Startek Reports Third Quarter 2021 Financial Results

- Growth Trends Across Core Verticals Drive Sustained Revenue Improvements- 

- New Executive Appointments Bolster Management Team and Represent Continued Progress on Long-Term Growth Strategy -

GREENWOOD VILLAGE, CO November 2, 2021 - Startek, Inc. (NYSE:SRT) ("Startek" or the "Company"), a global provider of customer experience management solutions, is reporting financial results for the third quarter ended September 30, 2021.

Third Quarter 2021 Financial Highlights ($ in millions, excl. margin items)

 

Q3 2021

Q3 2020

Change

Net Revenue

$172.8

$162.7

6%

Gross Profit

$21.5

$22.3

(3)%

Gross Margin

12.5%

13.7%

-120 bps

SG&A Expenses

$13.1

$14.3

(8%)

Net Income/(Loss)[1]

$0.1

$0.4

(79)%

EPS[1]

$0.00

$0.01

(80)%

      Adjusted Net Income/(Loss)[2], [3]

$2.9

$3.3

(13)%

Adjusted EPS[2], [3]

$0.07

$0.08

(14)%

Adjusted EBITDA[3]

$15.9

$15.6

2%

 

[1] Reflects net income (loss) attributable to Startek shareholders.

[2] Reflects Adjusted net income (loss) attributable to Startek shareholders. 

[3] Refer to the note below about Non-GAAP financial measures.                             

 

Management Commentary  
“During the third quarter, we continued to drive growth across core verticals and strengthen our operational foundation,” said Aparup Sengupta, Executive Chairman and Global CEO of Startek. “We generated year-over-year increases across both revenue and adjusted EBITDA. While we maintained our disciplined approach to cost management across our organization, we experienced some gross margin pressure led by the cybersecurity event. Despite this, our work to invest in key platform enhancements, drive continued business development, and support our personnel across all geographies in which we operate has allowed us to continually improve our position as a nimble and innovative provider of differentiated customer experiences.

“Examining our performance by vertical, our growth during the third quarter was primarily driven by sustained momentum with our telecom clients, as well as continued strength within both banking & financial services and technology & IT services. By geography, we generated meaningful year-over-year improvements in India, the Middle East, and South Africa, with some year-over-year revenue softness in the United States due to growing pandemic-related labor constraints. As we continue to monitor these trends, we are placing a strong priority on ensuring we have a robust set of resources for delivering our high-quality business process management solutions. This includes increasing our sales, solutioning and marketing workforce, fine-tuning our go-to-market approach, and continuing to make investments in new digital capabilities for our platform. All of these investments are to strengthen our ability to preserve the quality and high-touch nature of our client services, no matter where or how we deploy them.

“Subsequent to the quarter, we further bolstered our senior management team with the announcement of two new executive appointments. Our new president, Bharat Rao, has been a Startek board member since 2018 and is a former Managing Partner at Capital Square Partners, and our new Global Chief Revenue Officer, Vivek Sharma, is Infosys BPM’s former Senior Vice President for Global Sales. Both Bharat and Vivek have extensive experience with driving growth and innovation across new industry segments, and I look forward to working closely with them to accelerate our capabilities across the customer experience transformation journeys we offer.

“As we move into the fourth quarter, we remain focused on maintaining our momentum within our key geographies and verticals, as well as ensuring the continued efficiency of our global operations. We will continue working to execute on these objectives and maximize the value we create for our clients and shareholders.”

 

Third Quarter 2021 Financial Results
Net revenue in the third quarter increased 6% to $172.8 million compared to $162.7 million in the year-ago quarter. The increase was driven by sustained strong performance across key verticals and geographies.

Gross profit in the third quarter was $21.5 million compared to $22.3 million in the year-ago quarter. Gross margin was 12.5% compared to 13.7% in the year-ago quarter. The decrease was primarily driven by higher growth in telecom, financial and business services and public sector enterprises verticals that are delivered onshore, as well as growing wage pressure and labor shortages in the United States.

Selling, general and administrative (SG&A) expenses in the third quarter decreased to $13.1 million compared to $14.3 million in the year-ago quarter. As a percentage of revenue, SG&A improved 120 basis points to 7.6% compared to 8.8% in the year-ago quarter as a result of continued operating leverage at the back of the higher revenue base generated during the quarter.

Net income attributable to Startek shareholders in the third quarter was $0.1 million or $0.00 per share, compared to a net income of $0.4 million or $0.01 per share in the year-ago quarter.

Adjusted net income* in the third quarter was $2.9 million or $0.07 per diluted share, compared to an adjusted net income* of $3.3 million or $0.08 per share in the year-ago quarter.

Adjusted EBITDA* in the third quarter increased slightly to $15.9 million compared to $15.6 million in the year-ago quarter. The increase was driven by the aforementioned growth in net revenue.

On September 30, 2021, cash and restricted cash were $63.5 million compared to $54.1 million[1] at June 30, 2021. The increase was primarily due to improved working capital during the third quarter. Total debt at September 30, 2021 decreased to $170.4 million compared to $173.9 million at June 30, 2021, and net debt at September 30, 2021 was $106.9 million[2] compared to $119.8 million at June 30, 2021.

During the three months ended September 30, 2021, the Company repurchased an aggregate of 57,759 shares of common stock under its repurchase plan, at an average cost of $5.67 per share.

*A non-GAAP measure defined below.
[1] Cash balance excluding restricted cash as at September 30, 2021 amounted to $56.8 million as compared to $47 million as at June 30, 2021.
[2] Net debt excluding restricted cash balance at September 30, 2021 was $113.5 million compared to $126.9 million at June 30, 2021.

 

About Startek
Startek is a global provider of tech-enabled business process management solutions. The company provides omni-channel customer experience, digital transformation, and technology services to some of the finest brands globally. Startek is committed to impacting clients’ business outcomes by focusing on enhancing customer experience and digital & AI enablement across all touch points and channels. Startek has more than 46,000 CX experts spread across 46 delivery campuses in 13 countries. The company services over 200 clients across a range of industries such as Banking and Financial Services, Insurance, Technology, Telecom, Healthcare, Travel & Hospitality, Ecommerce, Consumer Goods, Retail, and Energy & Utilities. To learn more about Startek’s global solutions, please visit www.startek.com.

 

Forward-Looking Statements
The matters regarding the future discussed in this news release include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are intended to be identified in this document by the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should” and similar expressions. As described below, such statements are subject to a number of risks and uncertainties that could cause Startek's actual results to differ materially from those expressed or implied by any such forward-looking statements. Readers are encouraged to review risk factors and all other disclosures appearing in the Company's Form 10-K for the fiscal year ended December 31, 2020, as filed with the Securities and Exchange Commission (SEC) on March 15, 2021, as well as other filings with the SEC, for further information on risks and uncertainties that could affect Startek's business, financial condition and results of operation. Copies of these filings are available from the SEC, the Company’s website or the Company’s investor relations department. Startek assumes no obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date herein.

Investor Relations
Giuseppe Montefinese
Startek
+1 732-890-8929
giuseppe.montefinese@startek.com  

Cody Cree or Jackie Keshner
Gateway Investor Relations
+1 949-574-3860
SRT@gatewayir.com