IBEX Limited

Thank you for standing by, and welcome to the IBEX Third Quarter 2021 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'll need to press star 1 on your telephone. As a reminder, today's program may be recorded. And now I'd like to introduce your host for today's program, Ms. Brittany Johnson, with the Blue Shirt Group. Please go ahead.

Good afternoon, and thank you for joining us today. Before we begin, I want to remind you that the matters discussed on today's call may include forward-looking statements related to our operation, 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 opinions 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 more detailed description of our risk factors, please review our annual report on Form 20F filed with the Securities and Exchange Commission. With that, I'll turn it over to Bob Duckett, CEO.

Thank you, Brindley. Good afternoon, and thank you all for joining us today as we discuss our third quarter fiscal year 2021 financial results. We are excited to speak to you today as Carl and I share our business overview and the financial results. First and foremost, we hope all of you are staying healthy and safe. The pandemic reminds us every day to put our employees and their families first. COVID-19 has not only changed the way IBEX does business, but the entire world. In the face of this global crisis, IBEX has continued to execute and outperform expectations. A critical factor in our success is our people. Without our employees, their drive and commitment to put our customers first, we would not have achieved the success we are experiencing today. Many thanks to each of them for their continued commitment to our business. Today, I am extremely pleased to announce that IBEX is winning in the market as we build on our continued strong momentum each quarter. I'm delighted to report that this is the 15th quarter in a row where we have organically increased revenue from prior year. Equally impressive is our EBITDA has increased 11 straight quarters from prior year. This demonstrates our ability to drive revenue growth balanced with profitability. And we closed out a very strong third quarter. delivering revenues of 108.8 million, up 7.6 percent. Adjusted EBITDA increased 12 percent to 16.7 million, resulting in record EBITDA margin performance at 15.3 percent. And non-GAAP EPS increased to 32 cents from 25 cents per share. Our leadership position in BPO 2.0 continues to fuel our differentiation and the delivery of our innovative solutions. Coming off of our seasonal ramps in Q2, we had a strong quarter of growth and winning key new logos. We benefited from an extraordinary performance by our sales teams, achieving 10 wins in the quarter, that spanned across many of our key verticals, including FinTech, healthcare, and utilities. These solutions are being deployed across all our major markets, including Jamaica, Nicaragua, the Philippines, and the U.S. It is also important to note IBEX's ability to capture market share in FinTech and our rapidly growing healthcare vertical. including wins with payers, providers, pharmacy, pharmaceutical, and humanitarian organizations. In just two short years, these two verticals alone have grown to greater than 15% of company revenues. We believe these important achievements will position IBEX for a very strong and successful 2021, enabling us to reaffirm our guidance to while creating solid momentum and an exceptional growth path heading into our FY 2022. As we continue to grow and diversify a solid base of new and existing customers, revenues outside our top three legacy clients is growing rapidly. This is being driven by sizable activity in our key verticals, and this has helped us reduce concentration on the telco sector to under 30%. To further showcase this new client growth trajectory, legacy tech and telco was 75% of our total business less than five years ago. Today, 58% of our total revenue is now derived outside of these verticals. which represents more than 250 million in revenue in the last 12 months and is growing at a rapid clip of 29%. Needless to say, the return on our investment in these strategic verticals is paying off. Moving forward, we remain laser focused on the new economy and our key strategic verticals as the demand economy continues to grow. Throughout this journey, we have won numerous awards, both from the industry and our clients. In Q3 FY21, we were recognized by Great Places to Work for an exceptional workplace culture for a second year in a row. IBEX was also recognized as the best place to work in Central America and the Caribbean, best workplace in Nicaragua, and best workplace for women in Central America and the Caribbean. These accolades are being reflected internally within the company as well. A recent iVoice survey measured employee sentiment towards engagement, culture, commitment, and work satisfaction. Nearly 90% of our employees responded with an employee net promoter score rating of 68, considered near best in class, and an increase of three percentage points from our prior survey. We also won the esteemed Frost & Sullivan Nearshore Company of the Year Award, which highlighted our innovative BPO 2.0 approach to CX outsourcing and serves as a testament to the vision, strategy, leadership, execution, and culture of IBEX. In addition, and most importantly, we earn several distinctive awards from our clients based on our consistent performance in voice of customer and NPS rankings. In fact, one of our largest customers has recognized IBEX with a year-to-date record 15 Customer Obsession Awards for its work across the Philippines, Jamaica, and Nicaragua. This includes naming Baha'u'llah, its top performing site with additional recognition over consecutive months for outstanding customer engagement over digital and voice support channels. In fact, IBEX Baha'u'llah has now won six Customer Obsession Awards. This company also recognized IBEX's Jamaica and Nicaragua operations as top sites for several of its lines of business. And for the same client, IBEX was also the first company to receive their One Network Award, along with being recognized for establishing numerous best practices on its behalf. They, as well as many other clients, have turned to IBEX to evolve their business. while digitally powering their CX across the entire customer journey. This is where BPO 2.0, our people, our WaveX technology continues to outpace the competition. IBEX's approach fosters innovative, future-focused technology and market responsiveness. That is accelerating expansion and driving profitable growth for us. We continue to win and distance ourselves from the competition by a relentless focus on our people, our culture, and investment in future-proof technology across IBEX Digital, IBEX Connect, IBEX CX, and our WaveX technology suite. We have an innate ability to work with customers to solve their toughest business challenges. No longer are we the brand behind our clients. but rather the brand beside them. The experience economy continues to drive more personalized interactions, a demand for faster outcome and frictionless experiences. Never has there been a more important time for companies to connect with their customers for strong brand affinity and success. I mentioned in my opening that COVID-19 has changed how companies do business. The pandemic has forced a lot of businesses to rethink how they operate in terms of how they engage with their customers and their employees for that matter, how they evolve their customer experiences, and how they perform in today's digital environment. This, as you know, is what I call BPO 2.0. Trends show that companies are no longer looking for very large labor arbitrage-focused service providers. that provide mediocre experiences. Instead, they are looking for partners with disruptive capabilities and a strong track record of helping create digital-first CX models. This is where IBEX is leading and is growing. In fact, today the top 10 providers in our industry, all multi-billion dollar corporations, represent approximately 30% of the market share. Many of these competitors have struggled to organically grow their businesses, and size does not guarantee success. Now, with only 30% of the market share, that implies 70% of all outsourcing is contracted outside of these top 10. 70% are outside these top 10. As many of those companies have been built through acquisitions, I would argue that the percentage of outsourcing away from them is even higher. Today, IBEX is winning by enabling digital innovation while being fast and flexible for these new economy brands. And we are winning by placing the customer first in everything we do, meaning we start with them, we understand their business challenges, that innovate and build on their behalf. Not only are we winning major deals with this customer first mentality, but we are also being recognized for it as a key competitive differentiator. Let me give you two specific examples of recent wins where we are leveraging our people and our technology to drive an industry leading differentiated customer experience. First is with a well-known FinTech company that is fostering an open financial system serving over 45 million accounts worldwide. This company was looking to diversify from a heavy Manila-centric concentration. And because of often unplanned and unprecedented volume spikes, we're seeking a partner to help deliver flexibility to quickly achieve scale, with superior speed to proficiency. They were also looking for a technology partner that could deliver high-quality results while reducing overall cost to operate, all without compromising security and other industry requirements in a provincial Philippine market. They chose IBEX with an original plan to launch a conservative timeline and conservative ramp plan. However, the bull run on cryptocurrency that started in late December 2020 changed everything. IBEX needed to rapidly pivot from an original pragmatic plan to an aggressive one where over 100 agents needed onboarding in less than five days. IBEX executed this with 100% attendance and was able to get the first wave proficient within three days and exceeded partner metrics within 10 days. The next two months were all about mass scaling, superior speed to proficiency, and agile scheduling. IBEX successfully scaled to over 630 agents within 75 days with 100% attendance in every training class. To date, we have a 1% to 2% agent attrition on the entire program while continuing to meet and exceed client performance KPIs. All of this without sacrificing the rigorous security and compliance requirements that are common in the FinTech space. The second example, you're providing customer service and technical support to one of the largest and fastest growing mobile investing platforms. Through our relationship, this client is able to tap into the power of IBEX financial ecosystem and leverage our expertise to help them meet their objectives of scale and customer satisfaction. Specifically, IBEX solution is tailored to this high-growth new economy client. We scale to over 200 U.S.-based agents in less than 60 days while meeting and exceeding the client's enterprise key performance indicators. We were also the first partner to launch this client in a 100% highly regulated work at home model with results that mirrored their internal and captive sites. In summary, IBEX is ideally suited for the rapidly evolving new economy and FinTech spaces, possessing the agility, flexibility, and responsiveness to pivot on a dime for unplanned and unprecedented changes. Our data security and compliance teams are key to the overall success of our results, providing feedback and insights on consumer behavior through regression and correlative analysis on customer satisfaction metrics. We also embedded WaveX within the training process, increasing agent speed to proficiency and positively impacting NPS. I'd like to recognize our operational teams who have been absolutely extraordinary in the face of COVID-19 cases throughout the world. Through their hard work, they have kept all of our centers safe as we continue to pass 100% of our health audits around the world. Additionally, our work-at-home solutions are delivering exceptional results. Let me highlight some of these results in the US. For one of our largest clients, top performance on client KPIs coupled with our low attrition and high attendance in a work-at-home environment have enabled us to move contractually to a permanent 100% work-at-home solution. In addition to delivering great results for our client, this will enable us to begin taking considerable capacity offline in the U.S. immediately. The end result is significant improvements on margins for IBEX in the U.S. Additionally, we've been successful working with new clients in the U.S. where we have been raising wages for our agents without having an impact to our cost structure as our BPO 2.0 focus clients are willing to pay for the value of our solutions. This has helped us remove the challenges surrounding labor shortages that some of our competitors and other sectors of this economy are facing. Looking ahead post-pandemic, we believe this trend will continue as we target new economy clients focused on brand and CX. And finally, even while operating in a global pandemic, we are launching new centers around the globe at an amazing pace. We added 800 seats, completing the build-out of our new GTEC center in Jamaica, and further expansion of our provincial Bohol Philippines, where we added another 560 seats. Before I conclude, I do want to touch on ESG and IBEX. Our company culture is one of our key competitive differentiators, including fostering a more diverse and inclusive workforce. Our shared goals, values, and attitudes define our organization and is the ultimate foundation for our success. Over a year ago, we launched the Women of IBEX Initiative with the goal to increase the number of opportunities for women in the company, further the impact of women throughout IBEX, and create a gender-diversified culture. I am proud to say that 30% 5% of our directors and above are women. In addition, IBEX is active in the Rainbow Movement Project, designed to support LGBTQIA community. Embracing global diversity makes us stronger, more agile, and competitive company. It also makes us more valuable and meaningful place to work for our employees. and the marketplace is noticing our efforts. As previously indicated, we most recently have been recognized as best place to work in Nicaragua for women in Central America and Caribbean, among other accolades. While there is much work to do, I'm excited about our initiatives and remain committed in this regard and will continue to evolve our culture and our values to reflect the communities where we operate. In summary, IBEX continues to lead the BPO 2.0 revolution, becoming a partner of choice for a growing portfolio of industry-leading brands. Not only are we securing new clients across various segments, but we are dramatically increasing market share across our install base while expanding across new lines of businesses, services, and geographies. I am honored to serve as CEO of this company and support our clients into this new era of accelerated growth and transformation. My team and I look forward to building on our momentum and continue to grow our company into a bigger, better, and more future-ready IDEX. We will accomplish this through our people, our culture, and our technology, and by making it easy for our clients to do business with us. I will now turn the call over to Carl.

Thank you, Bob, and good afternoon, everyone. Thank you for joining the call today. As Bob highlighted, our ability to attract new logos coupled with focus on accelerated growth across our strategic verticals has resulted in strong revenue and a record-adjusted EBITDA margin this quarter. We continue to see strong demand from our new economy clients and work with our blue-chip clients to drive their digital transformation efforts. We are very optimistic about the outlook of the business and believe our business model aligns with our ability to deliver on our strategic growth initiatives while creating strong return for our shareholders. Revenue of $108.8 million increased by 7.6% compared to the year-ago quarter. New economy revenue grew 6.3%, non-voice revenue increased 10.2%, and digital revenue increased 1.8% compared to the prior year quarter. After adjusting for one client that was significantly adversely impacted by the pandemic, which we believe is more indicative of the business, new economy revenue grew 21.9%, Nonvoice increased by 31.8%, and digital growth was 10.5%. Next quarter, the comparative adverse impact that the pandemic had on this client will end. Revenues fiscal year-to-date were $334.8 million, up 10% from the prior year. Net loss in the third quarter was $0.2 million, compared to net income of 4.5 million for the same period last year. On a non-GAAP basis, adjusted net income was 6 million versus 4.7 million in the prior year quarter. Non-GAAP pro forma, fully diluted, adjusted earnings per share was 32 cents in the third quarter of 2021 versus 25 cents in the prior year quarter based on 18.8 million shares outstanding. Adjusted EBITDA increased 12.4% from the prior year quarter to 16.7 million to a record 15.3% of revenue, compared to 14.8 million or 14.7% of revenue for the same period last year. As we have previously discussed, we continue to expand our adjusted EBITDA margin by a combination of increasing our new economy and blue chip digitally transforming clients, growth in our offshore and nearshore geographies, and growth in our higher margin services, such as nonvoice and digital services, despite increased costs related to becoming a public company. In addition, we have significantly improved our onshore margins in the third quarter through our flexible work-at-home model, which has led to lower attrition and improved productivity. Our achievement of 15% or greater adjusted EBITDA margin for the second quarter in a row is a significant milestone for the company. Turning to client mix in the third quarter, our client concentration continues to decrease quarter over quarter. In Q3 fiscal year 21, our top three legacy clients represented 34.1% of overall revenue, down from 43.6% for the same period last year. The revenue generated from clients outside of the legacy top three increased by 25.9%, and are the main drivers of the overall revenue growth. By vertical market, telecommunications decreased to 29.1% of revenue from 36.3% in the prior year quarter, whereas retail and e-commerce increased to 19.7% of revenue from 16.5% for the same period last year. Additionally, technology increased to 15.5% of revenue, from 13 percent, FinTech increased to 9.6 percent of revenue from 7 percent, and healthcare increased to 4.7 percent of revenue from 3.6 percent versus the prior year quarter. Third quarter net cash inflow from operations decreased slightly to $13.9 million from $14.3 million compared to the prior year quarter. we had an increase in cash flow from operations, excluding working capital change and non-occurring expenses of 1.7 million euro a year. DSOs, which are currently well below the industry average, was 51 days for the third quarter, up two days from the same period last year, and three days sequentially. As mentioned last quarter, we expect our DSOs to increase during the remainder of fiscal year 2021 as the temporary decrease related to a key client is expected to reverse. The company's balance sheet remains strong with $62.6 million in cash compared to $21.9 million as of June 30, 2020, strengthened by the net proceeds of the IPO in August. Total capital expenditure which includes amounts financed in the period, if any, were $6.6 million or 6% of revenue for the third quarter of 2021 versus $2.1 million or 2.1% of revenue for the year-ago quarter. We added 1,360 workstations this quarter, 560 in the Philippines, and the remaining 800 seats in Jamaica that I mentioned last quarter. On a normalized basis, excluding the effect of the warrant fair value adjustment, our third quarter tax rate was 8% versus 22% for the prior period. Reduction in the normalized rate was primarily the result of a U.S. employment tax credit, which began to benefit the company this quarter. For the current fiscal year, we continue to expect our normalized effective tax rate to be between 17, and 20%. We are pleased to report that Frontier has successfully exited bankruptcy on April 30th of 2021. We are proud to be partnering with them and look forward to our continued relationship. As it relates to COVID-19, as communicated previously, the largest impact has been operational in nature primarily related to the complexity of ensuring staff can continue to be safe and productive, whether at home or in the new socially distanced office environment. From a financial perspective, the impact of the pandemic manifested itself primarily in the form of temporary housing costs last year and local transportation costs in the Philippines this year. As a result, we have incurred non-recurring expenses at approximately $1.1 million in the third quarter, down from $4.3 million in the first quarter. We expect to continue incurring costs related to the ongoing public transportation disruptions in the Philippines through the end of this calendar year. Turning now to our full year 2021 guidance. Given our strong performance year-to-date, we are reaffirming our guidance for both revenue and adjusted EBITDA. We are expecting revenue of $445 million to $448 million and adjusted EBITDA of $62 million to $63.5 million. In closing, our revenue momentum continues to be strong. We are focusing on strategic long-term growth that will continue to fuel our leadership position in BPA 2.0. Our ability to digitally transform our clients' customer experience is buoyed by our people, and a relentless focus on our customers along with investment in future-proof technology such as our WaveX suite of capabilities. Our success is evidenced by the pursuit and award of critical business from clients who are focused on enhancing and leveraging their customer experience as a true competitive differentiator for their business, and as a result, we continue to deliver impressive results. With that, Bob and I will now take questions. Operator, please open the line.

Certainly. Ladies and gentlemen, if you have a question at this time, please press star then 1 on your touch-tone telephone. If your question has been answered and you'd like to remove yourself from the queue, please press the pound key. Our first question comes from the line of Dan Perlin from RBC Capital Markets. Your question, please.

Thanks. Good evening, guys. You touched on this a little bit, but I'm curious, you know, the talent acquisition kind of situation in the broader IT market and even in some of the areas that you guys are in, it does sound like it's a challenging market in aggregate. You mentioned maybe that you're not seeing some of those. Your strategy is a little bit different. So maybe you could speak to that. And I'm wondering, given that that might not be as big an issue for you, are you seeing incremental demand because you're able to fill those seats?

Sure, Dan, and hey, thanks for joining the call today and great question. And so, you know, we're all aware of, you know, the U.S. market and how the various, you know, checks from the government, et cetera, are putting stress on people getting, you know, getting people into work or, you know, to take the jobs that are open. Our approach, what we've done is in the markets that, you know, we've really been selling into in the U.S., has been working with what I'll say very competitive wages, which I think are a little bit different than our competitors are. So we're going in with what I think are very competitive wages with a great value proposition of a heavy work-at-home environment, giving a whole lot of flexibility to that potential employee And then if you parlay that with these really cool brands that we're winning, it creates a great job. And so, you know, I've heard, you know, people, you know, and my peers and all that talk about the challenges that they're having. We're not seeing that. We're not seeing that because a combination of that and the fact that what I refer to as our, you know, BPO 2.0 focused clients that are really focused on ensuring that you deliver a great experience and not focused on, you know, let me try to, you know, just grind on the lowest prices, you know, in the marketplace. And the combination of those really allow us to structure a great job. People are taking them. They're staying with us. And the result is our margin structure in the U.S. has improved significantly, you know, over the last quarter from where we have been.

Yep. No, that's great. And my follow-up is just, you know, can you talk a little bit about the current pipeline that you have, maybe the nature of what's, you know, inside of that pipeline and how we should be thinking about, you know, the impacts to mix as we think about, you know, maybe even heading into next year? You know, you've got to – it seems like you have a pretty good jumping-off point at this level, but I'd love to hear about the current pipeline. Thank you.

Sure. Yeah, sure. And, you know, for us – The pipeline for us is so important, getting out in front of what I'll call marquee brands. I like to refer to this as the deals that we're going on. They are on-Broadway deals. These are not off-Broadway deals. These are high-profile deals that any of my competitors would love to go after. We've been winning those, and that pipeline continues to get stronger and stronger. Our performance this year is going to be significantly higher than any year we've had of new logo revenue, and I expect that to continue and even continue to accelerate into 2022. The look of them are new economy brands. They're digitally transforming blue chips. They're big in fintech. We have a great traction going in healthcare and then in the whole e-commerce ecosystem. So when I fast forward out, I just feel really, really positive and excited about the traction that we had, the results that we had, how that will impact our business going forward.

That's great. Thank you. Thank you. Our next question comes from the line of Toby Summer from Truist Securities. Your question, please.

Thanks. I wanted to ask a question for you about the expense and kind of margin trajectory. You just reported the highest margin here in a while, forever. As you see things normalizing, and I know that term applies to multiple facets of the business, is that normalization process an upward or downward bias on margins?

Toby thanks for joining and that's a fantastic question there's a lot of there are a lot of puts and takes inside that we talked about you know the costs that were incurring on transportation you know those are fairly significant especially the market like the Philippines but those also occur in markets like Jamaica as well And then there are, you know, incremental costs on, you know, kind of COVID testing and, you know, and things like that. Clearly offset by what I'll call, you know, big reductions in T&E, you know, although we are now back to, you know, we have clients that are coming to our centers and, you know, my sales team is now out in front of clients, face-to-face meetings. So we're kind of evolving, you know, beyond just pure Zoom. And so those are a lot of puts and takes. You know, I think the way I think about this is it's kind of probably about, you know, with all of that in there, it's probably about, you know, kind of equal to maybe positive for the business. But it's not all, you know, there are, you know, pluses and minuses. So equal to a little bit positive.

And as a follow-up, I wanted to ask you about how – how you've improved the process to remotely onboard new talent sort of today here or early in 2021 versus when you started, you know, a little more than a year ago, at least on a full-blown basis. And if you could compare and contrast that a little bit, that'd be helpful.

Thanks. And if I could, just to make sure, are you talking about kind of the onboarding of clients or more of the onboarding of our agents that need to get trained? Your agents, internal talent, for sure. Perfect, sure. So our onboarding process is, you know, our ideal model is what I'll call more of a hub-and-spoke model. We're hiring, interviewing, hiring in that early onboarding in a pure virtual environment. But we like the idea of bringing the teams into our centers to start the training process. And in the early phase of their career is where we can to have them in a brick and mortar place to then eventually, once they get a little bit of that cadence, um to move on and that that was really what i'd say our model um early on and we got very very good at it and and very good at putting the technology in place to as we move the people into the work at home environment we're able to manage it uh in an amazing virtual environment uh where that has evolved now and one of the clients that i talked about you know us it was a 100 work at home In fact, in a market that we had taken our center offline. So, you know, we had a lease that was expiring, and so we got rid of the center. And so we operated that completely 100% virtual. And I think that was an evolution of as we got really good on the, you know, knowing how to hire and get the right, you know, the right people sourced to then, you you know, then take the training element in a pure virtual environment and our results speak for themselves. So, you know, it kind of is a, you know, a little bit of an accordion and started in a, you know, more in center and now we have the ability to do this pure virtual.

Thank you very much. Thank you. Our next question comes from the line of Ashwin Srivakar from Citi. Your question, please.

Thank you. Hi, Bob. Hi, Carl. Hey. So I guess, you know, given what you said, Bob, with regards to sort of the benefit of work from home, not just on margins, but also on the ability to attract and retain talent, can you give us some longer-term views on on sort of the sustainability of work from home post-pandemic. How are you thinking about that? What's the balance there between work from home and agents that go into a workplace?

Sure. And when I talk about this, I always want to make sure we talk in two, you know, really in two buckets. One is in the U.S., because that has definite different dynamics than in emerging markets. And so our belief in the U.S. and our clients are fully on board on this is work at home is here to stay and here to stay in a large area, in a large way. One of our largest clients, as I said, has now, and we've contractually gone to 100% work at home on a permanent basis, allowing us to now take sizable capacity offline. It's a benefit. The reason why is our results have been absolutely stellar in the overall performance. We do an amazing job. Now, we also have other clients that are, what I would say, they like having the center But they know that the work at home, having that as a resiliency variable, a scalable variable, is really important. And you can deliver significantly better, deliver on faster scales, faster ramps, better performance, things like that, and a whole lot more flexibility in there. And so it's along that continuum. but we really don't have any clients that are saying in the U S I want to be 100%, you know, in, in center. And that gives us great flexibility to our operating model, our margins, but it also gives to performance because that, that the results we're getting are absolutely exceptional. When I moved to emerging markets, most of our clients there are prefer in center with a, degree of work at home. And so I, I view that as, you know, kind of a, you know, to be successful there, you need centers, you need brick and mortar with a work at home compliment. And, you know, and those, you know, those clients typically, you know, I would say range from, you know, 90% in center to maybe 75% in center, but, you know, along that continuum. Absolutely.

Understood. And just a clarification question on the client that you've been citing that has had a pandemic impact on the growth rate. When that client comes back, is it, I mean, are the revenues lost, sort of lost revenues, or are they pushed out revenues in terms of how we should think of future quarters?

Sure. So the good news is we're now moving into a favorable comparison quarter coming up, our Q4. That's when the pandemic hit them drastically. And so they're... their revenues were cut by, and I don't have enough, you know, significant 70%, you know, revenues, which then drove our rep, you know, their need for contact center services went down proportionately. They are on a consistent buildup now, month over month, quarter over quarter. And we're now moving into that, you know, that, that, you know, the quarter of, you know, what I'd say, like for like comparisons and, And so that will allow us to say the growth of our digital business, of our non-voice, we get like-for-like comparisons. And we're, you know, as our growth of new economy, you know, outside our top, you know, legacy top three, growing in the mid-20 range, you will see that. you know, not on an adjusted basis, but on a true, you know, true comparison basis. And so we're pretty sure that we'll, you know, we'll have those numbers going forward, because that's where our growth is coming from a client set that look like that.

Right, I guess it's not just a comp issue, then this is, this is a sure the comps get better, but the client itself is also recovering. So that's the benefit.

Okay, got it. Understood. Thank you. Yeah, it will help us drive some of the revenue growth going forward. They are in a business that is right in the middle of really rebounding as travel opens up, as people get around and need rides around and things like that. Their business is starting to rebound. you know, every, every, literally every week, every, every month.

Understood. Thank you.

Thank you. Our next question comes from a line of Dave Coney from Baird. Your question, please.

Yeah. Hey guys. Thanks. Nice job. And yeah, yeah, I guess, uh, First of all, just the guidance for the rest of the year now assumes 10% to 12% growth in Q4, which is a lot better than the 7% growth in Q3. It seems like a combination of just the ongoing wins plus probably the rebound, kind of what Ashton was asking about just now. And it's on the toughest comp of last year at the same time. Can we kind of assume that this type of acceleration is leading into a pretty good situation for Q3? you know, fiscal 22, kind of in that same 10% plus range?

Yeah, so Dave, you know, we've been growing, you know, at that 10%, you know, right around there. And we expect to continue to be around that rate. Obviously, our goal is to accelerate that. A lot of that, you know, there's a lot of variables that play into that. One is the speed with which your new ramps take place. And we've been really fast. I mean, when I talk in my remarks about, you know, ramping to 675 folks in 75 days, that's a fast ramp for any, you know, anybody. Um, so we have those things that are, that are taking place. And then you offset that with, you know, kind of your telco, you know, kind of some of the headwinds in the telco. And then there is one variable, you know, one other variable that's out there, which is, um, Here in the States, obviously, we feel good about where the pandemic is and the vaccines. In these emerging markets, and fortunately, we don't have any operation in India, but very aware of that, and some of these other markets are hit. Those are the variables we're dealing with right now, real-time in Q4. We think we'll be dealing with them in early Q1, Q2 of FY22. Um, we feel like the overall structure of the business is built for strong growth. And, um, you know, so we're just kind of assessing that and, you know, we'll, we'll probably, you know, look a little conservative that into, into when we talk about FY 22 and our next, you know, in our next quarter. But, you know, in general, we feel our new logo machine and our ability to win, you know, win the win in the base is, uh, is really good. And lastly, Dave, we still haven't lost any, you know, any material clients since I've been here. So that's a, that's a strong piece for us too.

Yeah, that's all, it's all good. And then maybe the other one, just on EBITDA for Q4, just the way you're guiding, it seems like Q4, 11 to 12% margin is just kind of what the implied guidance is. The whole year has been 14, 15%. Why is that again, that the margins will be down in Q4? And then, we can assume it'll go right back. I think Toby asked about that, but we should assume it kind of gets back to normal or better over time, right?

Yeah. And Carl, maybe you want to, you know, I'll defer over to you, Carl, if you want to, you know, you want to comment on that. Sure. Sure.

Dave, Dave, a good question. Just to follow up with what Bob said as far as, and what you said, when you look at the revenue, you know, we reaffirmed guidance on the revenue and then overall we, When you look at that range, it's roughly about a 10% year-over-year increase. And, you know, when we look at it, you know, if there's potential COVID impacts in Q4, items like that, we just decided not to change the adjusted EBITDA guidance at this point. So right now, we reaffirmed the guidance. We mentioned what we went through on the revenue, but with some potential impacts that you could have, we decided not to change the adjusted EBITDA guidance. Got you. Okay, thank you.

Yeah, and Dave, you know, look, our I think we talked last quarter, hey, we were really excited to punch through 15% EBITDA. And but our q2 is everybody knows, you know, the calendar year q4 is is a big quarter, a lot of, you know, the seasonal ramps and all of that stuff. So for us to continue to be above 15 and hit 15, three for this quarter, is really good. We're really excited that this thing didn't fall back down. Our goal is to keep pushing and keep that. So a lot of work to be done, a lot of work to be done, and we're hopeful we'll be able to deliver a strong finish to the year.

Yeah, great job on that. Thanks. Thank you. Our next question comes from the line of Arvind Ramnani from Piper. Your question, please. You might have your phone on mute.

Hi. Yes. Hey, Arvind.

How are you doing? Yeah, we can hear you now.

I'm doing good. I'm doing good. Congrats on a good quarter. I know you've talked about this on the call a couple of times, but I wanted to revisit it. You know, you've had a number of external factors, you know, sort of come through in the last like 18 months. So, and I'm just trying to figure out, you know, kind of the longer term growth rates and operational impact. So, the way I look at it is, you know, one, you know, as you indicated on the call, the pandemic has intensified the use of digital channels. And this was something you were anyway optimized for even before the pandemic. Number two, your operations were put to the test, and that thoroughness was really well tested in 2020. Then three, you had this work from home, which increased talent availability. And finally, of course, as a public company, you've become a much more well-known brand. and probably another couple of big ticket items I've missed, but when I look at these four factors, I would think your medium to longer term growth rate as well as your operations in terms of hiring talent and managing talent has changed significantly than maybe 18 months ago or two years ago. If you can maybe just talk about how you're thinking about the medium to long term growth rate.

Sure, Arvind. And you just highlighted our year, 18 months, whatever, you know, 12, really the last 12 months, which has just been an amazing whirlwind, you know, not the least of which is, you know, becoming a public company, but it's, it is nonstop new challenges coming in, coming after us, you know, every day. And, COVID related, you know, clients related, you know, uh, talk about FinTech and, you know, we all watch everything that's going on in the world of FinTech and the challenges that are there that they also include cryptocurrency. And I mean, it is just, you know, um, you know, uh, opportunities and arrows are coming nonstop. And what I am probably most proud about, about IBEX and this team, is we've been able to deal and have not been phased by any of these. We've reacted, and then figured out how we can actually turn everything into an opportunity for us. That is the traits that I believe our clients are looking for. And back to some of the questions on pipeline, numerous deals I'm sitting with absolutely big, you know, leading blue chip, digitally transforming type companies that are saying, we are moving away from the multi-billion dollar players. We are looking for companies that I've actually fit the bill in. And there's a few others out there that certainly fit that well. So with a lot of confidence, my team and I, as we're looking out over the three-year timeframe, we're looking at how do we accelerate growth here. And I think all of those areas, plus us now having a lot bigger brand recognition as a public company, which was one of the reasons we did decide to IPO, those elements are lining up. And so our goal is to really use all of those to to create an acceleration vector here on, on what has been great growth rates. And you will see, I believe the mathematics of this are as kind of those legacy guys become smaller and smaller and telco becomes smaller and smaller. Just think of the size of the rest of the business that is growing mid 25 to 30%. That becomes a higher percentage of the business. That's why we're so excited about this business. That's how we're thinking about this. That's really the team and I. That's the journey that we're trying to get to.

Terrific. Not to put you on the spot on this earnings call, but maybe on the next earnings call, if you're able to share how you're thinking about medium and long-term growth opportunities,

know in light of this i'm sure it'll take some analysis and you know kind of thought to see what what they're comfortably sharing but but i think i think that would be uh that would be welcomed by everybody i that's a great uh great suggestion and i think we will work and see what the best forum to go you know to go do that and all and certainly you know around that time frame we we will have uh you know we i think we'll be in a good position and so uh Why don't we take that as a to-do and figure out the best way to go about that.

Fantastic. Thank you.

Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to management for any further remarks.

Sure. And thanks, Jonathan, and I appreciate all you've done today. So, hey, look, just in closing, I'd really like to say, and you've heard it, we really like our competitive position in this space. and the momentum we have. And we'll look forward to keeping you posted as we close out FY21 and move on to FY22, which we're really excited about. So thanks all for your participation and stay healthy. Thank you.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.