Earnings call transcript: IBEX Q4 2025 beats expectations with strong growth

IBEX Ltd reported impressive financial results for the fourth quarter of 2025, exceeding market expectations with an earnings per share (EPS) of $0.87, surpassing the forecast of $0.70. Revenue for the quarter reached $147.1 million, significantly above the predicted $129.21 million. The company’s stock responded positively, rising 5.33% in aftermarket trading to $29.85. According to InvestingPro analysis, IBEX is currently trading below its Fair Value, suggesting potential upside opportunity. The stock maintains an attractive P/E ratio of 13.07, particularly noteworthy given its growth trajectory.

Key Takeaways

• IBEX reported a record fiscal year revenue of $558.3 million, a 10% increase year-over-year.
• The company achieved a record adjusted EPS of $2.75 for the year, up 31%.
• Offshore revenue grew by 17%, driven by expansion into India.
• The stock rose 5.33% in aftermarket trading, reflecting strong investor confidence.

Company Performance

IBEX Ltd demonstrated robust performance in the fourth quarter of 2025, with revenue increasing by 18.2% compared to the same period last year. The company’s strategy of integrating AI into its operations has yielded positive results, contributing to its competitive edge in the market. Despite a challenging environment, IBEX’s revenue growth outpaced the broader BPO sector, which is experiencing low or negative growth.

Financial Highlights

• Revenue: $147.1 million, up 18.2% year-over-year
• Earnings per share: $0.87, significantly above the forecast
• Adjusted EBITDA: $72 million, a 10% increase
• Free cash flow: $27 million for the year, with $23 million in Q4

Earnings vs. Forecast

IBEX’s actual EPS of $0.87 outperformed the forecast of $0.70, marking a 24.29% surprise. Revenue also exceeded expectations by 13.85%, with actual figures reaching $147.1 million compared to the $129.21 million forecast. This performance highlights the company’s ability to surpass market predictions consistently.

Market Reaction

Following the earnings announcement, IBEX’s stock price increased by 5.33% in aftermarket trading, reaching $29.85. This rise reflects the market’s positive reception of the company’s financial results and strategic initiatives. The stock’s movement is significant, considering its 52-week range of $16.38 to $32.08. InvestingPro data shows IBEX has delivered an impressive 75.7% return over the past year, significantly outperforming the market. The company’s strong momentum is supported by management’s aggressive share buyback program, one of several bullish signals identified in InvestingPro’s comprehensive analysis.

Outlook & Guidance

Looking ahead, IBEX anticipates fiscal year 2026 revenue between $590 million and $610 million, with adjusted EBITDA projected at $75 million to $79 million. The company plans to continue its focus on AI-driven customer experience solutions and expand its market presence. InvestingPro analysis rates IBEX’s overall financial health as "GREAT" with a score of 3.01 out of 5, suggesting strong fundamentals to support its growth initiatives. The company’s PEG ratio of 0.21 indicates the stock may be undervalued relative to its growth prospects.

Executive Commentary

CEO Bob Dechant emphasized IBEX’s leadership in AI-driven solutions, stating, "We believe we are the early leader in bringing compelling AI-driven CX solutions to market for our clients." He also highlighted the company’s successful transition from AI proof of concept to production, which has been well-received by clients.

Risks and Challenges

• The BPO market is experiencing low or negative growth, which could impact future revenue.
• The fintech sector’s reduced contribution to revenue poses a challenge.
• Macroeconomic pressures may affect client spending and demand for services.

Q&A

During the earnings call, analysts inquired about IBEX’s AI strategy and its impact on growth. The company reiterated its commitment to enhancing customer journeys through AI solutions and expanding its market share.

Full transcript - IBEX Ltd (IBEX) Q4 2025:

Conference Operator: Welcome to the IBEX Fourth Quarter Full Year 2025 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. To ask a question during the session, you will need to press 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today’s conference is being recorded. To note, there is an accompanying earnings 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 U.S. Securities and Exchange Commission on September 11, 2025, and any other risk factors we include in subsequent filings with the SEC.

With that, I will now turn the call over to IBEX CEO Bob Dechant.

Bob Dechant, CEO, IBEX Limited: Thanks, Mike. Good afternoon, and thank you all for joining us today as we share our fourth quarter and fiscal year 2025 results. Before we get into the details of our results, I think it might be helpful to step back and look at how our business has evolved over the past decade and why we are confident in our continued ability to outperform the market. In FY 2016, when I joined as CEO, we undertook a strategic journey of transforming IBEX into a differentiated customer experience company. This strategy was built on three key pillars: one, the blend of our culture, engagement, and branding; two, our purpose-built technology we called WaveX; and three, our deep analytics and business insights capabilities, we called this BPO 2.0.

Today, we believe we are best in class in each area, and the result of this is a differentiated company that is and can continue to outperform the competition. These capabilities, those three key pillars, have enabled us to consistently win trophy new logo clients who are looking to a partner who can disrupt the status quo. Equally important, these attributes do, in fact, power us to outperform our competitors and, consequently, win new market share. The thesis is if you have an extremely engaged employee powered with great technology and analytics, you will outperform your competition, delight, and retain your clients, and our financial results continue to validate our differentiation.

In FY 2024, as the market began to look at the intersection of AI and CX as a threat, we set our new vision to BPO 3.0 with a goal to extend our capabilities and become an industry leader in delivering AI solutions to our clients and, as a result, create an even stronger company. I am proud to report that FY 2025 saw IBEX make great strides in this strategic next step. We’ve been able to deploy AI internally to enable our operational teams to execute more effectively and efficiently for our clients, while at the same time, we have jumped ahead of our competitors in deploying AI agent solutions like chatbots and voice bots to solve less complex interactions. What we have found is that having a seamless integrated solution from AI agent to human agent uniquely positions us to support customers along the entire customer journey.

This gives us a competitive advantage. Importantly, this strategy and our ability to execute against it help IBEX deliver on the most impressive results in our history as a company in FY 2025 and has us well positioned to perform in FY 2026 and beyond. FY 2025 was a transcendent year for IBEX, where we significantly outperformed the BPO market and achieved all-time bests across a number of key financial metrics. In FY 2025, we delivered record fiscal year revenue of $558.3 million, up 10% from a year ago. We finished the year with Q4 revenues increasing to a blistering 18% from prior year. We delivered record adjusted EBITDA of $72 million for the fiscal year, up more than 10% from a year ago, while making key investments into new markets like India, geographic expansions into our highly profitable offshore regions, and into our WaveX tech stack.

We achieved record adjusted EPS of $2.75, up 31% from a year ago, on record adjusted net income of $43 million, up 12% from a year ago. We posted our strongest free cash flow quarter ever of $23 million in Q4 and a record $27 million for the year. The IBEX brand is stronger than it has ever been. Our growth has been driven by operational excellence with our embedded base clients, enabling us to win significant market share from our competition, while our differentiated value proposition resulted in continued new logo wins with trophy clients throughout the year. Importantly, this past quarter marked the shift from proof of concept for our AI solutions to full-scale deployments, setting the table for future growth. Fiscal 2025 was a milestone year across many fronts, including our successful entry into India.

When we IPO’d the company in August of 2020, we were early in our strategy and a work-in-progress company. We believed in ourselves and our strategy, and what an amazing journey this has been. Today, we have built IBEX into a structurally strong company that is outperforming the market and is well positioned for the future. Let me highlight the current state of IBEX. We are a growth leader. Revenue grew 10% in FY 2025 when many of the largest players were low single-digit or negative. We have a strong margin profile that continues to expand, driven by double-digit revenue growth and our highest margin services and geographies. We have built one of the finest rosters of trophy clients in the industry, each with significant outsourcing spend. Our balance sheet is very healthy with zero net debt and strong free cash flow generation.

More than 80% of our business is higher-valued digital-first and integrated omnichannel support. We have a powerful new logo engine that continues to win high-profile clients and an operational team that outperforms. We believe we are the early leader in bringing compelling AI-driven CX solutions to market for our clients. All of this gives me, our leadership, and our board great confidence as we look ahead to the next three to five years. With these results in mind, I’d like to thank my team and the whole IBEX family for a tremendous quarter and fiscal year. Fiscal 2025 was a statement year, one for the record books and highlights the strength of IBEX and this team. Last year, at this time, I said we believed we’d reached an inflection point for IBEX with a return to growth.

The momentum we amassed throughout the fiscal year showed exactly that, delivering record results. We are now well positioned for another strong year in FY 2026 and beyond. With that, I will now turn the call over to Taylor to go into more details on our fourth quarter and full year FY 2025 financials, as well as FY 2026 guidance. Taylor?

Taylor, CFO, IBEX Limited: Thank you, Bob, and good afternoon, everyone. Thank you for joining the call today. In my discussions of our fourth quarter and fiscal year 2025 financial results, references to revenue, net income, and net cash generated from operations are all on a U.S. GAAP basis, while adjusted net income, adjusted earnings per share, adjusted EBITDA, and free cash flow are on a non-GAAP basis. Reconciliations of our U.S. GAAP to non-GAAP measures are included in the tables attached to our earnings press release. Our fourth quarter results are once again among the strongest in our history, with record results across the board for revenue, adjusted EBITDA, EPS, adjusted EPS, and free cash flow. Fourth quarter revenue was $147.1 million, an increase of 18.2% from $124.5 million in the prior year quarter. This was our highest growth quarter in approximately three years.

Revenue growth was driven by vertical growth in retail and e-commerce of 25%, health tech of 19%, travel, transportation, and logistics of 10%, and outstanding growth in our digital acquisition business. Our focused efforts to grow our higher margin offshore delivery locations are continuing to have a favorable impact on bottom-line results. Offshore revenue grew 17% from the prior year and comprised 49% of total revenue, allowing us to maintain our strong gross margin of 31.4%. Revenue mix in our higher margin digital and omnichannel services also continues to be strong. Digital and omnichannel delivery represented 82% of our total revenue, an increase from 77% in the prior year quarter, and grew 25% versus the same quarter a year ago. For context, digital and omnichannel comprised roughly 65% at the time of our IPO in 2020 and was basically negligible when we started this journey in 2016.

We expect that we’ll continue to be successful driving growth in these higher margin regions and services as new client wins and growth in our embedded base continue to be focused in these areas. Fourth quarter net income remained relatively consistent at $9.6 million compared to $9.8 million in the prior year quarter. The results were primarily driven by the meaningful growth of work in higher margin offshore regions of 17% year-over-year for the quarter, offset by higher selling, general, and administrative expenses related to investments in our teams, technology, and the Workday implementation, as well as our expansion into India. We also incurred severance and impairment expenses of $2 million related to long-term assets no longer carrying value for us and the closure of a very small business line.

Net interest expense was $400,000 in the quarter versus $400,000 of net interest income in the prior year, and our tax rate was 19% versus 26% in the prior year. Fully diluted EPS was $0.66, up from $0.56 in the prior year quarter. Positively impacting EPS growth were fewer diluted shares outstanding due to our share repurchases totaling 3.9 million shares during fiscal 2025, which includes the repurchases of 58,000 shares in the fourth quarter for $1.7 million. Our weighted average diluted shares outstanding for the quarter were 14.5 million versus 17.6 million one year ago. Moving to non-GAAP measures, adjusted EBITDA increased to $20.5 million, or 13.9% of revenue, from $17.9 million, or a record of 14.4% of revenue for the same period last year. Adjusted net income increased to $12.6 million from $10.2 million in the prior year quarter.

Non-GAAP fully diluted adjusted earnings per share increased to $0.87 from $0.58 in the prior year quarter, which was driven by the impact of higher revenue, strong operating performance, a lower tax rate, and fewer diluted shares outstanding, offset by higher net interest expense. As a BPO company, we are pleased with the client diversification we’ve established over the last several years. For the fourth quarter of fiscal year 2025, our largest client now accounts for less than 10% of revenue due to the strong growth in the rest of the business, and our top 5, top 10, and top 25 client concentrations remain consistent with the prior year at 36%, 54%, and 79%, respectively, of overall revenue, representative of a well-diversified client portfolio.

Over the past decade, we have done a tremendous job retaining our top 25 clients and are excited to see one of our signature client wins from fiscal year 2024 now move into the top 15. Switching to our verticals, retail and e-commerce increased to 25.3% of fourth quarter revenue versus 24% in the prior year quarter, and health tech and travel, transportation, and logistics remained strong at 14% and 13.8% versus 13.9% and 14.8%, respectively, in the prior year quarter. These changes were driven by continued growth in multiple offshore geographies and our continued ability to win significant new clients in these verticals. Conversely, our exposure to the fintech vertical decreased to 10.6% of revenue for the quarter versus 13.7% in the prior year quarter. We expect the fintech vertical to stabilize as we move forward based on the strength of our pipeline in this vertical.

Moving on to our fiscal year 2025 results, revenue increased 9.8% to $558.3 million compared to $508.6 million in the prior year. Revenue growth was driven by vertical growth in health tech of 23%, travel, transportation, and logistics of 14%, and retail and e-commerce of 13%, along with outstanding growth in the digital acquisition business. We grew in both our onshore and offshore regions throughout the year. Onshore revenue, which comprised 24% of total revenue during the fiscal year, increased 13%, and offshore revenue, which comprised 51% of our total revenue, increased 15% versus the prior year. Our nearshore region, which comprised 25% of our total revenue, declined slightly at 3% versus the prior year as some of this business shifted to our offshore locations. Fiscal 2025 net income increased to $36.9 million versus $33.7 million in the prior year.

The increase was driven by revenue growth and gross margin expansion, particularly in our higher margin offshore regions, offset by increases in selling, general, and administrative, and net interest expense. Our effective tax rate was 19.7% versus 17.9% for fiscal year 2024, which was attributable to changes in revenue mix across our taxable jurisdiction and discrete items recorded in the prior year. We expect our normalized tax rate going forward to be in a 20% to 22% range, benefiting from higher net income and lower diluted shares outstanding. Our GAAP diluted earnings per share increased 28% to $2.36. Reviewing non-GAAP measures for the full year, adjusted EBITDA increased to $72 million, or 12.9% of revenue, compared to $65.2 million, or 12.8% of revenue for the prior year.

Adjusted EBITDA margin increased slightly as growth in our higher margin offshore locations and in our digital acquisition business, as well as our site optimization efforts over the past year, were largely offset by increased SG&A expense. Adjusted net income increased 12.1% to $43 million, compared to $38.4 million in the prior year. Non-GAAP fully diluted adjusted earnings per share increased 31% to $2.75, compared to $2.10. The increase in adjusted net income and non-GAAP fully diluted adjusted earnings per share was primarily driven by the top and bottom-line operating performance discussed earlier and our lower share count. This was offset slightly by increased net interest expense compared to the prior year. Net cash generated from operating activities was a record of $45.7 million for fiscal 2025, compared to $35.9 million for fiscal 2024.

The increase was primarily driven by an increase in revenue and a lower use of working capital. Our DSOs ended the year at 72 days for the quarter, consistent with the DSO at the end of last year. We expect our DSOs to remain stable in the mid-70s on a go-forward basis. Capital expenditures were $18 million, or 3.3% of revenue for fiscal year 2025, versus $9 million, or 1.7% of revenue in the prior year. This increase was primarily driven by expansions to meet the strong demand in our highest margin regions. Free cash flow for fiscal 2025 was a record of $27.3 million, up from $27 million in the prior year. Our record operating cash flow was offset by the increase in capital expenditures of $9.5 million, as discussed above.

We ended the fourth quarter with $15 million of cash and debt of $1.6 million for a net cash position of $13.7 million, an improvement of $21.2 million compared to net debt of $7.6 million at the end of our third quarter. When compared to our net cash position of $61.2 million as of June 30, 2024, this reflects the impact of $77.2 million in share repurchases during fiscal 2025, including our $70 million TRGI share repurchase. To summarize our 2025 fiscal year, we achieved outstanding top and strong bottom-line results during the year, allowing us to enter fiscal 2026 with great momentum. We delivered a multi-year high top-line performance with 10% revenue growth for the year and 18% for the fourth quarter. Our adjusted EPS of $2.75 for fiscal year 2025 was up 31% over the prior year and was a record for our business.

The fourth quarter was also our strongest quarter ever in generating free cash flow of $23 million. Our continuing strong financial results and healthy balance sheet are enabling strategic investments in our growing AI capabilities and sales resources, as well as further expansion into strategic markets and in our top-performing geographies. Importantly, with the backdrop of a fluid market environment, we maintain continued confidence in the business to provide the following guidance on growth in the first quarter and fiscal 2026. For fiscal 2026, revenue is expected to be in the range of $590 to $610 million. Adjusted EBITDA is expected to be in the range of $75 to $79 million. For first quarter fiscal year 2026, revenue is expected to be in the range of $143 to $146 million. First quarter adjusted EBITDA is expected to be in the range of $17.5 to $19 million.

Capital expenditures are expected to remain in the range of $20 to $25 million for the year. Our business is well positioned for today and the years ahead, and we’re excited about the momentum we’ve built as we head into fiscal year 2026. With that, Bob and I will now take questions. Operator, please open the line.

Conference Operator: As a reminder, to ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by while we compile the Q&A roster. Our first question comes from David Koenig with Baird. Your line is open.

David Koenig, Analyst, Baird: Yeah, hey guys, great job again.

Bob Dechant, CEO, IBEX Limited: Thanks, Dave. Yeah, we’re really pleased with the quarter, the year, and the trajectory, so thank you.

David Koenig, Analyst, Baird: Yeah, everything looks really good. I guess maybe to kick it off, the quarter itself, when we’ve looked at Q4s in the past, I think every quarter since we’ve covered the stock, it’s been a flat to down sequential quarter. This quarter, you were up 5% sequentially. I guess, A, is there anything in there that was a little bit one-time in nature? B, there’s a vertical called kind of other that doesn’t fit the other, you know, the other verticals that you often talk about. That one was up a lot, I think over 100% year over year, about $8 million sequentially. Was there something in there that maybe a new client that’s coming on, and is that sustainable?

Bob Dechant, CEO, IBEX Limited: Yeah, great question, Dave, and good call out on our Q4, which historically does not jump up like it has this year. Here’s the cascading down of the growth. To your question, is any of this a one-time? The answer to that is no, this is all kind of sustainable, annuity-type business. What we did exceptional in this quarter is win market share in our embedded base, driven by our great performance. The team on the operational side just continues to outperform the industry. Our Client Services and Biz Dev team has done an amazing job of leveraging that to win market share, which is growing into new markets. We talked about India. Those are growth vectors and margin, or market share expansion vectors. We did that across many, many clients, of our existing clients. I’ll give you an example of that.

Our second largest client, big e-commerce company, we grew in every market with them, massively in Pakistan, massively in the Philippines, and now we even got the go-ahead in Central America. It’s kind of the one market we didn’t have for them. We feel really good, kind of Q1. That was, I think, the first big element is winning market share. Number two was our digital acquisition business, the digital marketing business that we’ve referred to. Under Michael Darwal’s leadership, that part of our business accelerated enormously with focus and execution and just really leveraging kind of those capabilities, our data marketing type capabilities, et cetera, to drive a lot of customer acquisition for our clients. We see that continuing into this, in the first half of this year, kind of the power of that.

The last element just to touch on was our new logo team just continues to do well, and have consistently done well over the years. You put those together with no client loss, and you have the makings of just a powerful growth business.

David Koenig, Analyst, Baird: Yeah, it’s all good. Maybe just a follow-up. You know, we talk with you and a lot of your competitors, and there’s just been obviously this fear about Gen AI and the impact. When we do our survey, the majority of you and your peers tend to say, yeah, there are some volumes we might lose over time, but net, net, it’s probably going to be a positive, and it’s just following the normal cadence of automation over time that you’ve seen for decades, really. It’s a little different type, right. Maybe some commentary, just Gen AI, how you feel about it, positive, negative, et cetera.

Bob Dechant, CEO, IBEX Limited: Sure. Your comments are pretty well grounded in what we’ve seen. What’s exciting is this Q4, Dave, we went from proof of concept to some full-scale production implementations with our clients. We’ve learned a lot as you do that. What we have seen is there’s a lot of opportunity for automation, but what’s more important is actually the entire customer journey and owning that journey. As we’ve jumped out into the, you know, and we believe clearly we have a leadership position in this. As we’ve jumped out into the leadership position of bringing those solutions to bear, having that whole, embracing the connection from AI agent to human agent and having that end-to-end value proposition, what we’ve seen is our clients see that as enormously valuable, enormously rich. I think that’s helped drive, help us create another vector of growth for us. I think what you’re hearing is right.

I think we’re further along than anybody. I think we also have more data around that end-to-end journey than anybody in this industry has, and we’re able to leverage that to our advantage.

David Koenig, Analyst, Baird: Yeah, great. Thanks, guys. Great job.

Bob Dechant, CEO, IBEX Limited: Great. Thanks, Dave, for your continued following and coverage of us.

Conference Operator: Thank you. This concludes the question and answer session. I would now like to turn it back to CEO Bob Dechant for closing remarks.

Bob Dechant, CEO, IBEX Limited: Thanks, Daniel. I’ll be brief. Couldn’t be more proud of what IBEX Limited has done and of what my management team just continues to deliver quarter over quarter, year over year. We are well positioned for FY 2026. I look forward to chatting in the next quarter. We’re really proud of everything that we’ve done in this space and how we’ve created ourselves into a truly differentiated company. Thank you all. Have a good day.

Conference Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.

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