StarTek (SRT) Misses Q1 EPS by 4c, Revenues Beat

StarTek (NYSE: SRT) reported Q1 EPS of ($0.09), $0.04 worse than the analyst estimate of ($0.05). Revenue for the quarter came in at $161.1 million versus the consensus estimate of $153.8 million.

Total revenue for the quarter increased 2% to $161.1 million compared to $158.6 million in the quarter ended December 31, 2018, and was up 40% compared to $115.1 million in the quarter ended March 31, 2018.

Gross profit for the quarter increased 9% to $27.2 million compared to $25.1 million in the quarter ended December 31, 2018, and was up 29% compared to $21.2 million in the quarter ended March 31, 2018.

Gross margin was 16.9% during the quarter compared to 15.8% in the quarter ended December 31, 2018 and 18.4% in the quarter ended March 31, 2018.

• Selling, general and administrative (SG&A) expenses were $24.1 million compared to $21.9 million in the quarter ended December 31, 2018, and $14.4 million in the year-ago quarter. As a percentage of revenue, SG&A was 14.9% compared to 13.8% in the quarter ended December 31, 2018 and 12.5% in the year-ago quarter.
• Net loss attributable to Startek shareholders for the quarter was $3.3 million or $(0.09) per share, compared to a net loss of $9.7 million or $(0.26) per share in the quarter ended December 31, 2018, and a net loss of $6.2 million or $(0.30) per share in the year-ago quarter.
• Adjusted EBITDA* for the quarter was $10.9 million compared to $11.4 million in the quarter ended December 31, 2018. Adjusted EBITDA* for the year-ago quarter was $12.8 million.

*A non-GAAP measure defined below.

Management Commentary

“The momentum in our business from the end of 2018 has carried into the first quarter,” said Lance Rosenzweig, president & global CEO of Startek. “While the first quarter typically takes a step back from Q4 due to seasonality, Startek managed to grow revenue during this period due to the continued ramp of both new and existing client programs across multiple geographies. We also generated a strong sequential improvement in gross margin, largely driven by our new client-centric management model and continued focus on serving high-growth verticals such as technology, financial services, next-gen retail, healthcare and travel. We have now consistently expanded margins each quarter since the business combination last year.

“Subsequent to the quarter, Startek received multiple accolades for our digital transformation efforts and CX management. In early April, we received the Top 50 Digital Edge Award from CIO Executive Council and IDG for our innovative proprietary IT helpdesk chatbot. And just last week, we were named to the 2019 Best of the Global Outsourcing 100 list by IAOP for our performance across several categories, including leadership and top innovation. Receiving these awards and being recognized as a leader in digital transformation is a major accomplishment for our team and further solidifies our position as an industry-leading CX services provider.

“As we look ahead, we will continue to focus on delivering best-in-class omnichannel solutions and implementing transformative technologies to help our clients better engage with their customers. We will also continue to reinvest in our business from a sales, marketing and technology perspective to bolster our growing pipeline and ensure we are continuously driving innovation to better serve our clients. With strong momentum at our back, we remain committed to delivering revenue growth and margin expansion in 2019.”

For earnings history and earnings-related data on StarTek (SRT) click here.

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