,160 40,291 Current portion of debt 14,809 8,059 Current portion of operating lease liabilities 16,087 15,872 Current portion of income tax payable 9,839 7,451 Deferred revenue 3,727 4,077 Total current liabilities 152,025 101,804 Noncurrent liabilities: Income tax payable 6,496 4,621 Long-term debt 241,357 256,166 Operating lease liabilities 32,946 31,475 Accrued payroll and employee-related liabilities 6,425 3,978 Deferred tax liabilities 17,046 25,214 Other noncurrent liabilities 84 233 Total noncurrent liabilities 304,354 321,687 Total liabilities 456,379 423,491 Commitments and Contingencies (See Note 10) Shareholders’ equity: Class A common stock, $ 0.01 par value. Authorized 2,500,000,000 ; 33,215,441 issued and 19,891,464 outstanding and 30,522,570 issued and 18,725,947 outstanding, respectively 332 305 Class B convertible common stock, $ 0.01 par value. Authorized 250,000,000 ; 70,032,694 and 70,032,694 shares issued and outstanding, respectively 700 700 Additional paid-in capital 726,917 683,117 Accumulated deficit ( 44,114 ) ( 89,984 ) Accumulated other comprehensive loss ( 25,389 ) ( 9,551 ) Treasury stock, at cost with 13,323,977 and 11,796,623 shares, respectively ( 161,527 ) ( 143,876 ) Total shareholders’ equity 496,919 440,711 Total liabilities and shareholders’ equity $ 953,298 $ 864,202 See accompanying notes to consolidated financial statements. 64 Table of Contents TASKUS, INC. Consolidated Statements of Income (in thousands, except share and per share data) Year ended December 31, 2024 2023 2022 Service revenue $ 994,985 $ 924,365 $ 960,489 Operating expenses: Cost of services 602,898 538,745 558,761 Selling, general, and administrative expense 239,585 228,523 260,003 Depreciation 40,223 40,391 37,915 Amortization of intangible assets 19,935 20,346 19,882 Loss (gain) on disposal of assets ( 80 ) 1,322 31 Total operating expenses 902,561 829,327 876,592 Operating income 92,424 95,038 83,897 Other expense (income), net ( 3,306 ) ( 1,711 ) 7,443 Financing expenses 21,549 21,717 11,921 Income before income taxes 74,181 75,032 64,533 Provision for income taxes 28,311 29,342 24,111 Net income $ 45,870 $ 45,690 $ 40,422 Net income per common share: Basic $ 0.52 $ 0.49 $ 0.41 Diluted $ 0.50 $ 0.48 $ 0.39 Weighted-average number of common shares outstanding: Basic 88,912,835 93,938,931 97,815,679 Diluted 92,304,270 96,173,071 102,603,179 See accompanying notes to consolidated financial statements. 65 Table of Contents TASKUS, INC. Consolidated Statements of Comprehensive Income (in thousands) Year ended December 31, 2024 2023 2022 Net income $ 45,870 $ 45,690 $ 40,422 Unrealized loss on derivative contracts, net ( 3,333 ) — — Retirement benefit reserves, net ( 551 ) 790 ( 98 ) Foreign currency translation adjustment ( 11,954 ) 306 ( 8,386 ) Comprehensive income $ 30,032 $ 46,786 $ 31,938 See accompanying notes to consolidated financial statements. 66 Table of Contents TASKUS, INC. Consolidated Statements of Shareholders’ Equity (in thousands, except share data) Capital stock and additional paid-in capital Accumulated deficit Accumulated other comprehensive loss Total shareholders’ equity Class A common stock Class B convertible common stock Additional paid-in capital Treasury stock Shares Amount Shares Amount Shares Amount Balance as of December 31, 2021 27,431,264 $ 275 70,032,694 $ 700 $ 556,418 $ ( 176,096 ) $ ( 2,163 ) — $ — $ 379,134 Issuance of common stock for settlement of equity awards 1,819,740 18 — — 3,460 — — — — 3,478 Shares withheld related to net share settlement ( 193,456 ) ( 2 ) — — ( 4,143 ) — — — — ( 4,145 ) Shares issued in acquisition of heloo 200,103 2 — — 7,194 — — — — 7,196 Repurchase of common stock — — — — — — — 1,649,931 ( 30,967 ) ( 30,967 ) Stock-based compensation expense — — — — 68,979 — — — — 68,979 Net income — — — — — 40,422 — — — 40,422 Other comprehensive loss — — — — — — ( 8,484 ) — — ( 8,484 ) Balance as of December 31, 2022 29,257,651 $ 293 70,032,694 $ 700 $ 631,908 $ ( 135,674 ) $ ( 10,647 ) 1,649,931 $ ( 30,967 ) $ 455,613 Issuance of common stock for settlement of equity awards 1,453,010 13 — — 618 — — — — 631 Shares withheld related to net share settlement ( 188,091 ) ( 1 ) — — ( 2,168 ) — — — — ( 2,169 ) Repurchase of common stock — — — — — — — 10,146,692 ( 112,909 ) ( 112,909 ) Stock-based compensation expense — — — — 52,759 — — — — 52,759 Net income — — — — — 45,690 — — — 45,690 Other comprehensive income — — — — — — 1,096 — — 1,096 Balance as of December 31, 2023 30,522,570 $ 305 70,032,694 $ 700 $ 683,117 $ ( 89,984 ) $ ( 9,551 ) 11,796,623 $ ( 143,876 ) $ 440,711 Issuance of common stock for settlement of equity awards 3,008,312 30 — — 6,231 — — — — 6,261 Shares withheld related to net share settlement ( 315,441 ) ( 3 ) — — ( 4,252 ) — — — — ( 4,255 ) Repurchase of common stock — — — — — — — 1,527,354 ( 17,651 ) ( 17,651 ) Stock-based compensation expense — — — — 41,821 — — — — 41,821 Net income — — — — — 45,870 — — — 45,870 Other comprehensive loss — — — — — — ( 15,838 ) — — ( 15,838 ) Balance as of December 31, 2024 33,215,441 $ 332 70,032,694 $ 700 $ 726,917 $ ( 44,114 ) $ ( 25,389 ) 13,323,977 $ ( 161,527 ) $ 496,919 See accompanying notes to consolidated financial statements. 67 Table of Contents TASKUS, INC. Consolidated Statements of Cash Flows (in thousands) Year ended December 31, 2024 2023 2022 Cash flows from operating activities: Net income $ 45,870 $ 45,690 $ 40,422 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 40,223 40,391 37,915 Amortization of intangibles 19,935 20,346 19,882 Amortization of debt financing fees 596 596 569 Loss (gain) on disposal of assets ( 80 ) 1,322 31 Provision (benefit) for credit losses ( 15 ) 103 1,746 Unrealized foreign exchange losses (gains) on forward contracts ( 689 ) 2,485 ( 4,589 ) Deferred taxes ( 10,889 ) ( 7,959 ) ( 11,755 ) Stock-based compensation expense 41,821 52,759 68,979 Changes in operating assets and liabilities: Accounts receivable ( 22,758 ) 1,861 ( 15,052 ) Prepaid expenses and other current assets ( 20,949 ) ( 2,015 ) ( 7,131 ) Operating lease right-of-use assets 16,109 14,314 12,726 Other noncurrent assets ( 63 ) ( 132 ) ( 1,240 ) Accounts payable and accrued liabilities 23,529 ( 9,825 ) 1,822 Accrued payroll and employee-related liabilities 18,251 ( 7,877 ) 13,589 Operating lease liabilities ( 17,312 ) ( 13,823 ) ( 12,391 ) Income tax payable 5,801 4,910 3,826 Deferred revenue ( 347 ) 592 ( 623 ) Other noncurrent liabilities ( 145 ) ( 68 ) ( 1,631 ) Net cash provided by operating activities 138,888 143,670 147,095 Cash flows from investing activities: Purchase of property and equipment ( 39,104 ) ( 30,995 ) ( 43,758 ) Acquisition, net of cash acquired — — ( 23,235 ) Investment in loan receivable — ( 1,000 ) ( 1,000 ) Net cash used in investing activities ( 39,104 ) ( 31,995 ) ( 67,993 ) Cash flows from financing activities: Proceeds from borrowings, Revolving credit facility — — 32,500 Proceeds from long-term debt — — 270,000 Payments for deferred business acquisition consideration ( 144 ) ( 1,875 ) — Payments on long-term debt ( 8,438 ) ( 3,713 ) ( 273,080 ) Payments for debt financing fees — — ( 1,821 ) Proceeds from employee stock plans 6,261 631 3,478 Payments for taxes related to net share settlement ( 4,255 ) ( 2,169 ) ( 4,145 ) Payments for stock repurchases ( 18,600 ) ( 111,959 ) ( 30,967 ) Net cash used in financing activities ( 25,176 ) ( 119,085 ) ( 4,035 ) Increase (decrease) in cash and cash equivalents 74,608 ( 7,410 ) 75,067 Effect of exchange rate changes on cash ( 8,218 ) ( 806 ) ( 4,659 ) Cash and cash equivalents at beginning of period 125,776 133,992 63,584 Cash and cash equivalents at end of period $ 192,166 $ 125,776 $ 133,992 Supplemental cash flow information: Cash paid for interest $ 21,094 $ 21,557 $ 9,952 Cash paid for taxes, net of refunds $ 34,200 $ 31,747 $ 31,805 Noncash operating, investing and financing activities: Accrued capital expenditures $ 6,024 $ 4,451 $ 3,108 Loan receivable exchanged for software $ — $ 2,182 $ — See accompanying notes to consolidated financial statements. 68 Table of Contents TASKUS, INC. Notes to Consolidated Financial Statements 1. Description of Business and Organization TaskUs, Inc. (“TaskUs,” together with its subsidiaries, the “Company,” “we,” “us” or “our”) was formed by investment funds affiliated with Blackstone Inc. (“Blackstone”) as a vehicle for the acquisition of TaskUs Holdings, Inc. (“TaskUs Holdings”) on October 1, 2018 (the “Blackstone Acquisition”). Prior to the Blackstone Acquisition, TaskUs had no operations and TaskUs Holdings operated as a standalone entity. TaskUs, Inc. was incorporated in Delaware in July 2018, and is headquartered in New Braunfels, Texas. The Company is a provider of outsourced digital services and next-generation customer experience to the world’s most innovative companies, helping its clients represent, protect and grow their brands. The Company’s global, omnichannel delivery model is focused on providing its clients three key services - Digital Customer Experience, Trust + Safety and Artificial Intelligence (“AI”) Services. The Company has designed its platform to enable it to rapidly scale and benefit from its clients’ growth. Through its agile and responsive operational model, the Company delivers services from multiple delivery sites that span globally from the United States, Philippines, India and other parts of the world. The Company’s major service offerings are described in more detail below: • Digital Customer Experience : Principally consists of omnichannel customer care services, primarily delivered through digital (non-voice) channels. Also included in this offering are learning experience and sales and customer acquisition services. • Trust + Safety : Principally consists of monitoring, reviewing and managing user and advertiser-generated content on online platforms to ensure it complies with community guidelines, legal regulations and platform specific policies. Also included in this offering are our services for risk management, compliance, identity management and fraud. • AI Services : Principally consists of large language model support and high-quality data labeling services, annotation, context relevance and transcription services performed for the purpose of training and tuning machine learning algorithms, enabling them to develop cutting-edge AI systems. 2. Summary of Significant Accounting Policies (a) Basis of Presentation The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The Company has made certain reclassifications to prior period consolidated financial statements to conform to current period presentation. Colombia, which was previously included in Rest of World, is now reported separately within property and equipment, net by geography. (b) Use of Estimates The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the determination of useful lives and impairment of fixed assets; allowances for credit losses; the valuation of deferred tax assets; the measurement of lease liabilities and right-of-use assets; valuation of forward contracts; valuation of stock-based compensation; valuation of acquired intangible assets and goodwill, as well as related impairment assessments, and reserves for income tax uncertainties and other contingencies. (c) Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The Company has no variable interest entities in its corporate structure. 69 Table of Contents (d) Segments Operating segments are components of a company for which separate financial information is available that is evaluated regularly by the chief operating decision-maker (“CODM”) in deciding on how to allocate resources and in assessing performance. The Company’s CODM is the chief executive officer (“CEO”). The CEO reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance based on factors including client demand and capacity and consolidated net income. Therefore, the Company has determined that it operates in a single operating and reportable segment. (e) Concentration Risk Most of the Company’s customers are located in the United States. Customers outside of the United States are concentrated in Europe. For the years ended December 31, 2024, 2023 and 2022, the following customers represented greater than 10% of the Company’s service revenue: Service revenue percentage Year ended December 31, Customer 2024 2023 2022 A 22 % 19 % 22 % For the years ended December 31, 2024 and 2023, the following customers represented greater than 10% of the Company’s accounts receivable: Accounts receivable percentage Customer December 31, 2024 December 31, 2023 A 19 % 16 % B 11 % 12 % The Company’s principal operations, including the majority of its employees and the fixed assets owned by its wholly owned subsidiaries, are located in the Philippines. (f) Business Combinations The Company accounts for business combinations in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. The purchase price of the acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives and market multiples, among other items. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in the consolidated statements of income. (g) Leases At inception of a contract, the Company determines whether an arrangement is, or contains, a lease based on the substance of the arrangement. In determining whether a contract contains a lease, the Company considers whether it has (1) the right to obtain substantially all of the economic benefits from the use of the asset throughout the term of the contract, (2) the right to direct how and for what purpose the asset is used throughout the term of the contract and (3) the right to operate the asset throughout the term of the contract without the lessor having the right to change the terms of the contract. If a lease is identified, the Company determines whether it should be classified as an operating or finance lease at commencement. The Company does not apply the short-term lease exception and therefore recognizes a right-of-use asset and lease liability for all leases. 70 Table of Contents The Company has various leases for office spaces under operating lease agreements which have a range of periods remaining from one to six years , and often include a renewal option for an additional term. Lease terms include the base, non-cancelable lease term, and any options to extend or terminate the lease when it is reasonably certain at commencement that the Company will exercise such options. Right-of-use (“ROU”) lease assets represent the Company’s right to use an underlying asset for the lease term and may include any advance lease payments made. ROU lease liabilities represent our obligation to make lease payments arising from the contractual terms of the lease. ROU lease assets and lease liabilities are recognized at the commencement of the lease and are calculated using the present value of lease payments over the lease term. Typically, lease agreements do not provide sufficient detail to arrive at an implicit interest rate. Therefore, the Company uses its estimated incremental borrowing rates (“IBR”) based on information available at the commencement date of the lease to calculate the present value of the lease payments. In estimating its IBR, the Company considers it credit rating, the lease term, the currency of the lease payments and market rates of comparable collateralized borrowings for similar terms. The Company remeasures its lease liability and related ROU lease asset upon the occurrence of the following: lease modifications not accounted for as a separate contract; a triggering event that changes the certainty of the Company exercising an option to renew or terminate the lease, or purchase the underlying asset; or the resolution of a contingency upon which any variable lease payments are based such that those payments become fixed. (h) Translation of Non-U.S. Currency Amounts The Company is subject to foreign currency exposure due to its principal operations being located in the Philippines and operations in various other international locations. Assets and liabilities of non-U.S. subsidiaries whose functional currency is not the U.S. dollar are translated into U.S. Dollars at fiscal year-end exchange rates. Revenue and expense items are translated at weighted average foreign currency exchange rates prevailing during the fiscal year. Translation adjustments are included in other comprehensive income (loss). Realized and unrealized gains and losses arising from foreign currency transactions are recognized in other expense (income), net. For the years ended December 31, 2024, 2023 and 2022, realized and unrealized foreign currency losses (gains) were $( 4.0 ) million, $ 0.5 million and $( 0.8 ) million, respectively, recognized in other expense (income), net. (i) Cash and Cash Equivalents Cash and cash equivalents consist of cash on deposit with banks and highly liquid investments with maturities of 90 days or less from the date of purchase. For the years ended December 31, 2024, 2023 and 2022, interest income was $ 5.5 million, $ 1.6 million and $ 0.1 million, respectively, recognized in other expense (income), net. (j) Accounts Receivable Accounts receivable are recorded as revenue and are recognized in accordance with the Company’s revenue recognition policy. The Com pany maintains an allowance for credit losses inherent in its accounts receivable portfolio. In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions and customers’ financial condition, the amount of receivables in dispute, and the current receivables aging and current payment patterns. The Company reviews its allowance for losses quarterly. Past-due balances over 30 days and over a specified amount are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. (k) Debt Financing Fees Debt financing fees include costs incurred in connection with obtaining debt financing and are amortized using the straight-line method over the term of the related credit agreement. Straight line amortization approximates amortization under the effective interest method. The amortization is included in financing expenses in the consolidated statements of income. On the consolidated balance sheets, the debt financing fees related to the term loan and revolver loan are classified as a discount against the associated debt. In instances when the revolver loan is undrawn, associated debt financing fees are included in other noncurrent assets. (l) Derivative Instruments and Hedging Activities ASC Topic 815, Derivatives and Hedging, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and hedging activities. It requires measurement of all derivative instruments at fair value, recognized as assets (prepaid expenses and other) or liabilities (accrued payroll and employee-related liabilities) on the consolidated balance sheets. The cash flow effects of all of the Company’s derivative instruments are reflected in operating activities on the consolidated statements of cash flows. The accounting treatment of changes in fair value is dependent upon whether or not a derivative instrument is designated as a hedge and if so, the type of hedge. 71 Table of Contents Cash Flow Hedges The Company performs an assessment, on the designation date and on an ongoing basis, to determine whether the cash flow hedges are expected to be highly effective at offsetting changes in the hedged item. For the effective portion, changes in fair values of derivative instruments designated as cash flow hedges are recorded in accumulated other comprehensive loss and reclassified into earnings when the hedged transactions occur. Derivatives Not Designated as Hedging Instruments Changes in fair value of derivative instruments not designated as hedges are included in other expense (income), net in the consolidated statements of income. (m) Revenue Recognition The Company recognizes revenue from its services in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, the Company recognizes revenues for services for which control has transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services. To determine revenue recognition for arrangements that are determined to be within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies its performance obligations. The Company accounts for a contract with a customer when the contract is legally enforceable and when collectability is probable. The Company has executed contracts with customers which detail, among others, the contract terms, obligations and rights of both parties and payment terms. Certain of the Company’s contracts include termination clauses, which the Company evaluates when determining the contract term (generally one to three years ) over which the parties have enforceable rights and obligations. A performance obligation is the unit of account under ASC 606 and represents the distinct services that are promised to the customer. Performance obligations are identified when the contract is created and based on agreed terms and business practices. The transaction price reflects the amount the Company expects to receive in exchange for services to the customer. The expected dollar amount is allocated to each performance obligation based on the standalone selling price agreed with the customer. The Company determines the standalone selling price based on the overall pricing objectives, taking into consideration market conditions, cost of performance obligations, and other factors including geographic locations. The Company’s performance obligations are related to providing services to its customers and its customers simultaneously receive and consume the benefits of those services. Therefore, revenue is recognized over time as performance obligations are satisfied and we have a “right to invoice.” We do not allocate transaction price to unsatisfied performance obligations. Differences in timing between the delivery of services, billings, and receipt of payment from customers can result in the recognition of certain contract assets and contract liabilities. Revenue recognized in excess of billings is recorded as accrued revenue, and is reported under accounts receivable, net of allowance for credit losses on the consolidated balance sheets. Billings in excess of revenue recognized is recorded as deferred revenue until revenue recognition criteria are met. Client prepayments (even if nonrefundable) are recorded as deferred revenue on the consolidated balance sheets and recognized over future periods as services are delivered or performed. ASC 340-40, Other Assets and Deferred Costs—Contracts with customers (“ASC 340”), provides guidance for incremental costs of obtaining a contract with a customer or costs incurred in fulfilling a contract with a customer. Incremental costs to obtain a contract with a customer are required to be capitalized if an entity expects to recover those costs. Signing commissions that are paid to sales employees are considered incremental costs of obtaining a contract with a customer. These commissions are deferred and then amortized on a straight-line basis over the contract period, which is typically one year. Amortization expense is included in selling, general, and administrative expense on the consolidated statements of income. The Company determines the period of benefit by taking into consideration its customer contracts, its technology, and other factors. Commissions paid to non-sales staff are also required to be capitalized if directly attributable to, and incremental from, obtaining a contract. (n) Advertising Expense Advertising costs are expensed as incurred and are included in selling, general, and administrative expense in the consolidated statements of income. Advertising expense for the years ended December 31, 2024, 2023 and 2022 was $ 1.7 million , $ 1.6 million and $ 2.0 million, respectively. 72 Table of Contents (o) Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization and any impairment in value. The cost of an asset comprises its purchase price and costs directly attributable to bringing the asset to working condition for its intended use. Expenditures for additions, major improvements, and renewals are capitalized, while expenditures for repairs and maintenance are charged to expense as incurred. Depreciation is computed on the straight-line basis over the estimated useful life of the Company’s assets, generally three to five years or, for leasehold improvements, over five years or the remaining term of the lease, whichever is shorter. Construction in process represents property under construction and is stated at cost, including costs of construction and other direct costs, which is not depreciated until such time that the assets are completed and available for use. Fully depreciated assets are retained in the accounts until they are no longer in use and no further depreciation is recognized. An item of property and equipment, including the related accumulated depreciation and amortization and any impairment losses, is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in profit or loss in the period the item is derecognized. Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets are grouped for recognition and measurement of impairment at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. (p) Intangibles Intangible assets consist of finite-lived intangible asset s acquired through the Company’s business combinations. Such amounts are initially recorded at fair value and subsequently amortized over their useful lives using the straight-line method, which reflects the pattern of benefit, and assumes no residual value. Finite-lived intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Finite-lived intangibles are grouped for recognition and measurement of impairment at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets. If circumstances require an asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset group to its carrying amount. If the carrying amount of the asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. (q) Goodwill Goodwill is the amount by which the cost of the acquired net assets in a business combination exceeds the fair value of the identifiable net assets on the date of purchase. Goodwill is not amortized. The Company reviews goodwill for impairment annually on October 1, or more frequently when events or circumstances indicate goodwill may be impaired. Management may initially assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the estimated fair value of a reporting unit is less than its carrying amount (“Step 0”). If determined that it is more-likely-than-not the estimated fair value of a reporting unit is less than its carrying amount, a quantitative assessment is performed (“Step 1”). Under FASB Topic ASC 350 Intangibles—Goodwill and Other , entities have an unconditional option to bypass the qualitative assessment described in the preceding sentences for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test. An entity may resume performing the qualitative assessment in any subsequent period. We have determined that we have a single reporting unit. We consider our market capitalization (calculated as total common shares outstanding multiplied by the common equity price per share), as adjusted for a control premium factor, as necessary, to represent fair value. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered to be impaired. If the carrying amount of the reporting unit exceeds its fair value, an impairment charge is recorded in an amount equal to that excess, but not more than the carrying value of goodwill. 73 Table of Contents (r) Prepaid Expenses and Other Assets Prepaid expenses and ot her current assets consists primarily of receivable from insurance, VAT and goods and services taxes, prepayments for software and insurance, advances to suppliers, refundable security deposits and implementation costs capitalized for hosting arrangements. Other noncurrent assets consists prima rily of refundable security deposits, implementation costs capitalized for hosting arrangements and deferred financing costs on the undrawn revolver loan. (s) Share Repurchases The Company records its repurchases of Class A common stock at cost, including direct and incremental costs, as treasury stock within shareholders' equity on the consolidated balance sheets. (t) Share-based Compensation The Company accounts for its stock-based awards in accordance with provisions of ASC 718, Compensation - Stock Compensation (“ASC 718”). For equity awards total compensation cost is based on the grant date fair value. For liability awards, total compensation cost is based on the fair value of the award on the date the award is granted and is remeasured at each reporting date until settlement. Awards to employees may contain service, performance, market conditions, or a combination thereof, that affect vesting. The Company recognizes expense over the requisite service period using a graded vesting model. For unvested awards with performance conditions, the Company assesses the probability of attaining the performance conditions at each reporting period. Awards that are deemed probable of attainment are recognized in expense over the requisite service period. The Company accounts for forfeitures as they occur. (u) Employee Benefits Defined benefit plans The Company has certain defined benefit plans that provide eligible employees with retirement income based primarily o n years of service and compensation during specific periods. Expense recognized for the years ended December 31, 2024, 2023 and 2022 was $ 1.9 million, $ 1.7 million and $ 1.3 million, respectively. The net obligations under our benefit plans as of December 31, 2024 and 2023 were $ 6.5 million and $ 4.0 million, respectively, nearly all of which is noncurrent. The retirement benefit reserve, which represents the cumulative amount of remeasurement of the defined benefit liability arising from actuarial gains and losses due to experience and demographic assumptions, is included in accumulated other comprehensive loss. Defined contribution plans The Company has certain defined contribution plans, including a 401(k) retirement plan in the U.S., whereby contributions made by eligible employees may be matched by the Company with certain limitations. Employer matching contributions recognized in expense for the years ended December 31, 2024, 2023 and 2022 was $ 2.9 million, $ 3.5 million and $ 2.8 million, respectively. (v) Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, and other sources are recorded when it is probable t hat a liability has been incurred and the amount can be reasonably estimated. The Company uses third-party insurance to cover liabilities for certain risks and generally recognizes a receivable when a loss event has occurred and recovery is probable. Insurance recoveries are recorded separately from the liability on the consolidated balance sheets, since insurance generally does not relieve the Company from its obligation to make payments, and recorded within the same line as the loss on the consolidated statements of income. Legal costs incurred in connectio n with loss contingencies are expensed as incurred. (w) Earnings per share The computation of basic net income per share of common stock (“EPS”) is based on the weighted average number of shares that were outstanding during the period, including shares of common stock that are issuable at the end of the reporting period. The computation of diluted EPS is based on the number of basic weighted-average number of shares outstanding plus the weighted-average number of common shares that would be issued assuming the exercise of all potentially dilutive common stock equivalents using the treasury stock method. Common stock equivalents consist of shares issuable upon the exercise of stock options and vesting of RSUs and PSUs . Common stock equivalents with performance or market conditions are included as potentially dilutive if the conditions for vesting would have been met if the last day of the period was the end of the contingency period. 74 Table of Contents (x) Income Taxes Current tax liabilities and assets are recognized for the estimated taxes payable or refundable, respectively, on the tax returns for the current year. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The carrying value of the Company’s net deferred tax assets is based on whether it is more likely than not that the Company will generate sufficient future taxable income to realize the deferred tax assets. A valuation allowance is established for deferred tax assets, which the Company does not believe meet the “more likely than not” threshold. The Company’s judgments regarding future taxable income may change over time due to changes in market conditions, changes in tax laws, tax planning strategies, or other factors. If the Company’s assumptions and, consequently, its estimates, change in the future, the valuation allowance may materially increase or decrease, resulting in a decrease or increase, respectively, in income tax benefit and the related impact on the Company’s reported net income. The Company utilizes a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining whether the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50 percent likely of being realized and effectively settled. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and that may not accurately forecast actual outcomes. The Company recognizes interest and penalties accrued related to unrecognized tax benefits as additional income taxes. (y) Recent Accounting Pronouncements The Company currently qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Accordingly, the Company is provided the option to adopt new or revised accounting guidance either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods as private companies. The Company has elected to adopt new or revised accounting guidance within the same time period as private companies. Recently adopted accounting pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This standard requires enhanced disclosure of significant segment expenses, and other segment items, on an annual and interim basis. The Company adopted this standard as of December 31, 2024, with retrospective application to all periods presented in the financial statements. See Note 16, “Segment Information” for disclosure of significant segment expenses. Recently issued accounting pronouncements In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This standard improves the transparency of rate reconciliation and income taxes paid disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. The standard also improves the effectiveness and comparability of disclosures by (1) adding disclosures of pretax income (loss) and income tax expense (benefit) and (2) removing disclosures that no longer are considered cost beneficial or relevant. This ASU will be effective for the Company for fiscal years beginning after December 15, 2025. Early adoption is permitted. This ASU will be applied prospectively, with retrospective application permitted. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expense. The amendments in this Update require (1) disclosure of employee compensation, depreciation and intangible asset amortization included in each expense caption presented on the face of the income statement within continuing operations (“relevant expense captions”); (2) certain amounts that are already required to be disclosed under current GAAP to be included in the same disclosure as the other disaggregation requirements; (3) a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively; and (4) disclosure of the total amount of selling expenses and, in annual reporting periods, the Company’s definition of selling expenses. This ASU will be effective for the Company for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. This ASU should be applied either prospectively or retrospectively. The Company is currently reviewing this ASU. 75 Table of Contents 3. Business Combination On April 15, 2022 (the “Closing Date”), the Company completed the acquisition of 100 % of the equity interests of Parsec d.o.o. and Q Experience d.o.o. (collectively, “heloo”) for $ 35.4 million. The former shareholders of heloo were also eligible to receive contingent earn-out payments not to exceed € 20.0 million, based on performance compared to prescribed EBITDA targets outlined in the purchase agreement during each of the one year periods ending April 30, 2023 and 2024, respectively. Since these payments were contingent on future service conditions, they were recognized as compensation expense ratably over the required service period. The Company recognized compensation expense related to the contingent earn-out payments within selling, general, and administrative expenses of $ 0.0 million and $ 7.9 million for the years ended December 31, 2024 and 2023 , respectively. The Company paid $ 0.0 million and $ 18.3 million related to the contingent earn-out during the years ended December 31, 2024 and 2023 , respectively, which is included in net cash provided by operating activities. The total fair value of remaining contingent earn-out payments was determined to be $ 0.0 million as of December 31, 2023, with the second earn-out period expired as of April 30, 2024, with no additional amount paid. The Company paid $ 0.1 million and $ 1.9 million related to holdback cash consideration during the years ended December 31, 2024 and 2023 , respectively, which is included in payments for deferred business acquisition consideration. 4. Revenue from Contracts with Customers Disaggregation of Revenue The Company’s revenues are derived from contracts with customers related to business outsourcing services that it provides. The following table presents the breakdown of the Company’s revenues by service offering: Year ended December 31, (in thousands) 2024 2023 2022 Digital Customer Experience $ 611,837 $ 605,943 $ 637,587 Trust + Safety 248,041 186,742 178,409 AI Services 135,107 131,680 144,493 Service revenue $ 994,985 $ 924,365 $ 960,489 The majority of the Company’s revenues are derived from contracts with customers who are located in the United States. However, the Company delivers its services from geographies outside of the United States. The following table presents the breakdown of the Company’s revenues by geographical location, based on where the services are provided from: Year ended December 31, (in thousands) 2024 2023 2022 Philippines $ 563,032 $ 511,298 $ 504,361 United States 117,773 148,708 252,457 India 123,804 115,777 102,561 Rest of World 190,376 148,582 101,110 Service revenue $ 994,985 $ 924,365 $ 960,489 Contract Balances Accounts receivable, net of allowance for credit losses includes $ 92.7 million and $ 77.2 million of unbilled revenues as of December 31, 2024 and 2023, respectively. Activity in the Company’s allowance for doubtful accounts consisted of the following: Year ended December 31, (in thousands) 2024 2023 2022 Balance, beginning of year $ 1,978 $ 3,422 $ 1,819 Provision for credit losses ( 15 ) 103 1,746 Uncollectible receivables written-off ( 664 ) ( 1,547 ) ( 143 ) Balance, end of year $ 1,299 $ 1,978 $ 3,422 76 Table of Contents 5. Forward Contracts The Company transacts business in various foreign currencies and has international sales and expenses denominated in foreign currencies, subjecting the Company to foreign currency exchange rate risk. During 2024 and 2023, the Company entered into foreign currency exchange rate forward contracts, with five commercial banks as the counterparties, with maturities of generally 12 months or less, to reduce the volatility of cash flows, primarily related to forecasted costs denominated in Philippine pesos, Indian rupees, Mexican pesos and Colombian pesos. In addition, the Company utilizes foreign currency exchange rate contracts to mitigate foreign currency exchange rate risk associated with foreign currency-denominated assets and liabilities, primarily intercompany balances. The Company does not use foreign currency exchange rate contracts for trading purposes. Cash Flow Hedges For the years ended December 31, 2024, 2023 and 2022, the Company did not settle any cash flow hedges. The following table presents the Company's outstanding forward contracts designated as cash flow hedges: Year ended December 31, (in thousands) 2024 2023 2022 Notional amount of outstanding forward contracts in Philippine pesos $ 152,803 $ — $ — Notional amount of outstanding forward contracts in Indian rupees 41,819 — — Notional amount of outstanding forward contracts in Mexican pesos 14,380 — — Notional amount of outstanding forward contracts in Colombian pesos 35,141 — — Total notional amount of outstanding forward contracts designated as cash flow hedges $ 244,143 $ — $ — All cash flow hedges were determined to be highly effective, with no component of any gain or loss excluded from the assessment of hedge effectiveness, for the periods presented. Net unrealized losses on cash flow hedges for the year ended December 31, 2024 was $ 4.2 million. As of December 31, 2024, the net accumulated loss on our foreign currency cash flow hedges expected to be reclassed from accumulated other comprehensive loss into earnings within the next 12 months was $ 4.2 million. See Note 15, “Accumulated Other Comprehensive Loss” for additional information regarding changes in accumulated other comprehensive loss. Derivatives Not Designated as Hedging Instruments The following table presents the Company’s settled and outstanding forward contracts and realized and unrealized losses (gains) associated with derivative contracts not designated as hedging instruments: Year ended December 31, (in thousands) 2024 2023 2022 Notional amount of settled forward contracts in Philippine pesos $ 169,029 $ 221,014 $ 194,013 Notional amount of settled forward contracts in Indian rupees 45,193 30,950 — Total notional amount of settled forward contracts $ 214,222 $ 251,964 $ 194,013 Realized losses (gains) from settlement of forward contracts $ 5,956 $ ( 2,577 ) $ 13,336 Notional amount of outstanding forward contracts in Philippine pesos $ — $ 169,029 $ 175,050 Notional amount of outstanding forward contracts in Indian rupees — 45,193 — Total notional amount of outstanding forward contracts $ — $ 214,222 $ 175,050 Unrealized foreign exchange losses (gains) on forward contracts $ ( 689 ) $ 2,485 $ ( 4,589 ) Fair Value Measurements The Company has implemented the fair value accounting standard for those assets and liabilities that are re-measured and reported at fair value at each reporting period. This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value based on inputs used, and requires additional disclosures about fair value measurements. This standard applies to fair value measurements already required or permitted by existing standards. By entering into derivative contracts, the Company is exposed to counterparty credit risk, or the failure of the counterparty to perform under the terms of the derivative contract. For the periods presented, the non-performance risk of the Company and the counterparties did not have a material impact on the fair value of the derivative instruments. 77 Table of Contents In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset and include situations where there is little, if any, market activity for the asset. For financial statement presentation purposes, the Company does not offset assets and liabilities under master netting arrangements. The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2024 and 2023 and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value: December 31, 2024 Fair value measurements using Total Gross Fair Value Effect of Master Netting Arrangements Net Amounts (in thousands) Level 1 inputs Level 2 inputs Level 3 inputs Assets Money market funds $ 60,346 $ — $ — $ 60,346 $ — $ 60,346 Derivatives designated as hedging instruments: Forward contracts receivable $ — $ 2 $ — $ 2 $ ( 2 ) $ — Liabilities Derivatives designated as hedging instruments: Forward contracts payable $ — $ 4,221 $ — $ 4,221 $ ( 2 ) $ 4,219 December 31, 2023 Fair value measurements using Total Gross Fair Value Effect of Master Netting Arrangements Net Amounts (in thousands) Level 1 inputs Level 2 inputs Level 3 inputs Assets Derivatives not designated as hedging instruments: Forward contracts receivable $ — $ 95 $ — $ 95 $ ( 95 ) $ — Liabilities Derivatives not designated as hedging instruments: Forward contracts payable $ — $ 784 $ — $ 784 $ ( 95 ) $ 689 T he Company’s derivatives are carried at fair value using various pricing models that incorporate observable market inputs, such as interest rate yield curves and currency rates, which are Level 2 inputs. Derivative valuations incorporate credit risk adjustments that are necessary to reflect the probability of default by the counterparty or by the Company. 6. Property and Equipment, net The components of Property and equipment, net at December 31, 2024 and 2023 were as follows: (in thousands) December 31, 2024 December 31, 2023 Leasehold improvements $ 76,171 $ 67,552 Technology and computers 115,816 105,375 Furniture and fixtures 8,480 7,392 Construction in process 5,476 1,140 Other property and equipment 16,260 14,238 Property and equipment, gross 222,203 195,697 Accumulated depreciation ( 155,428 ) ( 126,804 ) Property and equipment, net $ 66,775 $ 68,893 78 Table of Contents The Company’s principal operations are in the Philippines where the majority of property and equipment resides under its wholly owned subsidiaries. The table below presents the Company’s total property and equipment by geographic location as of December 31, 2024 and 2023: (in thousands) December 31, 2024 December 31, 2023 Philippines $ 22,888 $ 29,765 United States 7,116 7,308 India 11,830 17,452 Colombia 12,950 6,638 Rest of World 11,991 7,730 Property and equipment, net $ 66,775 $ 68,893 During the years ended December 31, 2024, 2023 and 2022, no impairment charges were recorded. 7. Goodwill and Intangibles The changes in the carrying amount of goodwill during the period were as follows: (in thousands) Balance as of December 31, 2022 $ 217,382 Foreign currency translation 726 Balance as of December 31, 2023 218,108 Foreign currency translation ( 1,317 ) Balance as of December 31, 2024 $ 216,791 As of October 1, 2024, 2023 and 2022, the Company opted to bypass the qualitative assessment under Step 0 and proceeded directly to performing a quantitative goodwill impairment test under Step 1. Based on the quantitative assessments for the years ended December 31, 2024, 2023 and 2022, the Company determined that the carrying value of the reporting unit did not exceed its fair value and no impairment charges were recorded. Intangible assets consisted of the following as of December 31, 2024 and 2023: December 31, 2024 December 31, 2023 (in thousands) Weighted-Average Years Remaining Intangibles, Gross Accumulated Amortization Intangibles, Net Intangibles, Gross Accumulated Amortization Intangibles, Net Customer relationships 8.7 $ 251,245 $ ( 103,162 ) $ 148,083 $ 251,899 $ ( 86,176 ) $ 165,723 Trade name 8.8 41,900 ( 17,458 ) 24,442 41,900 ( 14,665 ) 27,235 Other intangibles 0.0 158 ( 158 ) — 236 ( 236 ) — Total 8.7 $ 293,303 $ ( 120,778 ) $ 172,525 $ 294,035 $ ( 101,077 ) $ 192,958 During the years ended December 31, 2024, 2023 and 2022, no impairment charges were recorded. Future amortization expense for intangible assets subject to amortization was: (in thousands) 2025 $ 19,891 2026 19,891 2027 19,891 2028 19,891 2029 19,891 Thereafter 73,070 Total $ 172,525 79 Table of Contents 8. Long-Term Debt The balances of current and non-current portions of debt consist of the following as of December 31, 2024 and 2023: December 31, 2024 December 31, 2023 (in thousands) Current Noncurrent Total Current Noncurrent Total Term Loan $ 15,188 $ 241,988 $ 257,176 $ 8,438 $ 257,175 $ 265,613 Less: Debt financing fees ( 379 ) ( 631 ) ( 1,010 ) ( 379 ) ( 1,009 ) ( 1,388 ) Total $ 14,809 $ 241,357 $ 256,166 $ 8,059 $ 256,166 $ 264,225 2022 Credit Agreement On September 7, 2022, the Company entered into a credit agreement (the “2022 Credit Agreement”) with both new and existing lenders which amended and restated its credit agreement entered into on September 25, 2019 (the “2019 Credit Agreement”). The 2022 Credit Agreement includes a $ 270.0 million term loan (the "2022 Term Loan Facility") and a $ 190.0 million revolving credit facility (the "2022 Revolving Credit Facility" and, together with the 2022 Term Loan Facility, the “2022 Credit Facilities”). The proceeds of the 2022 Term Loan Facility were used to repay all borrowings under the 2019 Credit Agreement, to pay related fees and expenses and for general corporate purposes (the “Refinancing”). The Refinancing was accounted for as a debt modification for existing lenders and new debt for new lenders, resulting in debt issuance costs, including amounts allocated from the 2019 Credit Agreement, of $ 1.9 million associated with the 2022 Term Loan Facility and $ 1.1 million associated with the undrawn 2022 Revolving Credit Facility. Third party fees of $ 0.3 million associated with the debt modification were recorded in financing expenses on the consolidated statements of income for the year ended December 31, 2022. The 2022 Term Loan Facility matures on September 7, 2027, and commencing with the fiscal quarter ending December 31, 2022, requires quarterly principal payments of 0.25 % of the original principal amount through September 30, 2023, 0.625 % of the original principal amount through September 30, 2024, 1.25 % of the original principal amount through September 30, 2025, 1.875 % of the original principal amount through September 30, 2026 and 2.50 % of the original principal amount thereafter, with the remaining principal due in a lump sum at the maturity date. Voluntary principal prepayments are permitted. The 2022 Revolving Credit Facility provides the Company with access to a $ 15.0 million letter of credit facility and a $ 15.0 million swing line facility, each of which, to the extent used, reduces borrowing availability under the 2022 Revolving Credit Facility. The 2022 Revolving Credit Facility terminates on September 7, 2027. As of December 31, 2024, we had no balance outstanding and $ 190.0 million of borrowing available under the 2022 Revolving Credit Facility. Borrowings under the 2022 Credit Agreement, with the exception of swing line borrowings, bear interest, at our option, either at (i) an adjusted Term Secured Overnight Financing Rate (“SOFR rate”) plus a margin of 2.25 % per annum, subject to a SOFR rate floor of 0.00 % or (ii) an alternative base rate plus a margin of 1.25 % per annum, subject to an alternative base rate floor of 1.00 %, Any borrowings under the swing line will be subject to the base rate. The 2022 Revolving Credit Facility also requires a commitment fee of 0.40 % per annum of undrawn commitments to be paid quarterly in arrears. We have elected to pay interest on borrowings under the 2022 Term Loan Facility based on the SOFR rate. The interest rate in effect for the 2022 Term Loan Facility as of December 31, 2024 was 6.679 % per annum. Due to its variable interest rates, the carrying amount of debt approximates fair value based on the present value of future cash flows using Level 2 inputs. The 2022 Credit Agreement contains a financial covenant requiring compliance with a maximum total net leverage ratio and certain other covenants, including, among other things, covenants restricting additional borrowings, investments (including acquisitions) and distributions. We were in compliance with all debt covenants as of December 31, 2024. Substantially all assets of our direct wholly owned subsidiary TU MidCo, Inc., its wholly owned subsidiary TU BidCo, Inc. and its material wholly owned domestic subsidiaries are pledged as collateral under the 2022 Credit Agreement, subject to certain customary exceptions. Principal maturities of the outstanding debt as of December 31, 2024 are as follows: (in thousands) 2025 $ 15,188 2026 21,938 2027 220,050 Total $ 257,176 80 Table of Contents 9. Leases The following table presents operating lease costs recorded to cost of service: Year ended December 31, (in thousands) 2024 2023 2022 Operating lease costs - Cost of services $ 19,177 $ 17,314 $ 15,242 Operating lease costs recorded to selling, general, and administrative expense were immaterial during the years ended December 31, 2024, 2023, and 2022. The following table presents the weighted average remaining lease term and weighted average discount rate for the Company's operating leases as of December 31, 2024 and December 31, 2023: December 31, 2024 December 31, 2023 Weighted average remaining lease term 3.5 years 3.5 years Weighted average discount rate 6.6 % 6.3 % The following table presents supplemental cash flow information related to the Company's operating leases: (in thousands) December 31, 2024 December 31, 2023 December 31, 2022 Cash paid for amounts included in the measurement of operating lease liabilities $ 19,733 $ 16,825 $ 14,551 ROU assets obtained in exchange for operating lease liabilities 24,023 18,938 13,146 The future lease payments on the Company’s operating lease liabilities as of December 31, 2024 were as follows: (in thousands) 2025 $ 18,421 2026 15,646 2027 10,316 2028 6,453 2029 3,344 Thereafter 720 Total lease payments 54,900 Less: interest ( 5,867 ) Total lease liabilities $ 49,033 10. Commitments and Contingencies Legal Proceedings The Company is subject to various legal proceedings, claims, and litigation arising in the ordinary course of business. Although the outcomes of such matters cannot be predicted with certainty, the Company believes that resolution of all such pending matters will not, either individually or in the aggregate, have a material adverse effect on its business, operating results, cash flows, or financial condition. However, given the inherent unpredictability of litigations, arbitrations, claims, inquiries, investigations and proceedings, it is possible that an adverse outcome in certain matters could have a material adverse effect on our business, operating results, cash flows, or financial condition in any future period. In addition, there can be no assurance that material losses will not be incurred from claims where potential losses have not yet been determined to be probable or possible and reasonably estimable. 81 Table of Contents On February 23, 2022, a purported class action lawsuit captioned Lozada v. TaskUs, Inc. et al., No. 22-cv-1479-JPC, was filed in the United States District Court for the Southern District of New York against the Company, our Chief Executive Officer, our President, and our Chief Financial Officer. The complaint alleges that the registration statement filed in connection with the Company’s initial public offering (“IPO”) and the Company’s second and third quarter 2021 earnings calls contained materially false and misleading information in violation of the federal securities laws. On October 20, 2022, the court entered an order appointing Humberto Lozada as lead plaintiff in the lawsuit. On December 16, 2022, lead plaintiff filed an amended complaint, alleging additional misstatements in certain of the Company’s 2021 earnings releases filed on Form 8-K and at an investor conference, and asserting additional securities claims, including against members of TaskUs’s board of directors as well as BCP FC Aggregator L.P. The complaint seeks unspecified damages and an award of costs and expenses, including reasonable attorneys’ fees, as well as equitable relief. On February 17, 2023, TaskUs and the other named defendants filed a motion to dismiss. On October 16, 2023, the plaintiffs voluntarily dismissed with prejudice certain claims based on certain theories of liability. On February 24, 2025, the Company entered into a Stipulation and Agreement of Settlement (the “Settlement Agreement”), which is subject to approval by the court . The Settlement Agreement contemplates a combined payment by defendants of $ 17.5 million, inclusive of plaintiffs’ attorneys’ fees and expenses, and a full and complete release of all claims. The Company expects its insurance retention and policies to fund the settlement amount. The defendants have entered into the Settlement Agreement solely to eliminate the burden, expense, uncertainty, and risk of further litigation and have denied, and continue to deny, any and all allegations of liability or wrongdoing. On January 15, 2025, TaskUs stockholder James Eaton filed a derivative lawsuit in the Court of Chancery of the State of Delaware captioned Eaton v. Maddock, et al., (C.A. No. 2025-0043-NAC), purportedly on behalf of the Company against certain current and former members of its board of directors. Eaton previously delivered a demand pursuant to 8 Del. C. §220 on TaskUs on July 3, 2024, which the Company responded to on September 16, 2024. The Eaton complaint includes allegations similar to those in the Lozada case. In particular, the complaint alleges that TaskUs’s public filings included misstatements regarding its low employee attrition rate and high Glassdoor rating in the lead-up periods to the Company’s IPO and secondary public offering in October 2021 (“SPO”). The complaint includes one count for breach of fiduciary duty and alleges that because of TaskUs’s breach, the Company has suffered damages in the form of: (1) legal fees associated with the Lozada litigation; (2) loss of reputation and goodwill; (3) costs associated with investigations into the misstatement allegations; (4) money used to facilitate the IPO and SPO; (5) insider profits derived from the IPO and SPO; and (6) loss of Company revenue and profits. The Company is unable to predict, with a reasonable degree of certainty, the likely outcome of this litigation. The Company is also currently defending three lawsuits that present in large degree the same legal or factual issues, with allegations that are similar in nature. We believe that these three lawsuits are without merit and intend to defend each vigorously. The Company cannot predict at this point the length of time that these actions will be ongoing or the liability, if any, which may arise therefrom. As these actions are still in preliminary phases, any potential loss or impact on financial position or results of operations cannot yet be estimated. On April 1, 2022, a purported class action lawsuit captioned Gregory Forsberg, Christopher Gunter, Samuel Kissinger, and Scott Sipprell vs. TaskUs, Inc. and Shopify, Inc., Shopify Holdings (USA), Inc., Shopify (USA) Inc., No. 1:22-cv-00436-UNA, was filed in the United States District Court for the District of Delaware. The complaint alleges the named defendants failed to exercise reasonable care in securing and safeguarding consumer information in connection with a 2020 data breach impacting Ledger SAS cryptocurrency hardware wallets, resulting in the unauthorized public release of approximately 272,000 pieces of detailed personally identifiable information, including Plaintiffs’ and class members’ full names, email addresses, postal addresses, and telephone numbers. The four named plaintiffs allege aggregate losses of approximately $ 140,000 , and allege that the damages exceed $ 5 million for purposes of class action jurisdiction. On April 8, 2022, the Company filed a motion to dismiss, which is currently pending. This case is currently stayed. On September 16, 2022, a lawsuit captioned My Choice Software, LLC vs. TaskUs, Inc., Tassilo Heinrich, Shopify, Inc., Shopify Holdings (USA) Inc., Shopify (USA) Inc., Does 1-50, No. 22-cv-1710 was filed in the United States District Court, Central District of California. The complaint alleges the defendants profited off of the plaintiff's information. The complaint seeks unspecified damages and an award of costs and expenses, including reasonable attorneys’ fees, as well as equitable and injunctive relief. On February 13, 2023, the Company filed a motion to dismiss the amended complaint. In May 2023, the court issued an Order dismissing certain parties, staying the case as to the Company and denying as moot the Company's previously filed motion to dismiss. This case is currently stayed. 82 Table of Contents On November 22, 2023, TaskUs was added as an additional defendant in a lawsuit captioned Naeem Seirafi, Edward Baton, Anthony Comilla, Brett Deeney, and Abraham Vilinger, individually and on behalf of all others similarly situated v. Ledger SAS, Shopify (USA) Inc., Shopify Inc., and TaskUs, Inc., No. 21-cv-02470 pending in the United States District Court, Northern District of California. The complaint alleges defendants failed to exercise reasonable care in securing and safeguarding consumer information in connection with a 2020 data breach impacting Ledger cryptocurrency hardware wallets, resulting in the unauthorized public release of approximately 272,000 pieces of detailed personally identifiable information, including Plaintiffs’ and “Class” members’ full names, email addresses, postal addresses, and telephone numbers. The complaint asserts claims against TaskUs for negligence, negligence per se, declaratory and injunctive relief, and for violations of the New York Deceptive Trade Practices Act. The named plaintiffs’ alleged damages of approximately $ 557,000 and an award of costs and expenses, including reasonable attorneys’ fees, as well as declaratory and injunctive relief, and other damages. On February 5, 2024, TaskUs filed a motion to dismiss. On July 16, 2024, the Court granted in part and denied in part the motion to dismiss. On August 23, 2024, the plaintiffs filed an amended complaint. On September 19, 2024, TaskUs filed a motion to dismiss, which the court granted on February 6, 2025. Indemnification In addition, in the ordinary course of business, the Company enters into agreements of varying scope and terms pursuant to which we agree to indemnify clients, vendors and other business partners with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, cybersecurity breach, services to be provided by us or from intellectual property infringement claims made by third parties. Historically, we have not experienced significant losses on these types of indemnification obligations. 11. Stock-Based Compensation Stock Plans 2019 Stock Incentive Plan On April 16, 2019, the Company established an equity incentive plan pursuant to which the Company has granted option awards to selected executives and other key employees (the “2019 Plan”) . The option awards contain service, market and performance conditions. Stock options under this plan contingently vest over a period of two years in the event of a change in control and over a period of three years in the event of an initial public offering (“IPO”) (each as defined in such plan), with the vesting period beginning on the date of the performance event so long as the holder remains employed. The amount of options eligible for vesting is contingent upon Blackstone’s return on invested capital in the Company. These options have contractual lives of 10 years . As amended, the Company reserved 7,597,730 common shares for issuance under the 2019 Plan. Following the IPO and establishment of the 2021 Plan, defined below, it is not expected that any additional awards will be issued under the 2019 Plan. 2021 Omnibus Incentive Plan On June 10, 2021, the Company adopted the 2021 Omnibus Incentive Plan (the “2021 Plan” and, together with the 2019 Plan, the “Incentive Plans”), which provides for the issuance of non-qualified stock options, incentive stock options, stock appreciation rights (“SARs”), restricted shares of Class A common stock, restricted stock units (“RSUs”), or other equity-based or cash-based awards. The stock options are subject to service-based vesting conditions and generally vest quarterly or annually ove r three to four years and expire 10 years from the date of the grant. The RSUs are typically subject to service-based vesting conditions and generally vest in quarterly or annual installments over two to four years . The Company initially granted 6,614,122 awards to its founders and reserved an additional 12,160,929 shares of Class A common stock for issuance under the 2021 Plan. As of December 31, 2024, the total number of shares available for future grants under the 2021 Plan was 6,206,554 , subject to automatic annual evergreen increases. Employee Stock Purchase Plan The Company adopted the TaskUs, Inc. 2022 Employee Stock Purchase Plan (the “ESPP”) on June 14, 2022. Under the ESPP, eligible employees may purchase a limited number of shares of our Class A common stock at the lesser of 85 % of the market value on the enrollment date or 85 % of the market value on the purchase date. As of December 31, 2024, n o shares were issued through the ESPP. As of December 31, 2024, the total number of shares available for issuance under the ESPP was 5,000,000 . 83 Table of Contents Stock Options The following table summarizes the stock option activity for the year ended December 31, 2024: Number of options Weighted-average exercise price Weighted-average remaining contractual term (years) Aggregate intrinsic value (in thousands) Outstanding at January 1, 2024 7,523,971 $ 14.19 6.9 $ 30,867 Granted — $ — Exercised ( 1,271,316 ) $ 4.92 Forfeited, cancelled or expired ( 1,406,158 ) $ 7.41 Outstanding at December 31, 2024 4,846,497 $ 18.58 6.4 $ 17,505 Vested and exercisable at December 31, 2024 3,705,984 $ 16.73 6.1 $ 17,505 Vested and exercisable at December 31, 2024 and expected to vest thereafter 4,846,497 $ 18.58 6.4 $ 17,505 There were no stock options granted during the year ended December 31, 2024. The weighted-average grant-date fair value of options granted during the years ended December 31, 2023 and 2022 was $ 8.85 and $ 10.73 , respectively. The total pre-tax intrinsic value of the options exercised during the year ended December 31, 2024, 2023, and 2022 was $ 12.6 million, $ 1.3 million, and $ 10.9 million respectively. Options granted to employees contain service conditions that affect vesting. The Company uses the Black-Scholes option pricing model to estimate the grant date fair value of stock options with service conditions with the following assumptions: Year ended December 31, 2023 2022 Dividend yield (%) 0 % 0 % Expected volatility (%) 36 - 45 % 32 - 35 % Risk-free interest rate (%) 3.6 - 4.2 % 1.6 - 4.2 % Expected term (years) 5.5 - 6.5 5.5 - 7.0 The assumptions used in the Black-Scholes model, other than the fair value of the Company’s common stock, are estimated as follows: • Expected dividend yield: Zero percent, as the Company does not anticipate paying dividends on its common stock. • Expected volatility: Based on a blended volatility of the Company’s historic stock price volatility and the historical stock price volatility of comparable publicly-traded companies in its peer group and the implied volatility of its assets and current leverage. • Risk-free interest rate: Based on the U.S. Treasury yield curve in effect at the time of grant. • Expected term: Estimated based on the simplified method as the Company does not have adequate historical data. 84 Table of Contents RSUs The following table summarizes the RSU activity for the year ended December 31, 2024: Number of RSUs Weighted-average grant date fair value Outstanding at January 1, 2024 3,864,319 $ 23.60 Granted 2,604,356 $ 12.66 Released ( 1,736,996 ) $ 23.55 Cancelled ( 422,321 ) $ 18.60 Unvested and Outstanding at December 31, 2024 4,309,358 $ 17.50 The weighted-average grant date fair value of RSUs granted during the years ended December 31, 2023 and December 31, 2022 was $ 16.66 and $ 25.97 , respectively. The total pre-tax intrinsic value of the RSUs released during the years ended December 31, 2024, 2023, and 2022 was $ 23.9 million, $ 15.4 million, and $ 20.3 million, respectively. Performance Stock Units (“PSUs”) The following table summarizes the PSU activity for the year ended December 31, 2024: Number of PSUs Weighted-average grant date fair value Outstanding at January 1, 2024 3,373,417 $ 4.02 Granted 320,000 $ 11.58 Released — $ — Cancelled — $ — Unvested and Outstanding at December 31, 2024 3,693,417 $ 4.67 The majority of PSUs outstanding as of January 1, 2024, vest contingently in annual installments over four years subject to continued service and the achievement of certain enterprise value compound annual growth rate ("CAGR") targets (market conditions). The remaining PSUs vest contingently in four years subject to continued service and the achievement of certain market capitalization CAGR targets (market conditions). The majority of PSUs granted during 2024 , vest contingently in annual installments over three years subject to continued service and the achievement of certain stock price CAGR targets (market conditions). The remaining PSUs vest contingently over three years subject to continued service and the achievement of certain New Business Annual Contract Value targets (performance conditions). The grant date fair value of the PSUs with market conditions granted during 2024 were estimated using the Monte Carlo simulation method with the following assumptions: Dividend yield (%) 0 % Expected volatility (%) 75 % Risk-free interest rate (%) 4.7 %- 5.1 % Stock-Based Compensation Expense The following table summarizes the components of stock-based compensation expense recognized in the Company’s consolidated statements of income for the periods presented: Year ended December 31, (in thousands) 2024 2023 2022 Cost of services $ 2,182 $ 3,269 $ 3,557 Selling, general, and administrative expense 39,639 49,490 65,422 Total $ 41,821 $ 52,759 $ 68,979 For the year ended December 31, 2024, there was $ 2.2 million, $ 25.6 million and $ 2.7 million of unrecognized compensation expense related to the Company’s unvested stock options, RSUs and PSUs, respectively, that is expected to be recognized over a weighted-average period of 0.9 years, 1.4 years and 1.3 years. The tax benefits recognized in the consolidated statements of income for stock-based compensation expense, including the impact of exercises and releases, were $ 0.5 million, $ 0.8 million, and $ 3.2 million for the years ended December 31, 2024, 2023, and 2022, respectively . 85 Table of Contents 12. Income Taxes The components of income before income taxes consists of the following, for the periods indicated: Year ended December 31, (in thousands) 2024 2023 2022 United States $ 33,595 $ 25,009 $ 7,942 Foreign 40,586 50,023 56,591 Income before income taxes $ 74,181 $ 75,032 $ 64,533 The provision for income taxes consists of the following, for the periods indicated: Year ended December 31, (in thousands) 2024 2023 2022 Current: Federal $ 16,716 $ 20,676 $ 16,418 State 5,044 6,328 3,215 Foreign 17,440 10,297 16,233 Total current tax expense 39,200 37,301 35,866 Deferred: Federal ( 6,706 ) ( 8,377 ) ( 6,490 ) State ( 386 ) ( 1,060 ) ( 881 ) Foreign ( 3,797 ) 1,478 ( 4,384 ) Total deferred tax benefit ( 10,889 ) ( 7,959 ) ( 11,755 ) Total provision for income taxes $ 28,311 $ 29,342 $ 24,111 The following table presents the tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities as of the dates indicated: (in thousands) December 31, 2024 December 31, 2023 Deferred Tax Assets Accruals $ 8,317 $ 5,012 Allowances and reserves 307 1,186 Intercompany payable 2,139 2,137 State taxes 810 785 Stock-based compensation expense 7,720 9,045 Deferred revenue 840 903 Operating lease liabilities 1,698 1,390 Fixed assets 7,254 3,508 Section 267 - Intercompany Payable 3,757 — Other capitalized costs 3,147 3,750 Other 1,620 219 Total deferred tax assets $ 37,609 $ 27,935 Deferred Tax Liabilities Intangibles ( 40,604 ) ( 44,520 ) Operating lease right-of-use assets ( 1,644 ) ( 1,266 ) Unrealized foreign exchange gain/loss 147 ( 377 ) Other ( 4,123 ) ( 2,129 ) Total deferred tax liabilities $ ( 46,224 ) $ ( 48,292 ) Net deferred tax liabilities $ ( 8,615 ) $ ( 20,357 ) 86 Table of Contents The Company assessed the available positive and negative evidence to estimate whether it was more likely than not that some portion, or all, of the deferred tax assets would be realized. Evidence of sources of taxable income and the pattern and timing of the reversal of the temporary differences were sufficient to support a conclusion that a valuation allowance was not needed. The Company thereby determined it was more likely than not the deferred tax assets would be realized. The following is a reconciliation stated as a percentage of pretax income of the U.S. federal statutory income tax rate (21%) to the Company’s effective tax rate: Year ended December 31, 2024 2023 2022 Federal tax rate 21 % 21 % 21 % State taxes, net of federal benefit 4 4 3 Nondeductible officers’ compensation 4 6 9 Global Intangible Low Tax Income (GILTI) 5 12 10 Foreign Derived Intangible Income (FDII) ( 3 ) ( 2 ) ( 1 ) Return to accrual adjustment 4 1 2 Nondeductible litigation costs 4 — — Stock-based compensation expense — 7 3 Foreign jurisdiction income tax holiday — ( 2 ) ( 3 ) Foreign tax credit ( 4 ) ( 10 ) ( 11 ) Foreign tax rate differential — ( 4 ) 1 Tax credits ( 1 ) ( 1 ) — Reserves for tax contingencies 2 4 — Base Erosion and Anti-Abuse Tax (BEAT) — — 2 Earn-out consideration — 2 3 Other adjustments 2 1 ( 2 ) Effective tax rate 38 % 39 % 37 % The Company operates under tax holidays in the Philippines, which were effective through December 31, 2024, and may be extended for certain sites, if certain additional requirements are satisfied. The tax holidays are conditional upon the Company meeting certain employment and investment thresholds. The impact of these tax holidays decreased foreig n taxes by $ 3.2 million, $ 5.2 million and $ 6.1 million for the years ended December 31, 2024, 2023 and 2022, respectively. The benefit of the tax holidays on net income per share (diluted) was $ 0.03 , $ 0.05 and $ 0.06 for the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024, unremitted earnings of the subsidiaries outside of the U.S. were approximately $ 331.9 million, which the Company has not made a provision for U.S. or additional foreign withholding taxes and state taxes. The Company’s practice and intention are to indefinitely reinvest these earnings outside the U.S. Determination of the amount of any unrecognized deferred income tax liability on this temporary difference is not practicable because of the complexities of the hypothetical calculation. Various foreign jurisdictions are in the process of enacting Pillar Two legislation to adopt a minimum tax of 15% on the income arising in each jurisdiction in which large corporations operate and would apply to multinational companies with consolidated revenue above €750 million in at least two of the four preceding years. This is per the “Model Rules”, which are also referred to as the “Anti Global Base Erosion” or “GloBE” rules as issued by the Organization for Economic Co-operations and Development. The increased focus of Pillar Two and various jurisdictions enacting new tax laws could have a material adverse effect on our effective tax rate, results of operations, cash flows and financial condition. The impact of this tax will depend on our facts in each year, anticipated guidance from the U.S. Department of the Treasury, and other developing global tax legislation. We will continue to monitor the impact of Pillar Two among the jurisdictions where we operate, and Pillar Two legislation has been adopted. 87 Table of Contents A reconciliation of the beginning and ending balances of unrecognized tax benefits is as follows: Year ended December 31, (in thousands) 2024 2023 Uncertain tax benefit balance as of beginning of period $ 4,229 $ 1,356 Gross increases (decreases) - tax positions for current period 2,021 1,469 Gross increases (decreases) - tax position in prior periods ( 211 ) 1,404 Uncertain tax benefit balance as of end of period $ 6,039 $ 4,229 As of December 31, 2024, the Company had approximately $ 6.0 million of unrecognized tax benefits that if recognized would affect the effective income tax rate. The Company estimates no material changes to its uncertain tax positions within the next 12 months. The Company recognizes interest and penalties related to uncertain tax positions as components of provision for income taxes. As of December 31, 2024, the Company accrued interest and penalties of $ 0.1 million and $ 0.1 million, respectively. The Company files income tax returns in US federal and state jurisdictions, as well as the foreign jurisdictions it operates in, including the Philippines, Canada, India, Greece, Mexico, Taiwan, the United Kingdom, Ireland, Colombia, Japan, Malaysia, Poland, Romania, Croatia and Serbia. As of December 31, 2024, the tax years 2019 to 2023 are subject to examination by tax authorities. 13. Shareholders’ Equity Amendment and Restatement of Certificate of Incorporation The Company’s amended and restated certificate of incorporation authorized three classes of ownership interests: (i) 250,000,000 shares of preferred stock, par value $ 0.01 per share, (ii) 2,500,000,000 shares of Class A common stock, par value $ 0.01 per share, and (iii) 250,000,000 shares of Class B common stock, par value $ 0.01 per share. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting, transfer and conversion rights. Voting Rights— Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to ten votes per share and is convertible into one share of Class A common stock at any time or automatically upon certain conditions but no later than June 10, 2028 ( seven years following the filing and effectiveness of the amended and restated certificate of incorporation). Dividend Rights— Subject to any preferential rights of any then outstanding preferred stock, all shares of our common stock are entitled to share equally, on a per share basis, in any dividends our board of directors may declare from legally available sources; provided, however, that in the event a dividend is paid in the form of shares of Class A common stock or Class B common stock, then holders of Class A common stock shall be entitled to receive shares of Class A common stock and holders of Class B common stock shall be entitled to receive shares of Class B common stock. We have no current plans to pay dividends on our common stock. Any decision to declare and pay dividends in the future will be made at the sole discretion of our board of directors and will depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions and other factors that our board of directors may deem relevant. Because we are a holding company and have no direct operations, we will only be able to pay dividends from funds we receive from our subsidiaries. In addition, our ability to pay dividends is limited by covenants in our existing indebtedness and may be limited by the agreements governing any indebtedness we or our subsidiaries may incur in the future. Liquidation Rights— Upon our liquidation, dissolution or winding up, whether voluntary or involuntary, after payment of the debts and other liabilities of the Company and subject to the rights, if any, of the holders of any outstanding series of preferred stock or any class or series of stock having a preference over or the right to participate with the common stock, the holders of all outstanding shares of Class A common stock and Class B common stock shall be entitled to receive the remaining assets of the Company available for distribution to its shareholders ratably in proportion to the number of shares held by each such shareholder. 88 Table of Contents 14. Earnings Per Share The Company has Class A common stock and Class B common stock outstanding. Because the only difference between the two classes of common stock are related to voting, transfer and conversion rights, the Company has not presented earnings per share under the two-class method, as earnings per share are the same for both Class A common stock and Class B common stock. The following table summarizes the computation of basic and diluted earnings per share for the years ended December 31, 2024, 2023 and 2022: Year ended December 31, (in thousands, except share and per share data) 2024 2023 2022 Numerator: Net income available to common shareholders $ 45,870 $ 45,690 $ 40,422 Denominator: Weighted-average common shares outstanding - basic 88,912,835 93,938,931 97,815,679 Effect of dilutive securities 3,391,435 2,234,140 4,787,500 Weighted-average common shares outstanding - diluted 92,304,270 96,173,071 102,603,179 Net income per common share: Basic $ 0.52 $ 0.49 $ 0.41 Diluted $ 0.50 $ 0.48 $ 0.39 The Company excluded 3,296,636 , 5,719,465 and 2,840,004 potential common stock equivalents from the computation of diluted EPS for the years ended December 31, 2024, 2023 , and 2022, respectively, because the effect would have been anti-dilutive. As of December 31, 2024, 2023, and 2022, there were 3,408,972 , 4,296,539 and 4,917,920 potential common stock equivalents outstanding, respectively, with market or performance conditions which were not met at the relevant date, that were excluded from the calculation of diluted EPS. 15. Accumulated Other Comprehensive Loss Accumulated other comprehensive loss consisted of the following: (in thousands) Foreign Currency Translation Adjustments Retirement Benefit Reserves Unrealized Gains (Losses) on Cash Flow Hedges Accumulated Other Comprehensive Loss Balance as of December 31, 2022 $ ( 10,011 ) $ ( 636 ) $ — $ ( 10,647 ) Other comprehensive income before reclassifications 306 736 — 1,042 Income tax effects — ( 31 ) — ( 31 ) Amounts reclassified from accumulated other comprehensive loss — 89 — 89 Income tax effects — ( 4 ) — ( 4 ) Other comprehensive income 306 790 — 1,096 Balance as of December 31, 2023 ( 9,705 ) 154 — ( 9,551 ) Other comprehensive loss before reclassifications ( 11,954 ) ( 727 ) ( 4,219 ) ( 16,900 ) Income tax effects — 243 886 1,129 Amounts reclassified from accumulated other comprehensive loss — ( 96 ) — ( 96 ) Income tax effects — 29 — 29 Other comprehensive loss ( 11,954 ) ( 551 ) ( 3,333 ) ( 15,838 ) Balance as of December 31, 2024 $ ( 21,659 ) $ ( 397 ) $ ( 3,333 ) $ ( 25,389 ) 89 Table of Contents 16. Segment Information The following table presents the significant expenses for the Company’s single segment: Year ended December 31, 2024 2023 2022 Operating expenses: Personnel costs (Cost of services) (1) $ 505,448 $ 457,937 $ 477,387 Operating costs (Selling, general, and administrative expense) (2) 183,970 170,517 183,437 Stock-based compensation expense (3) 42,391 53,179 69,452 Non-operating costs (Selling, general, and administrative expense) (4) 15,423 8,108 10,682 Other (Cost of services) (5) 95,251 77,527 77,806 Depreciation 40,223 40,391 37,915 Amortization of intangible assets 19,935 20,346 19,882 Loss (gain) on disposal of assets ( 80 ) 1,322 31 Total operating expenses $ 902,561 $ 829,327 $ 876,592 (1) Represents salaries and wages and employee welfare costs, excluding stock-based compensation expense, of employees that can be directly attributed to the delivery of services. (2) Represents operating costs related to sales and marketing and other administrative departments, including personnel costs, professional fees, travel expenses, cloud-based capabilities, insurance premiums and other corporate expenses. (3) Represents stock-based compensation expense for cost of services and selling, general, and administrative expense, as well as associated payroll tax. (4) Includes earn-out consideration recognized as compensation expense related to the acquisition of heloo in 2022, professional service fees related to non-recurring transactions in 2022 and 2023, and certain litigation costs that are considered non-recurring and outside of the ordinary course of business in 2024. (5) Represents other costs that can be directly attributed to delivery of services, including the costs for sites and technology, recruiting, professional development and employee engagement. 90 Table of Contents Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None.