TaskUs, Inc.

Good afternoon and welcome to TASCUS second quarter 2026 investor call. My name is James and I will be your conference facilitator today. At this time, all lines have been placed on mute to avoid background noise. After the speaker's remarks, there will be a question and answer session. To ask a question during the session, you need to press star 1-1 on your telephone and you will hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised today's conference is being recorded. I would now like to introduce Trent Thrash, Senior Vice President of Corporate Development and Investor Relations. Trent, please go ahead.

Hello, everyone, and thank you for joining us for today's Task Us earnings call. 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. Before we start, I would 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's 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. For details on the uncertainties and other factors that may cause our actual results to be materially different than those expressed in our forward-looking statements, see the Risk Factors section of our most recent annual report on Form 10-K, our quarterly reports on Form 10-Q, and other documents filed with or furnished to the FCC. These filings, which may be supplemented with subsequent periodic reports, are 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 TASCUS assumes no obligation to update or revise them, whether as the result of new developments or otherwise, except as required by law. The discussions throughout today's call contain non-GAAP financial measures. For a 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. Good afternoon, everyone, and thank you for joining us. Before we dive into the quarter, I want to take a moment to warmly welcome Rishabh Khemka, our new Chief Financial Officer, to his first TAPCA's earnings call. Rishabh brings an extraordinary track record of financial leadership, operational excellence, and disciplined growth across dynamic technology and service companies. He's hit the ground running and has already made an impact on our business in less than two months on the job. We're thrilled to have Rishabh on board, and I know he looks forward to partnering with many of you on today's call. In the second quarter, we again delivered solid performance, generating $308.9 million in revenue, which outperformed the top end of our revenue guidance by $10.9 million, or 3.6%. Our year-over-year revenue growth rate at 5% helped us generate $57.7 million in adjusted EBITDA, or an adjusted EBITDA margin of 18.7%. This was 70 basis points ahead of our margin guidance, and on a dollar basis, it was 7.5% ahead of the adjusted EBITDA implied by the top end of our Q2 revenue guidance. Our business's ability to generate cash was on full display in Q2. We delivered $36.4 million in adjusted free cash flow, bringing our cash balance to $180.3 million. This brought our net leverage ratio down under 1.3 times. giving us a very strong balance sheet with ample liquidity to continue to invest in our AI and growth initiatives. Those investments are paying off. In Q2, we maintained our strong momentum by capitalizing on our biggest growth opportunities in artificial intelligence services and AI-enabled digital customer experience. Our Q2 performance underscores the resilience of our business in the AI era, and reinforces our conviction in the strength of our client partnerships and the quality of Taskus' team and solutions. We remain laser focused on our long-term goal to increase revenue, EBITDA and earnings per share over a multi-year horizon at rates that are among the best in the industry. Next, I'll provide some highlights from C2 along with an update on our 2026 outlook. Then I'll hand it over to Rishabh to walk through our financials in more detail. Again, Q2 revenue was $308.9 million, an increase of 5% on a year-over-year basis. As expected, revenue from our largest client declined by approximately 22% compared to Q2 of 2025. This decline was more than offset by growth from other clients, resulting in revenue concentration from our top client of 20% in Q2 compared to 26% in Q2 of 2025. As we shared in Q1, revenue in the second half of 2026 will reflect additional headwinds from our largest client's automation and cost optimization efforts. However, our relationship with our largest client remains strong. Thanks to our high-quality delivery and proven agility in adapting to their evolving strategic priorities, TaxGus is positioned to benefit as this client consolidates vendors over the medium term. I'm very proud to report that outside our largest client, performance across the rest of our business was once again very strong. If we exclude our largest client, revenue in the rest of our business grew approximately 15% year over year in the quarter. The primary engine behind this was our second through 20th largest client cohort, which grew approximately 30% on a year over year basis in Q2. Notably, these growth rates that exclude the impact of our largest client All accelerated when compared to Q1. Our sales and client service teams carried their momentum into the second quarter, delivering another solid performance. Q2 was once again defined by the expansion of our established partnerships, with more than 50% of signings coming from existing clients. Following exceptionally strong onshore signings in our AI service offering in the first quarter, Q2 returned to a more normalized mix with heavier offshore delivery. Let's look at our service line performance for the quarter in more detail. Digital customer experience delivered $175.7 million in revenue, representing year-over-year growth of 6.4%. DCX growth was primarily driven by clients in our mobility, logistics, and travel, technology, healthcare, retail and e-commerce, and entertainment and gaming verticals. We expect DCX growth in the mid to high single digits for 2026, with growth rates likely to accelerate in the back half. It's important that we pause and highlight this. In the face of countless market headlines predicting that BPO customer care would all be automated, our customer care business is growing at an accelerating rate. Our success is based on our two-part approach. We're using AI to support the automation of simpler customer contacts, while leveraging our talented teammates for premium human-led customer interactions. The accelerated growth of our DCX business in the AI era shows that our strategy is paying off. The future of customer care is combining AI technology with human talent to deliver better customer experiences. Finally, I'll note that our investment in healthcare is also delivering results. During Q2, we're pleased to be named to Evers Group's Healthcare Customer Experience Management Intelligent Operations Peak Matrix Assessment for 2026. Turning to trust and safety, we generated $67.1 million in revenue, a decline of approximately 12.3% year-over-year. This was primarily driven by declining revenue from our clients and our social media vertical, partially offset by growth in our technology and financial service vertical. As we previously shared, as our largest social media clients invest in automating content moderation, we expect our trust and safety revenue to continue to decline year over year during the back half of 2026. We remain optimistic that these declines will stabilize in 2027 as we continue to support complex trust and safety workflows and benefit from vendor consolidation at our largest client. Moving on to AI services, This specialized service offering continues to be our fast-growing service line, with revenue increasing 26% year-over-year to $66.1 million. Here, our strong growth is primarily attributable to our ongoing ramp of clients in our mobility, logistics, and travel vertical, including clients in the autonomous vehicle, autonomous delivery, and robotics industries. This exceptional performance was partially offset by reductions in revenue in our social media vertical driven by the end of certain AI automation projects at our largest client and other social media clients. From an AI services signings perspective, we saw strength in our technology and social media verticals during Q2. Given our results, we continue to believe our investments in our AI service offerings focused on the world's leading foundational models, hyperscalers, and autonomous vehicle, autonomous delivery, and robotics companies are paying dividends. We're confident these investments will enable us to deliver a strong growth in the second half of 2026. In Q3, AI services growth rates will be partly impacted by the sunsetting of the AI automation projects at the social media clients I mentioned earlier. In Q4, we expect AI service growth rates will again accelerate to better than 30% year over year, driven by our continued growth with autonomous vehicle and robotics clients. On that note, I'd like to provide an update on our strategy for the AI-driven future. As part of the first pillar of our AI strategy, we remain focused on building a highly differentiated solution set that strengthens our AI services offerings, specifically within physical AI, autonomous vehicles, autonomous delivery, and robotics. The strategic investments we've made over the past several quarters have positioned us to continue winning market share as these emerging sectors reach inflection points. As part of our commitment to leading in emerging AI technologies, we recently established our first robotics and physical AI training lab in Noida, India. A great example of our work here is our partnership with a leading developer of home-based autonomous robots. Here, our team collects, annotates, and validates physical, spatial data to train our clients' autonomous systems to complete daily tasks. This lab highlights our momentum in moving beyond pure digital AI into complex physical robots, positioning Taskus at the center of our clients' most innovative initiatives. Outside of our labs, we are also leveraging our Taskverse platform to collect egocentric data in diverse real-world settings, providing imitation learning for humanoid robotics. Here, we are making investments in our platform to optimize how we deploy and manage these specialized, Finally, we continue to aggressively recruit domain-specific talent with deep expertise in autonomous vehicles, autonomous delivery, and robotics. By combining modern platform infrastructure and specialized human expertise, Tacitus is solidifying its position as the critical operational partner for industry leaders across these emerging high-growth markets. From high-fidelity data capture and mapping to mission-critical remote assistance and roadside emergency response, our specialized workflows are integral to our clients' real-world deployments. Turning to the second pillar of our AI strategy, investments in our AI consulting practice, I want to outline some improvements we've seen with agentic solutions we've implemented for clients. These results are a direct reflection of our ability to leverage Taskus's intimate knowledge of our clients' products, processes, and workflows into higher-performing autonomous agents and deliver seamless orchestration between these technologies and the human intervention required for a more complex and nuanced resolution. Building on the success of our initial deployment of an agentic customer support solution for a streaming client, we've driven a meaningful increase in the overall contact containment rate. Our deep knowledge of the client's workflows has allowed our AI consulting team to quickly contain more than 70% of contacts in our recent performance. This progress was propelled by expanding our specialized technical troubleshooting capabilities into high-volume workflows, including account management, technical support, and customer trial abuse mitigation. As we scaled these egyptic solutions, we have not compromised customer experience as evidenced by our 4.7 out of 5 CSAT score. Building on the success, we're now extending these proven conversational capabilities into our client's email channel with additional plans to expand into voice to drive further automation and unlock additional operational savings. At another key client in a highly regulated industry, we've deployed an AI voice agent capable of executing end-to-end appointment scheduling, rescheduling, and the initiation of new customer intake. By integrating partner technology with our operational expertise, we've continuously increased containment rates while positively impacting overall booking rates. Complex and sensitive interactions seamlessly escalate the task of teammates, allowing human empathy to shine where it matters most. Since April, first attempt AI agent resolution rates have improved nearly 30%, resulting in fewer human transfers. Our AI scheduling agents have also become more efficient with median AI agent talk time dropping by nearly 12%. Finally, our agents delivered a reduction in appointment cancellations of over 60% in the past three months. Given our success in directly increasing our clients' revenues, we are exploring other work streams and agent capabilities, including adding outbound agent calling, which we anticipate to launch next quarter. Each of those successful agentic deployments showcase our ability to move beyond pilots into production environments The third and final cornerstone of our strategy for the AI era is the automation of our internal processes to drive margin expansion and operational excellence. Beyond our previously discussed agentic AI deployments in our talent acquisition and HR helpdesk functions, we're developing custom solutions to address targeted real-world operational challenges. A critical focus area is putting AI directly into the hands of our frontline leaders, reducing their administrative burden and empowering them to focus entirely on their roles as coaches and leaders of our teammates. A prime example of this is Maestro, our proprietary AI-powered platform for team leads. Maestro acts as an intelligent operational assistant, seamlessly blending automation, predictive AI, and deep integrations with our existing delivery ecosystem. Maestro allows our team leads to explore their team's performance data using natural language. It automates routine administrative reporting and surfaces real-time performance insights, including schedule appearance, average call time, QA, CSAT analyses, and personalized coaching recommendations. This empowers our team leads to focus on high-impact coaching, elevating delivery quality. This will also allow us to improve spans of control over time. By transforming how our frontline operates, Maestro serves the powerful industry differentiator, positioning us to aggressively take market share from the competition. Before handing it over to Rishabh to provide more details on our Q2 results, I want to touch on our 2026 outlook. In light of our strong results, sales momentum, and continued strength of both our digital customer experience and AI service offerings, we are raising our full-year revenue outlook. to $1.22 billion to $1.24 billion. This updated range accounts for the continued headwinds we expect to face at our largest client through the end of 2026. At the $1.23 billion midpoint of our revenue guidance, we expect full-year adjusted EBITDA margins to be approximately 19%. We're also increasing our outlook for full year adjusted free cash flow by approximately 5% to between $110 million to $120 million. For the third quarter, we expect revenue to be between $300 million and $302 million, or roughly 1% year-over-year revenue growth at the midpoint. Adjusted EBITDA margins are expected to be flat sequentially at approximately 18.7% in Q3. Looking ahead to 2027, we plan to continue increasing our level of investment in emerging growth and AI transformation initiatives, including AI services and AI-enabled ECX. These investments are likely to continue to impact margins. Our performance to date increases our conviction that these investments are the right strategic decision to position Taskus for the future. Overall, despite top client headwinds and a choppy overall macro environment, We're pleased to have delivered performance that exceeded our expectations in Q1 and Q2. We remain confident in the trajectory of our business driven by resilient demand for our premium DCX offerings and strategic advancements in AI services. I look forward to updating you on our Q3 results on our next call. With that, I'll hand it over to Rishabh to go through our financials in more detail.

Thank you, Bryce, and good afternoon, everyone. Before I begin, I want to say how excited I am to join Taskus and to speak with all of you. I'd like to thank Bryce, the board, and the entire Taskus team for such a warm welcome. In my first few weeks, my conviction in this business, its people, its client relationships, and its position in the AI era has only grown. I look forward to meeting many of you in the coming months. Now turning to our second quarter results. In the second quarter, We earned total revenues of $308.9 million, reflecting an increase of 5% compared to the previous year. This was $10.9 million ahead of the top end of our guidance for the quarter, driven by stronger than expected volumes in AI services and digital customer experience. Approximately 75% of our growth came from new clients. Our strong top-line performance despite headwinds from our largest client, demonstrated the resilience of our business, our consistent focus on strategy execution, and our ability to capture market share, regardless of the macroeconomic environment. As Bryce mentioned, we saw solid year-over-year growth in AI services, which grew a remarkable 25.8%, and DCX, which accelerated further in Q2 to 6.4% compared to the prior year. As contemplated by our Q2 guidance, trust and safety declined 12.3% on a year-over-year basis. In the second quarter, our largest client represented 20% of total revenue, down from 26% in Q2 of 2025. Our top 10 client concentration was 64%, up from 58% in Q2 of last year. and our top 20 clients accounted for 75% of our revenue, up from 71% in the prior year period. Excluding our largest client, revenue from the rest of our business grew approximately 15% on a year-over-year basis in Q2, compared to approximately 13% growth in Q1 of 2026, a slight acceleration in growth on a sequential basis. Here, growth in clients from the rest of our portfolio more than offset a revenue decline in our largest account. These strong results from clients other than our largest client were primarily driven by new and existing client growth across a broad range of verticals during the quarter, showcasing the underlying momentum of our core business. Looking at our geographic delivery mix, in the second quarter, we generated 51% of our revenues in the Philippines, 15% in the United States, 12% in India, and 22% from the rest of the world, primarily in Latin America and Europe. In Q2, we saw particularly strong year-over-year revenue performance in the United States, Egypt, and Mexico. We ended the quarter with approximately 63,200 global teammates, a decrease of approximately 1,200 teammates from the end of Q1. This was primarily the result of changes in the scope of work we perform in the Philippines for our largest client. Next, I'd like to provide additional details about our service line performance. In the second quarter, our DCX offering generated $175.7 million in revenue and year-over-year growth of 6.4%. This growth was well balanced between new and existing clients, with nearly 50% being attributable to clients we ramped up within the last year. Overall DCX growth was primarily driven by strong performance from existing clients in our mobility, logistics and travel vertical and new technology vertical clients. This growth was partially offset by a decrease in revenue from existing clients in our financial services vertical. In terms of DCX signings in Q2, we again demonstrated remarkable resilience that positions us well for continued strong growth in DCX during the back half of 2026. We saw broad-based strength in signings across most of our vertical markets, including technology, healthcare, mobility, logistics and travel, retail and e-commerce, and financial services. In particular, we were pleased that more than 40% of our DCX signings in Q2 were comprised of high-value-add sales and lead generation solutions. Our trust and safety offering, which includes our content moderation and financial crime and compliance services, declined by 12.3% compared to Q2 of 2025, resulting in $67.1 million of revenue. Here, the drop in revenue from our largest client more than offset the remaining growth from other existing and new clients, which was otherwise well-balanced. From a vertical perspective, The existing client decline in trust and safety was primarily driven by social media and retail and e-commerce, partially offset by an increase in technology vertical clients. New client growth was strongest in our professional services and financial services verticals. AI services demonstrated strong growth in excess of 25% for the seventh quarter in a row, resulting in $66.1 million in revenue. This was primarily as a result of expansion in services we provide to new and existing clients in our mobility, logistics and travel vertical, partially offset by a decrease from existing clients in our social media vertical. Overall, existing clients contributed approximately two-thirds of AI services total growth for the quarter, led by one of our long-term autonomous vehicle clients. From a signings perspective in Q2, we saw demand signals from a diversified set of AI services clients, primarily within our technology, social media, retail and e-commerce, and mobility, logistics, and travel verticals. Now, moving on to the drivers of our income statement performance. In the second quarter of 2026, we earned adjusted EBITDA of $57.7 million and and 18.7% margin, which compared favorably to the $53.5 million of adjusted EBITDA implied by the midpoint of our Q2 guidance. As a reminder, we anticipated a year-over-year and sequential margin decline to 18% for the quarter based on several factors, including geographic delivery mix shift to lower-margin U.S.-based delivery and our strategic investments in emerging growth opportunities and AI capability. However, we were largely able to minimize these impacts through revenue outperformance and disciplined cost controls across our operations and overhead functions. Our cost of service as a percentage of revenue was 65.3% in the second quarter compared to 61.4% in Q2 of the prior year. The increase was primarily driven by several factors including the impact of annual personnel cost inflation, delivery mix shift and a pricing environment that remains competitive. These factors were partially offset by the run rate benefit of operating efficiency improvements made during the second half of 2025 carrying over into 2026 and additional cost optimization initiatives we initiated during the quarter. In the second quarter, our SG&A expenses were $54.6 million or 17.7% of revenue. This compares to SG&A in Q2 of 2025 of $68.4 million or 23.3% of revenue. This decline as a percentage of revenue reflected lower transaction costs in Q2 of 2026 on a year-over-year basis. Our continuous efforts to optimize overhead costs and a reduction in stock-based compensation expense. These improvements in overhead expenses were partially offset by the AI and growth investments mentioned earlier. Adjusted net income for the quarter was $30.6 million and adjusted earning per share was $0.33. By comparison, in the year-ago period, we earned adjusted net income of $39.7 million and adjusted EPS of $0.43. The year-over-year decline in adjusted net income was mainly due to higher interest expense from our refinancing and the impact of foreign exchange rates compared to the prior year. Our weighted average share count was relatively consistent and therefore not a material driver of our adjusted EPS performance. Now moving on to the balance sheet. Cash and cash equivalents were $180.3 million as of June 30, 2026, compared with the December 31, 2025 balance of $211.7 million. We were pleased that our strong year-to-date free cash flows of nearly $69 million significantly offset declines related to our one-time special dividend and refinancing activities of approximately $84 million and the negative translation adjustment related to fluctuations in foreign exchange rates. Our net leverage ratio continued to be healthy at less than 1.3 times at the end of Q2. As a reminder, we calculate this ratio as total debt less cash divided by adjusted EBITDA for the trailing 12-month period. Our refinanced $500 million term loan maturing in March of 2031 bears interest of so far plus 2.75% and our new $100 million revolver remains undrawn. Cash generated from operations on a year-to-date basis was $89.4 million. This increase of nearly 70% was primarily due to the positive impact of changes in working capital stemming from stronger cash collections and the timing of payments related to prepaid assets. Year-to-date adjusted free cash flow was $78.7 million or 67.7% of adjusted EBITDA. These results bolstered our confidence in increasing our full-year 2026 adjusted free cash flow guidance. Our Q2 year-to-date capital expenditures decreased to $20.7 million compared to $31.5 million through Q2 of 2025, primarily due to lower facility build-out and technology refresh expenditures. As a result, We expect capex to be approximately $47 million for the year, a reduction of $13 million compared to our initial 2026 outlook. In terms of our financial outlook for the remainder of the year, we are increasing our full year 2026 revenue range to $1.22 billion to $1.24 billion, resulting in a midpoint of $1.23 billion. We also expect to earn full year 2026 adjusted EBITDA margins of approximately 19% at the midpoint of our revenue balance. As mentioned earlier, we are increasing our full year adjusted free cash flow outlook to $115 million at the midpoint with a range of $110 million to $120 million. As a reminder, Adjusted free cash flow excludes the impact of certain costs that are non-recurring and outside the ordinary course of business. For the third quarter, we expect revenues to be in the range of $300 million to $302 million, reflecting growth of 0.8% at the midpoint. We expect our adjusted EBITDA margins to be approximately 18.7%, which includes the impact of wage increases Geographic Mixed Shift, Pricing Renegotiations, and Continued Investments to support our revenue growth and AI transformation initiatives. Offset by the operational and overhead efficiency initiatives we discussed earlier in the call. As a reminder, our margin guidance is based on current foreign exchange rates. Deterioration in the value of the US dollar would put downward pressure on our margin performance. In closing, another solid quarter has positioned us to lift our full-year top-line and cash flow guidance. While we expect continued headwinds at our top client, the core engine of our business is performing exceptionally well. Pipeline and signings are building nicely, particularly in AI services, and our premium DCX practice continues to win shares from the competition. None of this happens without our global team, whose commitment to excellence Drives us success every day. Now, I'll hand it back to Bryce to close us out.

Thank you, Rishabh. Before we open for questions, I'd like to share one of our TASCUS teammates' stories. At TASCUS, we often talk about people and performance in the same sentence, and our commitment to frontline stability is a prime example of why that connection matters. Meet Raylan, a teammate who has been with TASCUS Philippines for nearly six years. Like many working parents, Raelynn has faced significant financial and emotional stress trying to cover tuition and school fees for her two elementary-aged children. That changed when she became a recipient of our NextGen Scholarship Program. The grant allowed Raelynn to enroll her children in a premier private school in La Union, fundamentally transforming their educational opportunities and removing a major source of financial strain for her family. In her own words, Having this support didn't just change my children's future, it gave me the peace of mind to focus, grow, and build a long-term career here. As a parent myself, I know firsthand how much peace of mind matters when it comes to your children's education and well-being. Nothing makes me prouder than knowing that the programs we build at Task Us create real generational impact for our frontline teammates. But this sense of purpose also drives real operational value. When we invest in our communities through programs like the NextGen Scholarship, we aren't just supporting families, we're investing in our best talent, talent that delivers the operational excellence TaskUS is known for. Elimiting major personal stressors for long-tenured teammates like Raelynn directly reduces burnout, drives industry-leading retention, and protects the high-quality execution our clients rely on every day. With that, I'll ask the operator to open our line for our question and answer session. Operator.

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile Q&A roster. And our first question comes from Jonathan Lee from Google Heimer Partners. Go ahead, Jonathan.

Thanks for taking my questions, and Rishabh, congrats on the new role. I want to start by asking about AI services. Look, Earth moderated from 36% in Q1 to 26% in Q2, ending what looks like a run of six consecutive orders north of 30%. How much of that deceleration reflects software comps and base effects versus some large customer dynamics? And what's the right growth range underwrite in the back half? And in 27 is the base scale. What gives you confidence in that trajectory?

Thanks, Jonathan. Yeah, AI Services has been our fastest-growing service line now for seven quarters in a row. In this quarter, it grew by 26%. As we shared on the call, we anticipate AI Service growth in the third quarter will be similar to that rate before accelerating again to over 30% year-over-year in Q4 as we exit the year. I think when we look at AI Services, it's important to double-click on the contract type. In general, we're signing master service agreements, with long-term and are delivering this work either by unit or by hour. But in the case of AI services, the dynamic nature of our clients' technology development and AI safety needs necessitates that we move from one project to the next with greater frequency than you'd see in a standard recurring customer service contract. So it's particularly true for AI training and AI safety work where we're supporting foundational model developers and robotics companies and social media firms to see this kind of project scale up and scale down. So in the call, we noted that in addition to the slowdown in revenue at our largest client, we experienced due to revenue declines at another social media client. And it's a good example of that sort of project-based dynamic. which has made the year-over-year compares a little more challenging for Q2 and Q3. But as I said, we've got confidence given the growth we're seeing across the broader base of our AI services business that that growth rate is going to accelerate back above 30% for the end of the year. And I'd also note that we're seeing a far greater level of stability in the autonomous vehicle and autonomous delivery work that we're doing inside AI services. Here, the contracts tend to look a lot more like those recurring DCX contracts that we're used to. And the sustained growth of that business is going to lead to enduring growth rates for AI services into 2027 and beyond.

Thanks, Bryce. And just as a follow-up on the outlook, Your implied 40 range spans roughly on negative 3% to positive 3.5 year-on-year. What gets you toward the high end versus the low end within that range? Is upside primarily existing customer rent conversion or does it require pipeline conversion? What's baked in for the top customer trajectory at the midpoint versus low end?

Yeah, so we're raising the bottom end of the guidance range by $10 million today, and I think this just speaks to the confidence that we've developed over the course of the first half of the year. We're also providing guidance for Q3 of $300 to $302 million in revenue, and I'll just note that that quarterly guidance is actually higher than the guidance we provided for both Q1 and Q2. As always, our goal is to meet or exceed the guidance that we provide. So we continue to be cautious in the guidance we're providing primarily because of the reductions that we're seeing at our largest client. As we noted on today's call, our revenue in Q2 grew by approximately 15% when we exclude the impact of our largest client. We anticipate the business will continue to grow like this in the back half of 2026. But our guidance also contemplates larger reductions than our largest client in the second half. So the path to meeting or exceeding our annual guidance is going to come from our ability to deliver on the growth opportunities across the rest of our client base, and we feel confident that we'll be able to do that. Appreciate that, Colin.

Please stand by for our next question. Our next question comes from Maggie Nolan from William Blair. Please go ahead, Maggie.

Thank you. On that largest client, at what point do you expect the vendor consolidation to outweigh some of these automation-driven volume reductions? And do you anticipate that even the revenue streams you'd receive through vendor consolidation could be subject to automation as well?

Yeah, thanks for the question, Maggie. So I'll start by saying that we're encouraged by the strength of the relationship that we've got at our largest client. I think they're very pleased with our agility and ability to deliver on the strategic objectives that they outlined for 2026. We know that we are going to be part of a very small subset of vendors that will benefit from vendor consolidation, and we anticipate that that will begin to happen in 2027. The rest of this year, we'll continue to see downward pressure driven by their automation and cost optimization initiatives. And we could see some of that continue into 2027. But over the medium term, we expect to see revenues of this client stabilize and perhaps even get back to growth, depending on some of the dynamics in their business and our ability to continue to support growth initiatives at the business in areas like AI.

That's helpful. Thank you. And then, you know, obviously the AI services growth is impressive and her outlook there, you know, continues to be robust. It's changing sort of the mix of the work that you perform. Is there evidence in your pipeline that you're seeing today that it's, you know, more than changing the mix, that AI is actually expanding your addressable market for the future?

Yeah, I think unquestionably. The AI service market is pretty much all net new business, not only for us, but for the industry in general. And so we're seeing this kind of three-part story play out where AI services is creating just massive growth opportunities. And frankly, our ability to drive 26% growth this quarter and hopefully closer to 30% plus growth for the full year in AI services is good. But I think we can do even better when we look at the broader market where we've seen companies be created that are generating hundreds of millions, if not billions of dollars in revenue from AI services. The story is obviously the opposite in trust and safety where the impact of automation has truly been the most significant. There, we think that we'll continue to see downward pressure on trust and safety revenues this year. But we do think that there is enduring demand, both for more complex content moderation, which we don't believe is going to be automated, and for growth that will be driven by things like financial crimes and compliance work, where we saw growth this quarter. And then I think the real surprise, given the headlines over the last few years, is we're seeing growth rates that are actually accelerating in our digital customer experience business. And there, you know, I think we've put ourselves on the right side of the AI-driven automation of simple workflows and have proven ourselves to be a premium support provider who can grow in some of these areas like sales and premium customer experience where we see clients actually investing more as they automate simple volumes.

Thanks, Bryce. One moment for our next question. Our next question comes from Puneet J. from J.P. Morgan. Please go ahead, Puneet.

Thanks for taking my question. We always view new unicorns or the tech trends as long-term fuel for taskless growth and it seems like we are in that up cycle once again as AI-based unicorns, new companies are generating a lot of energy in Silicon Valley. Is there a way to size the opportunities you've seen from these clients? You talked about AI model companies, robotics clients. So the opportunities you are seeing in AI services or customer service, and how does that compare with some of the past cycles like social media or crypto or whatever? If you can talk about that.

Yeah, thanks for your question, Puneet. At the start of the cycle, there was a lot of fear that these companies were going to be materially different than the companies that we really built our business on in the 2010s. And if you think about the businesses in on-demand transportation, food delivery, direct-to-consumer e-commerce, these were businesses that had quite neighbor-intensive processes. And as a result of that, I think There was a fear that when we compared that to, say, some of these AI labs, that they wouldn't be quite as labor intensive. I mean, just by the nature that they were using AI to automate lots of the workflows. And certainly the headlines would indicate that. We hear about one-man startups generating millions of dollars in revenue, et cetera. But I think the story in reality is far more nuanced. We've been able to grow Both AI services and customer experience business with some of the foundational model developers into contracts that are worth tens of millions of dollars a year. We've seen demand from robotics, autonomous vehicles, autonomous delivery companies that are as big or larger than that number. And so I think the opportunity set is as large as it's ever been. It is definitely different in that it's requiring us to develop new services and capabilities in this AI service practice, certainly different than the core customer service expertise we built the business on. But the opportunity is definitely there.

Got it. And if you're a top client, will it be fair to say much of the revenue you'll generate from that client will be based on AI-enabled services when they're done with their automation initiatives?

Yeah, I think so. I mean, certainly the top client is investing heavily in using AI to automate and enable these services to be provided more efficiently. We're also, as we do with all of our customers, deploying our own tool set to make our teammates more effective at their jobs. And so I think as they move through these automation initiatives, the work that will remain will be far more complex and undergirded by both of our investments in AI-driven automation.

Okay. Thank you.

One moment for our next question. Our next question comes from Jacob Hegarty from Baird.

Hey, guys. Great job. Just wanted to touch on the shift to the U.S. delivery that called out. How sticky is this shift with these new AI services, and is this something where it might be a few years in the U.S., and then over time, we'll see this shift offshore again?

I think at this point, we've been surprised by how much demand there is for U.S. delivery. But AI services is definitely the biggest driver of that revenue growth. And we expect that U.S. delivery revenue will continue to grow as we scale those AI service engagements for the rest of this year. Over the medium term, we do believe that a portion of this work will migrate to higher margin offshore delivery locations. So while onshore delivery does come at lower margins, we're pleased by the fact that we're continuing to grow this anti-service business so significantly and obviously being responsive to wherever our clients want that work to be delivered from.

Yeah, that makes sense. And then just following up on that with the DCX revenues, is there a point where they're going to grow fast enough in the offshore regions to help offset some of the margin pressure from the U.S. delivery?

Yeah, certainly that's our hope. Right now, The bulk of the offshore delivery is a blend of AI service growth and VCX growth. And certainly, like, at this point, we think we've got room to sell significantly into offshore locations like the Philippines and India. And so we're hyper-focused on an ability to do that, just given those locations deliver higher margins.

At this time, I'm showing no further questions. This does conclude our conference for today. You may now disconnect.