What happened
Shares of TaskUs (TASK 2.34%) were up 12% as of 3:30 p.m. ET on Wednesday after the provider of digital outsourcing and customer support services announced a $100 million share repurchase program.
So what
TaskUs' stock price is down roughly 70% so far in 2022. Investors hammered its shares after TaskUs cut its full-year revenue forecast in August. Management trimmed its sales outlook to $930 million to $950 million, down from its prior projection of $980 million to $1 billion.
Yet the company's revenue did jump 36.9% year over year, to $246.5 million, in the second quarter. And its new guidance still calls for revenue to grow by approximately 24% in 2022.
Moreover, TaskUs expects to generate about $100 million in free cash flow this year. That would be an impressive feat for the young tech company. It's also one of the reasons that TaskUs' leadership team believes the sell-off of its stock is overdone.
"This share repurchase program reinforces the confidence that our board and management team have in the company's strategy and future growth prospects," co-founder and CEO Bryce Maddock said in a press release. "Given our strong cash generation, we believe that our current valuation presents an attractive buying opportunity."
Now what
In addition to its robust cash flow production, TaskUs has multiple ways to potentially create gains for investors. Its high net revenue retention rates show that it's successfully increasing sales to existing customers. New service lines and international expansion could further fuel the company's growth. And management sees mergers and acquisitions as another intriguing opportunity.
"We will continue to invest in our business for growth and pursue repurchases as a strategic use of excess free cash flow to create long-term shareholder value," Maddock said. "Our strong balance sheet and relatively low leverage ratio provide us the flexibility to capitalize on organic and inorganic growth opportunities."
