IBEX Limited (IBEX) Q2 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings report indicates strong financial performance with a 16.7% revenue increase, improved EBITDA, and EPS growth. Despite challenges in the telecommunications vertical and increased capital expenditures, the company shows promising growth in high-margin sectors like HealthTech and AI. The raised revenue and EBITDA guidance further support a positive sentiment. The share repurchase program adds to shareholder value. The Q&A session confirmed favorable business mix shifts and long-term margin improvement strategies. Overall, the outlook is positive, suggesting a stock price increase of 2% to 8% over the next two weeks.
Key Financial Performance
Revenue $164.2 million, an increase of 16.7% from $140.7 million in the prior year quarter. Growth driven by high-margin HealthTech vertical (35.1%), travel, transportation and logistics (20.2%), and retail and e-commerce (17.2%). Decline in telecommunications (23.1%) partially offset growth.
Net Income $12.2 million, up from $9.3 million in the prior year quarter. Increase driven by growth in higher-margin offshore regions and reduced SG&A expenses as a percentage of revenue.
Adjusted EBITDA $20.7 million, 12.6% of revenue, up from $16.5 million or 11.8% of revenue in the prior year quarter. Improvement due to growth in higher-margin offshore locations, key verticals, and reduced SG&A expenses.
Fully Diluted EPS $0.83, up 45% from $0.57 in the prior year quarter. Growth attributed to strong operating performance and fewer diluted shares outstanding due to share repurchase program.
Adjusted Net Income $12.8 million, up from $9.6 million in the prior year quarter. Increase driven by growth in higher-margin regions and services.
Cash Flow from Operations $6.6 million, up from $1.1 million in the prior year quarter. Increase due to higher revenues, profitability, and lower working capital usage.
Capital Expenditures $11.7 million, 7.1% of revenue, up from $4.3 million or 3.1% of revenue in the prior year quarter. Increase driven by expansion in offshore regions to meet demand.
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Operating Highlights
Wave iX AI solution: IBEX's AI solution has two dimensions: creating AI solutions for clients to ensure seamless customer journeys and deploying AI internally to improve operational efficiency, including agent hiring, training, and onboarding.
Expansion into India: IBEX entered the Indian market in March 2025, establishing two sites with nearly 1,000 agents. The expansion includes broader revenue cycle management and credentialing services, particularly for healthcare clients.
Revenue Growth: Achieved 16.7% revenue growth in Q2 FY 2026, driven by high-margin verticals like HealthTech (35.1% growth), travel and logistics (20.2%), and retail and e-commerce (17.2%).
Profitability: Generated $80 million EBITDA with 13% margins in calendar year 2025, showcasing operational efficiency.
Client Diversification: Largest client accounted for 10% of revenue, with top 5, 10, and 25 clients representing 39%, 57%, and 79% of revenue, respectively, indicating a well-diversified portfolio.
AI Leadership: IBEX is investing in AI capabilities and partnerships, positioning itself as an industry leader in AI-powered customer experience (CX).
Leadership Changes: Promoted Mike Darwal to Chief AI and Digital Officer to lead AI and digital transformation efforts.
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Risk or Challenges
Telecommunications Vertical Decline: The telecommunications vertical experienced a significant decline of 23.1%, marking the first time since pre-IPO that this vertical comprises less than 10% of revenue. This decline could impact overall revenue diversification and growth.
Capital Expenditures Increase: Capital expenditures increased to $11.7 million or 7.1% of revenue, up from $4.3 million or 3.1% in the prior year quarter. This planned increase, driven by offshore expansion, could strain cash flow and financial flexibility.
DSO Increase: Days Sales Outstanding (DSO) increased to 73 days from 71 days in the prior quarter. This rise could indicate potential challenges in cash collection and working capital management.
Telecommunications Revenue Exposure: Exposure to the telecommunications vertical decreased to 8.7% of revenue from 13.1% in the prior year quarter, reflecting lower volumes from legacy carriers. This reduction could limit revenue stability from this sector.
Free Cash Flow Outflow: Free cash flow was an outflow of $5.1 million in the current quarter compared to an outflow of $3.2 million in the prior year quarter, driven by increased capital expenditures. This could impact liquidity and investment capacity.
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Guidance & Outlook
Revenue Expectations: Revenue is now expected to be in the range of $620 million to $630 million for fiscal year 2026, up from the previous range of $605 million to $620 million.
Adjusted EBITDA Projections: Adjusted EBITDA is now expected to be in the range of $80 million to $82 million, revised from the previous range of $78 million to $81 million.
Capital Expenditures: Capital expenditures are expected to be at the upper end of the $20 million to $25 million range for fiscal year 2026.
Growth in High-Margin Geographies and Services: The company plans to continue investing in higher-margin offshore regions and digital services, which are expected to drive future growth.
AI Leadership and Investments: IBEX is making opportunistic investments to extend its leadership in AI-powered customer experience (CX) solutions, including expanding AI capabilities and sales resources.
HealthTech Vertical Growth: The HealthTech vertical is on track to reach $100 million in revenue by the end of fiscal year 2026, driven by rapid growth since its launch in 2021.
Expansion in India: IBEX plans to continue expanding its operations in India, which is identified as one of the highest growth vectors for the company.
Tax Rate Expectations: The effective tax rate is expected to remain consistent at 20% to 22% for the remaining quarters of fiscal year 2026, excluding discrete items.
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Shareholder Return Plan
Share Repurchase Program: During the quarter, we repurchased approximately 78,000 shares for $2.9 million, bringing our fiscal year share repurchase to $170,000 or $5.6 million and leaving $7.8 million on our share repurchase authorization.
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Key Q&A
Q:How is the demand for AI affecting the company and its industry?
A:The company has established itself as a leader in AI within the industry, which benefits its new logo engine and helps win traditional BPO deals. AI also enhances operational execution, leading to market share growth, as evidenced by a 20% growth in the top 10 clients. Additionally, the company is creating unique AI agentic solutions that integrate business insights and human expertise, resonating well in the market.
Q:How is the mix of business changing, and does it affect the sequential revenue pattern?
A:The business mix is shifting favorably towards higher margins and better growth areas like healthcare, away from telecom. This change has led to a more consistent revenue flow across quarters, reducing the historical Q2 spike and subsequent Q3 and Q4 tapering.
Q:Why did gross margins decrease year-over-year while operating expenses as a percentage of revenue improved?
A:The decrease in gross margins is due to deferred training revenue and investments in India. Training costs are expensed upfront while revenue is spread over the program duration, creating a temporary headwind. Additionally, the company is still investing in India, which is not yet at expected margin levels. However, high-margin growth vectors like vertical markets, offshore geos, and AI are driving long-term gross margin improvement.
Q:Review of Unclear Management Responses
A:None of the questions were avoided or lacked clarity. All responses were detailed and addressed the questions directly.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI Digital
AI agent
AI evolution
AI separation
AI technology
Agentic AI
BPO CX
BPO market
BPO partnership
BPO service
CEO Greg
CFO role
CX Chairman
CX industry
CX provider
CX way
Chairman member
Chairman role
Chase executive
Chief AI
Chief Engineer
Digital Officer
Engineer success
IBEX success
India
Instructions
Wave
approach
class
contact center
cycle
differentiation
dimension
transformation
trophy client
IBEX Transcript
IBEX Limited (IBEX) Q2 2026 Earnings Call Transcript
Positive2-6
The earnings report indicates strong financial performance with a 16.7% revenue increase, improved EBITDA, and EPS growth. Despite challenges in the telecommunications vertical and increased capital expenditures, the company shows promising growth in high-margin sectors like HealthTech and AI. The raised revenue and EBITDA guidance further support a positive sentiment. The share repurchase program adds to shareholder value. The Q&A session confirmed favorable business mix shifts and long-term margin improvement strategies. Overall, the outlook is positive, suggesting a stock price increase of 2% to 8% over the next two weeks.
IBEX Limited (IBEX) Q1 2026 Earnings Call Transcript
Positive11-7
The earnings call summary indicates strong financial performance with a 16.5% revenue increase and a 74.1% rise in adjusted EPS. The guidance was raised, and share repurchases were made, both positive indicators. Despite some risks like a decline in telecommunications and increased CapEx, the growth in other verticals and AI investments are promising. The Q&A session confirmed management's confidence in future growth. Overall, the sentiment is positive, suggesting a stock price increase of 2% to 8% over the next two weeks.
IBEX Limited (IBEX) Q4 2025 Earnings Call Transcript
Positive9-11
The earnings call reflects strong financial performance with record-high revenue and EPS growth, positive guidance, and successful market expansion, particularly in India. The Q&A session confirms sustainable growth in key areas and a positive outlook on AI integration. Despite increased expenses, the share repurchase plan supports shareholder value. Overall, the positive financials and strategic moves outweigh the risks, suggesting a positive stock price movement.
IBEX Limited (IBEX) Q3 2025 Earnings Call Transcript
Positive5-10
The earnings call summary and Q&A indicate strong revenue growth, record high revenue, and optimistic guidance, which are positive indicators. The company has announced a new market entry in India, new client wins, and a share repurchase program, all of which are favorable. Despite some margin decline due to strategic investments, the overall sentiment remains positive, especially with the raised guidance and strategic growth initiatives. The stock price is likely to react positively in the short term.
IBEX Slides
IBEX Q2 2026 slides reveal record revenue, 46% EPS growth as HealthTech vertical surges2026-02-05
IBEX Q1 2026 slides: revenue jumps 16.5%, digital services drive growth2025-11-06
ibex Q4 2025 slides: Record revenue growth and strong margins drive optimistic outlook2025-09-11
IBEX Q3 FY2025 slides: Revenue jumps 11%, company raises full-year outlook2025-05-08
IBEX Report
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