Sign in

You're signed outSign in or to get full access.

AI

AgileThought, Inc. (AGIL)·Q3 2022 Earnings Summary

Executive Summary

  • Q3 revenue was $43.395M (+7.4% y/y; -6.0% q/q) as the company continued to exit non-core business; gross margin expanded to 34.3% (+770 bps y/y; +100 bps q/q), and revenue finished above prior company guidance .
  • FY22 outlook raised: revenue “at least $176.0M” (prior: at least $174.7M) and gross margin 31.5%–32.5% (prior: 31%–32%); Q4 revenue guided to “at least $42.2M” .
  • GAAP loss widened on one-time items (notably $11.7M loss on debt extinguishment), resulting in Q3 net loss of $15.089M despite stronger gross margin .
  • Strategic actions continued: new TMT/US West market unit, two new offices in Latin America, and ongoing exit from non-core projects; management emphasized margin trajectory and balance sheet optimization as key drivers into year-end .

What Went Well and What Went Wrong

What Went Well

  • Revenue and gross margin exceeded internal targets; gross margin rose to 34.3% (+770 bps y/y; +100 bps q/q). CEO: “revenue above our guidance and solid gross margin improvement” .
  • Strategic footprint and go-to-market: launched a new TMT/US West market unit targeting a large end market and opened two new Latin American offices to access talent pools .
  • FY22 outlook strengthened: raised gross margin guidance to 31.5%–32.5% and nudged FY revenue floor up to at least $176.0M, reflecting confidence in margin trajectory while exiting non-core work .

What Went Wrong

  • Sequential revenue declined 6.0% vs Q2 due to the deliberate exit from non-core business, a near-term headwind to top-line momentum .
  • Operating and net losses widened primarily from non-core items: $11.708M loss on debt extinguishment contributed to a $15.089M net loss in Q3 (vs. $3.502M loss in Q2) .
  • Cash generation remains a watch item: nine-month operating cash flow was -$8.127M YTD through Q3 (though improved vs prior year), necessitating continued cash cycle optimization emphasized by management .

Financial Results

Summary vs prior quarters

MetricQ1 2022Q2 2022Q3 2022
Revenue ($M)$44.224 $46.166 $43.395
Gross Margin (%)31.3% 33.3% 34.3%
Net (Loss) Income ($M)$(6.298) $(3.502) $(15.089)
Adjusted Operating Income ($M)N/A$3.488 $1.699
Adjusted Net (Loss) Income ($M)N/A$1.932 $(0.347)
Adjusted Diluted EPSN/A$0.04 $(0.01)

Notes: Company did not disclose Adjusted Operating Income/Adjusted EPS in Q1 2022 release; Q3 tables reflect company-defined non-GAAP reconciliations . Wall Street consensus (S&P Global) for AGIL was not available via our connector for Q3 2022; therefore, we compare to company guidance rather than consensus estimates.

Geographic revenue mix

Geography Revenue ($M)Q1 2022Q2 2022Q3 2022
United States$28.998 $29.287 $27.410
Latin America$15.226 $16.879 $15.985
Total$44.224 $46.166 $43.395

KPIs

KPIQ1 2022Q2 2022Q3 2022
New clients added9 3 6
Large active clients (≥$1M LTM)29 32 29
Top 10 client concentration61.5% 60.6% 61.7%
Cash, cash equiv. & restricted cash ($M)$2.713 $11.279 $10.361
Employees (Total)2,630 2,608 2,576
TCV / Book-to-billRecord $64.4M TCV; 1.4x in Q1 LTM TCV $239.0M; 1.4x N/A

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2022≥ $174.7M (8/11/22) ≥ $176.0M (11/10/22) Raised
Gross MarginFY 202231%–32% (8/11/22) 31.5%–32.5% (11/10/22) Raised
RevenueQ4 2022N/A≥ $42.2M (11/10/22) New
RevenueQ3 2022 (for ref.)≥ $42.1M (given on 8/11/22) Actual $43.395M (11/10/22) Beat company guidance

Management noted the guidance reflects the ongoing exit from non-core business .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2022)Trend
Exit from non-core businessQ2: “significantly de-emphasizing any non-core revenues” Sequential revenue -6% as exit continues Ongoing exit; near-term top-line headwind
Gross margin expansionQ1: margin expansion a cornerstone (31.3%) ; Q2: 33.3% 34.3%; raised FY margin guidance Improving, guidance raised
Talent/people investmentsQ1: investing in talent infrastructure ; Q2: added Chief People Officer “strengthen[ing] our AgileThought team” Continued organizational build
Go-to-market structureQ2: launched Guilds & AgileSquads New TMT/US West market unit Evolving GTM
Regional presenceN/ATwo new LATAM offices Expanded regional footprint
Sales pipeline/TCVQ1: record $64.4M TCV, 1.4x book-to-bill ; Q2: LTM TCV $239M Not disclosedLimited update in Q3 release

Select call remarks (independent transcript source): management reiterated Q3 revenue of $43.4M was above guidance and raised FY22 gross margin guidance “given the strong trends in gross margin” .

Management Commentary

  • CEO (Manuel Senderos): “I am very proud of our third quarter achievements, with revenue above our guidance and solid gross margin improvement… we created a new market unit -Technology, Media, and Telecom (TMT) / US West-… [and] announced the openings of two new offices in Latin America...” .
  • CFO (Amit Singh): “Our third quarter results exceeded our revenue and gross margin targets… We also continued to strengthen our Balance Sheet by working on optimizing our cash cycle…” .
  • From the call: “Given the strong trends in gross margin, we are raising our full-year 2022 gross margin guidance range to 31.5% to 32.5% versus 31% to 32% before” .

Q&A Highlights

  • Margin durability and guidance: Management explicitly raised FY22 gross margin guidance on the call, citing strong trends and continued execution .
  • Non-core exit and revenue trajectory: Management reiterated that sequential revenue pressure stems from the intentional exit of non-core projects; focus remains on higher-quality growth and margins .
  • Balance sheet and cash cycle: CFO emphasized ongoing work to optimize the cash cycle to support investments in sales, delivery, and people .

Estimates Context

  • Wall Street consensus (S&P Global) for AGIL Q3 2022 EPS and revenue was unavailable via our S&P Global connector for this period; as a result, we benchmark results versus company guidance rather than consensus. Company reported revenue above its prior Q3 guidance (≥$42.1M) and raised FY22 guidance ranges .

Key Takeaways for Investors

  • Quality-over-quantity pivot: Sequential revenue decline is deliberate (non-core exit), while gross margin continues to improve and FY margin guidance was raised—supporting the quality-of-revenue thesis .
  • Execution on strategy: New TMT/US West unit and LATAM office openings signal continued investment in scalable GTM and delivery capacity aligned with end-market opportunities .
  • Watch non-operating items: One-time charges (notably debt extinguishment) drove a wider GAAP loss; underlying margin trajectory improved, but headline losses may cloud optics near term .
  • Client concentration stable: Top-10 client concentration (~62%) remains elevated; monitor diversification and large-client health amid macro uncertainty .
  • Liquidity/cash cycle: Cash balance ended Q3 at $10.361M; management’s cash cycle optimization remains a key execution lever into Q4/FY close .
  • 4Q setup: Q4 revenue guided to at least $42.2M; delivery on raised FY22 gross margin range is the primary catalyst for sentiment near term .

Sources: Q3 2022 8-K earnings press release with full financials and guidance ; Q2 2022 8-K for prior guidance and KPIs ; Q1 2022 8-K for earlier trend context ; third-party transcript references for call remarks .