Executive Summary

Q2 revenue declined to $38.3M, down 17.0% YoY and 8.4% QoQ, as management continued exiting non‑core revenues and cited market volatility since mid‑March; gross margin fell to 32.1% (-266 bps YoY, -363 bps QoQ) .
GAAP loss from operations was $5.3M and net loss was $20.3M, pressured by a sharp rise in interest expense ($15.7M vs. $2.8M YoY) .
Non‑GAAP results weakened: Adjusted Operating Loss ($2.6M) and Adjusted Net Loss ($6.4M), or $(0.13) adjusted diluted EPS .
No earnings call or updated guidance was provided for Q2; management added four new clients and emphasized pipeline building and focus on transformational technologies .
Subsequent events overshadow fundamentals: on Aug 28, 2023, AgileThought filed for Chapter 11, secured DIP financing (~$22.7M new money) and signaled expected Nasdaq delisting, with Blue Torch as stalking horse—key catalysts for the equity and capital structure .

What Went Well and What Went Wrong

What Went Well
- Added four new clients in Q2, signaling continued commercial traction despite a softer top line .
- CEO emphasized confidence in pipeline and positioning “at the forefront of transformational technologies and innovations,” supporting the longer‑term demand narrative .
- Large active clients (≥$1M TTM spend) rose to 33 vs. 32 YoY, indicating resilience among bigger accounts .
What Went Wrong
- Revenue fell 17.0% YoY and 8.4% QoQ to $38.3M as non‑core exits and mid‑March market volatility weighed on the quarter; gross margin compressed 266 bps YoY and 363 bps QoQ to 32.1% .
- Interest expense surged to $15.7M (from $2.8M YoY), driving a $20.3M net loss (vs. $3.5M loss YoY) and highlighting balance‑sheet strain .
- Liquidity/stability risks escalated post‑quarter: notice of acceleration, Chapter 11 filing, DIP financing, and anticipated delisting materially changed the risk profile .

Financial Results

Metric	Q2 2022	Q1 2023	Q2 2023
Revenue ($USD Millions)	$46.166	$41.844	$38.325
Gross Margin (%)	34.7%	34.2%	32.1%
Loss from Operations ($USD Millions)	$(0.237)	$(35.553)	$(5.289)
Net Loss ($USD Millions)	$(3.502)	$(38.071)	$(20.309)
Interest Expense, net ($USD Millions)	$2.779	$4.217	$15.710
Adjusted Operating (Loss) Income ($USD Millions)	$3.488	$(1.186)	$(2.590)
Adjusted Net (Loss) Income ($USD Millions)	$1.932	$(4.162)	$(6.419)
Adjusted Diluted EPS ($)	$0.04	$(0.09)	$(0.13)

Revenue by Geography

Geography	Q2 2022 ($M)	Q1 2023 ($M)	Q2 2023 ($M)
United States	$29.287	$26.113	$22.436
Latin America	$16.879	$15.731	$15.889
Total	$46.166	$41.844	$38.325

KPIs

KPI	Q2 2022	Q1 2023	Q2 2023
Large Active Clients (≥$1M)	32	33	33
Top 10 Clients Revenue Concentration (%)	60.6%	62.4%	64.6%
Employees – Total	2,608 (as of 6/30/22)	2,255 (as of 3/31/23)	2,186 (as of 6/30/23)

Selected Balance Sheet and Liquidity

Metric	Dec 31, 2022	Mar 31, 2023	Jun 30, 2023
Cash, Cash Equivalents & Restricted Cash ($M)	$8.691	$3.174	$4.024
Total Debt, net ($M)	$76.056	$84.523	$91.122
Total Stockholders’ Equity ($M)	$79.924	$44.043	$29.317

Non‑GAAP adjustments included change in fair value of embedded derivative, change in fair value of warrant liability, equity‑based compensation, restructuring, intangible amortization, paid‑in‑kind interest and amortization of debt issuance costs, among others .

Guidance Changes

Metric	Period	Previous Guidance	Current (Q2 2023)	Change
Revenue	FY 2023	≥ $185.0M; ≥4.6% YoY growth	Not provided in Q2 release	Not reaffirmed/withdrawn
Gross Margin	FY 2023	34.5%–35.5%	Not provided in Q2 release	Not reaffirmed/withdrawn
Adjusted Operating Income	FY 2023	≥ $13.7M; ≥20.2% YoY growth	Not provided in Q2 release	Not reaffirmed/withdrawn

Note: Q1 outlook disclosure also flagged default under financing arrangements and substantial doubt about going concern, contingent on obtaining additional funding .

Earnings Call Themes & Trends

Note: No Q2 earnings call was held . Themes are drawn from company press releases.

Topic	Previous Mentions (Q4’22, Q1’23)	Current Period (Q2’23)	Trend
AI/Technology Initiatives	Q1: Launched “Applied AI” and “Gaming” guilds; emphasized digital transformation demand	CEO focus on “transformational technologies and innovations”	Continued focus
Macro/Market Volatility	Q1: Market volatility since mid‑March impacted revenue; exiting non‑core	Cited “market volatility since mid‑March” impacting Q2 results	Persisting headwind
Portfolio Mix/Non‑core Exit	Q4/Q1: Ongoing exit of non‑core revenues to improve quality/margins	Continued exit referenced in Q2 commentary	Ongoing execution
Liquidity/Capital Structure	Q1: Default under financing agreements; going concern risk	Post‑Q2: Notice of acceleration, DIP financing, Chapter 11, expected delisting	Deteriorated materially post‑quarter
Regional Trends	Q4/Q1: US and LatAm diversified footprint	US revenue fell QoQ and YoY; LatAm relatively stable	US softness

Management Commentary

“I am proud of our second quarter achievements… we feel confident about the future as we continue to build our pipeline and deliver top of the line services… staying at the forefront of transformational technologies and innovations.” — CEO Manuel Senderos .
“Our continued exit from non-core revenues and small non-strategic accounts… helped us grow our gross margin… gives us confidence in achieving strong Adjusted Operating Income this year…” — CFO commentary (Q1 context) .
Q2 operational highlights included four new clients added .

Q&A Highlights

AgileThought did not host a Q2 earnings conference call; therefore, there was no Q&A or guidance clarification in the period .

Estimates Context

Wall Street consensus from S&P Global was not available for AGIL at this time; as a result, comparisons vs. consensus EPS/revenue for Q2 2023 are not presented.
The company also did not provide updated Q2 or FY guidance in its Q2 release .

Key Takeaways for Investors

Top line under pressure from portfolio pruning and macro volatility: revenue fell to $38.3M (-17% YoY, -8.4% QoQ), with gross margin down to 32.1% as near‑term demand and mix weighed on profitability .
Balance sheet stress was acute: interest expense spiked to $15.7M, with cash at $4.0M and debt at $91.1M as of 6/30, contributing to a $20.3M net loss .
Non‑GAAP results deteriorated (Adjusted Operating Loss $2.6M; Adjusted Net Loss $6.4M; adj. EPS $(0.13)), reflecting restructuring, financing costs, and other adjustments .
No Q2 call or guidance update diminished visibility; the Q1 FY23 outlook (revenue ≥$185M, GM 34.5–35.5%, Adj. Op Inc ≥$13.7M) was not reaffirmed in Q2 and earlier was conditioned on resolving liquidity/going concern issues .
Post‑quarter developments dominate trading setup: Chapter 11 filing, DIP financing terms, and expected delisting imply material capital structure risk for existing equity and debt—these actions likely overshadow near‑term fundamentals .
Client base quality shows some resilience (33 large active clients; rising top‑10 concentration), but revenue concentration (64.6% with top 10) elevates customer risk in a volatile backdrop .
Near‑term focus shifts to court‑supervised restructuring milestones and potential 363 sale outcomes; investors should anchor scenarios on DIP milestones and stalking horse process rather than quarterly KPIs .

AgileThought, Inc. (AGIL)·Q2 2023 Earnings Summary