– Strong Revenue Growth Across Core Verticals Driven by Continued Recovery Tailwinds and Operational Resilience –
Startek, Inc. (NYSE:SRT) (“Startek” or the “Company”), a global provider of customer experience management solutions, is reporting financial results for the second quarter ended June 30, 2021.
Second Quarter 2021 Financial Highlights ($ in millions, excl. margin items)
| Q2 2021 | Q2 2020 | Change | |
| Net Revenue | $189.0 | $142.2 | 33% |
| Gross Profit | $24.6 | $15.8 | 55% |
| Gross Margin | 13.0% | 11.1% | +190 bps |
| SG&A Expenses | $12.3 | $14.6 | (16%) |
| Net Income/(Loss)[1] | $6.9 | $(5.2) | 232% |
| EPS[1] | $0.17 | $(0.14) | 225% |
| Adjusted Net Income/(Loss)[2], [3] | $9.9 | $(2.6) | 486% |
| Adjusted EPS[2], [3] | $0.24 | $(0.07) | 466% |
| Adjusted EBITDA[3] | $19.6 | $8.8 | 123% |
[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
“We are very pleased with our results this quarter, generating strong growth in both revenue and profitability, underscoring the resilience of our organization and each and every one of our employees.,” said Aparup Sengupta, Executive Chairman and Global CEO of Startek. “We delivered growth across our key verticals, healthcare in particular, aided by contributions from the COVID-19 assistance programs we supported throughout the United States as domestic vaccine rollout efforts accelerated. Our continued commitment to prudent cost management further enhanced our operational efficiency during the quarter. I am proud of our robust recovery from the lows of the pandemic last year, which is a testament to our team’s strong execution on driving new business, as well as leveraging the increasing flexibility of our platform.
“Across our client base, we maintained our focus on high-quality customer service and partnerships, as our clients continued to navigate their recovery amid various macroeconomic and industry-specific factors. Recovery-related tailwinds benefited our partners across business and financial services, media and cable, local travel, and e-commerce, with even long-challenged verticals such as telecom beginning their return to growth. Contributions from our U.S. COVID-19 assistance support initiatives drove significant growth within our health and education sector as we used our platform’s expanded range of capabilities to help facilitate vaccine drives in communities throughout the U.S. While we do not expect to continue this government program in the back half of the year, the comprehensive support we were able to provide demonstrates that our improved scale and resources position us well for future extensive, large-scale government opportunities.
“On the digital front, we continue to focus and invest in expanding our capabilities, paving the way for a best-in-class omni-channel customer experience. Most recently, we announced our collaboration with Automation Anywhere™, a global leader in cloud robotic process automation that will enable us to implement AI-powered capabilities across our customer experience value chain. Initiatives like these spur efficiency among our workforce and client base alike, allowing our client organizations to spend less time on repetitive tasks and more time on business-critical projects.
“As we continue into the second half of 2021, we are closely monitoring changes in recovery progress and health protocols around the world as we further support our clients and workforce. Within our ongoing digital transformation, we plan to balance our prudent cost management with strategic investments in support of key market-facing growth initiatives. We remain committed to optimizing our platform and maximizing our organizational efficiency as we work to generate additional value for our clients and shareholders.”
Second Quarter 2021 Financial Results
Net revenue in the second quarter increased 33% to $189.0 million compared to $142.2 million in the year-ago quarter. The increase was driven by continued strong performance across key verticals and geographies, with significant contributions from the U.S. COVID-19 assistance government contract. On a constant currency basis, net revenue increased 33.7 compared to the year-ago quarter.
Gross profit in the second quarter increased 55% to $24.6 million compared to $15.8 million in the year-ago quarter. Gross margin increased 190 basis points to 13.0% compared to 11.1% in the year-ago quarter. The increase was primarily driven by the aforementioned net revenue growth across key verticals.
Selling, general and administrative (SG&A) expenses in the second quarter decreased to $12.3 million compared to $14.6 million in the year-ago quarter. As a percentage of revenue, SG&A improved 380 basis points to 6.5% compared to 10.3% in the year-ago quarter as a result of operating leverage at the back of the higher revenue base generated during the quarter.
Net income attributable to Startek shareholders in the second quarter improved significantly to $6.9 million or $0.17 per share, compared to a net loss of $5.2 million or $(0.14) per share in the year-ago quarter. The increase reflects both the substantial net revenue growth and a more normalized effective tax rate in the current period, as there were no one-time or exceptional costs in the second quarter of 2021.
Adjusted net income* in the second quarter improved significantly to $9.9 million or $0.24 per diluted share, compared to an adjusted net loss* of $2.6 million or $(0.07) per share in the year-ago quarter.
Adjusted EBITDA* in the second quarter increased significantly to $19.6 million compared to $8.8 million in the year-ago quarter. The increase was driven by the aforementioned strong revenue growth.
On June 30, 2021, cash and restricted cash were $54.1 million compared to $64.6 million[1] at March 31, 2021. The decrease was primarily due to increased receivables related to the revenue growth generated during the second quarter. Total debt at June 30, 2021 was $173.9 million compared to $172.8 million at March 31, 2021, and net debt at June 30, 2021 was $119.8 million[2] compared to $108.1 million at March 31, 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 40,000 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.
