TaskUs, Inc.

Greetings and welcome to the Task Us third quarter 2025 investor call. My name is Donna and I will be your conference facilitator today. At this time, all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If anyone requires operator assistance, please press star zero on your telephone keypad. I would like to introduce Trent Thrash, Vice President of Corporate Development and Investor Relations. Trent, you may begin.

Good morning, and thank you for joining us for today's Task Us earnings call. Joining me are Bryce Maddock, our co-founder and chief executive officer, and Balji Shekhar, our chief financial officer. Full details of our results and additional management commentary are available in our earnings release, which can be found on the investor relations section of our website at ir.taskus.com. We have also posted supplemental information on our website, including an investor presentation and an Excel-based financial metrics file. Please note that this call is being simultaneously webcast on the investor relations section of our website. Before we start, I'd like to remind you that the following discussions contain forward-looking statements within the meaning of the federal securities laws including but not limited to statements regarding our future financial results and management expectations and plans for the business. These statements are neither promises nor guarantees and involve risks and uncertainties that may cause actual results to differ materially from those discussed here. You should not place undue reliance on any forward-looking statements. Factors that could cause actual results to differ from these forward-looking statements can be found in our annual report on Form 10-K. This filing, which may be supplemented with subsequent periodic reports, is accessible on the SEC's website and our investor relations website. Any forward-looking statements made on today's conference call, including responses to questions, are based on current expectations as of today, and Task Us assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. The discussions throughout today's call contain non-GAAP financial measures. For reconciliation of these non-GAAP financial measures to the most directly comparable GAAP metric, please see our earnings press release, which is available in the IR section of our website. Now, I will turn the call over to Bryce Maddock, our co-founder and chief executive officer.

Bryce? Thank you, Trent. To begin, I want to briefly discuss the termination of the proposed take private transaction we first announced in May. Please note that outside of these prepared remarks, we will not be responding to questions regarding the transaction during our Q&A session. During our October 8th special meeting of shareholders, the requisite company shareholders did not approve the adoption of the merger agreement. As a result, on October 9th, upon the recommendation of the special committee and the approval of the company's full board of directors, the company and the buyer group entered into a mutual agreement to terminate the merger agreement. This mutual decision to terminate was not entered into lightly and followed two adjournments of our special meeting of shareholders. The buyer group used this time to have multiple discussions regarding the level of price increase required to obtain the approval of certain shareholders who believed that the 1650 offer price undervalued the company. Ultimately, we did not obtain the necessary shareholder vote because the valuation gap persisted despite this engagement. While we recognize the uncertainty the take private attempt created, We're encouraged by the high valuation expectations of our shareholders and see it as a testament of their belief in TaskUs and the opportunities ahead. Throughout this process, I challenged our leaders and teammates to remain laser-focused on delivering the best-in-class, specialized services that our customers have come to expect from TaskUs. I believe our Q3 financial results and Q4 guidance are a direct reflection of this focus. I want to thank all of our shareholders, our board members, and most importantly, all Taskus teammates for their focus, effort, and support during this process. With that, let me turn briefly to our strong Q3 performance before outlining our plan for the future. In the third quarter, we once again set a record for the highest quarterly revenue in Taskus' history and generated solid adjusted EBITDA. We delivered $298.7 million in revenue, reflecting a 17% year-over-year growth rate, and $63.5 million in adjusted EBITDA, or an adjusted EBITDA margin of 21.2%. We generated 42 cents in adjusted earnings per share, reflecting approximately 14% year-over-year growth. We ended the quarter with a very strong balance sheet. We have $210 million in cash and a net debt to adjusted EBITDA ratio of less than 0.2 times. I'm very proud of the strength of our performance in this current environment. Growth across the BPO industry has slowed as clients aim to reduce their costs by leveraging generative AI to automate workflows previously done by employees and outsourced vendors. In 2025, Taskus has performed significantly better than many of our competitors because of our relentless focus on operational excellence and strong client relationships. But going forward, this will not be enough. To thrive in the AI era, we must shift from selling time-based services to selling solutions delivered by a combination of technology and talent. our strong balance sheet and cash flow generation position as well to make the investments required for this transformation. We will begin this journey by significantly increasing our spending on our agentic AI consulting organization. We've already signed multiple clients leveraging these capabilities. Here, we support the development, training, and maintenance of AI agents from our partners, Regal and Decagon. These AI agents are able to automate a portion of our clients' support volumes. But Taskus human teammates continue to deliver premium support services where the AI agents are unable to solve customer challenges. Unlike pure technical solutions, our combined human and AI offering can address 100% of customer issues at launch while dramatically reducing the cost to serve. In the next few years, the quality of customer support will meaningfully improve, not only as a result of AI agents being able to quickly solve simple customer issues, but also because human support agents will be free to provide hyper-personalized support in the most critical moments. As evidence of this, our customers are reinvesting a portion of their cost savings to deliver better human-led support in the moments that matter or to their most valuable customers. The best customer support offering today is a combination of AI agents and human talent. By perfecting this combined offering, we aim to continue to take share and grow our business. In addition to expanding our agentic AI consulting practice, we will also increase our investments in AI services, like AI safety and autonomous vehicle and robotic support, and continue our investments in our own generative AI development to automate internal processes. These are the first steps in a transformation from a company that sells human-centric services to a company that combines agentic technology, consulting, and talent to deliver solutions. This journey will not be a straight line. Our increased investment will reduce our margins in the near term. We may face short-term revenue headwinds as we increase the use of AI agents to support our clients and, in some cases, automate services that our teammates previously provided. Throughout all of this, we remain laser-focused on long-term results. Our goal is to increase revenue, EBITDA, and earnings per share over a multi-year horizon at a rate that is higher than the rest of the industry. While our primary focus will be on reinvesting our free cash flow into the business to drive transformation, our strong balance sheet and cash flow will also allow us to pursue a capital allocation strategy that enhances shareholder returns. I look forward to sharing more details on our annual earnings call early next year. Next, I'll go through some of the highlights of our Q3 performance and 2025 outlook, then hand it over to Balaji to walk through our financials in more detail. Q3 revenue was $298.7 million, an increase of 17% on a year-over-year basis. Diving into service line growth for the quarter, our digital customer experience service line saw single-digit year-over-year growth of approximately 6%, consistent with the year-over-year increase we saw in Q3 of the prior year. Given our year-to-date revenue and signings performance, we expect to report full-year 2025 DCX growth in the high single digits. In terms of DCX signings in Q3, we saw broad base strength in bookings across most of our vertical markets, including retail and e-commerce, travel and transportation, technology, financial services, and healthcare. Turning to trust and safety, we had another great quarter, with revenue increasing 19.1% year over year, largely driven by the performance of our social media vertical. Earlier this year, we were pleased that our investment in our trust and safety specialized service line continued to garner industry accolades. For the third year in a row, we were recognized as a leader in Everest Group's trust and safety services peak matrix assessment, This recognition spotlights Taskus' full spectrum of services across the trust and safety value chain, including AI safety, proprietary technology, and our wellness as a service offering. Moving on to AI services, as expected at the end of 2024, AI services has remained our fastest growing service line throughout 2025. In Q3, AIS delivered 60.8% year-over-year revenue growth. compared to just 17.8% in Q3 of 2024. Here, the strong growth was partially attributable to the ongoing ramp of the new social media client we discussed on our Q4 call and the demand for AI services across multiple other client verticals, including travel and transportation. We continue to be pleased with the results of the investments we've made in the service line and the resulting demand for AI services we're seeing with industry leading clients in the generative AI and autonomous vehicle and robotics industries. The nature of our AI service line is more project driven than the rest of our business. But given our expectation of well over 50% year over year revenue growth from the service line in 2025, it is clear that our investments are paying off. Before handing it over to Balaji to provide more details on our Q3 results, I want to touch briefly on our 2025 outlook. As mentioned earlier, in light of our strong year-to-date operational execution and sales momentum, we now expect full-year revenue of between $1.173 billion and $1.175 billion. At the midpoint, this is $64 million or approximately 6% higher than the $1.11 billion midpoint of guidance we provided at the start of the year, which was subsequently withdrawn in connection with the proposed take private transaction. It also represents approximately 18% year-over-year growth at the midpoint, which compares favorably with the 7.6% growth we saw in 2024. For Q4, we expect to set a new TASCUS record for revenue at $302 million to $304 million, resulting in approximately 11% year-over-year revenue growth at the midpoint. This deceleration to low double-digit growth was expected due to the significant increase in revenue we saw from our largest client during the back half of 2024. I'll note here that in Q3, our revenue growth excluding our largest client was approximately 11% year-over-year And our forecast for Q4 revenue growth when we exclude our largest client is approximately 9% year-over-year. Given the overall macro backdrop in the BPO industry, we're very pleased with the enduring strength of our performance. From a margin perspective, we expect Q4 to be impacted by seasonal expenses related to holiday pay and employee benefits and by a minimum wage increase in the Philippines. Our strong sales and top-line revenue performance have also required us to continue investing in new facilities, hiring, and training initiatives. We're also beginning to see some margin impact from our strategic growth investments in AI and other areas. As a result of these factors, we expect adjusted EBITDA margins in Q4 to decline to approximately 19.8%. This drop is consistent with the size of the sequential Q3 to Q4 decline we saw in 2024, leading us to forecast Q4 EBITDA margins that are slightly better than those earned in 2024. For the full year, we expect to deliver approximately 21.1% adjusted EBITDA margins This is consistent with our expectations at the beginning of the year, despite some of the factors mentioned earlier, as our efficiency initiatives and G&A leverage continue to pay dividends and bring stability to our margins. With this margin outlook, we now expect to deliver full-year adjusted EBITDA of approximately $248 million, representing an increase of more than 18% when compared to 2024. We also expect to generate adjusted free cash flow of approximately $100 million in 2025. As we look to the last quarter of 2025, we are pleased that the tireless work of our team has set the company up for a record-setting year of top-line revenue and profitability, a performance that we believe to be among the best in our industry. I look forward to updating you on our Q4 results and providing our initial 2026 guidance and during our call early next year. With that, I'll hand it over to Balaji to go through the Q3 financials and our 2025 outlook in more detail.