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Financial report summary
?Risks
- Our business is dependent on key clients.
- Our profitability largely depends on maintaining efficient asset utilization levels, pricing our solutions appropriately, and managing costs, particularly through our contracts with customers.
- If our solutions do not comply with the quality standards required by our clients under our agreements, our clients may assert claims for reduced payments to us or substantial damages against us.
- The consolidation of our clients or potential clients may adversely affect us.
- Our clients may decide to enter into or further expand insourcing activities in the future, and current trends toward outsourcing services and/or outsourcing activities may reverse.
- We may be unable to continue to anticipate our clients’ needs by adapting to market and technology trends.
- We may not be successful in converting visitors to our customer acquisition websites into purchasers or subscribers.
- We face substantial competition in our business.
- We may acquire other companies in pursuit of growth, which may divert our management’s attention, result in dilution to our shareholders, be unsuccessful, and consume resources that are necessary to sustain our business.
- If we fail to adequately protect our intellectual property and proprietary information in the United States and abroad, our competitive position could be impaired, and we may lose valuable assets, experience reduced revenues and incur costly litigation to protect our rights.
- If we are unable to fund our working capital requirements and new investments, we could be adversely affected.
- Our operating results may fluctuate from quarter to quarter due to various factors.
- Unfavorable economic conditions, especially in the United States and in the retail, e-commerce and telecommunications industries, from which we generate a significant percentage of our revenue, could adversely affect us.
- The inability or unwillingness of clients that represent a large portion of our accounts receivable balance to pay such balances in a timely fashion could adversely affect our business.
- Our existing debt covenants may affect our flexibility in operating, developing and expanding our business.
- If our goodwill or intangible assets become impaired, we could be required to record a significant charge to earnings.
- Our ability to use our U.S. net operating loss carry forwards may be subject to limitation.
- Our business relies heavily on technology, telephone and computer systems as well as third-party telecommunications providers, which subjects us to various uncertainties.
- An inability to effectively adopt AI into our offerings could materially impact our ability to compete.
- Our business is heavily dependent upon our international operations, particularly in the Philippines, Jamaica, Pakistan and Nicaragua and any disruption to those operations would adversely affect us.
- We rely on the attraction, retention, and motivation of qualified senior management, employees, and agents to support our success and operations.
- Natural events, health epidemics (including the Pandemic), wars, widespread civil unrest, terrorist attacks and other acts of violence involving any of the countries in which we or our clients have operations could adversely affect our operations and client confidence.
- Fluctuations against the U.S. dollar in the local currencies in the countries in which we operate could have a material effect on our results of operations.
- We depend upon internet search engines to attract a significant portion of the consumers who visit our customer acquisition websites, and we would be harmed if we are unable to advertise on search engines on a cost-effective basis.
- We may face difficulties as we expand our operations into countries in which we have no prior operating experience.
- We have entered into certain related-party transactions and may continue to rely on related parties for certain key development and support activities.
- Our facilities operate on leasehold property, and our inability to renew our leases on commercially acceptable terms or at all may adversely affect our results of operations.
- Our global operations and customers expose us to numerous legal and regulatory requirements.
- Unauthorized or improper disclosure of personal information, breach of privacy, whether inadvertent or as the result of a cyber-attack or improperly by our employees, has resulted in liability and could harm us.
- Others could claim that we infringe on their intellectual property rights or violate contractual protections, which may result in substantial costs, diversion of resources and management attention and harm to our reputation.
- We may be impacted by tax matters, new legislation and actions by taxing authorities.
- We may become subject to taxes in Bermuda after 2035.
- Bermuda law differs from the laws in effect in the United States and may afford less protection to holders of our common shares.
- Any U.S. or other foreign judgments you may obtain against us may be difficult to enforce against us in Bermuda.
- We are a “controlled company” within the meaning of the rules of Nasdaq and, as a result, qualify for, and intend to rely on, exemptions from certain corporate governance requirements.
- Our largest shareholder, The Resource Group International Limited, and its major shareholder, TRG Pakistan Limited, have substantial control over us and could limit your ability to influence the outcome of key transactions, including any change of control.
- The anticipated strategic and financial benefits of our relationship with Amazon may not be realized.
- Our future earnings and earnings per share could be adversely impacted by the Amazon Warrant and if Amazon exercises its right to acquire our common shares pursuant to the Amazon Warrant, it will dilute the ownership interests of our then-existing shareholders and could adversely affect the market price of our common shares.
- We are an emerging growth company, and the reduced disclosure requirements applicable to emerging growth companies may make our common shares less attractive to investors.
- The transition from foreign private issuer to U.S. domestic issuer status effective from July 1, 2023, requires us to comply with the U.S. domestic reporting requirements under the Exchange Act and will result in significant additional compliance activity and likely increased costs and expenses.
- We incur increased costs and demands upon management as a result of complying with the laws and regulations affecting public companies.
- If we are unable to maintain effective internal control over financial reporting, our results of operations and the price of our common shares could be adversely affected.
- Certain U.S. holders of our common shares may suffer adverse U.S. tax consequences if we are characterized as a passive foreign investment company.
- A significant portion of our total outstanding shares may be sold into the market in the near future. This could cause the market price of our common shares to drop significantly, even if our business is doing well.
- Anti-takeover provisions in our bye-laws could make an acquisition of us, which may be beneficial to our shareholders, more difficult and may prevent attempts by our shareholders to replace or remove our current management.
- We have the ability to issue preferred shares without shareholder approval.
- The market price of our common shares may be volatile.
- We may not pay any dividends. Accordingly, investors may only realize future gains on their investments if the price of their common shares increases, which may never occur.
Management Discussion
- Our revenue was $126.8 million during the three months ended March 31, 2024, a decrease of $4.8 million, or 3.6%, compared to the prior year quarter. This decrease was primarily driven by macroeconomic factors impacting the FinTech and Telecommunications verticals, which decreased $7.0 million or 28.7%, and $3.6 million or 16.7%, respectively, from the comparative period. These decreases were partially offset by increases in the Retail & E-commerce vertical of $2.7 million, or 9.3%, and Travel, Transportation & Logistics vertical of $2.5 million, or 17.7% from the comparative period.
- As a percentage of total revenue, the revenue from our Retail & E-commerce vertical increased to 24.9% during the three months ended March 31, 2024 compared to 22.0%, and the revenue from our Travel, Transportation & Logistics vertical increased to 13.1% compared to 10.7% during the prior year quarter. Conversely, the revenue
- from our FinTech vertical decreased to 13.7% compared to 18.5%, and the revenue from our Telecommunications vertical decreased to 14.0% compared to 16.2% during the prior year quarter.