ibex (IBEX) Q1 2027 earnings review
ibex raises its full-year plan, while AI bots replace calls
ibex, which runs customer service centers and automated support bots for big brands, accelerated after a slower fourth quarter while lifting its profit margin. Revenue rose 16% from a year ago to $175 million, beating the top of the company's own plan as new client programs ramped up. Finance chief Taylor Greenwald raised the full-year sales and profit targets, and by our math the new outlook points to 12% revenue growth across the rest of the year.
| Revenue | $175.2M +15.9% from a year ago |
|---|---|
| Adjusted EBITDA margin | 14.4% +1.5 percentage points from a year ago |
| Profit per share, excluding one-offs | $1.10 +21.2% from a year ago |
| Full-year revenue outlook | Raised $20M middle of the range: 13% growth |
⚖️ Verdict: 🟢 Bullish
The story got better because the first-quarter rebound and the raised annual plan overturned two standing worries at once: that growth was slowing toward 10% and that training costs were squeezing profits. Healthcare sales also resumed growing from last quarter. One caution: chief executive Bob Dechant noted that automated software now handles 20% to 40% of inquiries at some clients, and the group still does not disclose how much revenue those bots generate.
The question now is whether automated customer-service bots bring in enough new clients to make up for the human call-center hours they replace. Either software wins keep pulling in full call-center contracts as they did at a fiber-internet client this quarter, or rising automation gradually shrinks billing at older accounts. Disclosing dollar sales for automated agents or tracking revenue growth at the top 10 clients over the next two quarters will tell.
🐂 Bull Case
New Customer Wins Lifted the Full-Year Plan
ibex runs customer service and support centers for large brands. Three months ago, a flat fourth quarter and a 9% to 11% full-year growth target raised concern that its growth was slowing down. First-quarter results and a raised full-year outlook show that the earlier slowdown was temporary.
"Our financial results were driven by stellar growth from new logos and further augmented by expansion in our embedded client base," finance chief Taylor Greenwald said. Customers signed across the past five quarters supplied about half of the quarter's revenue gain, chief executive Bob Dechant said on the call.
- First-quarter revenue: $175.2 million, up 15.9% from a year ago and $5.2 million above the top of the outlook
- New customer wins: four traditional outsourcing clients signed in the quarter, plus three verbal commitments after it ended
- Existing clients: revenue rose 14% at the top five accounts and 18% across the top 25
- Full-year revenue outlook: raised by $20 million to a range of $720 million to $735 million
This matters because newly signed customer service programs take two to three years to reach full size. Raising the annual growth plan to a range of 12% to 14% after one quarter proves last year's record 17 client wins are now turning into billed revenue.
What to watch: second-quarter revenue against the 12.1% growth pace implied by the full-year outlook for the rest of the year. Clearing that bar would show the new client programs are still speeding up.
Offshore Growth Restored the Profit Margin
Last quarter, higher training costs for new clients and moving work between regions pushed profitability down. That drop raised the risk that fast hiring would eat into profits this year. Both the first-quarter recovery and the higher annual profit outlook reverse that concern.
Gross margin — the share of sales left after paying the direct cost of delivering services — rose 0.9 percentage points from a year ago to 30.4%. Direct service costs fell by 0.9 percentage points of revenue to 69.6%, while overhead and sales costs dropped 0.4 percentage points to 17.2%.
Adjusted EBITDA — profit before interest, taxes, depreciation, and one-offs like stock pay — grew 29.4% to $25.2 million, lifting the margin by 1.5 percentage points to 14.4%. The customer service provider grew 14% in its more profitable offshore regions, which now provide half of total sales, and raised its full-year adjusted EBITDA forecast by $5.5 million at the middle of the range.
What to watch: adjusted EBITDA margin across the remaining three quarters, which by our math the annual plan puts at 13.1%. Holding above last year's 12.8% full-year rate would confirm that training costs are no longer dragging down profits.
Healthcare Resumed Growing From Last Quarter
HealthTech, which provides support for healthcare and medical technology clients, is the fastest-growing part of the business. Last quarter, revenue in this division fell from the third quarter right after executives called the third-quarter level a permanent new baseline.
In the first quarter, HealthTech revenue grew 39.9% from a year ago and made up 17.5% of total sales, up from 14.5% a year earlier. By our math, that equals $30.7 million in quarterly sales, up 4.3% from the fourth quarter's $29.4 million. Strong healthcare and digital marketing demand also pushed US onshore sales up 37% from a year ago.
The sequential gain eases the worry that healthcare demand was shrinking, though the division still sits below its $34.1 million third-quarter peak. What to watch: whether HealthTech share of revenue stays above 17.5% in the second quarter, when seasonal health-plan enrollment usually lifts volume.
🐻 Bear Case
AI Bots Cut Call Volumes Without Disclosed Revenue
ibex sells automated software bots alongside its 39,000 human call-center workers, claiming that automation brings in new clients rather than shrinking its business. Chief executive Bob Dechant said the group is "benefitting from our new vector of growth through our AI agent solution, powered by our strategic partnership with Sierra."
Since the quarter ended, the outsourcing group signed four new automated agent deals. For one fiber-internet client, it used Sierra's conversational software to replace an older voice menu in six weeks, cutting dropped calls by more than 60% and winning the client's human call-center contract for December.
That example shows how software can help win new accounts, but the risk to existing contracts remains untested. Dechant noted on the call that automated agents now handle 20% to 40% of customer inquiries at some clients without human help. Because traditional call centers bill for human time, automating up to two-fifths of the calls reduces human billing, and the company still does not report how much revenue its software brings in or how much it pays partner Sierra.
What to watch: any dollar disclosure for automated agent revenue or total spending at existing clients before and after automation. Until those figures are published, rising automation rates leave open the risk that software shrinks older contracts faster than it adds new ones.
Higher Taxes and Share Count Held Back Profit
Operating profit grew 33.5% from a year ago in the first quarter, but diluted profit per share rose at a slower 19.6% pace to $0.99. Two items between operating profit and per-share earnings absorbed more than a third of the operating gain.
First, income tax expense more than doubled to $3.5 million, lifting the effective tax rate by 8.2 percentage points to 19.1% as tax breaks in foreign operating countries normalized toward the 20% to 22% full-year target. Second, the diluted share count rose 2.6% from a year ago to 15.0 million even though management spent $4.4 million buying back 122,806 shares, because stock-based employee pay rose to $2.9 million and option exercises added shares.
What to watch: the diluted share count in the second quarter, with $13.5 million left on the buyback plan. If stock grants and warrants keep pushing the share count higher despite buybacks, per-share profit will continue to trail operating growth.
Risks This Quarter Didn't Answer
Three standing risks from prior quarters received no new figures in the first-quarter release or call highlights.
- Telecommunications client shrinkage: the release gave growth rates for four industries but omitted telecommunications, which shrank 18.7% last year; the quarterly filing's segment table will show the exact drop.
- Client concentration and cancellation terms: the top 10 clients supplied over half of revenue entering the year under contracts they can cancel on 30 to 120 days' notice; the filing will update concentration shares.
- Foreign currency and offshore weather exposure: half of revenue comes from offshore centers in countries like the Philippines, Pakistan, and Jamaica, where currency swings and storms can disrupt operations.
💲 Other KPIs
Total deferred revenue — cash collected upfront to train workers for new client programs before service begins — rose 36.5% from a year ago and 16.9% from last quarter. The net inflow of $1.43 million more than doubled last year's $0.61 million first-quarter addition, backing up the higher full-year revenue plan.
Free cash flow — operating cash left after buying equipment — rose 14.1% from a year ago to a first-quarter record. Operating cash flow grew only 4.2% to $16.3 million because unpaid customer bills (accounts receivable) rose by $11.0 million during the quarter to $136.3 million as new client programs ramped up.
Cash minus debt climbed 13.4% from $30.9 million three months ago and $21.1 million a year earlier. The outsourcing company holds $36.7 million in cash against $1.7 million of total debt, leaving it able to fund its $30 million equipment budget and share buybacks without borrowing.
🔮 Guidance
Raised. Management lifted the full-year sales plan by $20 million at both ends, pointing to 13.0% growth at the middle of the range versus 9.8% previously. By our math, that leaves 12.1% growth for the remaining three quarters against tough 16% comparisons from a year ago. In each of the past two fiscal years, the group raised its initial annual revenue target three times and beat the final range.
Raised. The full-year profit target moved up $5.5 million at the middle of the range, calling for 18.4% growth and a 13.4% margin on guided sales. By our math, after a 14.4% margin in the first quarter, the plan leaves a 13.1% margin across the rest of the year. Greenwald said the margin will improve from a year ago in each remaining quarter, though by less than in the first quarter.
Raised to the top of the prior range. The US-headquartered company now expects to spend about $30 million on facilities and equipment this year, up from $27.8 million last year, to build out call-center seats for
❓ Key Questions
Why Did Management Stop Giving Next-Quarter Targets?
Last quarter, the release included explicit revenue and adjusted EBITDA ranges for the first quarter, but this release gave only full-year targets. Asking for second-quarter ranges will clarify whether the 12.1% growth pace implied for the rest of the year starts right away.
What Are the Dollar Sales and Margins for AI Agents?
Executives cited four new automated agent deals and said software resolves 20% to 40% of interactions at some clients. Without the revenue from those bots or the fee split with partner Sierra, investors cannot tell if automation adds to or subtracts from existing client billing.
How Much Did Telecommunications Revenue Shrink This Quarter?
The earnings release listed growth rates for four industries representing about two-thirds of sales but left out telecommunications, which fell 18.7% last year. Knowing whether legacy carrier volume is stabilizing or falling faster helps gauge the drag on total growth.
Did BJ's Wholesale Launch Human Call-Center Support?
Last quarter, chief executive Bob Dechant said an automated agent win at BJ's Wholesale would expand into traditional human-agent support in the first half of fiscal 2027. Confirming that launch would test whether software wins reliably bring large human support contracts.