SRT - Earnings call transcript Q2 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 Second Quarter ended June 30, 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, measures. some the today discussion include non-GAAP may Regulation Company has with to amounts reconciled the based GAAP closest measurement. G accordance these back In the 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, may would over like to turn Global please the call proceed. to Rao. CEO, Bharat you

Bharat Rao

you, everyone. Thank And joining. all for afternoon, Good thank Raynon. you

results operated expectations were quarter with line as second against our of we backdrop internal conditions. Our the in market shifting

revenue, in the one-off general declines year-on-year prior benefit quarter market a as soft experienced opportunities tailwinds. we revenue well received of the large with CDC, as year While

hiring services our of Our verticals by priority ramp ongoing during and up agents the the quarter several in was additional to client second training capacity. expand

we opportunities the slowly last on Travel Whilst few continue for its past expect While our consistent Both U.S. show and clients as inevitably with returning profitability for the coming perform for verticals and to activity levels. showing company. growth levels to to the expect to growth soft these and across consistent impact deepened year-over-year we the compared this and in margin clients. recapture South relationships pre-pandemic to quarters. a this growth our valuable our continue quarters compression, as our hospitality represent expansion existing based pre-COVID, comes telecom normalized core still well. and to business do of Through has Africa the telecom well and financial service vertical on to process through services drove consistent our territories we with trajectory our proved vertical we quarter be the

to revenue of a vaccination the is large that portion a mix. decline prior year our though program vertical netting due our one off to this quarter outsized support healthcare showed Our an contributed

ecosystem more sales in as quarter the added with discussions. several logos Our through seven showed new improvement advanced we

our the sales occurring receive U.S. calls in proposals campaigns our to effect team and brand initiatives incoming in our with territory. clients across pipeline all U.S. investment sales we have and are existing for greatest Driven bolstered of our greatly an Our by marketing requests by prospective awareness the influx beginning

pipeline team value StarTek, bringing Our our builds redefined visibility sales provided immense tangibly and awareness marketing strategy for greater revamped our expansion. in future has sales to while

pillars of footprint As sales one our to lean the of expand across our to industry. will we three identified, main the ecosystem growth have upon we continue

effortlessly streamlined do service We are to further we solutions of we quarter, agent modular and that services provide and on personalizing partner StarTek center and capabilities. digital software, our Genesys customer into our experience experience, look industry. continue AI, has to deliver technology combines focus the conversations has AI last better technologies to partnership natural agents identify allow services entered Genesys partnerships, platform that our with a and superior our contact of with capabilities platform, enhance launch so. leading been Agent experience a our ensuring in experience. we goal Startek seamless leveraging expand As will Genesys and forefront powered Last the and solutions we announced emerging that to processes Alongside their customers. their customers. At customer our to to best-in-class leverage our continue to provide center empathetic the quarter, a for our continuing is at forward platform our to to to to fit with meaningfully work them their customer clients, highly agents' with and partnership to and allow their a our technologies remain we call cloud

our supports platform the tasks. agents more will us of repetitive burden and skills globe the and Our manual faster, allow efficiently, across reduce cultivate to new onboard

we associates tools to on necessary am platform culture our that the focused globe. builds our the promotes for an second allow capabilities, we can built services, CEOs voice provide our combined that will a for AI providing Startek to Startek I quarter, environment honored an upon for award-winning success our I to mentioned company. earlier, clients. and Best have our In has Equity, all the diverse As the our and was to a the XX,XXX our the proud the and inclusive foster of ourselves, Diversity, the Agent work commitment Startek Diversity, customers our nurturing It world-class of of employees. to customer are that deliver of was best-in-class for an with agents and confident platform. to Comparably be Award Committee all work award accept with on they been through environment behalf experience named can around that winner of our privilege continue in we incredible Inclusion the Cloud

a a evaluate work structures we recently and more all macro lean one and site across U.S. and our infrastructure hybrid our the physical geographies. as to the mix evolves. evaluating ensure environment continue contact To centers continue exited efficient will we of We physical in remain organization

our quarter We up ramp in to excess on committed we platform ongoing and quarter we The our continue exciting savings StarTek position to Overall, marketing, capitalize the for new existing fixed done this clients. digital necessary another with for and growth. cost have preparing expenditures and sales, eliminate investments work our was towards to we and also where had efforts. those remain optimizing reallocate structure

within are be aggressively sales invest the our and marketing to we continue we future must we As for teams, demand generating. that ecosystem prepared

back return shareholders. year-on-year While did and preparing StarTek top to value the our positioned growth, line focus greater on for we a bottom line has our achieve not platform future to

by turn over for the to Partners, Just the proposal we latest website. Shah on a would note to his Nishit second like now After available you the to you. not and our call to may I’ll concludes Nishit of us. the questions made joining to for our the financial And that the the Session this review the Gillette, by our going Square details pass over performance turn Nishit our I'll everybody call results. to at statement call. direct insights for into release answer strategic to I initiatives XXXX dated is he all is are committee, I of going quarter that non-binding end Thank to be special StarTek’s over further Q&A to Capital of provide financial during of press you the June the Ron year beyond. remainder discuss to available any the have Transformation, XX, today, provide now Head call on more

Nishit Shah

in compared net Bharat. top quarter. The X% the one-off Thank $XXX.X decreased line, net year in revenue our was an by quarter. $XXX prior Starting revenue On COVID QX to million was in quarter. on by the driven year vaccination to aforementioned the primarily decrease million revenue currency the to compared ago, ago constant basis year contributing you. oversized Thanks, program a benefit

year million of off-setted in year to margin to due quarter of verticals. The quarter. by termination ago to experienced a core the continued quarter. strength compared first was the also was compared decline by in decline of $XX.X ago was factors. Gross our XX% e-commerce XXXX, in XX% million We Gross $XX.X the client our profit driven the multiple

inflation material impact. had First, a

in factor impacted This geographies we increases to current some in train in informed, margins in As quarter. our decade-high inflation where India, also of to some taken resources in had work from our resources needed the quarter. will billable ramp quarter hire saw advance. client this These we previous wage be levels. Furthermore, quarters, next and significant the

of of quarter. to decline the as the the and claw compared the million normalize. expect year back quarter to the year-ago general $XX.X Selling, We current of administrative, second some SG&A, above for in factor half in $XX.X million, the second expenses was some margin

is to income to quarter. $X.X sales ongoing attributable – $X.X or to compared net was million $X.XX was year-ago X.X%, Please marketing is in share in percentage As that compared of million, our adjusted to revenue, diluted the added X.X% are, year-ago StarTek in of million, year-ago two share, These QX investments $X.XX quarter. accrued quarter shareholders quarter. $X.X or million, $X.XX to also $X.X a attributable second per StarTek share Adjusted diluted $X.XX quarter. quarter to or on in booked shareholders expenses EBITDA for of was the was per million under to to income million, $XX.X for the also per however, in increase ongoing and compared take-private SG&A Net primarily income The offer or share net Adjusted year-ago account the in $XX.X per attributable expenses the due note back compared initiatives. EBITDA. SG&A expenses.

at restricted EBITDA percentage profit. sheet XX.X% Total the March of a March million, balance to stands digital a $XXX.X to XX, million, June X.X%, in primarily Net as and now Thank over turn $XXX.X assets, XXXX. XX, well The $XX.X debt, to of cash As This in adjusted at XX, $XXX.X year-ago at an our at marketing aforementioned million From result at in compared I XXXX. XXXX Ron. as at was the $XX.X XXXX debt in prepared XXXX. March was revenue, increase sales, a perspective, compared my June decrease and will cash, cash quarter. was million XX, call restricted to compared compared to million investments decline gross remarks. million, was you. $XXX.X at XX, XXXX balance June XX, concludes excluding

Ronald Gillette

discuss I'm going time to focus going use to Nishit. strategic this Thanks, forward. our

quarter customers our U.S. sales half our bolstered we'll to to and plan expanding the acquiring we focused handle and our team U.S. as to logos. With of footprint capacity add push on We look services on ready growing year, sales in new to and aggressive leaders current and forward be pipeline make the new For to capitalizing across the our U.S. back sales our additional this drive new an ramp-ups, on India. efforts we the

We in relationships existing will work our our and services our expanding deepening clients. also to continue

clients, In program both to can delivery. to provide better increasing and client strengthen awareness our our our on digital management can relationships solutions are fact, who services also benefits while management our of greater reducing account cost delivering working in deepening focus we and integrated that about teams

our partners. our series, accelerated markets. In have sponsored as we networking part we aim we across where also largest marketing contact we Week, customer Vegas, Las our Contact awareness event of one quarter, Customer world's past as digital to a with efforts event Additionally, cohosted increase the the brand of

two and HFS sponsorships to presenting leadership with thought will research These on with our continue a initiatives also see vendors our and conducted and showcased with Group. Everest come focus in will leaders, clients. kicked in when emerging series, through collaboration include digital off customer in approach QX experience the we which This will explores webinar in Our results in QX partnership will be life. trends space, association thought

strategy platform for As service we on focused having our expand customers. our we'll best-in-class continuing of platforms, be a our

While existing offerings of and to our developing to we new internal teams especially are in proactive to platform, drive refine remain our also ahead continue competition. technologies our digital cybersecurity, partnerships our in will new enhance

focus Our AI and and to on agent of centers in within increasing disruptive, innovative remain to voice customer enhance continues experiences. use both innovation contact

throughout year second occurs of our is this our half. of due the to to expect Part better the first half be business. our seasonality natural slightly than that We

region, a our example, the not will pass-through territory that some in us, have we For were first to Saudi costs productive due Ramadan. unlock to able we highly on for in quarter

have impact by ecosystem, identified expect in financials revenues that already service we similar, we as our logos we this We've that The second and to quarter our relatively sales Bharat market partnerships. on capitalize recapture we XXXX. digital of we more. discussed will with are in quarter While clients compression to our refreshed of our expansion half material won revamped margin begin driven services our will And to onboarded some with through through on services this earlier, have the the continued discussions incurred through of ramp-up strategy agents. be several opportunities advanced starting the a

value call strategy do With return ready As Operator, over our shareholders, to you. and the we we growth execute to are first sustainably company our that, our will questions. always, priority is so. our now open to to for growing to on back

Operator

Widell Ethan Thank Our comes you. Riley. instructions] [Operator first from question with B.

Ethan Widell

for question. Thanks taking Hi. my

So could a into I little color additional was gross provide your wondering if margin. you

costs? of wage I if highlight you think. kind of increases Specifically, address trading and costs, inflation, other breakdown I was could those relative the you wondering And

Bharat Rao

Ethan, business on Thanks, cetera, See, off, quarter than step a you one. kind question. of can normally and take I provide if as and typically up, margins back that if ramping for little the starts Sure. color then And you breakdown. quarter we a our less can more two it's see et start

So XXXX or versus that's in no different XXXX in that XXXX.

seen. quarter of kind even you Now, which circa – XX.X%, first margins have if much the of margins in ramps to as of course, quarter you East, start, out margin about as incur as in a additional festivities the kind the ramp-up this terms seasonal. dampens costs to XX.X%. that they we have about those well perspective. quarter but these from quarter of And go Middle we we our three would in talked look at Ron any need you of were and items XX% seasonal pretty XXXX, into that four, And about get as we, the in And in of

if So to quarter a two two one gross between XXXX look you XXXX, see XXXX. one of margins what quarter quarters. you at of the X% for in two circa I quarter difference quarter Very in similar and and those had

pressures, Now recall, for some two. some about you quarter inflationary that in into talked Ethan had – and XXXX, a of margin pressure, kind with just about one we continuing of talked obviously, of we would or had quarter the

adjusting that So conversation are level. have getting at right are to situations we coming those in where those to proper we up to look working the contracts just around a are

significantly about in terms ramps we quarter one which a positive, have versus different the quarter XXXX. that ramps, impact value. that the of longer-term nothing So from and creating that we seen, talked value two Apart extent, shareholder XXXX there's that of the to in to of significant and is shareholder Ron have

in quarters. any pause relatively costs next and So if the two that in this specific the we of has see peel get I'll get of any offset if take can any kind kind provide the we and just have color, then more that if – will quarter level next a and into ramp layer you detail. want you of – the areas,

Ethan Widell

very No, Certainly. helpful. that's

the sort be trough So this do for expect margins? to you of for

Bharat Rao

quarter You mean reasonable four to get think in quarter saw and back in one, to the quarter would that levels estimate. I three a that you be

Ethan Widell

my Thank you. on end. all That's Okay.

Bharat Rao

Thanks, Ethan.

Operator

Mr. our concludes over call I would this remarks. now to Rao Please like the closing for question-and-answer At proceed. time, session. this turn back to

Bharat Rao

forward we And you this for Renan. next us speaking for all support thank our results. with of afternoon when and you, continued Thank joining third your StarTek. to report quarter I you look

Operator

Thank you, ladies gentlemen. and

now may You disconnect.

Startek (SRT) 9 Aug 222022 Q2 Earnings call transcript