Crispr Therapeutics shares tumble after significant earnings miss
Introduction & Market Context
IBEX Ltd (NASDAQ:IBEX) reported strong third-quarter fiscal 2025 results on May 8, 2025, showcasing continued momentum in its digital transformation strategy and geographic expansion efforts. The customer experience technology provider posted record quarterly revenue and raised its full-year guidance, signaling confidence in its business trajectory despite varying performance across industry verticals.
The company’s strategic pivot toward digital-first services and higher-margin offshore operations appears to be yielding results, with notable growth in key verticals including healthcare technology, transportation, and retail. This performance comes as IBEX continues to diversify its client base and invest in artificial intelligence capabilities.
Quarterly Performance Highlights
IBEX reported record third-quarter revenue of $140.7 million, representing an 11.0% increase compared to the same period last year. This growth was primarily driven by strong performance in several strategic verticals.
As shown in the following chart of vertical performance:
The HealthTech vertical led growth with a 20.0% year-over-year increase, followed by Travel, Transportation & Logistics at 18.7% and Retail & E-commerce at 14.6%. These gains were partially offset by a 12.2% decline in the FinTech vertical.
Net income for the quarter reached $10.5 million, slightly above the $10.3 million reported in Q3 FY2024. Fully diluted earnings per share jumped to $0.73 from $0.57 in the prior year period, benefiting from a reduced share count following the company’s share repurchase activities.
The following slide summarizes IBEX’s key financial highlights for the quarter:
On a non-GAAP basis, adjusted EBITDA was $19.4 million with a 13.8% margin, compared to $19.2 million and a 15.1% margin in the year-ago quarter. The slight margin compression was attributed to increased SG&A expenses related to the company’s expansion into India and investments in people and technology.
Adjusted earnings per share reached a record $0.82, up 18% from $0.70 in Q3 FY2024, primarily benefiting from the company’s share repurchase program which reduced the weighted average diluted shares outstanding from 18.0 million to 14.4 million.
Strategic Initiatives
IBEX continues to execute on several strategic initiatives that are reshaping its business profile. The company has successfully increased the proportion of revenue derived from offshore operations to 51% in Q3 FY2025, up from 48% in the prior year quarter. This shift toward higher-margin geographies is contributing to improved profitability metrics.
The company’s transformation into a digital-first business is also progressing, with 81% of Q3 FY2025 revenue now coming from digital-first integrated omnichannel business. Additionally, IBEX is positioning itself as an early mover in AI solutions, with 75+ pipeline opportunities and 9 deployments already in place.
The following slide highlights IBEX’s track record of transformation:
Client diversification remains a key focus, with the company reporting that its top 5 clients now represent 37.5% of revenue, while the largest client accounts for just 10.6%. This represents significant progress from the company’s IPO, when client concentration was substantially higher.
During the quarter, IBEX made a strategic entry into the Indian market, which is expected to provide additional capacity for growth while maintaining the company’s offshore cost advantages. While this expansion has created some near-term pressure on margins, management views it as a critical investment for future growth.
Detailed Financial Analysis
IBEX generated $8.8 million in cash from operations during the quarter, down from $11.4 million in Q3 FY2024. Capital expenditures increased to $5.3 million (3.7% of revenue) from $1.7 million (1.3% of revenue) in the prior year period, resulting in free cash flow of $3.6 million compared to $9.7 million a year ago.
The company’s balance sheet shows continued improvement, with cash and cash equivalents of $13.0 million as of March 31, 2025, down from $20.2 million at December 31, 2024. However, this reduction was primarily due to the retirement of a $25 million convertible note with TRGI. Total (EPA:TTEF) debt decreased to approximately $20.6 million from $33.9 million at the end of December 2024, resulting in a net debt position of approximately $7.6 million, an improvement of $6.1 million.
Days sales outstanding (DSO) increased slightly to 77 days from 72 days at the end of fiscal 2024, indicating some pressure on working capital management.
Forward-Looking Statements
Based on the strong performance in the first three quarters of fiscal 2025, IBEX has raised its full-year guidance. The company now expects revenue in the range of $540-545 million, up from its previous guidance of $525-535 million. Adjusted EBITDA is projected to be between $68-70 million, compared to the earlier forecast of $68-69 million. Capital expenditures are expected to remain in the range of $15-20 million.
The following slide details the updated guidance:
This raised outlook represents a significant improvement from the company’s initial fiscal 2025 guidance provided in its previous earnings report, which projected revenue between $510-525 million and adjusted EBITDA of $67-69 million. The upward revision suggests IBEX is exceeding its own growth expectations for the year.
The company’s stock closed at $25.22 on May 8, 2025, up 1.47% for the day, and has traded between $13.61 and $27.83 over the past 52 weeks. With the positive quarterly results and raised guidance, IBEX continues to demonstrate momentum in its transformation strategy, though investors will likely monitor the impact of the company’s investments in India and AI capabilities on future margin performance.
Full presentation:
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