TaskUs, Inc. (TASK) Q2 2021 Earnings Call Transcript

TaskUs, Inc. (TASK 1.88%)
Q2 2021 Earnings Call
Aug 10, 2021, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon, and welcome to the TaskUs second-quarter 2021 investor call. My name is Josh, and I will be your conference facilitator today. [Operator instructions] I would now like to introduce Barry Hutton, managing director of investor relations. Barry, you may begin. 

Unknown speaker

Good afternoon, and thank you for joining us for the TaskUs second-quarter 2021 earnings call. Joining me on the call today are Bryce Maddock, co-founder and chief executive officer of TaskUs; and Balaji Sekar, chief financial officer. Full details of our results and additional management commentary are available in our earnings release, which can be found on the investor relations section of the website at ir.taskus.com. Please note that this call will be simultaneously webcast on the investor relations section of the company's corporate website.

Before we start, I would like to remind you that the following discussion contains forward-looking statements within the meaning of the federal securities laws, including, but not limited to, statements regarding TaskUs' future financial results and management's expectations and plans for the business. These statements are neither promises nor guarantees and involve risks and uncertainties that may cause the actual results to differ materially from those discussed here. You should not place undue reliance on any forward-looking statements. Factors that could cause actual results to differ from the forward-looking statements can be found in our prospectus dated June 10, 2021, filed with the SEC on June 14, 2021, which is accessible on the SEC's website at www.sec.gov and also available on our website at ir.taskus.com as may be supplemented in subsequent periodic reports we file with the SEC.

Any forward-looking statements made in this conference call, including responses to your questions are based on current expectations as of today, and TaskUs assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. The following discussion contains non-GAAP financial measures or a reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP metric, please see our earnings press release, which is available in the IR section on our website at ir.taskus.com. Now I will turn the call over to Bryce, co-founder and chief executive officer of TaskUs.

Bryce Maddock -- Co-Founder and Chief Executive Officer

Thank you, Barry. Good afternoon, everyone, and thank you for joining us. It's a bit surreal to welcome you all to our first-ever quarterly investor call as a public company. Before we begin, I want to take a moment to thank our teammates around the globe who continue to show up day and night to deliver for our clients.

Today would not be possible without each of you. I also want to thank our clients, partners and new investors for joining us on this journey and helping us to complete a very successful IPO in June. All of this has taken place against the background of an ongoing global pandemic. At TaskUs, the health and safety of our teammates and the communities we serve remain our top priority.

TaskUs is committed to paying for the vaccination of every TaskUs teammate and their family members. I'm proud to report that in Q2, we began facilitating vaccinations for our teammates in India, and we expect to do the same in the Philippines in the third quarter. As of June 30, 2021, approximately 91% of TaskUs teammates around the globe are working from home. My deepest sympathies go out to our teammates and their families who have been affected by this pandemic.

Despite the losses and tragedies many of our teammates have endured, they have delivered a remarkable performance in our first-ever public quarter. In Q2, our team delivered strong growth and profitability. Our second-quarter revenue grew 57.4% year on year to $180 million. It's important to note that this growth is completely organic, just like all of our growth to date.

Our second-quarter adjusted EBITDA grew 67.3% year on year to $44.1 million or an adjusted EBITDA margin of 24.5%. Since this is our first call together, and we've got many listeners who are just getting to know TaskUs, I'm going to provide a brief overview of our business before going a bit deeper into our Q2 results. TaskUs was founded in 2008. That year, my best friend, Jaspar Weir and I had just graduated from college into the middle of the worst recession in recent memory.

Struggling to find jobs, we decided to invest our combined life savings to launch TaskUs. While all of the major competitors in our industry were occupied serving traditional telco clients, we made the decision to focus 100% of our efforts on the emerging digital economy. Most TaskUs clients have three things in common: they are truly customer obsessed, they've grown faster than nearly every other company in history and their success has led to massive operational challenges that can put their customer experience at risk. That's where we come in.

TaskUs provides the specialized services these companies rely on to scale their business and deliver for their customers. Today, we provide three primary specialized services: digital customer experience, content security and artificial intelligence operations. We've been fortunate enough to be the chosen outsourcing partner of many of the companies that have defined this era of digital innovation, which has enabled us to grow revenue organically at a 60% CAGR from 2017 to 2020 and achieve an average net revenue retention rate of 125% from 2018 to 2020. The market opportunity in front of us is simply massive.

The total addressable market across the specialized services we deliver is over $100 billion, and demand for some of these services is growing up to 50% annually. So we are just getting started. We have five areas of focus that enable us to drive consistent above-market growth and profitability. The first is our current clients who are growing extremely fast and accelerating their outsourcing spend.

The second is introducing new specialized service offerings. The third is expanding our global delivery footprint. The fourth is adding new clients. Besides our current success with high-growth disruptors, we're focused on big tech and supporting the digital transformation of Fortune 500 companies.

The final area of focus will be M&A. While we've grown 100% organically to date, we're exploring acquisitions that will expand our geographic and service capabilities. So with that as background, let me share a few more details on our performance in the first half of 2021 and Q2 more specifically. In the first half of the year, we closed a record amount of business from both new and existing clients.

We saw significant new client wins and existing client expansions in our fintech business, which includes digital banking clients, online exchanges and cryptocurrency providers. Our e-commerce segment had a very strong start to the year, signing four exciting new clients. We're seeing significant growth due to changes in online buying behavior, driven by the pandemic. We signed a major online gaming company, one of the hottest mobile dating apps in the world and a European health tech provider, all of which are new clients to TaskUs.

Finally, one of our most exciting new contracts in the autonomous vehicle space, where our AI operations team is helping to enable the future of self-driving cars. In the second quarter, we saw strong revenue growth across all of the specialized services we deliver for customers. We also saw strong revenue growth in each of the eight countries from which we deliver these services. For our two largest verticals by revenue, social media and on-demand transportation and food delivery, we saw continued double-digit year-on-year growth.

Our social media revenue growth was primarily driven by geographic expansions and service line additions within existing clients. Our on-demand transportation and food delivery revenue grew significantly even when compared to an unbelievably strong Q2 2020, in which we saw a surge of pandemic-related demand from customers in the food delivery space. We continue to see very rapid growth, driven by our investment in strategic vertical markets. Most notably, our fintech business delivered over $10 million in sequential quarter-over-quarter growth and grew an astounding 300% year over year.

In fintech, we see strong demand for our specialized services in the areas of anti-money laundering and know your customer. Our health tech and high-tech businesses grew revenues in the high double digits, and our retail and e-commerce vertical delivered triple-digit revenue growth fueled by a strong online shopping environment and new client wins. In Q2, we saw continued revenue growth from our top two clients, while revenue concentration from our largest client continued to improve in the quarter. Our largest client, which represented 32% of our 2020 revenues and 29% of our Q1 2021 revenues delivered 27% of our Q2 revenues.

I'm extremely proud of what our team has delivered this quarter and this year. All of this is made possible by our ridiculously good people. Now I know that every company talks about their culture. But at TaskUs, culture is a core part of our competitive strategy because attracting and retaining world-class talent is what enables us to deliver specialized services at scale.

This has never been more important than it is today. In the face of increasing competition for talent, we are confident because of the investments we've made in our people since Day 1. In Q2, we continued these investments. We ensured that every TaskUs teammate benefited from our IPO, paying a cash bonus or equity award to every one of our employees.

We paid for the private education of 755 of our teammates children through the TaskUs Scholars Program, and we held over 3,000 connected team sessions. These are one-to-one video conference calls between our senior leaders and frontline teammates. This platform, which was built by TaskUs, to replicate the serendipitous meetings we used to have in office randomly pairs two people for a 15-minute conversation about anything. This quarter, I got to meet a technical writer working on-site for a big tech client of ours in the Bay Area, a member of our software development team in India and a teammate supporting a video conferencing client from the Philippines.

So while the competition for talent has never been more intense, we are continuing to scale successfully. In Q2, we added over 4,000 new TaskUs teammates and delivered an on-time hiring SLA of over 98%. Our Glassdoor rating was 4.7 stars as of June 30. And while we have seen a slight increase in attrition from 2020, this year's numbers remain well below those of 2019.

Our team's success signing and scaling new business in the first half of the year puts us in a great position to provide our first-ever revenue and EBITDA guidance. And for that, I'll hand it over to Balaji.

Balaji Sekar -- Chief Financial Officer

Thanks, Bryce, and good afternoon, everyone. I'm going to discuss our financial results for the second quarter of 2021. Please note that some of these items are non-GAAP measures and the relevant reconciliations are attached to the press release we issued earlier today. In the second quarter, we earned total revenues of $180 million, an increase of 57.4 percentage over the prior year.

As Bryce outlined, we generate revenues from three specialized service offerings. In the second quarter, our digital customer experience business generated $113.6 million for a year-over-year growth rate of 59.2 percentage. Our content security business grew 38.4 percentage to deliver $43 million, and our AI operations business grew 95.9 percentage for revenues of $23.5 million. Our total cost of services are tied to increases in head count as we hire people who deliver specialized services to our clients.

The cost of service as a percentage of revenues is not heavily influenced by the service offering mix. Instead, it is primarily influenced by the geographic location from which services are provided. We expect our geographic mix to be fairly stable in the near term. In the second quarter, we generated 53.1 percentage of our revenues in the Philippines, 32.7 percentage of our revenues in the United States and 14.1 percentage of our revenues from rest of the world, mainly driven by our operations in India and Mexico.

As a result, we incurred cost of service as a percentage of revenues of 57.7 percentage in the second quarter, compared to 56.1 percentage in the prior year. The increase was primarily driven by a 4.5 percentage appreciation in the Philippine peso and additional charges that we incurred in Q2 of 2021 to enable a virtual operating model. We expect our cost of service as a percentage of revenues to remain flat for the remainder of the year. In the second quarter, our SG&A expenses were $177.8 million, which included $129.4 million onetime expenses of Phantom shares bonus made in connection with our IPO, a $6.8 million for nonrecurring teammate IPO bonus and other IPO-related expenses.

We started to accrue for stock compensation expenses in the current quarter of $5.8 million, which was prorated for the period from the IPO date to the end of the quarter. For the rest of the year, we will see full-quarter impact of the expenses relating to these new equity grants and of any further grants awarded between now and the end of the year. Excluding these items, SG&A for the second quarter was $35.9 million or 20% of revenues, compared to $25.7 million or 22.5 percentage of revenue in the prior year. The current quarter included some public company expenses accrued since our June 11 IPO date.

We will see the full-quarter impact of these public company expenses in the third and fourth quarter. In the second quarter of 2021, we earned adjusted EBITDA of $44.1 million and 24.5 percentage, compared to $26.4 million and 23.1 percentage earned in the second quarter of 2020. The improvement in adjusted EBITDA margin was primarily driven by the revenue growth and better SG&A efficiencies despite the negative impact of Philippine peso appreciation. In the second quarter, our GAAP net income was a loss of $105.9 million or a loss per share of $1.14.

As I outlined earlier, this result included the $139.4 million onetime expense related to Phantom shares and $6.8 million for nonrecurring teammate IPO bonus and other IPO-related expenses. By comparison, in the prior year, we earned GAAP net income of $8 million and EPS of $0.09. Included in our GAAP net income was an income tax benefit of $7 million, resulting from nonrecurring deductions, related to expenses incurred in the IPO, which lowered our full-year taxable income. In the second quarter of 2020, we had an expense of $1.6 million.

In the second quarter, we earned an adjusted net income of $31.4 million and adjusted earnings per share of $0.32. By comparison, in the year-ago period, we earned adjusted net income of $17 million and adjusted EPS of $0.18. Now moving on to the balance sheet. Cash and cash equivalents stood at $195.9 million as of June 30, 2021.

As of December 31, 2020, total available cash and cash equivalents was $107.7 million. Cash generated from operations was $5.8 million for the second quarter as compared to $20.5 million in the previous year. The current quarter was impacted, primarily by an increase in accounts receivable, which was driven by the 57.4 percentage year-over-year revenue growth. I would like to highlight two other key cash flow related items in the second quarter.

We paid a pre-IPO dividend to our shareholders at that time of $50 million in April 2021, from company cash, and we received gross IPO proceeds of $120.7 million in June 2021. We will use these IPO proceeds in the third quarter to settle the Phantom share and nonrecurring teammate IPO bonuses that were earned in the current quarter. Our capital expenditure in the second quarter was $13.3 million, compared to $10.2 million in the same period of 2020. The growth in capital expenditures was primarily driven by purchases of computer equipment due to increased head count.

Our capital expansion will continue to expand in the second half as we catch up on our facility expansion from last year and the first half of this year as part of our return to office plans. At this point, I will outline our third-quarter and full-year 2021 financial outlook. For the third quarter of 2021, we expect total revenues in the range of $182 million to $186 million, representing year-over-year growth of 50.3% at the midpoint. We expect to earn a Q3 adjusted EBITDA margin of 23.1 percentage to 23.5 percentage.

Looking forward, we anticipate full-year 2021 total revenues in the range of $705 million to $709 million, representing year-over-year growth of 47.9 percentage at the midpoint. We expect to earn a full-year 2021 adjusted EBITDA margin of 23.7 percentage to 24.1 percentage. The above outlook includes our anticipation that our cost of service as a percentage of revenues will remain roughly flat. We also expect to incur full-quarter public company costs and a small increase to operating expenses as we increase our investments in our digital and innovation capabilities and prepare for our teammates to return to the office.

Thank you, and I'm going to hand it back to Bryce before we take your questions.

Bryce Maddock -- Co-Founder and Chief Executive Officer

Thanks, Balaji. Before we get to Q&A, I want to share a TaskUs teammate story. As I briefly mentioned, each year, TaskUs offers an opportunity for teammates to apply to have one of their children's school tuition paid for by the company. We started this program, which we call the TaskUs Scholars Program to invest in the education of the next generation.

The program, which began in 2012 with just three scholars, will send 755 children to great schools this year. Delia was a TaskUs teammate for nine years. As a single mother in the Philippines, she worked hard to care for her son, John. Delia was able to send John to private school with the help of the TaskUs Scholar Program.

After he graduated from high school and university, John decided to move back home to care for his mother in retirement. Delia told John, there was no better place to start his career than TaskUs. John applied and was hired and today, John is a TaskUs teammate supporting a fast-growing logistics marketplace. In his early 20s, John has already started saving for his own retirement through the TaskUs retirement program.

Delia and John are great examples of the ways we aspire to improve the lives of our teammates all around the world. With that, I'll ask the operator to open the line for a question-and-answer session. Operator? 

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question comes from Jason Kupferberg with Bank of America. You may procees with your question.

Unknown speaker

Hey, guys, this is Kathy on for Jason. Great quarter out of the gate. First, I just wanted to ask about your full-year guidance and your 3Q guidance. I know it implies a pretty minimal quarter-over-quarter growth, respectively, for the third quarter and fourth quarter from that kind of 50%-plus you guys delivered in 2Q.

I just wanted to know, is that just an element of conservatism? Or are there other dynamics in play there?

Bryce Maddock -- Co-Founder and Chief Executive Officer

Kathy, thanks so much for the question. So clearly, the year is off to a very strong start in the first half of the year. We saw organic revenue growth of over 53%. And we signed a number of major contracts in the first quarter that ramped into the second quarter.

That kind of early success can result in some difficult sequential quarter-over-quarter comps, but we feel very confident in today's guidance of over 50% revenue growth for the third-quarter and full-year organic revenue growth that's north of 47%. 

Unknown speaker

OK, super helpful. And just one quick follow-up for me then. It's nice to see that the client concentration decreased. Just curious, I know you guys said the top one client was 27%.

How big was the top two clients? And overall, are these top two growing much faster than the overall client portfolio? Are you kind of seeing growth being, driven from sort of maybe the non top, call it, 20 clients going forward? Thank you.

Bryce Maddock -- Co-Founder and Chief Executive Officer

Yeah, thanks again, Kathy. So as I said, our largest customer saw improved revenue concentration, which was 32% in 2020. In Q1 of 2021, it was 29%; and then in Q2 of 2021, it was 27%. So while that client is continuing to grow very aggressively, the rest of the business is outpacing their growth.

As far as our second largest client, they represented 12% of our Q2 2021 revenues, which is roughly consistent with where they were in Q1 of 2021 as well. 

Unknown speaker

OK, perfect. Thanks, guys. Congrats again.

Bryce Maddock -- Co-Founder and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Puneet Jain with J.P. Morgan. You may proceed with your question.

Puneet Jain -- J.P. Morgan -- Analyst

Hey, thanks for taking my question, and very strong results. This was easily the highest ever sequential increase in revenue for TaskUs. So given that, can you talk about your ability to replenish the pipeline and backlog, specifically pipeline for new clients, given there was so much upside in this quarter. 

Bryce Maddock -- Co-Founder and Chief Executive Officer

Thanks so much for the question, Puneet. So currently, the pipeline is very strong. We're on pace to exceed the records that we set in 2020 for both new client wins and win rates. As I said on the call, we've seen very strong demand among our fintech and retail and e-commerce customers in particular.

And the recent wins and the pipeline momentum are giving us a lot of confidence as we begin to look at the next fiscal year. Clearly, as I said on the answer to the previous question, Q1 saw a few really massive wins that helped us scale into Q2. And our sales team is well aware that we need to go and replicate that success in the back half of the year. 

Puneet Jain -- J.P. Morgan -- Analyst

Understood. And you added like about 4,000 employees in this quarter, taking total to about 8,000 new employees in the first half. Can you talk about like if you are also seeing any challenges in the hiring market, supply challenges, which a lot of peers have talked about, it seems like your attrition was still below 2019. So what are you doing that is keeping the attrition low and helping you hire in such large numbers despite challenges elsewhere? 

Bryce Maddock -- Co-Founder and Chief Executive Officer

Yes, thanks for that question, Puneet. In Q2, we had an on-time global hiring SLA of over 98%. And as you pointed out, we added 4,000 net new positions. We added hundreds of new roles in the United States and over 1,000 new roles in the Philippines and over 1,000 new roles in India.

So we are really proud of the success of our recruitment organization. Ultimately, we think this comes down to our employer brand, which is, we believe, among the strongest in the industry, in particular, in the markets that we've been in for a very long time, like the Philippines. We are seeing some recruitment challenges, in particular in the United States, and that's something that we're being very vigilant as we head into the back half of the year. 

Puneet Jain -- J.P. Morgan -- Analyst

Thank you.

Operator

Thank you. Our next question comes from Maggie Nolan with William Blair. You may proceed with your question.

Maggie Nolan -- William Blair & Company -- Analyst

Thank you. Congrats. You definitely saw strong performance across the board, but in particular, it seems like you saw some good growth within AI operations. I'm wondering are there any new client additions in this segment or any other factors that are giving you confidence that you're building some good momentum in that segment? 

Bryce Maddock -- Co-Founder and Chief Executive Officer

Maggie, thank you so much for that question. We've seen both organic growth inside existing customers for whom we're delivering AI operations, as well as some exciting new wins. We had an existing autonomous vehicle customer where we were providing some consulting services at our AI operations services. And our teams there are now really helping to shape the future of self-driving cars as we have done for other customers in the past.

So it's a very exciting segment to watch. And obviously, one that is growing very quickly for TaskUs. 

Maggie Nolan -- William Blair & Company -- Analyst

OK, thank you. And then, historically, you've focused on clients that are quite disruptive, often tech companies. And that's something that's distinguished you from your peers. As you're thinking about being more acquisitive going forward, how important is a potential target company's client base when you think about things like cultural compatibility and being able to deploy employees across different TaskUs accounts? 

Bryce Maddock -- Co-Founder and Chief Executive Officer

Yeah, it's incredibly important. So we're looking to acquire businesses that will either expand our geographic delivery footprint, add specialized service capabilities or get us deeper into our existing end markets. And obviously, we want these acquisitions to be accretive. So we are looking for assets that are as close to us as possible in terms of growth, profitability and digital work mix.

But the thing that we absolutely will not compromise on is culture. I've told the team that we're only going to do acquisitions that are culturally accretive. And given those factors, we're gonna be very selective about the acquisitions that we choose to make.

Maggie Nolan -- William Blair & Company -- Analyst

All right. Thank you so much. Great quarter.

Bryce Maddock -- Co-Founder and Chief Executive Officer

Thanks, Maggie.

Operator

Thank you. Our next question comes from Matt VanVliet with BTIG. You may proceed with your question.

Matt VanVliet -- BTIG -- Analyst

Yeah, thanks for taking the question, guys. And nice job on the first quarter out of the gates here. I wanted to dig in a little bit in terms of some of the new business that you've won in the newer markets and maybe if there were any deals to call out, whether in Colombia or in Greece, in addition to the India strength that you mentioned. 

Bryce Maddock -- Co-Founder and Chief Executive Officer

Yes, thanks so much for that question, Matt. So we've seen really rapid uptake in Colombia. It's a market that we entered at the start of this year and have signed some very exciting on-demand delivery customers that were new to TaskUs, as well as adding Spanish language capabilities to existing TaskUs customers. In Greece, the same thing has happened.

We've had multiple new clients enter the Greek market with us in Q2. Some of those are new logos to TaskUs, but the vast majority are expansions from existing customers who are looking to add European language capabilities. 

Matt VanVliet -- BTIG -- Analyst

All right. Very helpful there. And then, as we think about the ability to, I guess, continue to ramp through the end of the year, were there any major deals that were closed near the very end of the quarter that we should think about ramping into the back half of the year, similar to what you mentioned happened in the first quarter. And maybe zooming out a little bit from that, Balaji, how do you feel about in terms of the total visibility into the second-half revenue? How much has sort of already been booked? And how much should we think about as still out to be closed in the back half? Thanks.

Balaji Sekar -- Chief Financial Officer

So Bryce, do you want to go first and then I'll answer the second question? 

Bryce Maddock -- Co-Founder and Chief Executive Officer

Yeah, absolutely. So I think, that the second quarter was a very strong quarter from a sales perspective, nearly as strong as the quarter we saw in Q1. And we expect to see ongoing ramps from both existing and new clients that were signed in the second quarter. We're very confident in the guidance that we've provided that we will get to $705 million to $709 million in revenue this year.

Balaji Sekar -- Chief Financial Officer

Yeah, and just to add on to what Bryce said, we have very good visibility, like you said, in terms of the closure that we had from a new business facility in Q1 and the greater than 47 percentage growth that we're estimating. We are starting with a great -- we started the year with great visibility, and we are starting this quarter with great visibility, too.

Matt VanVliet -- BTIG -- Analyst

Wonderful. Thank you. Great job on the quarter, guys.

Bryce Maddock -- Co-Founder and Chief Executive Officer

Thanks, Matt.

Operator

Thank you. [Operator instructions] Our next question comes from Dan Perlin from with RBC. You may proceed with your question.

Matt Roswell -- RBC Capital Markets -- Analyst

Yes, good evening, it's Matt Roswell on for Dan congratulations on the nice quarter. When it comes to winning new business, are you generally part of a sort of request for proposal process? Or is it clients coming to you? And if you could talk a little bit about what win rates look like in the quarter.

Bryce Maddock -- Co-Founder and Chief Executive Officer

Thank you so much for that question. So TaskUs has long been seen as a disruptive outsourcing service provider. And we're often the first outsourced service provider that our fast-growing technology clients turn to. So in those cases, there are typically not formal RFP processes.

We may see competitive processes, but generally, we try to use our relationships to get in early and be the provider of choice as these fast-growing technology companies begin to outsource some of their specialized services. Increasingly, we are seeing our disruptive clients have grown to become public companies themselves. And with that maturation does come procurement teams and organizations that are dedicated to mitigating risk. So the biggest question that we've heard from those companies in recent years is actually if we do business with you, what's to say you're not going to get bought by one of the traditional players.

And so one of the nicest things for us in going public is that it is a communication to our customers and to the market that we absolutely intend to remain independent and is really helping us to win business from some of those newly public companies. As far as win rates, we are going to break out both new client wins and win rates on an annual basis. But as I said before, we're on pace to exceed our record-setting new client wins and win rates from 2020. 

Matt Roswell -- RBC Capital Markets -- Analyst

Excellent. And then, just a quick follow-up on that. What was the FX impact on the revenue growth in the quarter? You mentioned that the peso hit on the cost of services. I was wondering if there's anything on the revenue line. 

Balaji Sekar -- Chief Financial Officer

Yeah. So I'll take that. So the opportunity for us, majority of our revenues is built in U.S. dollars.

So we actually do not see any ForEx impact from a revenue perspective. But we do see impact from a cost perspective when we do the translation from, let's say, as an example, peso to U.S. dollars. And that was -- the peso appreciated by about 4.5 percentage year on year from Q2 of last year to Q2 of current year.

So that did impact our cost of service line and also SG&A as we kind of translate those, but there was no impact from a revenue perspective. 

Matt Roswell -- RBC Capital Markets -- Analyst

OK, thank you very much.

Bryce Maddock -- Co-Founder and Chief Executive Officer

Thanks, Matt.

Operator

Thank you. [Operator instructions] Our next question comes from Dave Koning with Baird. You may proceed with your question.

Dave Koning -- Baird -- Analyst

Hey, guys, congrats on a huge quarter. 

Bryce Maddock -- Co-Founder and Chief Executive Officer

Thanks, Dave. 

Dave Koning -- Baird -- Analyst

Yeah, so I mean, it looks sequentially like you grew as much as you did revenue just a few years ago per quarter. You grew that much in one quarter. So it's pretty impressive. But I guess, when we think about how big this year is gonna be, can you still do your 25% growth off of what just seems like such as a massive comp this year? 

Bryce Maddock -- Co-Founder and Chief Executive Officer

Absolutely. We guided in our IPO process to think about 25% year-on-year revenue growth in the medium term. And we absolutely intend to deliver on that for 2022 and beyond. 

Dave Koning -- Baird -- Analyst

Gotcha. All right. Great. And then, I guess, one just quick kind of financial thing.

What was the normalized diluted share count in Q2? It got a little hard to tell because of the GAAP loss. And then, I guess, what should it be in Q3 as well? 

Balaji Sekar -- Chief Financial Officer

Yeah, absolutely. So let me just follow up that, just give me one minute. So the normalized share count as of the end of June will be about 92,957,493. But in terms of the additional stock grant that we would be giving in the following quarter, that number is going to change.

So that is something is not currently estimate-able because the diluted shares will change once we start granting new shares. But it will be in that -- I'll probably say in that ballpark.

Dave Koning -- Baird -- Analyst

OK, that's great. And maybe if I can just sneak one more in. It looks like Q4 margins kind of imply 22%, 23%. Is that a good place to kind of start for next year? Just to think about 22%, 23%, and then maybe grow a little bit from there into 2023 -- or I'm sorry, into 2022. 

Balaji Sekar -- Chief Financial Officer

Yeah, so let me answer the question in two parts. One is in terms of what I mentioned earlier. As far as the EBITDA in H2 is concerned, we are gonna be incurring full-quarter public company costs in Q3 and Q4, which we did not incur in Q2. It was only just a couple of weeks that we were public in Q2.

And the second is we're going to incur some expenses in investments in digital and preparing our teammates to go back into the office. But I believe that in a short-term perspective, 23% would be a good adjusted EBITDA number for this business to deliver. And for this year, at the midpoint, we will deliver about 23.9 percentage in 2021.

Dave Koning -- Baird -- Analyst

Gotcha. Yeah, great job. Thanks so much.

Operator

Thank you. Our next question comes from James Faucette with Morgan Stanley. You may proceed with your question.

Jim Faucette -- Morgan Stanley -- Analyst

Thank you so much. Apologies for the background noise, if it's loud. But I wanted to ask, you mentioned kind of recruitment challenges in the U.S., and are you seeing any potential for wage inflation? And how are you thinking about your ability to pass that on to end customers? And if you -- what your ability to do that? And what kind of lag there may be if you do have some wage inflation? 

Bryce Maddock -- Co-Founder and Chief Executive Officer

Yeah, Jim, it's a really important question. So we've got a robust process to ensure that our employee wages are competitive. With that said, we aim to not compete purely on wage. Instead,, at TaskUs, we aspire to create a best-in-class employee experience, which includes differentiated benefits like our healthcare program, retirement plan and our world-class facilities.

So we have seen wage pressure in the United States, and we've got a wage review and increased process, which is designed to respond to those pressures in every geography that we're operating in. We do have COLA provision in the contract with the vast majority of our clients, where we're able to pass along the wage inflation in those markets in most cases. And it is important just to say again that in the second quarter, we achieved an on-time hiring SLA of 98% globally, and we actually exceeded that number in the United States. 

Jim Faucette -- Morgan Stanley -- Analyst

That's good to hear. And then, separately, I wanted to ask just about acquisitions. You kind of mentioned that you're looking at doing different types of acquisitions, including geographic expansion. But I'm wondering if you can give a little color on the types of capabilities you may be looking to add as well.

Bryce Maddock -- Co-Founder and Chief Executive Officer

Yes. One of the areas we're seeing a lot of growth in, at the moment, is trust and safety. And by that, we're sort of bringing together the financial service work that we're doing in the areas of anti-money laundering and know your customer with some of the work that we're doing with client safety lines and general investigations. We work for -- with marketplaces doing fraudulent good investigations and even, in some cases, financial crimes investigations.

So we're very interested in that general area as the next line of specialized service that we'll be able to break out. So the type of companies that we would look to acquire would be specialists in some of those services. 

Jim Faucette -- Morgan Stanley -- Analyst

That's great, thanks a lot.

Bryce Maddock -- Co-Founder and Chief Executive Officer

Thanks, Jim.

Operator

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Bryce Maddock for any further remarks.

Bryce Maddock -- Co-Founder and Chief Executive Officer

Well, in closing, I just want to, again, thank all of our TaskUs teammates all around the globe who have worked tirelessly to deliver what we believe to be a very strong first quarter as a public company. I would like to thank all of our new shareholders for joining us on this journey, and we will see you all next quarter for our Q3 investor call.

Operator

[Operator signoff]

Duration: 55 minutes

Call participants:

Unknown speaker

Bryce Maddock -- Co-Founder and Chief Executive Officer

Balaji Sekar -- Chief Financial Officer

Puneet Jain -- J.P. Morgan -- Analyst

Maggie Nolan -- William Blair & Company -- Analyst

Matt VanVliet -- BTIG -- Analyst

Matt Roswell -- RBC Capital Markets -- Analyst

Dave Koning -- Baird -- Analyst

Jim Faucette -- Morgan Stanley -- Analyst

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