SRT - Earnings call transcript Q1 2022

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Operator

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Startek's Financial Results for the First Quarter Ended March 31, 2022.

Joining us today are Startek's Global CEO, Bharat Rao; the Company's Global CFO, Nishit Shah; and the Company's Head of Business Transformation, Ronald Gillette.

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 securities laws. These statements are based on the information currently available to us and are subject to various risks and uncertainties that could cause actual results to differ materially. uncertainties. listening XX-K call for posted of risks those latest review the all these and XX-Q on and advises to to this the summary Startek its website update Startek any does the not responsibility forward-looking undertake statements. to Further, in with measures Regulation some accordance the today discussion include non-GAAP may G. GAAP The reconciled closest back to amounts has measurement. Company the these based reconciliations be found the their of section can in on The website. Investors the earnings release Investors be section a that the I would available replay today's www.startek.com. via call remind the at like website webcast will of of Company's everyone to

Now Startek's I Sir, would over like to turn Global please the call to Rao. CEO, Bharat proceed.

Bharat Rao

would you this Kate. a your I thank you first premier transformation on embarking solution not global you, are been hardworking all made always, able recognize afternoon, progress to who across Like for our our Thank customer to all all experience Without your the us. help, company. Thank our everyone, have want Startek to Good become we've accomplish for provider. organization. us since and growth ambassadors to joining reinvigorate we dedication helping

their desire worked just the an of open valuing for not to revenue client the focused creating services. wages industry. focused to each of with relationships our strategic our quarter combination year-on-year growth, our investing platform explore new through first increased customers to improved our relationships support and address and We and number reiterated key with upon heavily clients. growth technology on our to drive overall quarter, experienced develop in pressures, to inflationary were customer efforts and rising verticals best in our opportunities customer in new with unique to as solutions backdrop and of them services new of efforts, services worked streams. Early needs, ecosystem to our we Our form we Through sales organic our within on revenue unique find digital partnerships the service dialogue cost new

and the in As a the e-commerce wanted operating where alongside Though, decision client our opportunities in to medium-term, vertical. graciously margin decision a in back efforts into we accretive a had in temporary difficult made working we led clients to could step the be our long-term make continuing expect the up This them, growth from channel to valued such, though, with contract e-commerce other we vertical. decline we that the in we within loss impact to we make this vertical. with fully vertical,

grow this and We Our deepen we clients and existing financial drove relationships. our existing new this and well quarter. business our relationships growth performance the year-on-year to In logos. doubling saw cultivate and throughout we we perform are year-on-year expecting segment efforts services our to strong by with client from vertical continue as deepen growth telecom, year our

mentioned we large I and previous win in fully interactions, to another client. client in with As new South Africa, are we of our business now lines our ramped with telecom continue

out in alluded and pre-COVID has now levels. our that territory in the Despite as prepared of to the sector we new organic soft set growth pre-COVID trend am to we normalize We travel This also see levels, is improvement to aggressively through ever. in but go hospitality that our experienced right began some volumes it in brought it relationships. the than that to our has earlier, we existing and expertise is several and we direction. compared stronger to clients quarter, rework experience members you identify to sales client I believe and I sector our confident begun to pipeline, back to the Like U.S.

to revamp part company. for have team deep are three of strategically verticals ecosystem, growth overall grow. our identified of sales that specific the we sales want our These to strategy one within efforts have domain new Our pillars in our the expertise we larger

you to refine us the I strategy, this therefore, optimistic within with and We to pipeline am our continue opportunities sales but U.S. be excited can our encouraging. realizing highly will and our wins territory. expect more confident quarter, focused revenue that is on

key As against any we our on infrastructure invest platform. ongoing an identify to have our our we remain continue cybersecurity in and also capabilities and within last front, areas augmented discussed in cybersecurity and technology prepared malicious for call, our attacks our to will and to effort prioritize areas

key have worked increase overall digital-first relevant digital us to capabilities clients. cutting also and and A strengthened platform new and have enter digital digital further added opportunities. organization to a strategic transformation solutions that our access and our latest strategy give edge to emerging tackle into our offerings us and to RFP toolsets. overall CX partnerships is our allowed around new We the to our to offer grow to These developed product reach partnerships to solutions

Krisp, As clients’ into AI-powered noise to with voice-based ensure deliver we we our both customers. entered provider, and an part employees solutions strategy, our this partnerships to that superior of can cancellation experience

is growth, are lean within operate to efficient our a for want to poised and we company structure. continuing While we ensure that

go globe to As with strategy. employees on locations solution with for This various a best and the an optimizing we evolving efforts, work the develop executing working have across our continuation initiatives of a our environment. number our right to includes hybrid of along sizing been growth

positive structure, that customers. have We work hybrid work are our clients as our and people our developed conversations seeing involving solutions our we both for with

work evolve, being variable in while clients solutions have environment taking won't and around tangible to preliminary maximizing of stages, are cost are so physical us, initiatives to to still ensure in provide our evaluating been come utility These our to the the continues want you yet. from expect the been centers we location. to we high have these quality each world Furthermore, environment. our that steps just see solutions able to out benefits the structure in we same work be have able As offer that the

seeing of benefits later these expect the quarters of towards we year. to some this So begin

made We Startek, position work to about have all I was this and here future the ways company I we done our quarter quarter for finding of Startek. to that the to very that momentous proud want new have the at reiterate am grow opportunities. progress

results. turn focus over to call details performance, driving his I growth, achieved While only our like sustainable Nishit topline we initiatives review first Shah the over have Startek's to year procedures. Nishit over and is possible remainder into on us now of growth quarter our and call our would on of the incremental to the provide he to end going you Head of of concludes you. pass by to beyond. turn optimizing any for the the cooperations is Transformation, our at Ron financial financial to After further Q&A call Thank for Thank Gillette, I'll joining insights the strategic on session of questions and to provide call. during now may the happy more this Nishit, answer you be you. our all I'll us to

Nishit Shah

across good year-over-year a compared revenue and and Starting financials $XXX.X to telecom million in all. net the quarter. service afternoon On Bharat, This in growth basis, on increased $XXX.X year-ago currency revenue topline, the compared quarter. strength by net our QX the and million constant X.X% you, continued Thank performance to year-ago business verticals. reflects increased to

$XX.X of compared that pressures proactively SG&A increase. within the the per inflationary also increases It's Selling, Our in to India Gross in wage $XX.X our XX.X% XX.X% million expanded to was the Gross growth wage increased the contributed due environment which and quarter, to in this $XX.X revenue million in primarily we now million million was the geographies, as compared for the was compared our quarter. year-ago technology Middle a mentioning hour U.S. in further the spending offer general cybersecurity year-on-year and support margin and in profit minimum to to $XX.X to wages East such year-ago quarter worth as the to increased higher and as infrastructure. quarter. we first administrative, in attributable well expenses inflationary $XX employees to year-ago

percentage to of quarter. X.X% As SG&A a the revenue, in X.X% compared was year-ago

$X.XX to and team year-ago income to $XX attributable net our diluted per $X.XX solutioning, quarter. in share $X.XX or or of the per loss million the $X.X Startek or to high in million $XX.X to in share in million sales, million growth compared Adjusted performing Adjusted attributable compared year-ago per was to first or compared million in drive first to $X.X in million a per shareholder year-ago QX Our the quarter. marketing loss $XX.X Startek the shareholder the $X.XX QX quarter investments SG&A was was quarter. share EBITDA Net digital share quarter. impacted $X.X for for diluted

as XXXX account on inflationary of to $XX.X compared XX, cash year-ago million XX, at $XXX sales, of to digital million XXXX. our $XXX.X in is at cash cash marketing EBITDA Net as pressure. XX, the Total due compared to at million revenue, and perspective, was balances primarily a XXXX. restricted XX, million XX, investments of compared adjustment at March million decrease adjusted X.X% As sheet quarter. was March restricted the XX, a compared well XXXX million December debt debt December to increasing impact percentage and team at From XX.X% March XXXX, our The balance in the was rate stands XXXX. to $XX.X at at $XXX.X $XXX.X excluding December

prepared the during shares an first to our strategy. our of reflection stock repurchased our at concludes the cost a will overall $X.XX growth an call XXX,XXX Ron This In over plan quarter now. of of my This have addition, turn per we common aggregate we average repurchase confidence of I a is share. in remarks. under

Ronald Gillette

going and rest now is able have robust Nishit. the benefit to on ever, centered emerging Thanks, be from revamp to and further strategic our operations. markets efforts The pipeline we capitalizing of core continuing use and our the a around to that to be sales our focus to evolve I to going XXXX going we sales discuss pipeline With time am stronger new identified. our expect on optimize than forward.

sales in invest as investments to senior sales initiatives. ecosystem, in continue our and as marketing personnel our our also will We branding includes ongoing which in well

be solutions the experience, capabilities great provider and with we want world in to leading industry the a unique to brand. able communicate a cement to digital-first in As our customer ourselves

team and ways in eyes activity, be content our target growing will of brand of key drive team sales to continue clientele marketing for find hiring to will team to audience this territory. the front Our Throughout to our U.S. several able target in of our grow customer utilizing clients key experts target year, the emerging specifically domain rest to we that opportunities. expect in sales by the the

said on driving throughout the we calls, past partnerships have in year. remain digital additional As we focused

continuously do the around such to so, These find taken continue new reiterate unable examine the and as our customer company prescriptive our are position allow around paced design only year. operate and in experience are to these performing will call, to service. drive want help an clients. cutting and We and ensure with as provider, the that actions XXXX. sizing position solutions. providers offerings to To looking we we the clients company the we us currently in on also revolve continue that to for to initiatives ways take fast we conversations mentioned all our Bharat We not throughout solutions journey capitalize to spaces solve begin had we the putting efforts and will globe. to operate customer are expect retain we a innovative expand space to and a throughout steps leading several our we have most insights correct to the ways best with problems but to to grow at will to evolving will their evolving level. we emerging analytics, edge optimal this to product partnerships I right Earlier reviewing with relevant as in predictive into digital are that us This constantly a

will We are principle. of disciplined us no take and in structure away cost amount our this growth from

people our want that into This underutilized are evolve potentially we to physical that us right for sure right As to works the looking the centers continuing environment to are hybrid clients. further consolidation. that system, our our a work ready and for we the steps make and solutions for carefully to find us into involves taking offer is areas

efforts of We second able towards about the offer and specifics impact will the benefits year. the of these to be part more

into we bottom We is that opportunities that want near-term. up the want capitalize Our anticipate limited the ourselves our the simple. on set to investing approach seeing heavily line we've for I for to growth future. while in reiterate

foundation willing Startek space We for there and on, lot we believe still we of our operate We ever value to have we call drive and position work for in to do potential our With company's the we untapped so. as in our are a ability Operator, a the as place we that invest opportunities. in pursue questions. you. in we'll in long-term are to this that, long-term shareholders. confident With are a these strong to remain is that to to now position success, and over to looking open focused ourselves

Operator

the Chris The Howe question now [Operator begin go from Instructions] will session. question-and-answer Research. ahead. We of first Barrington comes Please

Christopher Howe

Good questions. and you good thank morning, for everyone my afternoon, and taking

on day. that footprint and long were about of some looking Sorry, now. comments at it just just the the physical wanted cost I to Ron's start-off is as mentioned structure

this you some or this should What need is having sometime juncture, some known and you underneath time detail there's I benefits, known these portion As second we some known of what will are what's portion versus to think not benefits but these provide start would time to or would about at portion dynamic can develop. develop? describe the Can in explain? presume some as plan? on which half, talk you additional about that

Bharat Rao

Sure. request can Nishit that take and I Ron Nishit, mean, provide numbers. some and happy to specific and I'm

was I Would question? have correct to what of the of areas of identified. think that your way a of understand summarizing you the be if that optimization identification, you we will, wanted extent

Christopher Howe

about discovered through would while optimization That's you checklist be strategy. go presume to year, – Yes. we as accomplish of some correct. things your I as will a there's that some move the

Bharat Rao

Sure.

So initiatives just And looking this a at looked – Ron I we as also dynamic when where putting but one talked end are look needs we about And of this clearly that place which at structure. this and the buckets situation are partnerships, towards last – priority is our dynamic volumes are, at is going that from last clearly because process technology process to think into because, we look year optimize perspective. various not in because right and very up high did FYXXXX. a well we to is business at delivery our a

is towards And stage, aspects it's areas are are for this to talk talk we as optimize, had feedback what first clients, we identified we areas the at have around that can the of evolve quarter, year. and we working be – to and by terms of with will I and real in our we mentioned, to a the estate, whether costs great the So clients. continue our is we from getting to costs as extent end the therefore, IT our process, And our guided as can know which clients last infrastructure, dynamic terms involved that them teams in we out, of a other discussions will fixed strategy with. ongoing what indirect be

already the and be with in same right about about that of pillars and that we end principle did we ensuring into that Now, so more from And recall, share benefits identified on year, more all going are talked effectively financial able this at this focused Ron we talked year we arising opportunities get the point. But size last from we I if at clarity, and is that that as growth about on underlying three that working and the all arising be had should think to can the year. you. details talked the you end organization, of the that last we that of

Christopher Howe

on the profit. the me that wage question or reasoning And perfect. quarter to next talked impact the We profit lead that gross to and about inflation my rationale in was question. That's had Okay. gross behind

You line. also key the hires impacted many SG&A that made

can First the this about ongoing question, attrition how your happen you will think employee benefits goals? rate your What's the about in impacted inflation. And hiring that turnover off, of also consider environment? talk my we we talked eventually about you and has that while last if

company more a footprint, what let's shift you the say, in is inflation As to lessen there to some and look for a juncture about future, in the at normal way environment? could were like an margin if more think to optimized

Bharat Rao

more then Nishit and frontline closely Planning I and very can is start teams. have also Corporate can Ankul request add for obviously that Startek, with I on. specific, Sure. and we to a Head Ron, Ankul working our of

see the the one cloud So one on-prem also you've optimization talked things of you that about, we and for the elements of instance and got of infrastructure. the infrastructure, is the infrastructure,

I'm those IT in Based there are for facilities, just we laboring looking critically Can at on infrastructure. our from at overlaps looking the right? of apart be are instance right, any point kind made on I also our because So so getting overlap. optimized, clients some the are to one others work are us have to we two has developed, with clients very comfortable to the giving talking guidance are that back site, the the optimize about systems from minimize earlier,

of that your something is to underway that's about So last that is the and question. process talked response that in I dynamic part

with respect the especially terms happy looking to has that turnover say areas, been In levels, are our things has our the where we turnover would at – areas at to stand been hires key investments, I senior of say relatively new low. key in I'm or that with priority

customers. built right, quarter. solutioning about team, generation team, putting talked marketing in brought strengthened solution the we on few team. team. in partnerships brand presales lead We we initiatives bulked the a digital For capabilities up sales substantially this up and had our – and Ron on sales out a when kind We there instance, leaders market And with we've the the our of our and team in

to happy we must we admit have don't a relatively at tribal I'm “the looking has at attrition and isn't this ensure from operational had may that these we say an we attrition areas, areas senior that We concerned from and low. of is point across in closely the knowledge we we gone some has talent areas lose, consolidated for point, I'm there do how seen view where in about. there attrition been investment that in that would that say I gained”. war for anything But instance, I have are of at levels have particularly perspective, an lot that although a the So

we with margins is renewal. for Now contracts – I think our our margins as up customers they our in as terms kind as way discussions for at the of come adjusting renegotiating of – clearly our look

us the we is add you of point the should if our perspective have be, or a on sense back a probably to that medium-term to more I anything where discussions from that relationship out those focused and probably having I made missed And client, the have would you think out. I we can or my quarter at we should So with I'll anything Ron what and we if for levels kind smoothen that makes conversations. Nishit therefore, this to alluded else for have just you have to is margins a in take of to earlier Hence had dilution a sense long-term because margin only not transitory strategic see actually looking two with that, get that if very that our clients. as think would original nature.

Ronald Gillette

Sure, Bharat.

going As and see of forward. we how the your was at look that also we around discussion part inflation

inflationary So we've times unusual here. pretty some come through

continue the going wage pressures increase of the today. The there. and around staffing America that we – but earlier, the the Well, in the talent the in inflationary out mentioned As to clients that's the that's our well in us we company and in within of with that how issues with out improvement and other address going to there North levels sure well long-term, because in wages to other play worked to situation. now. brought we to COVID stabilized had past responded geographies be in world where the Not are agents

and the solve able pressures be clients we'll serve their continue but us the to that these staff subside to come allows inflationary hopeful right forward. would solution to to effectively with needs to future, invest are work to in going and that them We our

Christopher Howe

certainly in hop appreciate color. you. chance. to Thank queue I of question all perfect. will I others That's the back the give a

Operator

[indiscernible] from Please B. next question Riley. ahead. The go is of

Unidentified Analyst

taking for my Thanks Hi. question.

three provide private Firstly, wondering evaluate you been hired your months outside updates on Square go you offer advisor any since considering I was from deal. Partners financial if the that outstanding could Capital it's to almost

Just any insight wonder additional if provide could on you that?

Bharat Rao

committee [Forbes] was Sure, Ethan. about. this business Ron at and can advisors given tell and the you the the looking situation. dynamics that talked constituted we stage, is and their I still At special all evaluating are that Freshfields They're the

I haven't obviously that form as they are So view assessing yet. as the a able and their they as soon fine formed or numbers, to tuning they're But their and situation a information. does lot they're But around that think situation the to happening everything the us. fair really environment point, still that's given in at evaluating the provide more say industry this view,

Unidentified Analyst

margins Absolutely. correct wondering wage of wondering here. gross in that And I if if about. of the worried was I Thanks. any assuming elements lower were driver primary I inflation I'm there other be that should the secondly, is kind was

Bharat Rao

organization It's some especially the space Not say think because wage to one don't pressure of any investments of been smarter. on there's the completely cybersecurity make in can in hand. actors And continue terms right, the that course, get I also in really. because world proof today too, cybersecurity our we largely

a investing dip in temporary we in to I whilst have might have And there. So temporary – will result margins. think continue a that may

Going stable system forward, for far and it'll provide more us. a secure

those it's else decline two contributed that really than has anything So margins. attributes in to the other

Unidentified Analyst

means for you question, so last from and sales what new was And wondering Thanks. your opportunities… returns I seen if have investments your any far that early then

Bharat Rao

repeat last I could your you I part missed the question. of think that? Sorry,

Unidentified Analyst

investment your asking you've means opportunities far your in and in that visibility pipeline? what new I seen Apologies. seen into of kind that you've so any terms if what sales in was and returns of

Bharat Rao

encouraging. and some had We've Sure. what that's wins is very good

believe in the once announcing of are is we – dried. we ink those we – Now as ones kind

suggest in I'm of work and of So won got. quarter, quarter. in to logos, see new which we And are are is digital XX our very the have investments seasonal Most we our our years, quite right our the after new an out of proposals we logos encouraged on that cetera. first positives overall that And revamped going most have terms in the got the proposals of that we new very some have et does side, the encouraging. that proposition The this digital that have direction. experience substantially integrated two of almost wins and and almost and we on will resolution encouraging logos offering, customer offering offering the around gap our had now have our impact called mechanics, barring in that have

we clearly the of are seeing benefits that. So

do therefore, imagine, understand as are markets integrating you Ron take obviously, that and time can Now, for appreciate. as mentioned, our And we marketing to these with efforts.

to rather releases increasingly you'll partnerships of talk our that as just on themselves. actually an lot in media customers benefits the see these on end more our a and than provide we social as our So partnerships partnerships

a pipeline help our So view that's Does very perspective, that encouraging those I are new quarter, that the all our of good I think about that XX that my Ron the won returns? fact of sense my kind logos to on we've of journey of force. point give you building embarked just sales clearly, given from we have mean, this alluded a from

Unidentified Analyst

best that. my again, all luck. for of I questions. really appreciate Thanks Yes, Absolutely. That’s and

Operator

Barrington Chris Research. of Please go question ahead. follow-up from a next is Howe The

Christopher Howe

one Hi. for mind, questions in Thanks out that I There's my that taking stood on. again. wanted follow-up to my

situation? step Is can client's reflective back? of decision color the step the the delicate talk you if more e-commerce some environment now? You a is, pricing it back mentioned on from right vertical. this in you pricing to a how Can is provide about And

Bharat Rao

ensure that provide overall wanted a account. we why only and strategic is context. We critical. is Actually have other of relationship look to one which related we becomes one into to number so I a factor it's Pricing had we took was pricing factors, aspect, can that an quite at

no we does was a other The we it that volume that to there no firm get environment, there be didn't fair a are challenges faced, – was when of kind the in have forecast challenging. bit one, minimum

combination trend going You've CapEx a you And can took got the going relationship into just consideration. requirements. down, we attribute forward. that pricing that than we see from perspective a is about of which strategic It this a rather talked are was margins add upfront and if where value really

So the we've that out we can. had quite more solutions, are do the up ensure can of which honestly with conversations the technology clients, and you what have those to the anticipated not Ron the we kind probably we CapEx, fair, the have all adequate we you're are questions come need to any point worked which around these that for extent together investment to of with see overcome leveraging is trends, pressure seen for win-win with and up, digital customers, we've that out there. And The that into guarantees. we we seen some All that customers, we we fact we specific why if time some us factors kind we – really didn't put become the now, be my didn't if underpins will or the all stepped decision. to with pricing haven't solutions inflation flexibility, having upfront have that our that volumes, reason made, influenced visibility our which can is only incurring incur proactively it's very fact help mind that and minimum to that fungible of interchangeable because had other CapEx have of is that conversations

you to want more and As if else have Ron you see Ankul, this if color. add some to and anything Nishit provide anything to

Ronald Gillette

think I it well. covered Bharat, you

Startek that, sense, we environment client, in our dialogue has to and clients pressures and have client For where a learn hopefully new of – worst though we'll And the both on the discussions positive hopefully if positive not have and the we'll will I ways inflation can. parties had us. then, to both the those behind work think continue through give is this in to overall into it get overall note both been costs specific not, wage control in I a for experience future, broader to us of good and then – to of

Bharat Rao

that. Thanks, agree with Ron. I would

the been I that with talked what drawing working fortunate think do strategic and I while have relationship can about, the suggest perspective. factors go back we have and them, we enjoyed from essentially we see a board to very

Christopher Howe

Perfect. Thank my you questions. for taking

Operator

turn the question-and-answer session. I call over Please our concludes proceed. like to would This Rao. Mr. back to

Bharat Rao

button, my I but and report for look second thank pressed I Thank you, mute for quarter you, all forward you think support in afternoon clearly, unmuting joining our speaking this results. next, we your continued Over didn't when I me. Sorry, to Startek. and to Kate. you of us Kate, believe with

Operator

ladies and you, gentlemen. Thank

You disconnect. now may

Startek (SRT) 10 May 222022 Q1 Earnings call transcript