Sign in

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

IL

IBEX Ltd (IBEX)·Q3 2025 Earnings Summary

Executive Summary

  • Strong beat and return to double‑digit growth: revenue up 11% YoY to $140.7M, a multi‑year high growth rate; adjusted EPS a record $0.82. Mix shift to higher‑margin offshore/digital, new logos, and embedded‑base share gains drove upside . Versus S&P Global consensus, revenue and EPS both beat materially, while GAAP EBITDA was slightly below consensus on growth investments in India (see Estimates Context for details)*.
  • Guidance raised: FY25 revenue lifted to $540–$545M (from $525–$535M) and adjusted EBITDA to $68–$70M (from $68–$69M), signaling confidence into 2H and FY26 . A new $15M share repurchase authorization adds a capital return tailwind .
  • Profitability solid with targeted investment: gross margin expanded 50 bps YoY; adjusted EBITDA rose to $19.4M with margin of 13.8% despite India startup costs and higher SG&A to support AI and growth .
  • Execution catalysts ahead: 75 AI opportunities in pipeline and nine deployments expected in fiscal Q4; entry into India expands delivery options; management emphasized limited direct tariff exposure and stable DSOs in mid‑70s days .

What Went Well and What Went Wrong

  • What Went Well

    • Double‑digit top‑line growth (11% YoY), highest in ten quarters, with record quarterly revenue; adjusted EPS up 18% YoY to a record $0.82 .
    • Mix improvements: offshore revenues 51% of total (48% prior‑year), digital/omnichannel 81% (78% prior‑year); gross margin +50 bps to 31.8% .
    • Strategic wins and AI traction: four new logos (12 YTD), robust Wave iX AI pipeline (75 opps), nine deployments slated for Q4; successful launch of India for a leading healthcare client .

  • What Went Wrong

    • Adjusted EBITDA margin contracted 130 bps YoY to 13.8% due to higher SG&A and India expansion costs, partially offsetting gross margin gains .
    • FinTech vertical softness (-12% YoY), with mix down to 10.8% from 13.7% a year ago, though management expects comps to ease going forward .
    • Free cash flow normalized lower YoY on planned capex increase for capacity expansion and India entry ($5.3M capex vs $1.7M prior‑year), though DSOs improved to 77 days .

Financial Results

MetricQ1 FY25Q2 FY25Q3 FY25 (Actual)Q3 FY25 (Consensus)*
Revenue ($M)$129.717 $140.682 $140.736 $131.2335*
GAAP Diluted EPS ($)$0.43 $0.57 $0.73 $0.725*
Adjusted EPS ($)$0.52 $0.59 $0.82 —
Adjusted EBITDA ($M)$15.588 $16.537 $19.380 —
Adjusted EBITDA Margin (%)12.0% 11.8% 13.8% —
Net Income ($M)$7.531 $9.268 $10.469 —
Net Income Margin (%)5.8% 6.6% 7.4% —
Cash from Operations ($M)$7.762 $1.141 $8.828 —
Capital Expenditures ($M)$3.630 $4.319 $5.267 —
Free Cash Flow ($M)$4.132 $(3.178) $3.561 —
  • Estimates marked with * are values retrieved from S&P Global.

Segment/Vertical and Mix KPIs (Q3 FY25):

  • Vertical Growth YoY and Mix

    • HealthTech: +20.0% growth; 15.8% of revenue vs 14.6% prior‑year .
    • Travel, Transportation & Logistics: +18.7% growth; 14.0% of revenue vs 13.1% prior‑year .
    • Retail & E‑commerce: +14.6% growth; 25.7% of revenue vs 24.9% prior‑year .
    • FinTech: -12% YoY growth; 10.8% of revenue vs 13.7% prior‑year .

  • Operating KPIs

    • Offshore revenue share: 51% (48% prior‑year); Digital/Omnichannel: 81% (78% prior‑year) .
    • DSOs: 77 days .
    • Weighted avg diluted shares: 14.404M .
    • Net debt: $7.6M (improved from $13.7M at Dec 31, 2024) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY2025$525–$535M $540–$545M Raised
Adjusted EBITDAFY2025$68–$69M $68–$70M Raised high end
Capital ExpendituresFY2025$15–$20M $15–$20M Maintained

Additional capital allocation: New $15M share repurchase authorization commencing May 12, 2025 .

Earnings Call Themes & Trends

TopicQ1 FY25 (prior)Q2 FY25 (prior)Q3 FY25 (current)Trend
AI/Technology initiativesAdded key AI opportunity wins; strong margin expansion backdrop AI wins to deploy in 2H; raised revenue and lower end of EBITDA range 75 AI opps in pipeline; 9 deployments expected in Q4; transition from pilots to production Strengthening
Mix shift (offshore/digital)Ongoing mix improvements; adjusted EBITDA margin +100 bps YoY Offshore +14% YoY; margin expansion YoY Offshore 51% of revenue (48% PY); digital/omnichannel 81% (78% PY); gross margin +50 bps Positive mix tailwind
Geographic expansion——Strategic entry into India (healthcare client) launched; near‑term SG&A/EBITDA impact Expanding footprint
Macro/tariffs——Direct U.S. tariff impact “not” affecting services; expect limited indirect impact Neutral
Vertical dynamicsHealthTech/RTL/Travel growth noted HealthTech +31.2%, TTL +16.7% HealthTech +20.0%, TTL +18.7%, Retail +14.6%; FinTech -12% Broadening, FinTech lag
Capital allocation$4.7M buyback in Q1 TRGI repurchase (3.6M shares; $70M) completed New $15M buyback authorized Continuing returns

Management Commentary

  • CEO Bob Dechant: “Ibex returned to double‑digit top-line revenue growth with 11%, our highest rate in ten quarters... Our growth continues to be driven by outstanding performance within our embedded base clients, new client wins, and our ability to drive innovative AI solutions across our clients.”
  • CEO on India and AI: Entry into India is a “major strategic milestone,” while Wave iX AI wins and deployments “increase our stickiness” with a robust pipeline of 75 opportunities and nine deployments expected in Q4 .
  • CFO Taylor Greenwald: “Adjusted EPS of $0.82 was up 18% over the prior year quarter, and was a record for our business.” He cited 19% offshore growth, improved gross margin, and SG&A increases tied to India, people, and technology as the key drivers .

Q&A Highlights

  • Sequential seasonality: Management structurally reduced typical Q2→Q3 seasonal decline by diversifying beyond retail, taking market share from competitors, and ~$5M of new‑logo revenue; still expect a small Q3→Q4 decline vs Q3 in line with historical pattern .
  • Margins and India: Gross margin expanded YoY; adjusted EBITDA margin compression was primarily from intentional investments (India launch, SG&A), not structural pressure. AI expected to be higher‑margin and an accretive revenue vector as deployments scale .
  • AI monetization cadence: Pilots are converting to production beginning in Q4, with accretive revenue and margin expected to layer through FY26; AI Automate (enterprise‑level wins) and AI Translate (fully accretive) highlighted .

Estimates Context

  • Versus S&P Global consensus for Q3 FY25: revenue $131.23M* vs actual $140.74M (beat), “Primary EPS” $0.725* vs actual $0.82 (beat), and EBITDA $18.0M* vs actual GAAP EBITDA ~$17.66M (slight miss); management’s adjusted EBITDA was $19.38M (non‑GAAP), reflecting add‑backs (share‑based comp, FX, etc.) .

  • Implication: Street models likely move higher on revenue and adjusted EPS, while reported EBITDA deltas reflect non‑GAAP vs GAAP treatment and growth investments (India) supportive of medium‑term margin expansion .

  • Estimates marked with * are values retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue re‑acceleration is real and broad‑based; double‑digit growth with strong embedded‑base expansion and new logos should support further upside into FY26 .
  • Mix tailwinds (offshore/digital) and AI deployments position margins to expand after near‑term India‑related SG&A and startup costs; watch adjusted EBITDA leverage in 2H and FY26 .
  • Raised FY25 guidance and a fresh $15M buyback are near‑term catalysts; capital returns remain active following the TRGI repurchase .
  • Vertical risk is concentrated in FinTech (‑12% YoY), but mix is diversifying toward HealthTech, Retail, and Travel where growth is strong .
  • Operational discipline evident: DSOs at 77 days and improving; capex elevated for growth capacity but funded by operating cash flow .
  • Near‑term trading: Expect positive bias from beats/raise narrative and AI execution milestones; modest caution on Q4 seasonality (slight sequential decline) per guidance color .
  • Medium‑term thesis: AI monetization, India scaling, and continued share gains vs larger competitors can sustain above‑market growth and margin expansion as non‑GAAP to GAAP bridge narrows .

Appendix: Additional Detail and Cross‑References

  • Q3 revenue $140.736M (+11.0% YoY); adjusted EPS $0.82 (+17.9% YoY); GAAP diluted EPS $0.73 (+27.5% YoY) .
  • Cash from operations $8.8M; capex $5.3M; FCF $3.6M; net debt $7.6M (improved $6.1M from Q2) .
  • Share repurchase plan: up to $15M over 12 months starting May 12, 2025 .
  • Guidance raised: FY25 revenue $540–$545M; adjusted EBITDA $68–$70M; capex $15–$20M .