Earnings call transcript Q4 2022

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Operator

Good morning. Welcome to the TaskUs Investor Call. My name is Paul and I'll be your conference facilitator today. At this time, all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. reminder, is a recorded. As Instructions] this being call [Operator

Katz, to of begin. I like Alan Vice may would now you introduce President Alan, Investor Relations.

Alan Katz

afternoon the us full for thank XXXX fourth year quarter and Good for call. earnings and you TaskUs joining

Relations call Balaji are me and results Maddock, Co-Founder of our and on section be Please the can release, of available Relations Investor at our call Chief on earnings section website. Financial additional our found are and Joining ir.taskus.com. today of Bryce commentary Executive the note in Chief our will the which website Officer be the of details this that management corporate simultaneously company's on Sekar, webcast TaskUs; Officer. Full Investor

to expectations nor contains to statements from for following like of management's future that actual Before not the including results discussed meaning the our differ I remind forward-looking and involve Federal within plans to, that we discussion cause Securities Laws, limited financial These the uncertainties here. and but and would the guarantees those business. statements and may regarding you statements results promises materially neither are risks start,

may at file and This accessible we the on SEC. ir.taskus.com, and supplemented periodic is place results can our Factors forward-looking on reliance could our X, cause on Form filing forward-looking with the on website that report annual XXXX. filed the actual March not any be was should SEC to You SEC's website with with those undue from on in reports differ statements. statements be found which subsequent XX-K,

made following a to and today's TaskUs week. The with development of required new based the measures. result otherwise, as revise to current today questions, whether by Any expectations conference except or contains law. assumes be call, discussion non-GAAP as or of them, financial update obligation We expect forward-looking in SEC filed responses our the XXXX are as on including to coming on statements XX-K no

For most press reconciliation of measures metrics, of to the in our a non-GAAP which website. our earnings the section these release, available GAAP financial comparable see directly is each of please IR

Bryce Now, the Officer I will Co-Founder of over and Executive Bryce? TaskUs. Maddock, call Chief turn to

Bryce Maddock

experience us. strong our first thank to strategic Thank you, you worked XXXX global in joining the learning ahead that with acquisition expanded our response Good end crimes everyone heloo, had financial which team solutions by Japan We as and expanded this adjusted finished coming advance year such a afternoon offerings both of new our and and our team for so and by risk development We led our work of above operations am new plan. geographies ranges. our such led year to and the completed into guidance European as We and footprint of proud revenue Alan. delivery and our tirelessly throughout EBITDA launched I service training and goals. Malaysia organization. our

tech companies business expanded annotation and global world officially also added enterprise projects signed three launched in scaled delivering existing clients. data platform with the clients. to both contracts our of the and with We and AI large new our We e-commerce TaskUs TaskVerse largest and

million clients back Lastly, strong corporate industry XX% billing XXXX clients and ended up $XX year million year. strengthen continue base. strongest throughout office the to of diversify an annually, and annual billing basis the more we revenue and more and on from Overall, end our prior. the with XX we $X or we maintain to in the our have XX believe We or as XX XX sales of to the continue culture of remains year what brought as teammates is the the activity

also efforts. cost efficiency and made progress significant We on our

a guidance recent team amidst our These our increasing year just the environment. few EBITDA we accomplishments economic QX very uncertainty. our incredible our result, at well our their efficiency of are year. the increased of of margins a in ended most the that and we initial and a In challenging from to above range shifted start the outlook XXXX, focus provided in adjusted As growth clients both

This is solutions both existing increased delivery from new our demand for offshore and and efficient clients. automation

XXXX. we of on as see challenging expect quarters over the comps last As macro continue a from discussed call, environment few the the half set as to volatile first to well we next of a

quick the to our beyond. fourth then I a growth organic in XXXX and from the ability full move this for position. revenue of growth and going on I'll what exit even drive to to confident discuss and However, I'll that and profitable year means the quarter the remain expect improve current we the outlook. back and I'm environment profitability that in drive in of strategy an impact XXXX results discuss recap year lastly, in our to XXXX our half into stronger And macro year

top above XX.X%. with another quarter both grew line by and to Revenue an EBITDA guidance line $XXX.X the QX adjusted to financials, with strong of our of million by X.X% year-on-year of start margin range our Let's for Adjusted of end million. year-on-year above bottom guidance grew growth. top EBITDA XX.X% of $XX.X X.X% also million $XXX

above adjusted $XXX.X achieved top margins we with XX.X%, believe XXXX, ranges. guidance an For line growth over highest million in EBITDA the the among XX% of end top EBITDA we maintaining to full for in million year $XXX.X of that and of again the We while the margin the revenue our be ended adjusted industry. year in

impact our over year-on-year. largest revenue our increased current year-over-year. and in If to be those rate clients. grew outside transition growth trading XX largest clients at continued growth and at signings This three top X% materially the clients, grew at XX% top from by approximately from the clients year-over-year declines equity of largest work our impacted from volume crypto our clients. we XX offshore XX% exclude revenue and to the clients XX on our and the QX, In Moving client with

to we and diversity of outside see top expect resilience our client in a of at our our faster the our than grow rate improve XX clients base. XXXX largest clients We as

from Looking to our with this global and the compared non-crypto a customer well expansion growth This more travel strong to as client digital equity in footprint lower of as existing returned seeing activity on looking result by QX crypto trading existing experience to and clients drive and by revenue clients signings. at with We're sequential than our from revenue X.X% with the spaces demand as HiTech, signing new leverage grew offerings, clients of spaces FinTech service transportation as service offering clients. HealthTech, in XXXX quarter volumes clients the were quarterly offset efficiency.

after discussed continued clients announcing As our last to quarter, internal have us staff turn to reductions. I absorb large volumes to

In crypto as clients, and million. our represented equity terms they X% of expected, $XX.X of or our revenue trading QX

space, to preferred from to in largest the expect XXXX. this we be the clients continue of these to continue players partner we While revenues decline throughout

Moving for signings QX, digital provider on a a to quarter. signed the CX transfers management. leading with the some of of contract we and money In multicurrency global

America America. servicing We digital Latin are savings multinational calls efficiency this We'll cost North their client's will be users end process a transformation Europe, for chat, supporting be and and in text enabling driving operations gains. and and email,

a close our this better company significant care healthcare patient while in operating In health patients appointment data data TaskUs plan validation risk provider. DCX healthcare gaps turned and Poor also to outcomes. to started poses industry's information. for clients’ solving a the we engagement a participation and with are data QX, provide we to improving This and ability protecting to efficiency. By drive providers, problem, and analytics

DCX work our seen nature of that clients a U.S.-based strong and This geography operations. of their services, the healthcare we their remain served the the as among a delivering due We believe delivery sensitive demand relationship U.S. environment. of particularly highly expanded clients. with a a see large example being for of our out is highly healthcare the provider in expansion for work. the these our We've of quarter requirements regardless to customers supporting also We regulatory business. key of specialized telehealth of services onshore great U.S. Both U.S. to are will economic type

and locations X.X% of service largest XXXX, safety, this impact on our which previously we in content declined the Revenues trust with by work driven moving of security. Moving client QX offering compared to called quarter's trust our this largest India. and of safety Philippines and XXXX. the in we to If would grown client, from our excluded by have impact with revenues the QX compared X%

QX. start of At we volume XX% supporting XXXX continue our year. our share increased number and the of see in The to competitors teammates of this take the by the largest end from client client from increases to

grow positioned volumes in the Philippines With India, both XXXX. continue in scaled largest operations to our client to at we're offshore well and

be transition effectively, of QX, we call, continue offshore QX offshore. I end complete at from on of the client U.S. all This U.S.-based transition As this now to time geographies. which the shifted the discussed will with have to revenue roles will our at

support, in workers. This dating from our based provide largest teammates XXXX support TaskVerse at apps the content lines, client to one our across small Looking and as a trust them in and the well leveraging and today other we services. both pilot of country's grown safety we offering, DCX as signings relationship gig with business both client expanded ten moderation in-office has

in expansion opportunities, environment. the has have will Our process multiple in and believe automation engineering expertise led to continue we current which

with a large platform social own We to social conversations also for and communities from publishers. site. back expanded to work that bring engagement platform digital our safety online This the enables publisher's publishers trust maintains networks

all largest and transformation They publisher's reactive and for policies communities. for on helped We've As policies. to these classification, the one to research, flagging virtual our TaskUs. publications such, of trends product expertise content moderation policy diverse to it us safety their enforcement generated protect ensure the this transitioned of vital this expertise, to that content of the client our our trust is quarter, Recognizing follows world's client user to and craft have proactive turned moderation and

with AI autonomous compared vehicle, social in media with by services in of travel clients transportation revenues primarily grew driven expansions existing spaces. XXXX, QX XX.X% and and the QX

to those specialized policy We're discovering industries responds in doing that work example need another provide develop sensitive, ensure leading highlighted engagement train their Their the provide the with I and user our call and base this industries AI growth moderation great that technology complex, Last quarter, as support industry. of of TaskUs to wellness In scale. clinician-led and TaskUs to new the last grown we their AI to developing the algorithm. for generative has serves in-center that to this services user requires the They we've services an accordance questions This QX, our content began new services scope technology. of to continue we since them. to provider leverage and exponentially guidelines. services exciting expanded with supported pioneered

taskers expanded XXXX. also XXX,XXX scope covering largest TaskVerse, using platform, TaskVerse We up countries, data approximately the brought in supported now XX approximately to XX the market annotation business the and technology companies languages. for We first crowdsourced our gig work in year signed In our data start the world. have of the we its gig of at some global worker collection which over of the

of a of just X.X one clients our For community over more million tasker than performed period our few annotations weeks. e-commerce the

and of our videos most learning-based our collected big products. annotated of advanced tens we one supporting of inclusive the tech TaskVerse development from For and of thousands clients client’s machine

our service offering few of from business TaskVerse the next expect of to perspective, a revenues significantly revenues is a growth small years. we the for outpace other this every While part from

and at new signings largest the business which annual XX% our We again an current our accounted ended XXX%, Looking opportunities from been, pipeline ever expansion client with by the for this the engagement retention engagements, large clients, including it is transformational net growth existing in clients, of for our and existing largely year rate new revenue over with were has signings deals. QX. of driven total quarter overall activities,

to within verticals. industry revenue Turning growth our

quarter HiTech transportation with We’re Each seeing of grew and space, clients. this by particular with and space, to and on-demand from XX% verticals call we retail technology their these approximately of strength XXXX. which begin compared in e-commerce clients QX travel just the will

that firms clients We XX% delivered began in saw that in the and entertainment these now we potential we’re results excellent growth earlier across viewed see three this also to the We all three from even outlook XXXX. In significant plans upside the technology for to QX, We growth of in this with year. for space quarter. largest expand relationships working the approximately more but as today. the clients, we gaming have providing world’s XXXX

we I’ll our spend discussing bringing XXX before headcount added minutes on In to teammates for TaskUs our the to XX,XXX. move outlook a XXXX. to few our global QX, I for teammates net talent and environment new

United of to except the We Ireland in country increases in populations every size year-over-year and see our teammate continue States.

in in back improvement had the In higher XXXX year. we of entire of and was retention half XXXX, X.X lower all than employee saw of year attrition Overall, end of significant stars full where XXXX, as a XXXX, and us the which the in but employee office. the QX; is retention the teammates in of the we than last XXXX rated our teammates Glassdoor we quarter. TaskUs the on numbers best had in employee

the heloo our of with flow quarter cash in on the that our generation at of margin our excluding and range, guidance completed of we press least Now, to of the earn In $XXX let’s release afternoon, associated of million, issued mid-point XX% for second we $XXX indicated EBITDA the XXXX. move payment out acquisition and free this revenue at outlook XXXX. million adjusted

our clients, the what improving we on our our call. EBITDA macroeconomic improve business. laser both in drive focused what provide happens free Balaji later environment. will regardless more results year, on details these are and adjusted flow is in the of year-over-year of efficiency will goal our the Like to This cash

Let current with closely a clients how few processes. budgeting me part guidance of the worked each as on minutes XXXX our our outlook. our environment into plays spend and their of We macroeconomic

our On trends two QX conversations. call, base these noted the from emerged that I across client

teams. model, our are resources shifting costs First, our offshore clients global to to efficient by looking in-house reduce expensive delivery leveraging

see large driver to signings a this of past as quarter. the continue in We

sensitive We’re complex on more more processes. taking doing critical and and work

At XX% QX U.S. QX decisive of contemplates back time, the size U.S. our to mid-point number revenues. from today continue supporting the total our By XX% of team the revenues from dropped impact for delivery. guidance the drops a had of the XXXX, clients of number in same a this of our revenues to scenario this year. came total to XX% XXXX, The reduce the provided of of which number in of of just them half

The U.S. delivery our U.S. U.S. role in that remains the the play stay and the compliance, model. or us A process majority is strong a work a regulatory key for for global always of because will of client in vital geography must reasons, in preferences.

rely it’s two healthcare for that clear earlier for We in our U.S. in that regulated like and operations our will but engine exciting our capabilities. on the Philippines teams business growth continue and and in I years win clients to mentioned automation new the nearshore our sensitive clients of the who to come be our U.S. and Mexico, efficient operations the digital offshore India, processes, Colombia operations

by environment, approach to Given we’ve the range uncertain and these setting decided a wider a macroeconomic trends cautious for XXXX. take guidance

the we our accelerate on our declines and growth floor to a of near we return of U.S. As in delivery the global locations, revenue growth year. back to expect this half

of XXXX. over to We the course on growth accelerate initiatives focused revenue three are

see large XXXX. we technology First, traditional the and that meaningful signed we with in global opportunity enterprise clients to expand

focus growth stellar clients XXXX, ability going we’re to our our in performance cost to on Given here. efficiencies, see and we’re confident deliver meaningful these

significant industries we’ve a increase demand our services from in Second, where we competitive advantage. for distinct seen have specialized a

We have the and industry. exciting the services to spaces. we’re generative opportunities very transportation excited in about personally I’m providing AI the autonomous HealthTech,

leader the that in the need we this hundreds supporting developing maintain the own are ahead a and will competition, again, in to models. of well space specialized set develop their services and of startups Here space of

and Asia. particular we’re our globally, expanding in efforts in Lastly, go-to-market Europe

service are our in XXXX, based As cement XX just there our provider. European acquisition Europe, a our year. in single supported in helped a XXXX, base client that approximately in In we heloo clients we tripling grew top Europe reputation as to

largest Taiwan, initiatives, executing From free our us sites for Asia profitably our Malaysia, these will the Global adjusted I EBITDA were XXXX clients in cash for expansion compete on increasing go-to-market services in us. operations and By for vast while represents opportunity three the our that we business flow. believe area in a of Japan and grow now providing positioning well of several to region. global

it ahead. more outlook in With over provide I’ll Balaji QX and for detail and that, hand the our to through financials bit year a go the QX to

Balaji Sekar

today. Thank our issued few quarter, everyone. good focus full going attached Bryce, year metrics. press my primarily reference but you, and to afternoon, key some the are we earlier remarks to on relevant I’m and we’ll note that items a fourth these Please are non-GAAP measures of reconciliations release the

the total over factors. In XX.X% the our guidance range. two earned and year, top guidance $XXX.X of $XXX.X million, of revenue driven higher The quarter, by of in to with leading total revenues fourth increase year revenues the performance we growth end primarily was million, the of compared fourth for of the quarter prior strong than an X.X%

our from resulting revenues First, from largest QX timing of the client, this offshoring the shifted which for QX to client in quarter. in higher

also our some earnings of we that stronger expected saw volume of as the consumer expected we we seasonality had and Second, not the exposed clients call last than with materialize. risks did

true demand particularly delivery the transportation spaces. clients and was e-commerce, food on This for in

past offshore as with grow delivery them. had shifted were to presence their Our volumes Hence, holiday drive to into this these attractive their focus cost businesses. able model an season, efficiency to way we clients

service experience offering We in to growth a of year-over-year year-over-year for digital million our two of three the saw $XXX our on service offerings. rate fourth offerings. generated quarter, specialized Moving growth X.X%. In our customer

QX, business revenue And of in our driven of our business see continued we services safety XXXX, $XX.X of grew year-over-year million client. Our offshoring base. from to the by In declined compared XX.X% largest for resulting of AI trust $XX.X X.X% volumes our revenues, diversification of and QX million. the to revenues

client in respectively and with from compared our continues. with XX% QX to of diversification XXXX, our with less consistent year-over-year both accounted and revenue and of our XX XXXX, revenue XX% was top year in while down XX% consistent than QX XXXX. our We XX% largest from for as client XX% showed trend XX% in XX in this second revenue client In revenue Our QX of QX and largest clients and XX% and prior of of our growth top revenue QX comprised of XX% the of QX with and concentration down sequential XXXX.

States, of revenues In driven Europe the rest of in the fourth from of our world, the quarter, revenues from our India our XX% XX% revenues of United we the in and XX% revenues generated of our the our in Philippines, operations by XX% and mainly Asia.

note began we as geography. reporting You’ll India standalone a that

our to Given important. future over the was we tremendous felt the India growth for past there be several as potential this the and as increased large the in disclosure years Philippines, that

terms of percentage service year. in the In of quarter our XX.X% in revenue, a XX.X% of the it was as compared prior fourth cost to

mix $XX.X with associated fourth The revenue. This and of the the the compares QX year-over-year In our the offset by associated increase or SG&A expenses This million geographic expenses transition XX.X% wage $XX.X with in work shifting dollar of quarter, with SG&A was XX% return to cost revenue. million or our U.S. and revenue. by driven were XXXX offshore. office inflation, of of primarily the strong was

actions drive and platform efficiency invest to in into continue TaskVerse We sales, functions. the to taking the corporate while automation significant

million accrual of quarter in margin $X.X out Stock earn year. in earned with reductions Stock the $XX.X primarily $XX.X XXXX, million in fourth $XX.X to million margin million in of the offset associated at relating heloo. XX.X% to XXXX. to acquisition the equity compared QX composition last compensation were in compared QX from QX expenses adjusted our We the million grants expense consideration quarter XX.X% and EBITDA by $XX.X they’re

mix increased worth offshore. to revenue U.S. Our revenue and geographic office, our and by return with offset to dollar of strong cost associated was due wage inflation expenses growth, partially the transitioning

EBITDA For our the XX.X% margin $XXX.X adjusted above achieved full year, million adjusted in we guidance and EBITDA an range. of

driving their efforts saving and to an through improve model, XXXX, automation and of dollars In of support we have efficiencies further millions last XXXX, the effort in into of and design. their our resulting use businesses, In operations have a so we. optimizing multi-year will leveraging services global clients global our the As to continue year. our we technology shifted functions administrative off kicked of efficiency focus operating these shared process

growth million adjusted This This of of with to continue It’ll margin to efficiency would half also the drive of multi-year invest offset to other business $XX and EBITDA allow in higher items XXXX. in us our growth lead our in beyond. effort areas. wage and cost program offshore help strategic and inflation year improvement XXXX in margins will in approximately back savings combined the

By adjusted EPS was Adjusted increased net by income and period, net adjusted higher the quarter. financing the per prior $X.XX. impacted $XX.X and million million year $XX.X was for in taxes and the of share we quarter earnings adjusted of expenses in income $X.XX, earned comparison,

was the year, net in full net share million with adjusted adjusted earnings and adjusted adjusted of $XXX.X $XXX.X share For earnings $X.XX per compared XXXX. was income income $X.XX and per million in

year million Now full and XXXX as XX%. compared of our of was to with equivalence XX.X% target balance adjusted were moving XXXX million. in the represents a million $XXX cash cash of December Free XXth between of million. EBITDA above being $XX.X balance XX% full on the to flow XX, $XXX.X cash million the Cash our for line rate conversion $XXX flow with and of our and of $XXX.X year QX for September This medium-term in guidance sheet.

flat Our XX days DSO at the QX. in remained with compared quarter

fourth revenue in million to the or decreased of in revenues to quarter expenditure capital million QX of X% $XX.X XXXX. $X.X or of Our compared X%

by better with X% year return $XX.X the compared to million was office. as $XX driven assets of revenue of X% For utilization technology of back or million XXXX in the full This employees CapEx or revenue. largely decrease was

we trend leverage model, build improving cash conversion. could flow that time our a lower work expect We from balanced more over free out home CapEx as

buyback this and use million program. of terms maintained In cash, allocated allocation of year we $XXX capital our we towards discipline program, our

$XX.X million. XXX,XXX for shares the we In quarter, bought

year shares had million X.X million. for we the $XX For repurchased

our allocate opportunistically. to buyback program to continue will capital We

at times continue sheet and year end deliver leverage EBITDA the ratio. to We debt-to-adjusted the balance net X.X

growth. Our priority investing remains for

balance the ample opportunity on have any Given criteria of to continue of sheet, investment M&A take we strength repurchases. meet in action return the that and our to our capital capacity form to

point, year revenue our We anticipate the be XXXX. for total the outline full first of million. At will XXXX $XXX outlook full million this $XXX to year of I in financial and range quarter to

full expect to a We XXXX earn with EBITDA we earn-out EBITDA of XX%, free change currency are This year million heloo in the for will adjusted confident current the on payment margin so achieve in associated $XXX cash rate, acquisition. flow and year based over we margins. adjusted approximately is rates margin our full XXXX, excluding to impact guidance ForEx any would the

the our see As revenue do revenues. not dollar the U.S. a dollars, collected we built in U.S. impact and reminder, of is our so on fluctuation from majority

our Our see achieved in be achieved by annual reduced gross the G&A in half basis, margins wage and typical team the the profitability will geographies spending also offset impacted higher by on back inflation offshore partially XXXX. that our we an of

more at term, for Looking immediate outlook QX unchanged our from our expectations. is the

QX time of As of the call. the

our see work offshore will QX the client. impact realize transition from our we largest the and for We will of seasonal reductions of volumes, the

revenues adjusted EBITDA to XX%. As of cost on $XXX The by for will be range next we we EBITDA saving margin an execute phase in $XXX to be lower while initiatives. of earn million, of we revenues result, impacted our and approximately expect million a margin anticipate adjusted the to QX

in in QX more our of begin the significantly and through two these again. as the flowing expect reported back year growing We we start half impact margins

back it before hand take Bryce, to now your will Thank I we you. questions.

Bryce Maddock

Balaji. you, Thank

in open month questions, share we I to Earlier Mexico. visited teammate's this I our team story. want TaskUs for another Before Tijuana,

invest means attract Mexico, careers. scholarships first to we we talent retain courses our facilities take advance part-time offer college in to teammates and the the in benefits to world-class Our providing In industry. inspiring frontline mantra and best their

critical for that me insurance. paid are we be told proved investment the at to provider offer region health to the Marcos, program This in our teammates a Procurement comprehensive our Oasis only Additionally, BPO location. the fully Officer

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I'll for operator the to that, With question-and-answer ask operator. session our line open our

Operator

Thank Thank you. you. [Operator Instructions]

Nolan with Maggie for is William Please question first Blair. with Our proceed your question.

Maggie Nolan

Hi, thank you.

close and resulting How types these from large be of given you margin You impact had of nature this would transformational a some some quickly to of color are on deals including mention able the pipeline, deals? deals. there

Bryce Maddock

Maggie Yes. for the question. Thanks

increased generative this we're past, to from in in in talked year transformational the our So base the interest our cases today size. deal driven by about in across that hours of the the pipeline deals number I've the are we're we is revenue AI of client dollars The this in in seeing and millions the now larger bill and focus outcomes. tens clients being a done the before way but seeing and space. on and revolution shifting shift We've a increased cost

excited being drive that deals these deals. expect All And take They have geographic levers traditional margins, need control us delivery. engagement somewhat to finally that expansion contract tend close of than these will and types terms. sizes the whether do time. we longer larger transformational over of again, So process drive to deals and growth deal to the we that margin I'm about prospect or longer give these that's over said very to automation

Maggie Nolan

fourth to should mentioned seasonality maybe That's drove And you of XXXX? quarter it so they terms of year Balaji, expectations and the have for the some had revenue like seasonality Okay. little great then revenue sounds that hear. a of then, in What sort we the in materialize later in XXXX. in bit

Balaji Sekar

of Maggie, season... so terms Yes, in

Bryce Maddock

I can jump...

Balaji Sekar

Yes. Go ahead.

Bryce Maddock

ahead, go No, Balaji.

Balaji Sekar

Yes.

terms don't from the see of We'll overall big gaining pick seasonal for QX that some seasonality we the Maggie, in in for a again, And see the of we of pretty see small see year. impacting as year, business is do businesses, seasonality a of So pickup the start again especially QX. consumer up not seasonality a typically that XXXX impact with happens the seasonality. QX overall what is But then rest and It's in with we a typically then for we impact. perspective work. typically revenue more in

Maggie Nolan

Okay, thank you.

Operator

you. Thank

is question Cheng next of from Our Bank with America. question. Please proceed your with Kathy

Kathy Cheng

Hey question. for guys, taking my thanks

ask, assumptions but largest that first of you into client, So as XQ client that wanted you I are well much some I trend I expecting the are crypto how as a for grew to XXXX? make expecting Are little gave well, and what your that got your wanted I baked you into sure and XQ top bit quarter-over-quarter? think on just in just year-over-year So you growth to to color continue And right. you your that in outlook? second of XXXX mentioned are that

in is you're of that dollar XXXX, percentage million you. terms $XX.X that of Thank throughout you expecting a crypto your In that is of total declines or as gave? terms in like

Bryce Maddock

Yes. Kathy. Thanks

the the QX we current our that on outlook outlook consistent is for provided QX with call. So

of restricting XXXX, watching tone we're and due a uncertainty QX cautious and to back specifically of the two things. terms just half macroeconomic In

to just larger is transformational decision decision to take ever, making, expect first deals large speed pipeline do said, making. And is longer we those of while the some as do The anticipate close. I we than delayed those our

environment continues economic have from reductions do in pursue largest that the we're business. back third we guidance a U.S. cost midpoint specific which the of revenues the to has at clients the If XXXX. a potential of here, to offshore revenues to half floor the savings, in cause look We down we XX% first of strategic further increased a approaching our scenario and clients, at for is this range, very overall revenues half client second a at to shifts but fault of contemplate in in we our just impact our The relationship. our U.S. about of continue believe XXXX

offshore see costs to XXXX. significant save expect them to large footprint, our opportunities Given we in do help

said XX% cut said that grew this costs in I very our on cost supporting focused the With As to looked XXXX, that is meant largest this they year, and headcount our client call being client additional year-over-year. in has areas QX. for have

remain permanently As this discussed the on last during first addition have business we quarter, example an and has impact that the U.S. will reductions had eliminated of the expected quarter, and this offshore rates. line in an our a we year-over-year that to to client shifts in growth on

revenue while guidance result, small year-on-year volumes our a client. increase midpoint a our As the decline, at contemplates of modestly this

to we client we're share over and Given footprint time. believed our from grow strong the competitors offshore continue relationship, well our take positioned to here and

the space, a guidance of in slight from our terms revenues contemplates rate QX. annual In crypto reduction run

equity some we're clients have given and crypto actually crypto being been in that experienced. largest largest the of players the the But volumes clients by this provider We continue space. of both and to up these believe winter reduced many to XX% that's ongoing I trading in our the the for spaces, support

Kathy Cheng

terms And margin think helpful. gave revenues, more it. up, end Super a how XX%. of guys for range follow how just a that number the about should gave you much in At specific guidance range flexibility that Got obviously then margins the outlook? for you so, a a revenue of low achieving but for of have we

Balaji Sekar

Yes.

in So, the in our our changes of we've and low by in react And cost have the we to the to that demonstrated range, Kathy, end been revenues able base of of EBITDA XXXX we adjusting Bitcoin. that the at maintaining provided XX% in guidance terms terms guidance margins.

XXXX, a also on So our in XXXX, in efficiency despite we headwinds the XXXX EBITDA savings guidance year call which had that provided I million. an that continue $XX will we and initial in beat that of we that deliver about and spoke full flows perspective. program through about the And kick of cash we we'll started some revenue for free for from

technology. So all very this we to to business based our grow that in the appropriately in and to And required sales we'll invest areas exercise continue the size we'll and make year. this performance thoughtful invest also be the and in sure to double-digit throughout appropriate program on that's in forecast continue

Kathy Cheng

Thanks guys.

Operator

you. Thank

Please from question. RBC with is next with Markets. Perlin question Our Dan Capital proceed your

Dan Perlin

around wanted the I bit Thanks. question little evening. just Good topical. a on up obviously super to follow mean, it's AI. I

– also You it of clients, risks that. a your attributes maybe the you the but be little described I transformational, with think just Thanks. you, what possible. see I balance want get side client or done you guys large a are do to your more cannibalized some the to going opportunity, headwinds maybe new way kind of understand and the I you've things you talking wins the potential but past if about of positive for to flip it like about bit between the in it's maybe foresee businesses, out mean, that potentially

Bryce Maddock

Dan thanks much the question. for so

taking AI. there ask So to we're And that generative this we of TaskUs. place two for implications when need incredibly considering excited about important that's the are say, revolution technology in as the questions you potential

to on exploded in trust our and space, question first ways and on leader many opportunities these creation last and in mentioned AI call, in providing since can working with safety companies We're safety we the of And hundreds the and funding. The them with of venture dollars support hundreds call, this these AI of new with them services market the has entrants millions our what of As is services. support. I with of industry and provide trust generative technologies? we're AI the engaged

media degenerative support As industry and delivery, trends – short become we transportation and for for the to services past food social in space. AI technology on-demand leader plan with

that will AI to be open the digital has generative second impact But question is of need Our working the Digital AI's been ask what we business? CX with automation team our on of efficiency the GPT-X their we've this support of for and amazing are with improve a over use technology clients and a to to built number prototypes engaged API actively year, process.

tendency we In technology in in there up of language enterprise generative integrated other fact, these order to solution technology exciting, an launched And well-documented our models also also effective. The large be using into customers. for support a but words, hallucinate, are XXXX, Large must challenges. one a to stack have are client's make in be results models answer. really AI existing scaled our

for the more for and future, So foreseeable a generative will or AI integrators work is create to service it system than providers cannibalize. destroy lot going

industry what and In at to going would to be is to from I'd understand impact providers who the like our technology be of is impact most in few exactly going speculating. years are the be? picks TaskUs. claims the accrue this belief shovels to long-term what profits next But this is that point, the anyone the And will question say the

So if two I that had say I I trends emerge. watching would to that think I'm speculate, may

translation And particularly country. The reduced a support I suited. be ways Philippines in will And support the an matter. will will this first be be interactions the one of our increase from differentiate native and improve, there India lowest white-glove of there that to that to second, support may on well are the And those moderation is moments need the in one companies operations able for likely be is for language as performed models think here for key be another automated, is cost based when support in quality are demand because simple and support.

positioned premium deliver. Here, support us to on our well focus

been early very it's So excited we've but this days, about space.

we'll progress come. solid top in stay quarters of seen on the we've think to to and continue I it

Dan Perlin

answer. great you. a that's Thank Yes,

Just on gross a up quick margins. follow

is within about – the States pivot we Thanks. cadence mean I difference think that obviously gross offshore and would the certain more the I with that margins, timing EBITDA? aspects but change is that it's Or pace there between for that? the kind that is positive trends cadence, consistent you of of out to a As of United see of guess, expect to

Balaji Sekar

while I'll guide gross are so talk be gross not on about while compared margins XXXX. to Yes, expected maybe just flat we to roughly – do margins, quickly we but

depreciation we're inflation. So are somewhat offset dollar of why reason the XXXX impact of benefit is And that from earlier because in the about is – when to the for seeing what continuing mix the and see then the spoke being compared second but shift, peso. we U.S. wage it I factor is half the of second especially to is Filipino the the

largest then our QX. do from happens. So the And U.S. offshore last while a into is the that saw majority have revenues from exposure is shift cost shifting dollars, we we client onshore the in perspective getting built of for this to when

between some EBITDA. million is is I we our pretty that happening which that what cost. that gross see in alignment of perspective. factor expenditure a by capturing will about kind you And a earlier, optimization G&A One and gross is be So, would margin of about of optimizing spoke from good margins $XX kind our additional G&A

adjusted level, will that benefit we'll seeing we would see may we an at not a what So level, but is more additional at be that EBITDA see. gross margin start

to else there? anything add Bryce,

Bryce Maddock

as Yes, time. over automation margins a with offshore that, deals path we undertaking, to also gross more flat year impact add transformational the those essentially gross that of for we and look shifts, I while expectations combined large just projects a this at is margins we're would full year expanding see of our XXXX and

Dan Perlin

Great. Thank you.

Operator

Thank you.

with Morgan. Puneet is J.P. question. Jain your Our next proceed question with from Please

Puneet Jain

taking Can growing you click thanks was to this benefits And my Yes. that great. glad the double talk tech digits question. you this can Bryce strategies Hey, those if beyond, be year double about strategy. and you get can you for into from year? and expect I enterprise would on hear large clients growth beyond

Bryce Maddock

question Yes, thanks the for much Puneet. so

the year. half that return to last this on in we of double to revenue said call; I digit So back expected our growth

digit As XXXX, guidance top growth half see range that revenue of QX in we the the today. double start returning we're we in providing

focused growth we're And on that as call, to are initiatives I the there. there us said get three on

expand which opportunities And as up our in and their XXXX. also there continue those big that won their ahead we with we're ahead to ramp actively relationships cost to for are clients First, across we these savings tech need meaningful meaningful enterprise with. initiatives, us. are engaged opportunities There subsidiary clients companies,

just for, AI perfectly just like Asia. advantage in efforts positioned opportunities the accelerate that we're significant finally, need to Second, go-to-market in discussed. and that those going I the space to of And take Europe we're both generative our we

and revenue a So to back I initiatives trajectory and in believe us these the on put digit in will digits beyond. XXXX of combination us grow three bring growth growth double to double

Puneet Jain

we mix gross think there how the how also benefit go back can you move of half margin could talked low margin And How left to about gross it. some mix about XX% revenue that in much downside cannot to we the the work U.S. is should this or year. decline is can mix and of that makeshift? given Got offshore, to that if quantify benefit of

Bryce Maddock

I'll Yes, let first and the thanks I’ll Balaji take answer second. question Puneet. the

headwinds come XXXX our biggest clearly So in U.S. business impacts to delivery. the have the our in and XXXX we've from seen

and before, we've As trading reductions shift by crypto large as as large our our driven client. the was the well offshore equity at this clients, largest discussed volume at

we that offshore these that have which to we smaller outgrow. created movements impacts, have teams to addition of additional some In seen headwinds need

lost compare approximately if forecast of revenue for of U.S., the from $XXX have dollar the annual in we U.S. of we XXXX delivery. XXXX rate this Besides million our run annual terms, QX from U.S. QX to revenue we've

of Given the of a XXXX, in U.S. total detailed before of guidance the provided revenues and delivery review at taking XX% did cautious back percentage down our to of we revenues entire half U.S. midpoint. business coming the we trends, today's we struck our in a from these tone guidance,

the that At compliance. work must the U.S. the reasons that and of for majority U.S. the process stage, remains in in regulatory stay

that we new operations, for I U.S. sensitive and rely two earlier us for regulated Additionally, just continue win our firms processes. operational like to the healthcare mentioned on clients who exciting

is model. key a all delivery continue a play global us our will vital role for absolutely the with and that in So to geography U.S. said,

Balaji Sekar

And Puneet, your second touch quickly. question I’ll upon

so generates – compared the revenues head revenues offshore per from when to So onshore. lower

but about to XX% XX% onshore perspective, margin to a does from it about revenues, to so means of So it’s higher let’s which say margin. XX% say higher tend XX%

you’re profit get terms of be not in you generate flat losing, may but do margin higher percentage. So the what while offshore dollars we that

from getting offshore start about we the [ph] year. to be especially that So so as is a half helping that for to is margin the accretive model, EBITDA the of going XX% to year, in growing acquisition be full going to us perspective the second

Puneet Jain

Thank Got it. you.

Operator

you. Thank

is next Potter question from question. proceed Ryan your with Our Citi. Please with

Ryan Potter

my question. for Hey, taking thanks

the mentioned were you reductions side. that you following on clients some their turning to headcount for call, – On support

and they So do like the their focus as cost through take usually whether I leg actions? I their if certain more seeing kind shift multiple this you wondering of in is of is was there a just typical to actions they remind where instances, us you’re costs the could guess and a you kind they or immediately do trend kind on side pivot help of clients think

Bryce Maddock

Yes. Ryan. Thank you for the question,

call So their our Greece about portion support support and we’re large in operations who both a global customer a seeing in a this on across a gaming and last of to shifted industries and the their I Philippines to operations large portion shifted talked of European our customer India. our I that large believe across e-commerce geographies.

trend media, that and that social continued into spaces. gaming FinTech, in QX clients And across the

And the question sorry, was? second

Ryan Potter

Just as kind of take to they actions cost? typical clients pivot

Bryce Maddock

Yes.

consultative a here. is really seeing we’re what led think approach I

growth continued service they’re talked having driver has as conversations our client we see are strategic this into that shifts. the And XXXX factored that year. been our these budget a clients with teams shifts about So earlier. conversations do contemplating we as Those of

Ryan Potter

it. And or increased better with exercises? your that, approve clients so, also you Got undergoing consolidation wallet in fared clients? off if to Have have majority instances the I you share seeing And these? of maintain of continued typically are you guess of

Bryce Maddock

Yes.

instances seen by clients our on a efforts consolidation So vendor we of on brought have cost. increased few focus

very stared we in exercises well and share. those our of increased all Fortunately, have

largest client. the I materially share As call, discussed at our – we’ve our increase as seen on our

year clients. try XX%. increase the been consistent of We talking our to size the by headcount This about has across largest that saw about we this in

of to agility India save very to are them and their help innovation delivery costs. well our We footprint They strategy. our because TaskUs in the with and offshore key like Philippines of and a vendor part work us positions

Ryan Potter

Great. Thank you.

Operator

you. Thank

Koning Dave Baird. with question. Our is next your with from proceed question Please

Dave Koning

quick whether of once stuff how that in guess that headwinds ones in any a just I back plus any on I we to been a the Yes. expect ad that just geographically, future? XX% that kind political the there grow couple been kind do Is is away that do of Hey the year know one-off And type we’re obviously a business? content review are has movement. of XXXX in steady just state or or it’s drag goes you this offshore – stuff business, into think on, has guys, business, half the

Bryce Maddock

the for Dave. Thanks Yes. question,

at our volume faced a client. this obviously the level, headwinds to result largest continues some revenue of those a business but grow level, at a shifts we’ve at into So double-digits, well as

safety As we do FinTech an return space. customers. we also expect e-commerce this opportunities space space And media, And moderation lap we’re shifts safety response we’re revenue meaningful continuing trust growth bit, and within trust to year, crimes numbers. e-commerce demand risk and in to little and to content and all our to work financial across we’ve our for the the doing a across elaborate those for strong our embedded here and the the see solutions. to social of dating in in fraud And seeing work our we’re of there most be clients

Dave Koning

rate XXXX? last Tax debt sequentially Balaji, in then but year? then a mid-teens ones. there in sense. makes kind And the And quick around just That really just up of to rest holds this high I just rates, for Yes. of is assume kind teens, kind touch just and the year, couple a it of goes then interest would maybe like of moved

Balaji Sekar

Yes.

effective is XX% to ETR, be of about about And tax one-time from we interest Phantom reason rate had payouts. because about rate again, XXXX the non-GAAP was rate we was tax GAAP, we why, the low will compared were from the X%. XXXX line cost tax a we And XXXX effective a XX% ended So perspective, perspective, expect stock would XX% – and And then that expect be from XX%, – an about XX% we And or to into XXXX. to pretty much at again, between rate year continue we interest getting the is in ETR then X.X% XXXX which about XXXX. XXXX. and with XXXX at

Dave Koning

thanks, Hey, right. All you. Got guys.

Operator

you. Thank

question Our Faucette is Please your proceed Morgan from Stanley. question. next James with with

James Faucette

this wanted much. just point around very back to go you thank Great, I offshoring. to

ramp and in to more some that so from having happen, more I But could sure beyond a they some kind looking think customer analysis importantly Balaji, understood that broadly, result then they But amp offshore you’d that to of if I in what to or there. what do correctly, did the perspective, et what up to happen like existing it with you’ve TaskUs new customers sounds offshore up customers, of you’re where your with are an support the are you cetera? conversations move can mentioned make revenue. hey, and fourth that future. want that expected to are didn’t better I But that in go the still expecting offshore quarter and work that you

Bryce Maddock

James. question, that take I’ll Yes.

impact. to work supporting at of our which the permanent client, about end reduction work additional in So largest be start clear to We some talked a last just the saw be U.S. fact teammates. got at here QX. QX in shift client from to of transitioning we additional client would offshore that we of That quarter, the pushed QX, revenue thus of the that handful just the brings the workforce an total that

across When revenue asked U.S. about effectively, this the base these from to that So broadly, in we’ve is question, going the we client of which be trend longer that revenues of of all client our dropping risks the really compliance U.S. to And provided U.S. think more XX% recurring looked no regulation must the because midpoint or back contemplates those factored the the U.S. process stay of the in in today, year. which guidance at the half into reasons. we revenues we and

James Faucette

about looks your quickly XXXX get as of into really probably we think what muted hiring stabilization calendar we’re is, quarter. How should of That’s I’m think then the shift at growth we a that great. here. of in somewhat reaching pace of level how much mix just to trying mix especially offshore? And sequential is function headcount some And the

Bryce Maddock

it’s Yes, question. great a

the the happens number if quarter. added that the reason do teammates for seasonal fourth So factored that in than lower us been we in volumes. September And quarter. hiring in for we preparing new full lot a it seasonal the of we net XXX that would all That have is was the of

to into As in will this first consideration to the quarter we seasonal headcount get in we look And removed. the of business. those sequential we we are reduction global headcount in growth in volumes our U.S. some at second the year, additional see expect take reductions back of quarter the But a this as year.

James Faucette

you very much. Thank

Operator

at Thank time. you. this This are further does conclude There conference. no questions today’s

disconnect your time. this you may participation. You lines Thank your for at

TaskUs (TASK) 28 Feb 232022 Q4 Earnings call transcript