IBEX NASDAQ: IBEX reported what executives described as another quarter of “outperformance” in its fiscal third quarter of 2026, driven by double-digit revenue growth, continued expansion in higher-margin verticals, and early traction from a newly announced strategic partnership focused on AI-powered customer experience solutions.
Quarterly results show record revenue and earnings growth
CEO Bob Dechant said the company delivered “record revenue growth of 17% to $164.4 million,” while adjusted earnings per share rose 11% to $0.91. Dechant said the quarter marked the company’s fifth straight quarter of double-digit revenue growth and its “eighth consecutive quarter of double-digit GAAP and Adjusted EPS growth,” which he emphasized was achieved organically.
Chief Financial Officer Taylor (who did not provide a last name in the transcript) said results were “once again among the strongest in our history, with record revenue, Adjusted EBITDA, EPS, and Adjusted EPS.” Revenue rose 16.8% year over year from $140.7 million to $164.4 million.
Net income increased to $13.3 million from $10.5 million a year earlier. Taylor attributed the increase primarily to revenue growth and operating leverage, noting SG&A expenses declined to 16.7% of revenue from 19.2% in the prior-year quarter. That improvement was partially offset by $800,000 of severance expense tied to a client shifting volumes from nearshore to offshore delivery. Taylor added the company expects “an additional asset impairment charge” in the fiscal fourth quarter related to that move as it adjusts capacity.
Fully diluted EPS was $0.89, up from $0.73. Weighted average diluted shares outstanding were 15.0 million compared with 14.4 million one year earlier.
Health tech and other strategic verticals drive growth
Management repeatedly pointed to health tech as a key growth engine. Dechant said health tech growth was “nearly 54%” and represented the high-water mark for the quarter. He said the vertical, launched in 2021, is expected to “far exceed a $100 million business by the end of this fiscal year,” and described it as validation of investment in India as a high-growth market.
Taylor broke out growth by vertical and cited broad-based gains, led by high-margin categories. He said third quarter growth was driven predominantly by:
- Health tech revenue growth of 53.7%
- Technology vertical growth of 42.6%
- Travel, transportation, and logistics growth of 15.1%
- Retail and e-commerce growth of 8.3%
These gains were partially offset by what Taylor called an “expected decline” in telecommunications revenue of 23.1%, noting it is one of the company’s smallest verticals.
On mix, Taylor said health tech increased to 20.8% of quarterly revenue from 15.8% a year ago, and technology rose to 9.2% from 7.5%. Telecommunications decreased to 8.6% of revenue from 13.1% in the prior-year quarter, while retail and e-commerce represented 23.9% of revenue versus 25.8% a year earlier.
Asked on the call whether health tech growth included any one-time revenue, Dechant said the segment’s performance reflects both new client wins and market-share gains at existing clients. He said IBEX has brought in “6 new logos” in healthcare over the past two years and also cited market-share gains at large customers. Taylor added, “None of that revenue was one time in nature… It’s all sustainable and… this is the new run rate for healthcare.”
Geographic and service mix shift toward higher-margin areas
Taylor said the company grew across geographies, with onshore revenue rising 36.8% year over year, offshore revenue growing 13.9%, and nearshore locations up 3.7%. Offshore revenue accounted for 50% of total revenue. Onshore revenue expanded to 27.9% of total revenue from 23.8% in the prior-year quarter, reflecting growth in digital acquisition services and onshore health tech delivery.
He also said digital and omni-channel services grew 18% from the prior-year quarter and represented 82% of total revenue. Taylor characterized the company’s strategy as structurally focused on higher-margin “regions, services, and vertical markets,” and said management expects that emphasis to continue as new client wins and embedded growth remain concentrated in those areas.
Adjusted EBITDA increased to a record $22.0 million, or 13.4% of revenue, compared with $19.4 million, or 13.8% of revenue, in the prior-year quarter. Taylor said the 40-basis-point decline in adjusted EBITDA margin was primarily due to the “temporary impact” of work shifting from nearshore to offshore and a less positive impact from deferred training revenue, partially offset by lower SG&A as a percentage of revenue. For the first nine months of fiscal 2026, he said adjusted EBITDA margin is up 50 basis points to 13%.
Client retention, diversification, and new logo momentum
Dechant said IBEX achieved 100% client retention for the quarter and revenue retention of 99.9% for the year. He added that growth within the company’s top 10 clients has averaged more than 25% over the last five quarters.
Taylor said the company’s largest client represented 9% of revenue during the quarter. He also reported that the top five, top 10, and top 25 clients grew 22%, 19.3%, and 15.8%, respectively. Those cohorts represented 35%, 54%, and 77% of overall revenue, compared with 38%, 54%, and 80% in the prior-year quarter.
Dechant said the company won “another new logo” during the quarter and has since added “3 additional significant wins in the first few weeks of April,” bringing the year-to-date total to 11. He said those wins “will set us up well for FY 2027.”
Sierra partnership frames “BPO 3.0” strategy and AI opportunity
Dechant spent much of his prepared remarks discussing IBEX’s view of generative AI’s impact on the outsourcing and customer experience market. He said some market participants believe call center volumes will shrink as AI handles more interactions, creating a threat for labor-arbitrage-focused providers. However, he positioned IBEX as a differentiated provider that views “Agentic AI” as an opportunity.
Dechant highlighted a newly announced strategic partnership with Sierra, saying IBEX will integrate Sierra’s AI technology with its customer experience operations, tech integration, and analytics to deploy “end-to-end AI-powered CX solutions.” He said IBEX believes it can stand up these solutions “in weeks, not months or years,” and described early opportunity volume as “great,” with “several decisive early wins.”
During the Q&A, Dechant explained how Sierra fits alongside IBEX’s internal AI initiatives. He said the company’s Wave iX stack is focused on internal tools that help agents perform better—such as training simulators and “agent assist.” For AI agents, he said IBEX’s philosophy was to partner rather than build: “We wanted to partner with the leading player in the industry. Sierra is clearly that leader.”
On economics, Dechant said contracts will be “IBEX contracts” billed to clients, with an arrangement for Sierra-related costs. He said management believes the model is “very accretive to BPO margins,” contrasting the company’s BPO gross margins—“in the 30% gross margin range”—with higher “technology slash software margins.”
Dechant acknowledged AI could reduce some human-handled volume but argued the combination of AI solution revenue and continued human support would be a net growth driver. He cited one large client that deployed an AI agent solution last summer and saw call volumes decrease by 20% within six months, while IBEX still grew overall at 17% as it took market share from competitors.
As an example of early traction, Dechant described an airline win where IBEX competed against AI technology firms, SaaS companies, and BPO competitors and deployed a Sierra-based solution in three languages. He also said the partnership has generated traditional BPO opportunities, referencing a luxury activewear brand that signed and launched with IBEX in April within 30 days to scale human agent support alongside an existing AI solution.
Dechant said the company believes it is positioned to lead what he termed “BPO 3.0,” combining AI agents with human support in a “seamless customer experience.”
In closing remarks, Dechant said the company’s “flywheel” of winning new clients and expanding within existing accounts remains intact, and added that with the Sierra announcement, IBEX believes its business is “extremely future-proofed.”
Guidance raised for fiscal 2026
Taylor said the company raised its full-year guidance again, citing performance and momentum. IBEX now expects:
- Revenue of $638 million to $642 million, up from $620 million to $630 million
- Adjusted EBITDA of $82 million to $84 million, up from $80 million to $82 million
- Capital expenditures of $25 million to $30 million, up from $20 million to $25 million, driven by investments to meet increased demand in higher-margin regions
For cash flow and capital allocation, Taylor said operating cash flow was $11.9 million, up from $8.8 million a year earlier, and free cash flow was $6.6 million compared with $3.6 million. The company repurchased about 140,000 shares for $4.5 million during the quarter, bringing fiscal year-to-date repurchases to 310,000 shares for $10.1 million, with $3.2 million remaining under the authorization. IBEX ended the quarter with $15.4 million of cash and $1.4 million of debt, for net cash of $14.0 million.
About IBEX NASDAQ: IBEX
IBEX Holdings, Inc is a global business process outsourcing (BPO) company that specializes in customer experience solutions for a range of industries, including telecommunications, cable, technology, financial services and e-commerce. The company's core offerings encompass multichannel customer support delivered via voice, email, chat, social media and digital self-service platforms. In addition to front-line contact center services, IBEX provides back-office processing, order management, technical troubleshooting and analytics-driven insights to help clients optimize operational efficiency and customer satisfaction.
Beyond traditional contact center operations, IBEX has built a proprietary technology stack designed to integrate real-time data analytics, workforce management and quality assurance.
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