StarTek, Inc.

Good afternoon, everyone, and thank you for participating in today's conference call to discuss StarTech's financial results for the third quarter ended September 30, 2021. Joining us today are StarTech's Executive Chairman and Global CEO, Aparu Sengupta, the company's CFO, Vikash Sureka, and the company's President, Bharat Rao. Following their remarks, we'll open the call for your questions. Before we continue, we would like to remind all the participants that the discussion today may contain certain statements, which are forward-looking in nature, pursuant to the safe harbor provisions of the federal security laws. These statements are based on information currently available to us and are subject to various risks and uncertainties that could cause actual results to differ materially. StarTech advises all those listening to this call to review the latest 10Q and 10K posted on its website for a summary of these risks and uncertainties. StarTech does not undertake the responsibility to update any forward-looking statements. Further, the discussion today may include some non-GAP measures in accordance with Regulation G. The company has reconciled these amounts back to the closest GAP-based measurement. The reconciliations can be found in the earnings release on the Investor section on their website. And I would like to remind everyone that the webcast replay for today's call will be available by the Investor section of the company's website at www.startech.com. Now, I would like to turn the call over to StarTech's Executive Chairman and Global CEO, Apurv Singh Gupta. Please go ahead.

Thank you very much, Joseph. Good afternoon, everyone, and thank you for all joining today's call. Our third quarter performance demonstrates the progress we have made with driving growth across core verticals and continuing to strengthen our operational foundation. We generated year-over-year increases across both revenues and adjusted EBITDA and sustained our prudent approach to cost management throughout our organization. On an operational level, we have continued to make key platform enhancements, support our global workforce, and make key additions to our leadership team. These efforts have helped us further optimize our platform and maximize our organizational efficiency. Examining our performance by vertical, our growth during the third quarter was primarily driven by our sustained momentum with clients across the telecom, banking, and financial services and technology and IT services verticals. Consistent with the trends we noted last quarter, these verticals have continued to make a healthy recovery from last year's pandemic-related lows. While the travel and hospitality vertical was down year over year on a revenue basis, we did see sequential volume improvements relative to last quarter as more geographies start easing restrictions and have begun gradually reopening. By geography, we generated meaningful year-over-year improvements in India, the Middle East, and South Africa as a result of both our strengthened operations in those regions and our sound recovery from particularly steep pandemic-related impacts last year. By contrast, we experienced some year-over-year revenue softness in the United States due to disruption caused by the cybersecurity incident and growing constraints around labor availability and wage pressure. As we continue to monitor these trends, we are placing a strong priority on ensuring we have a robust set of resources for delivering our high-quality business process management solutions. This includes ensuring we have the team members needed to support onshore solutions for certain verticals and continuing to make investments in new digital capabilities for our platforms. Our newly appointed President Bharat Rao will be later on the call to discuss this strategy and specific developments in greater depth. But I'm pleased with the strong progress we have made to date and look forward to further developing an operational dexterity we have consistently demonstrated during a dynamic time for the global PPO industry. Before I turn the call over to our CFO Vikash Surekha to walk you through our third quarter financial performances in greater detail, I wanted to provide a brief update on our recovery from the cybersecurity attack we experienced at the end of Q2. As a reminder, the threat involved encryption of some of our systems and was contained to just a few specific geographies, mostly impacting agents who were working from home. We swiftly eradicated the threat and restored the affected agents and climbed safe, secure access to our platform. and have since further bolstered our platform security and protection measures to safeguard against similar threats. Some of the measures we have undertaken to enhance our managed and endpoint detection and response include having a two-factor authentication protocol, geofencing, and predictive analytics tool. In addition, we have also created a 24-7 cybersecurity monitoring command center. While the incident did somewhat impact our financial performance during the quarter, As Vikash will detail shortly, the fact that we nevertheless drove year-over-year top-line growth and adjusted EBITDA profitability expansion indicates that our team's tireless commitment and flexibility has helped us create a resilient operational and financial foundation. This infrastructure has helped us navigate some of the most difficult times our business and our industry have ever experienced, and we plan to continue leveraging our solid platform to deliver secure, efficient, and exceptional customer experience management solutions across our global client base. I'd now like to turn the call over to Vikash to a more detailed overview of our Q3 financial performance. Vikash?

Yeah. Thanks, Aproop. Starting on the top line, net revenue in Q3 increased 6% to $172.8 million compared to $162.7 million in the year-ago quarter. On a constant currency basis, net revenue increased by 7% compared to the year-ago quarter. This year-over-year growth reflects continued strength across key verticals and geographies. On a nine-month basis, net revenue increased 13% as compared to the year-ago period. This is a testimony of the resilience and innovation shown by our teams to quickly adapt a hybrid model of working and future-proof our business. This also gives us confidence that we have the capabilities to handle any future disruption that may be caused by COVID and we can now strongly focus on driving growth. Gross profit for Q3 was $21.5 million compared to $22.3 million in the year-ago quarter. Gross margin was 12.5% compared to 13.7% in the year-ago quarter. This decline is primarily attributable to the cybersecurity incident, where we lost 75 basis points. In addition, gross margin was impacted by the year-over-year growth we saw in the telecom, financial and business services, and public sector verticals that are largely delivered onshore. We are also closely monitoring the growing wage pressure and labor shortages, particularly in the U.S., and we will take appropriate measures including optimizing our infrastructure costs to offset any impact from these on our overall margins. Selling, general and administrative, SG&A for short, expenses for Q3 decreased to $13.1 million compared to $14.3 million in the year-ago quarter. As a percentage of revenue, SG&A improved 120 basis points to 7.6% compared to 8.8% in the year-ago quarter. This is as a result of continued operating leverage at the back of the higher revenue base we generated during the quarter. We expect to make investments in high performing sales, solutioning, marketing, and digital teams over the next few quarters in order to drive growth and differentiation. This could result in higher SGMA cost relative to our revenue performance. Having said this, It continued to remain guided by our stated objective of achieving sustainable double-digit adjusted EBITDA margins. Net income attributable to StarTech shareholders for Q3 was 0.1 million or 0 cents per share compared to a net income attributable to StarTech shareholders of 0.4 million or 1 cent per share in the year-ago quarter. Adjusted net income attributable to StarTech shareholders for Q3 was 2.9 million or 7 cents per share compared to an adjusted net income attributable to StarTech shareholders of 3.3 million or 8 cents per share in the year-ago quarter. Adjusted EBITDA in Q3 increased slightly to 15.9 million compared to 15.6 million in the year-ago quarter. As a percentage of revenue, Adjusted EBITDA was 9.2% compared to 9.6% in the year-ago quarter. During the quarter, we received 2.7 million in government grants compared to 1.1 million in the year-ago quarter. This helped offset the loss of margin caused by the cybersecurity incident. Led by revenue growth, our adjusted EBITDA for the nine-month period increased by 53% as compared to the year-ago period. And as a percentage of revenue, adjusted EBITDA for the nine-month period was 10.4% compared to 6.2% in the year-ago period. From a balance sheet perspective, at September 30, 2021, our cash and restricted cash totaled 63.5 million compared to 54.1 million at June 30, 2021, with the increase due to improved working capital during this quarter. Total debt at September 30, 2021 improved to $170.4 million compared to $173.9 million at June 30, 2021. Net debt at September 30, 2021 improved to $106.9 million compared to $119.8 million at June 30, 2021. Our net leverage on a trailing 12-month basis continues to stay well under 2x. and we remain comfortable with our liquidity position as it stands today. In addition, we purchased an aggregate of 57,759 shares of our common stock under our repurchase plan during the third quarter. We did this at an average cost of $5.67 per share. This was a testament to our continued confidence in our long-term growth prospects as well as our strong execution on these initiatives. As we progress into the fourth quarter and prepare for 2022, we have maintained a commitment to invest in improving our IT and go-to-market strategy, including enhancing our sales capabilities and continuing to grow our sales and marketing teams. We expect these investments combined with the strength and security measures we have put in place to bolster our operational foundation for the quarters ahead. and we look forward to providing further updates on our growth trajectory. This concludes my prepared remarks. I will now turn the call over to our company's new president, Bharat Rao, who I'm very pleased to formally introduce to all of you today. Bharat, over to you.