IBEX Limited

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Welcome to the IBEX second quarter full year 2023 earnings conference call. At this time, all participants are in a listen-only mode. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. To note, there is an accompanying earnings deck presentation available on the IBEX investor relations website at investors, IBEX, I will now turn this conference over to Mr. Michael Darwall, investor of Investor Relations of IBEX.

You may begin. 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 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 a more detailed description of our risk factors, please review our annual report on Form 20F filed with the U.S. Securities and Exchange Commission on October 4th, 2022. With that, I'll turn it over to Bob Deccant, CEO.

Thank you, Mike. Good afternoon, everyone. And thank you all for joining us today as we share our second quarter fiscal 2023 results. Once again, I'm extremely proud of how well our business is performing. We posted tremendous results where profitability soared while revenue continued to grow and our new logo engine performed well. Driven by the strategic decisions we have made in our business, we were able to set a new standard in the second quarter with adjusted EBITDA margin at an impressive 18%, or 25.1 million. up 450 basis points from a year ago quarter. Revenue grew to 139.4 million, up 12.6% when normalizing for the Q4 FY22 exit of our lowest margin, highly seasonal client. Equally impressive, on a trailing 12-month basis, revenue increased 13% to $520.1 million, well above our historical 10% growth rate, while adjusted EBITDA was $80.8 million, or 15.5%, up from $61.8 million and 13.5%. We have built a strong business that has proven resilient to turbulent market conditions. Fueled by an enviable client list, our vertical mix of both elite blue chip and leading new economy clients and our powerful new logo sales engine, Topline continued to perform well. More importantly, the strategic decisions we have made over the last several years the plan to aggressively expand capacity in our highly profitable regions during COVID-19 social distancing, enabling us to scale for many of our clients and the exit of a large but low margin client relationship are proving to be very impactful to our overall profitability. We have previously indicated that profits will rise as we grow into this capacity. And that's exactly what we have seen. Capacity utilization in our high margin offshore and nearshore locations grew from approximately 50% to the mid 60s in the last two quarters, resulting in sizable margin gains. And we see opportunities for further expansion as we look out on the horizon. Earning to our clients. In the second quarter, we won four new clients, each across key verticals, and we recently closed a high-growth opportunity with a top-tier blue-chip financial services company that we are preparing to launch this month. Looking ahead, we expect another excellent year of revenue build by new logos. I am also excited about our progress on our sales pipeline. Our pipeline is now over 400 million, up 40% from a year ago as a result of the investments we made in our sales and marketing organizations this last year. More importantly, our win rates are at an extremely high rate and well above the industry averages. Our ability to win high profile deals is a direct result of our differentiated BPO 2.0 capabilities. our growing reputation as a provider who outperforms the competition, the culture of our company, and a really strong sales team. Another key vector for our revenue growth is within our embedded base clients. As clients face uncertainties in today's environment, the need to keep their customer satisfied grows. As a result, strong operational execution is paramount. We see this as an opportunity playing directly into our strengths. The combination of WaveX technologies, business analytics and insights, our agent-first culture, and a strong and disciplined leadership team continue to be key differentiators in our ability to outperform competitors of any size. And as we outperform, we become our client's partner of choice, leading to significant market share gains with many of our clients. As I have previously discussed, our business has become a model for client and industry diversification. The result is our successful mitigation of the impact of the current macroeconomic environment. as we are not overly exposed to any one client, vertical, or service delivery type. As such, we continue to drive strong growth in our business. To that point, the retail and e-commerce vertical has grown 29% year over year, representing now 27% of our business. up from approximately 22% in Q2 FY22. A prime example of our market share gains is with one of the world's largest retailers, where we were able to successfully expand delivery during the holiday season, increasing headcount by approximately 1,600 across a mix of chat, voice, and email in a key strategic high-margin offshore market. we maintained the number one CSAT position for the quarter across all the mediums. And recently, the client named one of our delivery geographies as their top chat team for 2022. Additionally, we continue to do a remarkable job in our strategic verticals of health tech and fintech with growth of 32% year over year. These two key verticals represent 28% of our business, up from approximately 22% in Q2 FY22, and will continue to grow with our recent wins and late-stage pipeline deals. Our operational performance is excellent in this client base. For example, our Q2 launch of 300 agents for our top-tier healthcare client has been exceptional. We have achieved performance metrics in the first 60 days, which took their other partners six-plus months to attain. This led to the client referring to IBEX as the best-performing new partner for meeting initial commitments. And this enabled us to drive market share gains. with awards of new business in the form of doubling the number of states we are now supporting. Similar performance and gains are occurring throughout this client base. Moving on to profitability, adjusted EBITDA margin improved 450 basis points over the same prior year period to a new high of 18%. This margin improvement resulted in a 40.5% adjusted EBITDA growth over prior year quarter to 25.1 million. As discussed in prior calls, during COVID, we added over 6,500 seats in our high-margin nearshore and offshore markets to enable us to grow with our clients. Because of social distancing requirements, Our centers were often running at a maximum of 50% capacity for the last year, adversely impacting margins on a short-term basis, where we had front-loaded costs burdening fewer utilized seats. Now that we have resumed to a pre-COVID operating model, we are realizing meaningful margin expansion as we grow into the available capacity and cost structure. but we are not done on margin. We have several important vectors to continue this trend. First, we have approximately 4,500 seats of available capacity in our high margin regions to sell into. As we grow, we expect to see further margin expansion from improved utilization. Second, Another key driver of margin improvement has been our ability to secure COLA price increases with our clients. This is a proof point of our operational excellence, as great performance best positions us to be successful in price discussions. As a data point, we have received COLA increases across approximately 40% of our revenue base between June and today. This well positions us for continued margin expansion as these increases have gradually layered in from Q4 22 through current. Lastly, we see additional margin opportunity as we continue to right-size our lower margin onshore footprint. Today, our onsite capacity utilization is extremely low. as the majority of our onshore operations has migrated to work from home. We expect to take significant onsite capacity offline over the next several quarters, which will help move margins up significantly in our U.S. region. All in, we very much like the margin trajectory we expect for IBEX going forward. Switching to the important things we are doing from ESG We continue to be recognized as a leader for diversity and inclusion. If you recall, last quarter, we won the award for top company in Pakistan for diversity inclusion by Pasha. I'm very excited to announce that Newsweek named IBEX one of America's greatest workplaces for diversity in 2023. which NASDAQ recognized us for and showcased on their tower on February 1st. As you can imagine, we are very proud of these awards, but even more so the impact of the efforts leading to them as we continue to make ESG an important priority for the company. Over the last two and a half years, we have transformed our balance sheet. we see a strong balance sheet as extremely important under challenging market conditions. Today, we have approximately $110 million of cash and borrowing availability on our revolving credit facilities, with less than $5 million in borrowings. Importantly, the business is poised to accelerate cash generation as profits climb and CapEx is reduced, putting IBEX in an even stronger position, and we are confident we can put this to good use for IBEX and our shareholders. Now, moving on to the outlook for the remainder of the fiscal year, our business continues to progress well on top line while significantly improving on operational profitability. We expect this to continue. As a result of our very strong first half and last 12-month results and our visibility going forward, we are raising guidance for adjusted EBITDA for the full year to $82 to $84 million from $77 to $79 million. To recap, we have revenue on a great trajectory despite the pressures of the macroeconomic environment. We made bold decisions to aggressively expand our footprint during the pandemic while many of our competitors stood still. As a result, our margins have soared with further potential upside. Our new logo engine continues to deliver strategic wins in key verticals with major clients and is truly the envy of the entire industry. Our operational team continues to deliver outstanding performance day in and day out, leading to market share gains with our client base. And we have a great balance sheet. I have tremendous confidence in what we have built here. I have always believed great leadership teams shine when markets are most difficult. And that is exactly what my team has done and will continue to do and is my proof that the IBEX leadership team is the best in the industry. And I would like to thank my great team for their continued dedication to our mission. With that, I will now turn the call over to Carl to go through our financial results. Carl?

Thank you, Bob, and good afternoon, everyone. Thank you for joining the call today. In my discussions of our second quarter fiscal year 2023 financial results, References to revenue, net income, and net cash generated from operations are on an IFRS basis, while adjusted net income, adjusted earnings per share, adjusted EBITDA, and free cash flow are on a non-GAAP basis. Reconciliations of our IFRS to non-GAAP measures are included in the tables attached to our earnings press release. Second quarter revenue increased 5.5%, to $139.4 million compared to $132.2 million in the prior year quarter and grew 9% sequentially. Excluding the legacy client that we exited in the fourth quarter of fiscal year 2022, our revenue increased 12.6% over the prior year quarter. We continue to experience high growth in our BPO 2.0 clients as this cohort grew by 16.9% over the prior year quarter and now represents 77.3% of our total revenue versus 69.7% in the prior year quarter. Net income was 1.9 million versus 8.5 million in the prior year quarter. The decrease in net income was primarily the result of the reevaluation of the share warrants, which was driven by an improvement in the stock price. We expect our fiscal year 2023 annual effective tax rate to be in the range of 15% to 17% on a normalized basis, excluding the effect of the warrant fair value adjustment. On a non-GAAP basis, adjusted EBITDA increased to $25.1 million, or 18% of revenue, compared to $17.8 million, or 13.5% of revenue, for the same period last year. The increase in adjusted EBITDA margin was primarily driven by the growth and profitability in our BPO 2.0 clients in higher margin offshore regions. Adjusted net income increased to $11.7 million compared to $5.2 million in the prior year quarter. Non-GAAP fully diluted adjusted earnings per share increased to $0.62 compared to $0.27 in the prior year quarter. The increase in adjusted net income and adjusted fully diluted earnings per share was primarily driven by stronger operating performance. For the second quarter of fiscal year 2023, our top five client concentration decreased to 40.8% from 41.3% of overall revenue compared to the same quarter last year. Our top 10 clients now account for 58.8% of total revenue down from 61% in the prior year quarter. We continue to work hard to diversify our client base and are proud of the progress we have made. Switching to verticals, retail and e-commerce increased to 26.9% of second quarter revenue versus 22% in the prior year quarter. FinTech and health tech increased 27.9% of second quarter revenue versus 22.3% in the prior year quarter. Our exposure to the telecommunications vertical decreased to 16.7% of quarterly revenue versus 17.3% in the prior year quarter. Technology decreased to 8.7% from 15% of quarterly revenue, primarily due to the previously mentioned exit of a legacy technology client in the fourth quarter of fiscal year 2022. Travel and transportation decreased to 11.4%, from 15.2% of quarterly revenue due to macroeconomic pressures experienced by one of our larger clients. Net cash generated from operations was $8.3 million for the quarter, compared to $3.4 million in the prior year quarter. The increase was driven by expanded adjusted EBITDA, partially offset by an increased use of working capital. Net cash generated from operations excluding working capital was $20.8 million for the quarter, compared to $13.8 million in the prior year quarter. Our DSOs were 61 days, down one day year-over-year, and up two days sequentially. We continue to trend below industry average. Capital expenditures were $7.9 million, or 5.7% of revenue in the second quarter of fiscal year 2023, versus 11.8 million or 8.9% of revenue for the same period last year. As previously stated, we continue to utilize capacity built out over the last two years that is now available as a result of the removal of social distancing requirements. Non-GAAP free cash flow increased to 0.3 million in the current quarter compared to negative 8.4 million in the prior year quarter. We ended the second quarter with $38.1 million in cash, down from $48.8 million as of June 2022, primarily driven by paying down debt, including a net pay down of a revolving line of credit during the fiscal year to date. Total debt was $90.5 million, including total borrowings of $4.5 million and lease liabilities of $86 million, down from total debt of $104.7 million including total borrowings of $15 million and lease liabilities of $89.7 million as of June 2022. Borrowing availability under our revolving credit facilities increased to $71.1 million as of December 2022 compared to $50.5 million as of June 2022. As of December 31, 2022, the company determined it will no longer qualify as a foreign private issuer. Effective July 1st, 2023, we will be subject to the requirements of a domestic filer and will be transitioning to U.S. GAAP financial reporting. In closing, our business achieved record revenue and adjusted EBITDA margin as we continue to expand our current base of business across multiple verticals and into our high margin geographies and higher margin services. We are effectively managing the challenging macroeconomic environment and remain optimistic about IBEX's outlook. We have demonstrated great resilience through the pandemic and continue to do so through the current market turbulence. We have a high degree of confidence about the growth of our business and are raising our fiscal year 2023 adjusted EBITDA guidance to $82 million to $84 million, with a midpoint margin of 15.1%, up from 77 million to 79 million, with a midpoint margin of 14.2%. In addition, we are reaffirming our revenue and CapEx guidance. We expect organic revenue between 545 million and 555 million, with a midpoint growth of 11.4% versus fiscal year 2022. And fiscal year 2023 CapEx, of $18 million to $22 million. With that, Bob and I will now take questions. Operator, please open the line.

And thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

And one moment for our first question. And our first question comes from Ryan Potter from Citi.

Your line is now open.

Hey, thanks for taking my question. I guess just starting on the revenue outlook, the implied second half guide seems to imply revenue to be at least flattish on a sequential quarter-to-quarter basis when historically These have been seasonally weak quarters and often down quarter quarters. So can you walk through kind of the various items at play here? What's given you confidence in the better than historical seasonality? Potentially the legacy CLI, I think you mentioned it was seasonal, so is CLI a mix at play here?

Yeah, and yeah, thanks for the question, Ryan. And so, look, we've done a A really good job of what I would say is restructuring our business makeup of clients where historically we've had a lot of retail. That makes that Q2 spike significantly up. Now, you know, as we've talked, we've exited one of those, which was at an extremely high price. Q2 seasonal client. But much more important to that is our success in the healthcare and financial services world. We basically created a business that is much more balanced on a quarterly, you know, quarter over quarter basis in sequential quarters. And so we really like that because it allows us to You know, I think run this business a little bit more consistently and utilize our capacity more effectively. And so that's how I view that playing out. And, you know, the more success and, you know, we highlighted, you know, really important win in the financial services world that that's getting going. But we also have another health care win. Those things provide strength into the back half of our year that should change dramatically.

you know i think the look of our historical uh you know quarterly flows got it thanks for that and then i guess just jumping down to margins they're they're pretty impressive in the quarter so um can kind of walk through anything that drove the strength other than kind of the Increases of capacity and kind of BPO 2.0. Because I kind of look at the second implied second half outlook. Looks to have a pretty sharp decline in margins. So just anything one time in that number in BPO?

There's no one times in that, just to be clear. And we feel like we've structurally moving our business up quite a bit. Now, with all the turbulence in the market, you know, when we look at the back half of the year, you know, the last thing we wanted to do is, you know, let's just say be over bullish on that, you know, as we, you know, as we look. So we raise guidance. We feel really strong about those numbers and our ability to, you know, to just nail that. And our goal is to drive significantly higher above that. But the makeup of the profitability is, you know, let me just kind of make sure I restate this. First of all, we keep winning with our BPO 2.0 solution set. And that drives high growth in our high margin regions. That's filled up that capacity, you know, starting to fill up that capacity. you know, that we've talked about. And so with that, you had a disproportionate flow-through of margins as you, you know, fill that up because you have a lot of front-loaded costs. The other area in my mind, you know, that really is important to call out, and again, these are not one times, is the COLA increases. And those things have layered in, you know, over time and then layered in into January and February as we get, you know, further success on that. So we feel there's further margin expansion there. And, you know, those results did not have everything, you know, everything built into it in our Q2. So we feel very strong about that. So we feel the trajectory of our business is really, really strong. That being said, we also know the kind of environments that, you know, that's out there. And, you know, I just want to, you know, we feel very confident in the raise that we gave. And we also like the trajectory of where this is going.

Got it. Thanks again. Yep. Thanks, Juan. And thank you. And one moment for our next question. And our next question comes from Toby Sommer from Truist.

Your line is now open.

Hey, good afternoon. This is Jasper Bibbon for Toby. Thanks for taking our questions. So I was hoping you could comment on how your new economy customers are managing their outsourcing spend in this environment. Obviously, we've all seen headlines about some large customers at least scaling back their full-time workforce, so I'm curious if that's having any impact on the outsourcing spend as well.

Oh, sure. And thanks for that question, Jasper, and all. And it's a really good question. And look, there's a variety of mix across our base, certainly clients that have been disrupted. You know, their business has been significantly disrupted. You know, their outsourcing spend is going down. And I'll give you an example. And, you know, as you guys know, we have, you know, some crypto markets. In that world, we've gained an enormous amount of market share as their spend has been, you know, cut significantly. And so our, you know, kind of our impact on that has been significantly less than what I would say our competitors in the industry because we do a really, really good job. We have the right price points for them and do a great job of delivering on that. So I would say, though, you know, kind of in general, you know, the – Companies that, you know, have been impacted. You know, in their businesses being impacted that spends down now, let me touch on the other side of that though. You know, that we know that there's been significant announcements of, you know, of. very large layoffs that have run through tech and, you know, and others. And I believe that that will provide significant opportunity And I like how that plays into our strength. And, you know, and I think the conclusion or the solution that those, you know, that those customers are going to come up with is outsourcing, it's offshoring, and then it's AI. And because that work still has to be done as they're taking that head count off. So I see that that provides significant opportunity on their outsourcing spend going up significantly. Now, in the short term, you know, it's kind of reality is when you have a massive layoff, a lot of people, you know, there's a lot of water cooler going on and trying to figure out who's surviving and who's not. So I think there's a little bit of a tap the brakes as that stuff is flowing through. But once there's kind of the definitive team going forward that's there, I think we're going to expect to see pretty fast decision making, you know, picking up as, you know, as again, you know, the strategies and the solutions include outsourcing, offshoring, and AI.

Thanks for that. And then on the EBITDA margin expansion, do you think this level of EBITDA margin is sustainable as you continue to scale to the pre-built capacity? And then do you have a target for what normalized utilization would look like in that scenario versus the 62% you cited this quarter?

Oh, yeah, great question. So, look, our belief is that this quarter's margins was not a series of every star lining up and a whole bunch of one times that jumped that up. I believe our business is, you know, is set to to operate at this new standard, you know, that we've set, and then move forward. As I outlined, those three vectors of margin improvement are very definable. And you can see how moving from 50% to mid-60s of utilization helped drive the number. Prior to COVID, we ran our sites in the 75% to 80% range. So underneath that, Jasper, is a lot of what I'd say is a lot of ceiling on that. And so we're excited about that. And again, that capacity is sitting there squarely in our high-margin regions where we're growing like wildfire. And then the other big one is, then look, we are, And you saw us with the decision to exit this relationship with a very large tenured client. We're not afraid to make the hard decisions here. And, you know, as I look out, you know, we have U.S. capacity that, you know, much of is sitting idle. And so you're going to see us aggressively move forward to that, which should move this thing up further. So I feel really, really excited about the immediate trajectory and the midterm trajectory.

Appreciate the detail there. Last one for me. It looks like the legacy revenues were actually up a bit sequentially this quarter. So do you think the declines in that legacy business have effectively stabilized at this point?

A great call out on that. Well done. Yeah, you know, we kind of, I think, maybe last call talk, hey, you know, that's either going to, it's either stabilized, we said we believe it's stabilized, or it may, you know, it may trajectory itself, you know, down. And the good news is it's stabilized and, you know, went up a little bit, not much, but, you know, that's certainly better than where that trend has done. And with that, you know, and what's driving that? just so you have an idea, is what I'll say, vendor consolidation and market share gains. One of those clients had about 12 vendors, and as their spend drastically shrink, they've taken the number of providers down significantly, down about 50%. And through that, we've been able to work our way up to the second largest market share in that enterprise as they've been taking out you know, kind of the low-performing, and most of those were multibillion-dollar providers, and they took out a lot of multibillion-dollar low-performing providers, and IBEX was, you know, has been able to hold its own, and now that they've kind of got it right-sized from that, we've been able to, you know, grow it a little bit, which we're excited about, not having that headwind.

That makes sense. Thanks for taking the questions, guys.

And thank you. And if you would like to ask a question, that is star 1-1. Again, if you would like to ask a question, that is star 1-1. And one moment for our next question. And our next question comes from David Coney from Baird. Your line is now open.

Yeah. Hey, guys. Great job.

Thanks, David.

Yeah. And I guess... A little bit like Toby's question, you know, well, this year it looks like you're setting up to have the best growth in five years and, you know, just a call out. It's a choppy environment, yet you're growing faster than in several years. And those years were good, too. I guess I'm wondering, like, you know, some of the verticals this year are still down because of some intentional, like, shedding of low margin business. So there's some headwinds even in this year. Does that mean that as we go forward, there's room for growth to accelerate even from here, given kind of the sales pipeline and just momentum?

Yeah, Dave, great question. I love the way you look at that, and I think you're exactly right. Look, our business, and we've shared this. Carl touched on it a bit. We have such fantastic diversification in our business, from our largest client being at about 12%, 13%. As you go down that, the next clients are 5%, 6% where they're sizable, they're large, but we're really diversified. That has helped us just whether a hiccup here or a hiccup there because you're getting gains elsewhere to offset that. I think, and let me give you an example, in the transportation and logistics side, which is down, and Carl talked about, you know, we have one client that's really having some challenges in the macro environment. So we're down, you know, we're down in what usually would have been a, you know, bit of a ramp for them in Q2, a strong, you know, think of logistics during the holidays. That's usually a historical strong quarter. They're down. Well, where we are right now is, you know, kind of think of it as bottomed. And now we're looking at unique work types, different work types that they've never outsourced before. And we have solutions in several of our really disruptive areas. low-cost labor markets that they're now launching with us, you know, and getting ready to launch with. That's all growth, and it's, you know, an opportunity, and it's really profitable work, you know, kind of in those regions. So, you know, those opportunities will present themselves there. So if we just stick to our plan of really driving the pipelines hard our win rates are just absolutely outstanding. You know, we keep that and then just the work that we do in our base, you know, as we kind of get through some of this dust and get through some of the, you know, just the short-term impacts of some of these, you know, maybe large layoffs. I think we're in good shape.

Yeah, no, it sounds good. And maybe just as my follow-up, what would be the call-outs, like when you change to U.S. GAAP, You know, what are the call-outs there, and will EBITDA or EBIT or, you know, anything change in ways that we should kind of think about?

Yeah. Hey, Carl, why don't – I think that'd be a perfect one to throw over to you.

Sure, sure. Thanks for the question. We're in the process, David, of, like, evaluating the changes, so we'll not comment on that right now. But there are items like, for instance, lease accounting and things like that. that are different between IFRS and US GAAP.

So maybe another way maybe to ask it is will the bottom line, I'm sure within some of those components, things will change. Like I'm assuming EBITDA maybe is a little lower. DNA is also maybe a little lower, some net. I'm just wondering kind of is the net EPS going to just end up being pretty close?

It should end up being pretty close. Again, we're in the process of changing the line items like you're saying. could change, and it could change the net number, a non-material amount, but we're in the process of evaluating that.

All right. No, that's great. Thanks, guys, and great job. Yeah.

And, Dave, you know, just kind of last on that. You know, when we got here, and I've talked a lot about the vision that we set out, but The vision, you know, was a growth company, great brands, all of this stuff. But the vision we put ourselves on was we were going to be top quartile on an EBITDA standpoint, you know, from a profitability standpoint. And, you know, that's always been a bit off, right, as we've talked. We've had a lot of exposure to U.S., you know, and kind of repositioning and getting our – footprint looking how I wanted it, you know, the vision of what we, and we just keep layering in and layering in those areas. And I will say where we are right now, I feel like we are, you know, we are right there, you know, and so we, you know, we feel like we have now moved our business in not only a growth engine, not only with great clients and great service offering and a great mode around our business, but I feel like we are now moved squarely into the top quartile from a profitability standpoint. And I feel really good. The whole team feels great about that.

Yeah, that's great, guys. Thank you.

And thank you. And one moment for our next question. And our next question comes from Arvind, from Nani, from Piper Sandler. Your line is now open.

Hi, thanks for taking my question. I had a couple of questions on your kind of business as exposed to kind of transactions or kind of more like volumes, or if you were like more like sort of variable in nature where your contract is in place, but you're getting paid based on kind of the volume that your clients are seeing. Are you able to quantify or give us direction? Is it more like 10 or 20% of your business? And have you seen sort of a pickup or kind of pressured volumes in that portion of the business?

Yeah, thanks, Arvind. Look, our business is all volume-driven based. I mean, you know, it is – and again, our clients will pay us – You know, for lack of, you know, for just simplicity thinking about this, they'll pay us for an agent, you know, kind of per hour around that agent. They'll pay us per transaction, like per call or per minute. That in the Connect side of our business is really the, you know, the operating model, the, you know, the financial model there. So in each scenario, volume matters. Clients will say, I need X number of agents, and we're billing those. And their math is they're forecasting that based around their volumes and what they predict the headcount they need. Other clients, they say, we're going to give you X number of calls or X number of minutes, and then we have to go determine the headcount. But at the end of the day, those are volume driven. And so when I look at our, so directly to your question, the significant part of our business is driven by those volumes. Now, you know, when I look at our business and our great client diversification, you have puts and takes. You have winners and you have those that are, you know, their businesses are struggling right now in today's world. And so I think that's where we think we are structured well with our business, with our client relationships and that diversification to continue to grow our business, to grow it strong above where this industry is growing because we have that call it resiliency built into our client portfolio. And then we do a really good job operationally. And so even inside those clients, we take market share from our competitors, which even if they're in a down environment, like I highlighted, we're able to, you know, we go down a lot less than many of our competitors. And at the end of the day, you put all that together. I like our growth trajectories.

Perfect. And then, you know, in terms of like new logos, I mean, clearly like the work you're doing with existing clients, that's going to drive the bulk of this year's business or even next year's business. But like new logos, you know, kind of has some kind of impact on current year, but they're more like two years, three years out when they really kind of scale. Are you seeing kind of increased traction sort of given the work you're doing with some of your clients around the BPO 2.0 or some decisions making sort of slowing just because of the bad environment. I'm just trying to figure out the velocity of new deals and how it could impact revenue like two years out.

Yeah. So I think right now a lot of the big companies that have had layoffs and all, large layoffs, their decision-making has slowed or now they're trying to assess their go-forward strategies with a lot less headcount. And so I think in the short term, those things have tapped the brakes a little bit on that. I absolutely expect that to start picking up the pace, picking up as they now sort through what their strategies are as they've taken this head count off. And as I, and I, and I believe this and I, you know, one of the top leaders in this industry and he's been on the client side with very, very large, you know, global company, one of the largest outsourcing spends and, you know, validated in these environments. the solutions are we have to do more outsourcing, we have to do more offshoring, and we have to now look at what types of technologies we can, you know, deploy AI-based technologies, you know, RPA-type technologies that can take workload out. And so I think that that will provide you know, a good tailwind to, you know, to this industry here as, you know, as I think the rush of downsizing, you know, kind of starts stabilizing.

Perfect. Thank you very much.

And thank you. And I am showing no further questions. I would now like to turn the call back over to Bob Deccan for closing remarks.

Great. Thanks, Justin. And thank you all for listening today. Obviously, you can see the excitement that we have in our business. The results that we posted, we're very proud of. They don't come easy. And it's a lot of hard work. So with that, thank you all. Thanks for your confidence and interest in IBEX. And we'll look forward to connecting as our business continues to move well. Thank you all. Have a good night.

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