Welcome to the IBEX Fourth Quarter Full-Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. [Operator Instructions] To note, there is an accompanying earnings deck presentation available on the IBEX investor relations website at investors.ibex.co. I will now turn this conference over to Mr. Michael Darwal, Head of Investor Relations for IBEX.

Good afternoon and thank you for joining us today. Before we begin, I want to remind you that matters discussed on today's call may include forward looking statements related to our operating performance, financial goals, and business outlook. Which are based on management's current beliefs and assumptions. Please note that these forward looking statements reflect our opinion as of the date of this call, and we undertake no obligation to revise this information as a result of new developments which may occur. Forward looking statements are subject to various risks, uncertainties, and other factors that could cause our actual results to differ materially from those expected and described today. For a more detailed description of our risk factors, please review our annual report on form 10-K filed with the US Securities and Exchange Commission on September 12, 2024. With that, I will now turn the call over to IBEX CEO, Bob Dechant.

Thanks, Mike. Good afternoon everyone, and thank you all for joining us today as we share our fourth quarter and fiscal year 2024 results. FY ‘24 was another transformative year for IBEX, where we achieved all time bests across a number of key financial metrics including EPS, net income, EBITDA Margin and free cash flow. We accomplished this in the face of evolving changes across the BPO market. With continued macroeconomic pressure and the excitement of Generative AI, we continue to demonstrate a unique ability to successfully compete and win against our much larger competitors. Our competitive advantage remains built around an unparalleled agent-first culture, with tremendous employee engagement. Paired with our Wave iX technology stack, where we are marrying cutting edge AI solutions and deep analytics. These attributes enable us to consistently outperform our competitors and provide compelling differentiators as we expand our sales pipeline and win new business. We have branded this as taking the IBEX challenge. Let me take a moment to highlight some of the key results we delivered in FY ‘24. We won 18 new client relationships in the fiscal year, primarily with leading retail, e-commerce, healthcare and gaming clients, up from 10 in the prior year. We achieved record EPS of $2.10, up from $1.96 last year. We continued the growth of our more profitable digital first services that operates primarily in our offshore and nearshore locations, delivering 77% of revenue in the fourth quarter, up from 74% a year ago in these regions. We delivered record free cash flow of $27 million versus $22.9 million in the prior year, and we ended the year with $61.2 million in net cash. We deployed our capital to repurchase 1.3 million shares at a cost of $21.7 million, reducing our shares outstanding by 8%. Although revenue…

Thank you, Bob and good afternoon everyone. Thank you for joining the call today. In my discussions of our fourth quarter and fiscal year 2024 financial results references to revenue, net income and net cash generated from operations are on a U.S. GAAP basis, while adjusted net income, adjusted earnings per share, adjusted EBITDA and free cash flow or on a non-GAAP basis. Reconciliations of our U.S. GAAP to non-GAAP measures are included in the table attached to our earnings press release. Turning to our results, our fourth quarter results are among the strongest in our history. Fourth quarter revenue increased slightly from prior year to $124.5 million and we achieved record fourth quarter adjusted EBITDA, net income and EPS results. Revenue growth driven by our higher margin regions offset by lower onshore revenue as we successfully grew several of our strategic verticals. Our focused efforts to grow our higher margin nearshore and offshore delivery locations are having a favorable impact on bottom line results. Offshore, nearshore revenues now comprise 77% of total revenue versus 74% in the prior year quarter. Our lower margin onshore region decreased to 23% of total revenue versus 26% in the prior year quarter. Revenue mix continued to grow in our higher margin digital and omnichannel services as well. Digital and omnichannel delivery now represent 77% of our total revenue versus 75% in the fourth quarter a year ago. We expect that we will continue to be successful driving growth in these higher margin services. As Bob mentioned, we are seeing our pipeline, particularly in the higher margin services, strengthen, leading to an acceleration of new client wins. Fourth quarter net income increased to $9.8 million, up $4.5 million in the prior year quarter. The increase was primarily driven by the site and cost optimization…

Thank you. [Operator Instructions] Our first question comes from David Koning with Baird. You may proceed.

Yes. Hey, guys, nice job getting back to what seems like more normalized sequential patterns to revenue and really good margins.

Yes, thanks, Dave. We were really proud of the -- what the team did this back half of the year, and in particular Q4.

Yes, yes, well, and I guess, when we put in perspective, like guidance, guidance is still a little below kind of normal trends. You know, I assume that's mostly macro driven, I'm kind of wondering like if we think of three buckets, you kind of have the macro environment, like how are you looking at that relative to kind of normal market share? How are you seeing yourself in terms of market share? And then how do you see Gen AI and you put those three together to drive kind of your forecast, I assume. But can you kind of just go through each of those buckets and how that's affecting your forecast?

Sure, Dave. And in addition, I think you nailed it. But there's probably one other variable, that variable would be the new logo engine, which is a key driver for us. But when I think of the macro in the second-half of the year, I think we started seeing volumes starting to move a little bit up into the right, which was encouraging for us. Now, if you recall, we built in this big part of our business, 80% of our BPO 2.0 clients, digital first, et cetera. When we did the analysis first those -- that part of our business is continuing to grow and has been growing, and it's been offset by still some shrinking with some of the legacy clients, that's now a small part of our business, but that's where the shrinkage has really come. As we looked at the year, and so as we look at '25, we feel that telco element will flatten out a bit. This past year, one of our key clients lost a big NFL contract. And so that caused some subscriber churn and some volumes down. So we think that we have a good handle of the kind of the base and the macro, and we feel relatively -- conservatively confident that we have good visibility and that will have a little bit of growth to that. So we're excited about that, the second element, as you touched on, is market share. The performance that we have inside our base is outstanding, which is giving our team a hunting license to go leverage that. I shared that big win we had with one of our largest clients into a completely new geography that they've never been in. And that was driven by the confidence they have in our ability to…

No, that's a -- that's great to hear. And then I guess my follow-up question, one of the key highlights, I mean, I guess a couple of the key highlights. One is margins keep going up and, you know, maybe how sustainable is that, is there anything, maybe one off this year and both in 2024 and 2025 or is that just scale, et cetera? And then I guess buybacks are the other kind of thing, that's a big highlight. Is that going to continue? I think you're a 3 times EBITDA, I've almost never seen that in my career, especially for a company growing margin. So maybe those two things too?

Yes. Hey, Taylor, do you want to -- why don't you take the margin discussion?

Yes, no, absolutely. And David, we do have the ability and we will continue to improve margins. I think next year, if you look at our guidance, you'll see some improvement over fiscal year '24. I think we're what 12 -- 7, 12, 8 in fiscal year '24 and we should be in the low 13s in fiscal year '25 and we see that margin improvement continuing a few trends are going to help us continue this over the next few years. I think the first big lever is the fact that we continue to grow our most profitable, you know, geographies and services and AI will contribute to that as well, where the services and agreements that we're signing are going to come with higher margins. So that's going to help drive us forward, economies of scale and operating leverage, we're still a relatively small player with, you know, a significant infrastructure for a public company that doesn't need to scale at the same rate as our revenue. So I think we'll see leverage with growth that's going to drive our margin. And then in terms of some items that maybe put a little pressure on the margin going forward. Yes, this business always has wage pressure, we do a very good job with Colas in our contracts and negotiating price increases, but that's something we always did keep our eye on. And also we are going to continue to invest in business. We want to continue to grow. So, you saw that in fiscal year '24 where we're investing our infrastructure and a new ERP system, financial system, technology resources and sales resources, and we're going to continue to balance those investments as well, so that we'll get -- set, we manage our business with ongoing margin improvement while we're still making investments in the business. If that answers the question. Ultimately, I think in the next few years, our goal would be to get to 15% EBITDA margin for the full-year and not just the back half of the year.

Yes. Thank you, guys. That's great.

And David, did we answer your -- you had a Part B of that question, I think was on the share buyback. But maybe if you could just restate that question if you want.

Yes, it was a long question. Sorry.

Yes.

Yes, just if you're going to continue, I mean, you have a lot of net cash. Is the plan to kind of study buybacks continuing?

Yes, it is. You know, we look, we have, I think, $27 million still to go on our latest, you know, announcement. You know, a total of $30 million have a long way to go. And so I think as we think about our capital allocations, that's one use we have done a really good job of filling up a lot of that capacity we built out over the COVID years when we were doubling our CapEx because of social distancing, if you recall. I think we'll see ourselves continue to do build outs this year, kind of, let's say restart build outs in our offshore regions that will spend a little bit of CapEx dollars on that. And then lastly, I'll just say we intentionally in this past year, put our focus not on M&A, but on AI. And we really wanted to make sure we were pushing and being first mover in the world of driving AI solutions. And we didn't want to get distracted by going down and spending a lot of time in M&A and then a lot of time in integration. And if you look at that, we're further ahead than anybody in AI. So we're really, we think that was a smart thing. But now that we have that in this real strong free cash flow generation, I think we're now at the point where we can look at and say, what are the things, what are the geographies, what are the areas that we can invest in that we can look to be acquisitive in to help us, you know, strengthen our business and accelerate growth. And so, you know, again, that's kind of how we're looking at '25.

Yes. Great. Thanks, guys.

Thank you. This now concludes our call for today. I would now like to turn it over to Bob Dechant for any closing remarks.

Hey, Josh, thank you and appreciate everybody's time and listening to this. As you can tell, we're really excited about the business, the quarter mostly, and just want to highlight, so proud of the team that delivered this and will continue to deliver for you guys as we move into FY ‘25. So thank you all and we'll talk to you next quarter.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.