- Earnings call transcript Q3 2022

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Operator

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Startek financial results for the third quarter ending September 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 the remarks, we'll open the call for your questions.

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

turn Now like conference would Global I Startek's CEO, Rao. to begin. the please over Bharat, to Bharat

Bharat Rao

our partnerships Good afternoon, a higher the focused of efforts have us you. on marketing for we on clients. segments. nearshore during you all proportion clients capitalized made from the verticals to our and services our and market core joining. digital and we secured In sales the into momentum Thank The sales pipeline saw sales static footprint our quarter, the new and and third our investments quarter, everyone, delivering across the and from offshore continuing expanding thank developed XX pipeline, teams

make delivered from through new to offshore leading the for work large provider that opportunities. have we and of compression e-commerce continue sales teams headwinds in in large year-to-date, airline platform, significant in accounts new clients multinational India, new growth higher-margin our player are a our this the expect or service year. will logos nearshore X including wins next to $X initiatives Amongst the million be exhibiting streaming in operator client our in offerings. tech delivery into made several margins line cable of our facing results, won edge centers, large progress and and a bottom Despite add to year-over-year economy, able our flow broader Despite top the exchange-related proportion in been driving into expanded audio focus a Asia-based quarter U.S., to global delivery client retain and persistent services. P&L resulting Our macroeconomic we line inroads of strategic business closely foreign headwinds, a in XX a impact, a we to new a

Over Startek our identified the on we that last X have delivering strategic of X and to quarters, path growth, sustained will believe customer pillars profitability experience. position a superior anchor we growth

with partnerships our India strengthening technology clients in strong during segment delivering are delivered growth improving sales and largest India our clients. with in digital with through of quarter, world-class some the region. platform in pillars operations strategic close performance the through by continuing Growth Our and our ramp-ups in Middle our Australia. We collaboration digital ecosystem, driven service East, the was revenue

have We vertical. increased due of performance. many replaced on with media the a the wallet share in quarter our the operations within the Revenue the our and client back track client of Americas record superior accounts declined competitors of during region termination to from consistent

verticals in industry X, the within South telecom across an We our existing quarter and clients to verticals, our each travel contracts volume continue the and we in business continuing across well Within and in Africa accounts sector. perform and improvement our travel into grow financial services. with clients existing to and of ramp-ups hospitality with services within and expanded hospitality several entered U.S.

Services our Center XXXX as also Quadrant We areas the transformative - Report digital were Experience several of global CX about of of best-in-class campaigns Group. the developments experience teams XX feel solutions very the and X portfolio I experiences with to past quarters customers. awareness across pipeline. to We on value-added recognized their our service our growth the be U.S. can, recognized we clients ISG new over our as solution efforts Customer provide truly enhance suite. digital Lens second a leader and fostered digital well pillar, increasing the brand Our and so partnerships our Everest turn, recognize were received in supporting our in positive for providers these interest an Global our successfully for and been Contact to solution In to by our deliver delighted in customer very customer that engaging they technology only have solutions Provider capabilities.

results platform agents to to elevate the clients and quality effective our enabling for opportunities. amplify to clients. we costs. turn Our insights impactful enable brands technology provide our value ensuring of to capabilities secured deliver new insights additional that initiated the our creating digital designed ensure measurable partnerships These a Throughout us to more, optimize we business What's trusted partners, capability and our to solutions the pilot our our and continue in that [towards in cutting-edge chip] several become us digital quarter, programs superior services. delivery service, of

Our people, solutions. to combined and recently announced leverage to a our solution our support as enterprises businesses medium-sized globally. OneCloud well and service through platform clients deliver market-leading Avaya to partnership delivered partnership Startek technology the to Through Avaya, with small- with CX as and CX aim allows a emerging data with bundled technology we

investment ownership, time that industry-leading a modular our return and subscription-based Startek the of We CX technology partnerships, our us reduces driving are solution for we better clients. our total model created scalable evaluating cost a and with allows By best-in-class rollout platform on for agent have and a both faster combining platform AI the associates. a clients

into innovative IP solutions creation market. in invest to to next-gen to innovation ecosystem continue bring continuously will our tap and We both

with essential and it to optimization continue our is clients areas potential that of we grow to identify globally, actionable as collaborate we insights. Lastly, provide closely

to experience. agent and of with providing a performance, large efficiency providers leverage their healthy agent we Towards designed this competition. and enhanced we goals speed celebrate space agents and to the with pilot increase manage achievement to in create tool to India, a partnered goal, proficiency reduce by their the telecom to an for significantly With AI-based e-tailer leading piloted tools

this One of solutions, our going objectives committed deliver remain responsibility to forward. we to primary is tailor-made and

X we carefully forward, of core road success of at the our will As remain strategic our pillars map. look selected

As fixed brick-and-mortar I able provide we margins transition our Optimizing our to services our of from us they efforts strengthened operation. our nearshore improve and increase discipline physical brick-and-mortar regardless and from a platform equally and part has our allowed site footprint from whether work the perform sheet through of by to to training or transition capacity while were work our We as associated to in quarter. at-home our Recent costs marketing additional hiring rental to saving during savings on and agents of agents to delivery. to consolidated activities. onshore prudent digital our clients costs. mentioned the our cost-efficient balance our our continued We enable to divert some investments continued of financial agents earlier, sales, to offshore as upgrades from Furthermore, our and our more home. sites intend

newly combined We top meaningful line with increased provide client expect our XXXX. a to capacity uplift performance portfolio our enlarged in to our

to As through with remain mix transition on a world-class will our higher we solutions clients. delivery, provided offshore to new to continue laser-focused logos we solutions of delivering clients and generate

expansion positioned quarter capitalize we our continued are summary, we in this momentum pipeline near to line, in Although well add from a we on In minor incurred top the segments of to setback footprint incremental strengthening verticals back technology partnerships margins. robust with logos new foster and across sales expanded and our to future. a a on margin marginal and business the sales our digital to did have all stack. innovative our a pipeline strengthen focus Whilst improving we a on dollar impact, realize

nonbinding to minority preliminary Square own. by acquire the Regarding Startek, Square Capital Capital proposal Partners that shares not did Partners the in

Nishit financial like and Head Square has Transformation, Gillette, further now to discussions our from to with our Directors. Committee provide initiatives formally Startek's of he over joining of us. since insight provide more the withdrawn session you public the any performance, will financial Special announcements, Special you As concludes for quarter have Nishit, year its be call of Nishit the to you. now the after would I call Ron turn his Partners I'll pass the to to over has most third the questions the The the been review Thank available our on all over end call. for I'll call the Board beyond. to to the Capital of results. at After strategic seen this Committee of of remainder turn may into details you dissolved. Shah of Q&A during have Thank answer you. proposal

Nishit Shah

previous in geographies, ago lower as basis rent of price quarter our compared America SG&A $XX.X following change and to dollar, we of margin in the of was for The vaccination contracts constant year X.X% of On to period. Bharat. impact renegotiated Thanks, support business The third costs the offset was $XX.X increased compared a net sites. increase ago X.X% strength to the in the million and in our strengthening delivery ago $XX.X our year normalization by revenue revenue to points basis, in the of compared our continued the million as quarter. expenses year delivered program consolidation from profit currency Gross U.S. was top general COVID-XX partially million by year million increased to verticals. million in as compared decline Net one-off brick-and-mortar mix core the $XX.X line. XX.X% several quarter. year QX primarily the was revenue The continued well XX.X% in the increased Selling, primarily that quarter. termination driven decreased in Gross increases XXX and in by administrative in the ago of are quarter. client to million $XXX.X nearshore media offshore were $XXX.X the decrease due to in to revenue quarter. compared Starting with ago the segment, on the

As a costs and transaction. to is well are XX.X% EBITDA. expenses the year and increase due ago The compared marketing back transactions as expense related onetime was take-private our SG&A nonoperating related in The to into added our in quarter. percentage nature to investments as initiatives are X.X% revenue, ongoing adjusted sales in take-private primarily was to of

the income diluted third million shareholders in million Our Adjusted to the or million per EBITDA or ago Startek's ago for $X.X $X.XX quarter. share to adjusted to by in $XX attributable $X.X compared $X.XX year share $XX.X to compared diluted to increased per quarter year increased a quarter. net QX million in XX.X%

revenue, was million XXXX, $XXX.X $XXX.X $XXX.X the to million XXXX, a on XXXX. $XXX.X increased excluding $XX.X to on in over balances June compared September compared XX to million This XX, will million a XXXX. the XX, my our and basis cash perspective, as EBITDA X.X% was September of XXXX, compared September cash to adjusted to debt, From to now As Total million points $XX.X XX, increased XXXX. X.X% XX, turn year Net June on quarter. concludes sheet ago percentage of XX, XX, restricted cash Ron. to restricted at compared prepared I debt million on call June balance remarks,

Ronald Gillette

us Nishit, all Thanks, thank you for today. and joining

discuss our focus going forward. Let's strategic

end into drive the the to focused labor we digital identifying on more approach. and of through year partnerships transitioning to drive cost-efficient pipeline towards from sales and of new our portfolio, offshore nearshore value-accretive the logos with advantage of greater momentum customer and a higher and strengthen our to Looking mix next, taking our margins delivery portfolio the platform a are client strengthen

in resources of opportunity we cost-efficient provide are to As team this of where United number we sales States. breeding the the to will We ground a dedicate footprint for directive, our part expand see solutions must-have. our continue as a a

will infrastructure other and and the work drive hybrid efficient towards and today, willing an our to on to across These increasing shift that decreasing capitalizing are approach we continues geographies. identified focused costs. in-house of lean physical structures experience and our team remote their key In market the customer be U.S. number companies cut Our opportunities solutions converting upon. to offshore our sales have

proactively nearshore we locations facilities Given and to provide the customers. in traction are are seeing, our offshore we to capacity expanding the our -- transaction state-of-the-art

digital our awareness partnerships, strategic increase tool develop all to set to our leverage to digital our In aim We to to and latest to carefully our utilize to into the and Ultimately, a brand solution will to partnerships transform allow order to our innovations our digital agents deliver continue will we marketing core and dollars expand digital-first access partnerships continue world-class truly services organization, segments. us industries giving clients. set. CX across

the With Avaya capability the have a now our clients partnership, box to CX offer we at to in scale.

making a our are effort We mix. concerted improve offshore, to nearshore

to them onshore from ultimately near-term clients current nearshore transitioning Our is services then offshore. move the strategy to to

As we our gain digital they service and our capabilities to customer to enhance quality the deliver. we platform, agents and our additional tools partnerships, of and technologies leverage will improved

near-shore comfortable we platform expansion to offshore growth improving believe margin in nearshore are our Overall, customers strong Our our and transitioning top pipeline way made built meaningful XXXX. we and every sales initiatives for strategic and into the we a expect services offshore and have the quarter, services. for investments pave to feel line and marketing we've in

see our capacity By investments to ability provide customer are beginning coming on bottom to future future in our broadened base increases top beginning capture be year. and able revenue leveraging and clients, to and line are return the new world-class a new global the logos to into expanded service We our our will our next to we incremental across service and in convert optimistic quarters. and

priority back our our road shareholders, call strategic look questions. we'll the years to executing and is our many we you. that, our sustainably growing now return map over company growth open to to to come. to for With value on always, forward for As Operator,

Operator

[Operator Instructions] Cummins question come with Zach from first will And B. Securities. today Riley our

Zach Cummins

really that a objective? continue Is to about Is logos. is to from these should with just in here the starting QX. that seen ramp Nice XXXX new How logos? new here First me, momentum around think QX? contribution of one in for see we revenue Bharat, more that it just you've

Bharat Rao

the Zach, thanks question. for

by related see to the ramp ramp I you'll them almost in in XXXX. from and see what through most we But think contract into the Typically, is of but logos, which all a see full all is want takes actually these equipments is part feel circuits. actually so, -- in we see the it completed, that we QX, happens equipment or some quarter would all new it time if of essentially XXXX. we'll get the the benefits why that coming you materializing

have the to of translating answer But that we would you started Some of of question the 'XX. have in from that the of logos quarter this won of impact, actually in well. revenues the revenues year see first your most half into starting terms in the as

Zach Cummins

can quarter improvement to the in And helpful. number and here It shifting are just positive to talk still you of the encouraging delivery That's like mean customers idea your Understood. more available now margin least sounds or to open I also see that's about to their lower-cost the nearshore the gross deliveries continue some you offshore in opportunity potentially to nearshoring at to that mix shift? increasing of an of offshoring operations. centers.

Bharat Rao

support the large. a yes, that I customers feeling at and delivery to think, a clearly and pinch very of equally, the are sensible consistent our able a attract also were and those number challenges to happy are customers lot trends got perform, All margin. of are on I ours being putting very customers, most able and inflationary -- with we pressure are their being to be people. see, support of to provide of But retain do of space that there able in mid-market we've mean,

offshore we onshore, nearshore the in to that opportunities. quite hadn't lot what to stay People comments, alluded thought players of open mid-market really in space, his and outsourcing, is, and to becoming see preference So now open now to about outsourcing. we see mid-market especially Ron who being whose a

So we've seen a lot more.

their clearly delivery, that and is mean really of that I without into are customer product cost the because to compromising offshore can questions. a today, trend frankly, doing will your answer priorities we and very existence. focus think their at nearshore your onshore, core businesses stay that is on all here acquisition, really have clearly with that of technology that I hope areas so to continue proposition compelling development a to focus getting that there the fraction

Zach Cummins

I versus your kind helpful. how be very just of is savings you've And many I some Absolutely. physical additional the consolidated know for delivery That's necessary question of about can thinking your of rent your extracted right you this? you centers. footprint forward? me there going hybrid are savings overall Yes. from that model that final is recognized. Or delivery mean around

Bharat Rao

I explore doing are we are into. of continue One of -- that -- we're ensure couple our overall there what are looking few We'll equally, to a mean course, brick-and-mortar consolidating to proper as facilities is, there we initiatives is utilization.

because where are think I not have just perspective. -- space -- are a having utilization able utilization of have can in flexibility cost home, But us utilization come the is centers, with hub-and-spoke equally those good from model. important we equally, which capacity proper from typically people work nonagent want kind the enables be provide a a people to we also from a where in you of to perspective staffing to support who as

support. to be If of you would programs the [the have option look like go come the to and our support, to get able they make government], start and at able trained back. get They being and

I our floors at but on also centers. typically just looking consolidating centers not we within efforts will So think continue

ensuring we and a As also long subject are have critically our is from But equally, we our as, the state-of-art ensuring of that perspective. our the obligations infrastructure. and what that we course, looking we to are facilities requirements contractual spacing maintain at doing

-- invest the And where in our centers especially continue -- really whilst we people and will to back to good and people ensuring come occupancy. centers one that good hand, work of we space consolidate in got invest experience, into many site. because them, very our So working we have are you've on agent have provide from building getting good geographies, refurbishing

will coming started back that centers I ensuring to people we equally work that rightsizing of combination and So site from have where continue. think in invest

Operator

will Please would Mr. over proceed. to the like I And time, session. this to at question-and-answer conclude Rao. Instructions] turn this call [Operator back our

Bharat Rao

report joining quarter for fourth you for operator, and results. Thank full XXXX speaking of year to next Startek. you support all this afternoon and thank us your you, we with look continued I and when forward our

Operator

Thank And disconnect. the you. at Ladies and gentlemen, conference. may concludes now this time, this you

Startek (SRT) 12 Nov 222022 Q3 Earnings call transcript