Executive Summary

Revenue of $140.7M grew 6.1% YoY—highest growth in 9 quarters—driven by new logo wins and expansion with embedded clients, with offshore revenue up 14% and now 53% of mix .
Adjusted profitability improved: Adjusted EBITDA rose to $16.5M (11.8% margin, +100bps YoY) and adjusted EPS reached $0.59 (+36% YoY) .
Company raised FY25 outlook: revenue to $525–$535M (from $515–$525M) and the low end of adjusted EBITDA to $68–$69M (from $67–$69M); capex maintained at $15–$20M .
Strategic actions: repurchased ~3.6M shares from TRGI for $70M (~20–21% of diluted shares), eliminating “controlled company” status and tightening share count ahead of Q3; a further drop to ~14.3M diluted shares is expected in Q3 .
AI wins (Wave iX Translate and Automate) slated for H2 deployments are expected to be accretive to revenue and margin, providing a potential catalyst for sentiment and estimate revisions if execution continues .

What Went Well and What Went Wrong

What Went Well

New logos + land-and-expand playbook: “Our powerful new logo engine…win large enterprise deals…then land and expand,” with five new logos in Q2 and eight YTD .
Mix-driven margin expansion: Offshore mix rose to 53% (49% PY), digital/omnichannel reached 80% (79% PY), supporting 100bps YoY adjusted EBITDA margin expansion to 11.8% .
Strategic capital allocation: $70M repurchase (3.6M shares) from TRGI eliminated controlled company status and supports EPS accretion from lower share count .

What Went Wrong

Vertical headwinds in FinTech: Revenue in the FinTech vertical declined 14.7% YoY in Q2; revenue mix for FinTech fell to 11% .
Working capital and cash flow: DSOs increased to 79 days (seasonal and new remittance account timing), and free cash flow was $(3.2)M in Q2 despite positive operating cash flow of $1.1M .
Net leverage inflected: Net position moved from $61.2M net cash (6/30/24) to $13.7M net debt at Q2 end, primarily due to the TRGI buyback; a $25M seller note was subsequently repaid with new HSBC revolvers post-quarter .

Financial Results

Core Metrics vs Prior Periods and Estimates

Metric	Q4 FY24	Q1 FY25	Q2 FY25	S&P Global Consensus	Beat/Miss
Revenue ($M)	$124.5	$129.7	$140.7	n/a	n/a
Net Income ($M)	$9.8	$7.5	$9.3	n/a	n/a
Diluted EPS ($)	$0.56	$0.43	$0.57	n/a	n/a
Adjusted EPS ($)	$0.58	$0.52	$0.59	n/a	n/a
Adjusted EBITDA ($M)	$17.9	$15.6	$16.5	n/a	n/a
Adjusted EBITDA Margin (%)	14.4%	12.0%	11.8%	n/a	n/a
Net Income Margin (%)	7.9%	5.8%	6.6%	n/a	n/a

Notes: S&P Global consensus data was unavailable at the time of this analysis due to an API request limit; we will refresh and provide beat/miss detail upon availability.

Revenue +6.1% YoY in Q2 (highest growth in 9 quarters) .
Adjusted EPS +36% YoY; Adjusted EBITDA margin +100bps YoY to 11.8% .

Segment/Vertical Breakdown (Q2 FY25)

Vertical	YoY Growth (%)	Revenue Mix (%)
HealthTech	+31.2%	15.1%
Travel, Transportation & Logistics	+16.7%	13.7%
Retail & E-commerce	+4.4%	28.5%
FinTech	-14.7%	11.0%

KPIs and Mix

KPI	Q2 FY25	Prior/Context
Offshore revenue mix	53%	49% prior-year
Digital & omnichannel mix	80%	79% prior-year
New logos	5 in Q2; 8 YTD	—
DSOs	79 days	75 days in Q1; expected mid‑70s going forward
Cash from Operations ($M)	$1.1	$(1.6) PY Q2
Free Cash Flow ($M)	$(3.2)	$(4.5) PY Q2
Capex ($M)	$4.3	$2.9 PY Q2
Net (Debt)/Cash ($M)	$(13.7)	$61.2 net cash at 6/30/24
Weighted avg diluted shares (M)	16.456	Expect ~14.3M in Q3
Shares repurchased	~3.6M for $70M (Q2)	Additional 282k for $4.7M in Q1

Non‑GAAP note: Adjustments primarily include foreign currency (gain)/loss and share-based compensation; reconciliations are provided in Exhibits 1–2 of the release .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY2025	$515–$525M	$525–$535M	Raised
Adjusted EBITDA	FY2025	$67–$69M	$68–$69M	Raised lower end
Capital Expenditures	FY2025	$15–$20M	$15–$20M	Maintained
Effective Tax Rate (expectation)	FY2025	—	21%–22%	New/clarified

Earnings Call Themes & Trends

Topic	Q4 FY24	Q1 FY25	Q2 FY25	Trend
AI/technology initiatives	Expanded AI pipeline; first significant customer‑facing AI opportunity closed	Two key wins: automation and translation AI for clients	Wave iX Translate (real‑time multilingual support) and Automate (low‑complexity call automation) wins; H2 deployments expected accretive	Strengthening, moving from pilot to deployment
Offshore/digital mix	Migration to offshore improved margins	Gross margin improvement from offshore growth	Offshore 53% (49% PY); digital/omnichannel 80% (79% PY)	Mix tailwind continues
Vertical dynamics	Retail, TTL, HealthTech growth; FinTech pressure	HealthTech +23.4%, TTL +10.0%, Retail +8.6%, FinTech -13.0%	HealthTech +31.2%, TTL +16.7%, Retail +4.4%, FinTech -14.7%	HealthTech/TTL accelerating; FinTech headwinds persist
Client concentration	—	—	Largest client 12%; top 5/10/25 now 39%/54%/79% vs 41%/59%/82% PY	Diversifying customer base
Capital allocation	FY24: 1.3M shares repurchased ($21.7M)	282k repurchased ($4.7M)	$70M TRGI repurchase (3.6M shares), eliminate controlled company status; program paused post deal	Aggressive buybacks; governance improved
Profit investments	—	Investing in AI capabilities and sales	Gross margins improving; investing in SG&A/tech may temper back‑half margins while supporting growth	Reinvesting gains to sustain growth
Macro demand	—	—	Demand “stabilized,” growth driven by share gains and new logos	Neutral macro; company‑specific execution driving growth

Management Commentary

“We delivered record Q2 revenue of $140.7 million, up 6.1% from a year ago…adjusted EBITDA margin [expanded] 100 basis points…adjusted EPS of $0.59, up 36%” — Robert Dechant, CEO .
“Our Wave AI translate solution…enables English-speaking agents to provide multilingual support…game‑changing…100% accretive to revenue and profitability” — Robert Dechant .
“Offshore revenues now comprise 53% of total revenue versus 49% in the prior year quarter…digital and omnichannel…80%…We expect [these] to continue” — Taylor Greenwald, CFO .
“We raised our fiscal year guidance…Revenue $525–$535M; Adjusted EBITDA $68–$69M; Capex $15–$20M” — Taylor Greenwald .
“Weighted average diluted shares…16.5M…In the third quarter, we expect…approximately 14.3M [shares] as we realized a full quarter impact from the 3.6M TRGI share repurchase” — Taylor Greenwald .

Q&A Highlights

Growth drivers and macro: Management attributed growth primarily to new logos and market share gains within embedded clients; macro demand is “stabilized,” not necessarily improving, which underscores execution and share capture as principal drivers .
Margins and investments: While gross margins are improving (+140bps in Q1 and +210bps in Q2 YoY), management is intentionally increasing SG&A for sales, infrastructure (financial/HR systems), and AI, which could modestly temper back‑half EBITDA margins even after raising full‑year EBITDA guidance .
Share count and liquidity: Diluted shares expected to step down to ~14.3M in Q3 due to the TRGI buyback; the $25M seller note used for the transaction was repaid post‑quarter using new HSBC revolving lines .

Estimates Context

S&P Global (Capital IQ) consensus for Q2 FY25 EPS and revenue was not retrievable during this session due to an API request limit, so we cannot quantify beats/misses at this time. We will update the beat/miss framework and revision context once the consensus feed is available.

Key Takeaways for Investors

Mix-led operating leverage: Continued shift to offshore (53%) and digital/omnichannel (80%) underpins margin expansion and should support medium‑term EPS growth if revenue momentum persists .
Vertical rotation: HealthTech and TTL remain growth engines (+31% and +17% YoY in Q2), while FinTech declines persist (‑15% YoY); pipeline and mix suggest durability of the favorable tilt away from weaker end‑markets .
Governance and share count: The $70M repurchase eliminated controlled company status and accelerates per‑share metrics with another step‑down in diluted shares expected in Q3—a potential valuation tailwind if growth sustains .
Cash flow watch‑items: Q2 free cash flow was negative due to seasonality and capex for offshore/nearshore capacity; DSOs rose to 79 days but are expected to normalize to mid‑70s—monitor working capital discipline in H2 .
FY25 raised guide anchored on H2: Revenue range lifted to $525–$535M and the EBITDA floor nudged up; H2 AI deployments are expected to be accretive, offering potential catalysts if execution stays on track .
Investment cycle: Management is reinvesting gross margin improvements into SG&A and AI capabilities—supportive of longer‑term growth and competitive moat, though it may cap near‑term margin upside .
Tax and liquidity: Effective tax rate expected at 21%–22%; post‑buyback leverage appears manageable with new HSBC lines in place .

Citations:

Q2 FY25 8‑K and financials
Q2 FY25 press release
Q2 FY25 earnings call transcript
Q1 FY25 press release (trend)
Q4 FY24 press release (trend)
TRGI repurchase press release

IBEX Ltd (IBEX)·Q2 2025 Earnings Summary