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IBEX GLOBAL SOLUTIONS PLC ORD 1P (NASDAQ:IBEX)
Q1 2021 Earnings Call
Nov 16, 2020, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen thank you for standing by, and welcome to IBEX's first-quarter 2021 earnings call. [Operator instructions] It is now my pleasure to introduce Brinlea Johnson of Blueshirt Group.

Brinlea Johnson -- The Blueshirt Group, ICR

Good afternoon, and thank you for joining us today. Before we begin, I want to remind you that matters discussed on today's call may include forward-looking statements related to our operations performance, financial goals, and business outlook, which are based on management's current expectations and beliefs and assumptions. Please note that these forward-looking statements reflect our opinions as of the day of this call and we undertake no obligation to revise this information as a result of new developments, which may occur. Forward-looking statements are subject to various risks, uncertainties, and other factors that could cause our actual results to differ materially from those expected and described today.

From our detailed description of our risk factors, please review our final prospectus filed with the Securities and Exchange Commission on August 10th, 2020 and our Form 20-F our filed on October 23rd, 2020. With that, I'll turn it over to Bob Dechant, CEO.

Bob Dechant -- Chief Executive Officer

Thank you Brinlea. Good afternoon and thank you all for joining us today as we discuss the first-quarter fiscal-year 2021 financial results for IBEX. I will provide a business overview of the quarter, then Karl will review the numbers after which, we will open it up for Q&A. I remain very optimistic about IBEX's market opportunities and our ability to outpace the industry.

IBEX is at the forefront of this fundamental shift occurring in this industry. Our position in the BPO 2.0 world continues to distance IBEX from yesterday's legacy competitors. This was technically our first reported quarter as a publicly traded company and I am very, very pleased with our continued strong results. We delivered record-high revenues of $108.8 million for the quarter, up 14% year over year, all of which is organic growth.

Adjusted EBITDA grew an impressive 41% to $15.6 million from prior-year Q1 and we achieved strong cash flow generation. We are off to a strong start to the year. We are delivering against our growth strategy, increasing our market share with key clients, and have good revenue visibility. Those factors give us confidence to raise our outlook for FY '21 to $440 million to $443 million in revenue, a growth of 8.5% to 9.5% over prior year.

And adjusted EBITDA to $60.5 million to $62 million, approximately 12% to 14% increase over prior year. I previously outlined a number of key strategic priorities for this year that included winning new opportunities with the new economy leaders and large blue chip clients that are transforming their customer experiences rapidly to a digital first offering, aggressive expansion in our near shore and Philippine markets, as well as, further leveraging our technology to further differentiate IBEX as a partner of choice which drives revenue growth and new customer wins. I'm excited to report that IBEX has continued to execute on all of our key areas. On the new logo front.

We had an extremely strong performance with a new logo wins in the quarter that span strategic verticals such as fintech and logistics and delivery, several of which, we were able to win and launch in this quarter. Between those clients and the new wins we had in Q4, we launched nine new clients this quarter driving revenue. Our broad CLX tech blend solutions continue to resonate well in the market. For a leading on-demand food delivery service client, we were able to launch a proof of concept contact center solution in our provincial Bohol Philippine Center.

The suit -- solution was initially focused on app driven digital care and included Wave X technologies such as training simulators to drive performance. Our scope was quickly expanded and the solution was scaled in size and scope to an omnichannel solution, which created a frictionless CX experience for consumers regardless of the device or the contact channel they preferred to use for support. In this launch, it was done completely remotely. Additionally, one of the largest health systems in the United States with a national footprint of hospitals, outpatient clinics, and physician practices, partnered with IBEX health to deliver high-end mission critical solutions to globalize and modernize the revenue cycle management function.

In the first days, we successfully moved their patient services and billing department to the Philippines and Nicaragua from the U.S., which will reduce their operating costs by 50%. During the transition, we levered our Wave Zero leadership acceleration process and Wave X training simulators which exceeded the client's expectations, delivering greater than 90% patient satisfaction within the first 90 days. Our proprietary dialer was also implemented, allowing us to blend a unique inbound and outbound contact solution, delivering improved cash collections compared to the internal team's previous performance. The next phase of our relationship will focus on driving innovation to become a leader in the consumer revolution that is now dominating the healthcare sector today.

To be clear, the deals we are winning are strategic deals that are diversified across segments and will continue to drive growth for us, both during and after the pandemic. And our pipeline remains extremely strong across all key verticals and with the compressed decision making cycle, which will continue to help us drive performance. This growth has led to continued expansions across our geographies. In the quarter, we launched two new sites in our nearshore markets; one in Managua, Nicaragua, where we continue to dominate the market; and one in Ocho Rios, Jamaica, where we are the first mover into the market.

These new sites along with site expansions added approximately 1,000 new seats in the nearshore in this quarter, capitalizing on our position as nearshore company of the year for 2019. Our Wave X technologies continue to be a key differentiator, as we deliver transformational digital solutions as consumer behaviors shift to more digital first experiences. With approximately 50% of our workforce now at home, we have been able to successfully adapt Wave X to operate in a virtual environment, enabling us to create a seamless environment between in-center and work-at-home operations. Now the health of our employees remain our top priority.

I am proud to announce that we have continued to pass all our health audits across the globe, and as a result, have had all of our centers operational for the quarter. Additionally, we were able to mobilize close to 100% of our workforce back to work and earning wages. We're proud of that. I would like to recognize and thank our leadership teams who have tirelessly worked to achieve these amazing results.

In summary, a major transformation is occurring in our industry toward digital and great customer experiences. IBEX is at the forefront. We are very confident in our competitive position and our ability to deliver and execute. Our leadership position is evidenced by our strong financial results.

We believe that BPO 2.0 and the new digital economy, our reputation for excellence, and our strong balance sheet positions us for long-term success. I will now turn the call over to Karl Gabel, our CFO who will walk you through the key financial highlights to the quarter. We'll then open up the call for Q&A. Thank you.

Karl?

Karl Gabel -- Chief Financial Officer

Thank you, Bob, and good afternoon, everyone. Thank you for joining the call today. I will now take you through the first-quarter results. As Bob mentioned, we achieved record first-quarter results, driving 14.1% revenue growth, compared to the prior-year quarter and have raised our fiscal year guidance.

The foundation of this impressive growth includes significant revenue increases from our digitally native client verticals, new lines of business from our embedded client base, our superior operational performance, and improvements in client concentration. Revenue in the first quarter grew 14.1% to $108.8 million, compared to the year-ago quarter. New economy revenue grew 18.8%, non-voice revenue grew 8.6%, and digital revenue grew 4.8%, compared to the prior-year quarter. Net loss in the first quarter of 2021 was $3.4 million, including $4.3 million of nonrecurring COVID-19 related costs, compared to net income of $2.3 million for the same period last year.

On a non-GAAP basis excluding nonrecurring expenses, fair value adjustments and share-based payments, adjusted net income was $5.2 million versus $3.1 million in the prior-year quarter. Pro forma fully ditluted adjusted EPS was $0.31 in the first quarter of 2021 versus $0.18 in the prior-year quarter. Adjusted EBITDA increased 41.3% from the prior-year quarter to $15.6 million or 14.3% of revenue, compared to $11 million or 11.6% of revenue for the same period last year. The 270-basis point increase in adjusted EBITDA margin is primarily driven by continued margin improvement in our digital business nearshore margin expansion, as this region continues to ramp up, and increased leverage of our overhead costs.

Turning to client mix in the first quarter. Our top three client concentration decreased to 31.1% from 46.2% of overall revenue for the same period last year. The clients outside of the top three increased by 31.3% and are primarily responsible for driving the overall revenue growth. By vertical market, telecommunications decreased to 29.9% of revenue from 38.6% in the prior-year quarter, whereas, retail and e-commerce increased to 21% of revenue from 13.5% for the same period last year.

Net cash provided by operating activities increased to $5.9 million for the first quarter, up from $0.8 million in the prior-year quarter. Non-GAAP free cash flow was 0.9 million usage, compared to 10.9 million usage in the prior-year quarter. The improvement in free cash flow is primarily attributable to an increase in adjusted EBITDA and improvement in networking capital and lower capital expenditures offset by nonrecurring cost. DSO for the first quarter was 53 days, down 13 datys in the same period last year, up four days sequentially.

Net debt decreased to $35.5 million, compared to $84.1 million as of June 30th, 2012, primarily driven by the net proceeds from the IPO of $63.1 million, significantly strengthening our balance sheet. Capital expenditures were $4.5 million or 4.2% of revenue for the first quarter of 2021 versus $9.3 million or 9.8% of revenue for the year-ago quarter. We added approximately 1,000 nearshore workstations, primarily driven by two new site launches in Ocho Rios, Jamaica and Managua, Nicaragua. In closing, the momentum we experienced last fiscal year continued in the first quarter of fiscal year 2021.

We remain extremely focused on our growth drivers as we continue our leadership position in BPO 2.0, by transforming the customer experience with our purpose-built Wave X technology and capitalizing on the significant CX market demand. With that, Bob and I will now take questions. Operator, please open the line.

Questions & Answers:

Operator

[Operator instructions] And our first question comes from the line of Seth Weber with RBC Capital Markets. Your line is now open.

Seth Weber -- RBC Capital Markets -- Analyst

Hey, guys. Good afternoon. Good evening. Hope you're doing well.

Congrats on the strong results.

Bob Dechant -- Chief Executive Officer

Thanks, Seth.

Seth Weber -- RBC Capital Markets -- Analyst

I -- you know, the margin really kind of stands out here. So I was just -- you know, a lot better than what we were expecting. Can you just talk to -- you know, you said, Bob, I think you've add about 1,000 new seats. Can you just talk to, you know, productivity levels for the new agents that have been hired? Is it -- has it been better than you've expect -- than you would have expected? Obviously, it's a very kind of unusual onboarding situation.

Can you just give us any color as to, you know, more color as to what's driving this margin performance? Thanks.

Bob Dechant -- Chief Executive Officer

Sure, Seth. So great -- great question and thanks for attending. So, you know, as we talk, our growth drivers are also our margin drivers. And our growth, you know, we've been winning big in the nearshore markets and places like the Philippines and so growth in those areas for us is really accretive to the financials.

Now what we have done really well, especially in this virtual -- in this virtual world, we've created in our markets amazing front end hiring machines that we're hiring people virtually. And so we're able to keep our pipelines of talent, really talented folks very, very strong. So we're able to do that in a virtual environment. We hire the people, we bring them onboard.

We've leveraged our Wave X technologies for training and we've made that virtual now. So we're able to actually bring in and get our folks trained. Many of those not in a classroom environment in the centers, but also in a virtual environment to enable us to really scale the business and using those technologies have allowed us to get, what I call, get to green fast. And so we're doing a great job for our clients delivering on their metrics, but we're also getting great -- kind of great throughput of those agents and creating really a win-win environment.

Win on our clients on the metrics and then and getting the margin -- the desired margins that we're looking extensively because we're able to fill those centers relatively quickly and keep our current centers operational.

Seth Weber -- RBC Capital Markets -- Analyst

Right. Right. No, that makes sense. I appreciate the color.

And then maybe just a follow-up for -- maybe it's for Karl. The digital and the non-voice revenue was good, but it actually was below the the total company revenue growth in the quarter. Is there something there? Is it a timing issue? Is it just sort of the new logos that you've added that are less focused in that area? Just anything that you would -- you'd highlight there that we should be thinking about and whether you expect that to accelerate going forward. Thanks.

Bob Dechant -- Chief Executive Officer

Hey, Karl. Yeah. Why don't you go ahead and take that and then I could have a little color on the back here.

Karl Gabel -- Chief Financial Officer

Thanks. Thanks for the question, Seth. The non-voice growth rate, as I mentioned is, uh, was 9%. There was one client that was one of the larger clients within the non-voice that did contract during COVID-19.

So our view is, when you look at the non-voice, the growth remains strong. When you kind of -- when you exclude impact of that contraction, you're talking about over 25%, 26% quarter-over-quarter growth when you have that contraction. So when you look at it from the perspective of how's the engine running for non-growth rate on the revenue after taking consideration the contraction on that one larger client that was negatively impacted, the growth rate still remains 25%-plus.

Seth Weber -- RBC Capital Markets -- Analyst

OK and has that -- has that client signalled that they're getting back to pre-COVID levels yet? Or is just going to take some time?

Bob Dechant -- Chief Executive Officer

Yeah. I'll have that. It'll take a little bit of time. You know, again, this is in the transportationwide sharing business and we've all followed how that market has gone and so it's a slow build back.

And so the good news is, we've -- revenues have, call it, bottomed out. We're building -- building back up on that, but that did have a big impact into our non-voice comparison from a year ago. And as Karl said, you know, the clients that we're bringing in, they're very, very digitally native clients and customers. And so we see that you have this greater than 25% to 30% growth is really the general trend that our business is having and will continue to see that normalize for one client.

Seth Weber -- RBC Capital Markets -- Analyst

Right. Right. OK. That makes sense because I appreciate it.

I appreciate the color and have a good night. Thank you.

Bob Dechant -- Chief Executive Officer

OK. So, thanks, Seth.

Operator

Thank you. And our next question comes from the line of Dave Koenig with Baird. Your line is now open.

Dave Koenig -- Baird -- Analyst

Yeah. Hey, guys. Remarkable progress so far with margins and concentrations and everything. Great job.

Bob Dechant -- Chief Executive Officer

Thanks, David.

Dave Koenig -- Baird -- Analyst

Yeah. And I guess you know, maybe, first of all, in kind of piggybacking on the last question. You know EBITDA, if you just look at in dollar terms is, up about $4.5 million year over year in Q1. In your guidance for the whole year, it's only up $6 million to $7 million or so.

It just seems like, I mean it seems quite conservative. Maybe you can talk about the back half or the back three quarters why the EBITDA growth might not be quite like the first quarter.

Bob Dechant -- Chief Executive Officer

Sure. Sure, Dave. And so great question and you know, we touched on this a little bit in the last earnings call. The business is operating really well.

It's running very, very strong. However, when you look out down the road, you know the wave two of the pandemic, you get a little concerned about that. What happens if the Philippines does a redux again and forces centers to shut down and move everything 100% work at home, things like that. So we've taken what I think is a conservative cautious approach to guidance.

You know as we look at our business toward the second half of the year, factoring that in. Now if we're able to avoid that, the strength of our new pipelines, the clients that we're winning, these are not -- these are deals that are impacting revenue right away. We feel really strong just as our -- really last year and a half, two-year results have shown it.

Dave Koenig -- Baird -- Analyst

Yeah. OK. And I think that probably answers kind of my second question, too. Just Q1, 14% revenue growth, the rest for you, you're kind of averaging more like $6 million to $7 million in the guidance, and that -- that's probably that same level of conservatism around COVID?

Bob Dechant -- Chief Executive Officer

Yeah. Yeah. That's exactly correct. And you know, we're -- we're hopeful we'll be able to navigate our way, but you never know what happens and we see the rates here in the States climbing and climbing.

And you know, it is a -- it is a difficult daily battle that our operations team have just done an amazing job of managing through that. But it is -- there's no 100% foolproof way to prevent that in our centers or in the markets that we operate. And so we've just looked conservatively kind of cautiously through that.

Dave Koenig -- Baird -- Analyst

OK. And maybe if I can just sneak one last one. Kind of a shout out and kind of a question. Usually Q1 is a weak cash flow quarter, usually it's quite negative just because of the timing I think of the way cash flow falls.

This quarter, you actually were about break even in a Q1 maybe for the first time. And maybe if you can just talk about how -- I mean it seems like a really strong quarter, but then the rest of the year should be positive, right?

Bob Dechant -- Chief Executive Officer

Hey, Karl, have a [Inaudible]

Karl Gabel -- Chief Financial Officer

Sure. Sure. Thanks, David. Yeah.

For Q1 as I mentioned, the -- many times that you're saying you could have a negative cash flow. The three drivers that really did contribute to the break even would have been the improved profitability, the focus on working capital management, and we had lower capex, and then, we also had the offset for the nonrecurring COVID-19 costs. From a working capital perspective, sequentially, we did have DSOs increase from June until September. So that would actually be a use, but there was some offset in the trade AP and other, you know, from payment timing that just based on the timing of the quarter gave us a source of cash in our Q1 if you look at the working capital.

So we continue to manage our working capital tightly, but there was a source of [Inaudible] just from the timing of the AP payments, and then our capex during this quarter was about 4% of revenue. A quarter ago, it was 10% of revenue, which included roughly about 2,100 seats plus of seat growth that happened in the offshore nearshore regions. So when you look at it collectively, you know the improved results, the difference in your in your capex and then also the working capital including like the timing aspect of the one I might have mentioned on some AP payments.

Dave Koenig -- Baird -- Analyst

Gotcha. Sounds great. Well, thanks, guys.

Bob Dechant -- Chief Executive Officer

Thanks David. Great to have you on the call. We missed you last time.

Operator

Thank you. And our next question comes from the line of Arvind Ramnani with Piper Sandler. Your line is now open.

Arvind Ramnani -- Piper Sandler -- Analyst

Hey, congrats. Congrats on another great quarter. I just want -- I had a couple of questions on how things are progressing. You know, specifically around client discussions.

So you know, you certainly have good execution during the pandemic and you talked about getting very positive client feedback. Has some of that feedback and executions translated into a lift at volume with existing clients? Or have you sort of see kind of new clients come into your pipeline?

Bob Dechant -- Chief Executive Officer

So, Arvind, thanks for that question and a great question. And I'll touch on both kind of from an existing client and new clients as well. The existing clients as we highlighted, our performance and resilience through the pandemic, through our Q4 and then into the summer has been as good as you possibly could have in this industry, and we've taken a lot of call volume for them when a lot of our competitors have struggled dearly. So we've taken market share as a result of that from them and that market share is not going back.

We've opened up new geographies for our clients and we've grabbed new lines of businesses and new services, and we track that and we've won a lot in the last quarter. Of you know, of those market share gains and it's driven by our resilience and it's driven by the execution, the results that we're delivering on their metrics. And not just taking call volume, but really delivering on fantastic CX metrics and things like that. So I just feel like that is an area that IBEX will continue to win and excel.

And as our competitors that have struggled, we've grabbed that market share and it's ours and it's ours now going forward. Now as it relates to new clients, this is what I'm just -- what I'm just so proud of that we've been able to do is, we've been able to sell, what I call, strategic deals, strategic wins that were not reactions to COVID for these -- for our clients. But they were clients that are looking to make important decisions in a long-term strategic fashion and our solution set has mapped up well and our solution set that includes our technology, our ability to deliver, the geographies that we operate in. Put all that together and we've been winning.

We won eight new logos this quarter. We have a strong performance in Q4. What's really interesting, Arvind, is we've launched those clients. We've got them operational and then we've already expanded with those.

So we've gone from proof of concepts to, not only just get to the proof of concept, but then start the scale process. Clients adding new lines of business on top of that and you can see those in the numbers that we're -- we've been generating as you kind of have that multiple compounding effect with those new logos coming on board. We think that the deal flow is a compressed cycle right now, which when you're winning them, that compressed cycle really resonates well for us.

Arvind Ramnani -- Piper Sandler -- Analyst

Yeah. That's fine. And then you touched up on it, but maybe if you can expand a little bit on what's driving that, right? I can -- and also you know, and so your tech-forward approach using automation, AI. You know, how much of that is sort of really driving differentiation? Because in some of the clients you're winning certainly.

I'm sure your -- they want kind of a process on who they want to work with. So if you could just get out a little bit more on what specifically has been resonating with some of your more recent wins?

Bob Dechant -- Chief Executive Officer

Sure. And there's several layers to peel back on that onion, but let me give you a couple of really important things. The first thing that they're going to look at is who is actually going to be able to deliver and get in the green, as I like to call it, fast and deliver. And our Wave X technologies that we have are really good in that.

Whether it's using AI intelligence on the hiring and profiling process or implementing our training simulators to get our agents really productive fast, things like that. Those are areas that our clients and prospective clients look at and say, IBEX is the gold standard on right now. And that pace is paying off in the win cycle, but it goes beyond that and it goes into what I call using a lot of back end AI analytics on being able to analyze the customer experience and customer sentiment and points of friction and the value add solutions that we're bringing there resonate well. And this goes to play against, what I call, our legacy BPO 1.0 labor arbitrage driven clients where we're bringing an enormous amount of intelligence to our clients and those interactions.

And that is, you know, that pays enormous dividends and that's the type of capabilities they're looking for in their go-forward partners. And that's why, you know, we're winning in, not only in, what I call, the new economy clients, but that's why we're winning big blue chip clients that are just looking for something different, something better than kind of yesterday's competitors and their yesterday providers, you know, provide them.

Arvind Ramnani -- Piper Sandler -- Analyst

Great. And just last one for me. So it has been a very unusual year. With that said, how I find budgets for next year shaping up, you know, just like compared to the last couple of years.

Is it sort of better visibility or roughly same visibility? You know in terms of client discussions, right? I think November is when clients start to kind make [Inaudible] budgets and all of that. I just wanted to see how this client budget discussions for next year shaping up.

Bob Dechant -- Chief Executive Officer

Yeah. And so you know if I look at that holistically, I think our clients have great visibility to their -- to where their business is going. So many of our clients are in the markets that are winning and so they have great visibility on that. And as a result and us being one of their strong partners, if not the number one partner or the sole partner, we're able to really look at where to be, what markets do we need to be, where do we need to expand as partners and all.

So I feel very good about our visibility of our revenue visibility to our business. Our clients are very open with us on that. And I have to point out one thing also to the revenue visibility for us is, you know, we haven't lost a client literally since I've been here. So, you know, and that's unique in the space and that allows us to really just look and not having to worry about client loss and client churn, and that just gives us a lot of confidence in where our business is going.

Arvind Ramnani -- Piper Sandler -- Analyst

Great. Thank you very much.

Bob Dechant -- Chief Executive Officer

Great. Thanks, Arvind.

Operator

Thank you. [Operator instructions] And our next question comes from the line of Tobey Sommer with Truist Securities. Your line is now open.

Tobey Sommer -- Truist Securities -- Analyst

Thank you. You mentioned shorter sales cycles kind of turn around at customers. I was wondering if you could give us some more color and maybe quantify that if possible pre-COVID versus the last six or nine months. And to speak to, what if anything you're doing to prepare for a post-COVID world where maybe the decision making process normalizes?

Bob Dechant -- Chief Executive Officer

Yeah. So, Tobey, great. Yeah. Great question and you know, thanks for joining the call.

So I'll describe the differences right now in the current environment and contrast that a little bit from how things operated prior. In prior, I think the extended sales cycles and so many of the clients we're operating in, they're still fast sell cycles. So the days of 18-month and 24-month sales cycles even with these big blue chips, those those for us, are -- that's a decade ago. Clients are making much faster decisions, but in, yes, you know prior -- in pre-COVID, it required a lot of their management figuring out calendars, when can they all get on a plane, when can they fly out to the Philippines or to Jamaica.

And then while in Jamaica, they're going to go see multiple competitors and so you know that takes time and they get everybody back. You know fly back, compare notes, and just think about the time, effort, and dollars that it takes in that environment. In this day and age, we're doing all this virtual and they may be meeting with us virtually on a Monday morning and with the competitor of ours on a Monday afternoon, no flying. I'm not flying 24 hours to the Philippines and so decisions are getting made fast.

Typically, clients they get through this and they're going to -- they huddle and they look and say, there's a clear winner and more often than not, in our deals we've been at IBEX. And why is it IBEX? It's because what we do, the unique culture, you can see that in a Zoom call. You can see it in the centers that we're operating in and the culture we've built that are agents, you know, those things resonate well and they do well on a Zoom call. So we've won really well and done that.

Now you raise a really good question. It's you know, post-COVID, what's that look like? You know what will be interesting for us and what we're excited about in that environment, we think we'll just operationally we'll have a lot of extra capacity on hand as we -- we'll be able to I think scale our business significantly and not have to do quite as many build outs as we have over the last several years. So we're excited about the potentials that that brings. But I think it goes back to why do clients look for providers in this BPO 2.0 world? They're looking for companies that are tech led, that are able to service digitally native that have created an amazing culture with their people.

That culture will create great experiences and so, whether it's through Zoom or post-COVID, I think that our recipe for success is going to really transcend, not only today, but in a post-world -- post-COVID world, which we can't -- can't get here fast enough.

Tobey Sommer -- Truist Securities -- Analyst

OK. Similar question on the expense side. Can you comment on what voluntary turnover is like among agents and kind of contrasted to pre-COVID and speak to any plans that you may have or initiative to kind of potentially keep it low as economies and unemployment rates kind of are improving, hopefully, over in a post-COVID world?

Bob Dechant -- Chief Executive Officer

Sure. So great question and I think of -- the question you're asking about employee turnover, agent turnover. I think absenteeism also matters in this environment and I think it's important to talk about this. And absenteeism as in an agent's not on, not able to take the phone call when you're hoping to have them available.

What we've seen and I think this is different by geography. In a market like the U.S. where working at home is a great environment and you have great broad broadband and great power, kind of reliable power etc., we've seen attrition go down significantly, we've seen absenteeism go down significantly. Our agents love -- they're able to work, they're able to earn wages if they need to be able to work overtime, things like that to drive performance and we've seen that really, really well.

So now in the non-U.S. markets, kind of the emerging markets for us, there's two dynamics that have taken place. One is attrition's down, sig -- down and we run low attrition in those markets anyhow but it is down. And I think it's down because of the importance to having a job and continue to earning and IBEX because we've been basically 100% operational.

We've had a good reputation on that and so attrition is down. Now that does get offset though a little bit by absenteeism and absenteeism comes in two -- in two broad buckets. One is kind of the transportation to get to the centers. With the public transportation really being shut down in a market like the Philippines.

It's become a lot more challenging. And so getting the people into the centers is becoming a big logistical problem, a project that we've had to operate under. But those that work at home, there's issues like reliability of power and reliability of broadband. So even though the agent may want to be taking the phone calls because of kind of have an unreliable elements of that.

It's caused a little bit of a negative on the, what I call, the absenteeism or availability side of that. So you kind of have a little bit of a gain on attrition, but a little bit more of a challenge on the availability side of those agents. Tobey, does that -- does that make sense to you follow up?

Tobey Sommer -- Truist Securities -- Analyst

It does and it gives me a good context. Could you describe what it means on a sort of a net basis if you net out those moving parts, either by developed or emerging markets and sort of the absenteeism, as well as, the turnover?

Bob Dechant -- Chief Executive Officer

Sure. So I mean, I think if you put it all -- altogether, I think it is a positive for us as a business for IBEX. I'm not sure how for our competitors. It is a positive, but there are incremental costs that we are occurring.

So at an agent level, attrition's down that's the big one. And so that's a good element, but then there's a lot of extra overhead that we are incurring that -- to keep your centers safe, clean. The extra deep cleanings that you have to do in your centers, the COVID testing. Things like that that go into that requirement to keep yourself operational.

You know that -- those offset some of the gains that we have, but on whole it's been -- it's been positive for us.

Tobey Sommer -- Truist Securities -- Analyst

Thank you.

Operator

Thank you and this does conclude today's question-and-answer session. I would now like to turn the call back to Bob Dechant for any closing remarks.

Bob Dechant -- Chief Executive Officer

Great. Thanks, Chris, for that, and I really appreciate the questions. We are really excited about where the business is. Our team is operating really well and they are working hard to keep our centers operational, our people safe, and we're just so excited that that the results that we've attained on that element and on the client side and on the financial side have all come together.

And we thank you for that, and we look forward to updating you on the future of some of the key developments. Thank you all. Bye.

Operator

[Operator signoff]

Duration: 46 minutes

Call participants:

Brinlea Johnson -- The Blueshirt Group, ICR

Bob Dechant -- Chief Executive Officer

Karl Gabel -- Chief Financial Officer

Seth Weber -- RBC Capital Markets -- Analyst

Dave Koenig -- Baird -- Analyst

Arvind Ramnani -- Piper Sandler -- Analyst

Tobey Sommer -- Truist Securities -- Analyst

All earnings call transcripts

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