Screen. With that, I'll hand it over to you guys. Thank you for joining us today.
Great. Thanks, Anja. Thank you very much. Taylor and I are really excited to be here today and appreciate your time and interest in ibex. We have a great narrative, I think, to tell you, and we're excited to tell this narrative. Let me give you all a little bit of a background of ibex, what we do. You know, we help connect some of the world's best brands with their customers seamlessly with human agents and AI agents. If you think of us as consumers when you need a question around a e-commerce, you know, platform, you know, a package you're waiting for delivery. I'm a member of a healthcare provider, and I have questions on my benefits, things like that.
We have a whole bunch of agents, about 38,000 employees around the world that focus on delivering great experiences to us as consumers and members and things like that, and we do that across a lot of different geographies. What we have and really excited is a business that continues to build great momentum and separate ourselves from the pack, as I like to call it, separate ourselves from where our competitors are. We're not the largest player in the industry by far, but we feel like we have the best resume of anybody. We finished our calendar year at a very strong growth of 16% EBITDA, 16 Adjusted EBITDA, 44% increase year-over-year and a strong Free Cash Flow year.
We're kinda hitting on all cylinders financially, and we've been doing this, and Taylor will cover this in a little bit, but we've been doing this for many years and, you know, and it's a long track record of continued up and to the right, and the momentum continues to build. Give you a little background of the industry with which we play in. You know, we kinda look and say we are in the contact center space. That's about a $350 billion market between clients that outsource and clients that run their own internal centers and clients that do both. Most of the clients that we have kinda do both.
About 30% of that or about $100 billion is in this outsourced area, which is, you know, kind of the segment that we play in the BPO space. Of that $100 billion, it is a highly fragmented industry where there is no massive dominant player that has, you know, 60% market share. The largest 10 players, which kinda range between $10 billion-$11 billion in revenue to about $2 billion in revenue, they only represent about 35% of the market. This space has a lot of opportunity for disruptors in this space, and that is kind of what we have done. In this world, we look at why we think this is a great space.
There's a whole lot of TAM to go after, and we believe as costs and kinda challenges, clients are gonna continue to look to outsource more and more over the next 10 years. I would like to take a minute to talk a little bit about this industry and kind of what we've done and the unique position that we have in this industry, which we call BPO 2.0, where we think we've built ourselves into the leader in this world. To understand that, I think I'd like to talk a little bit about the journey of this industry. With that, I'll start with kinda how this industry operated in the first 20 years. I've been in this industry 25+ years.
You know, from the mid-1990s through about 2010, 2011, 2012, in that range, this industry was what I call BPO 1.0. It was a large labor arbitrage play. Bigger was better. The competitors in this space did many acquisitions to become bigger and bigger and bigger, not necessarily better. You know, cost was the prime focus of the outsourcing game. These businesses were built solely for that. They won a lot of market share along the way. What happened though, along the journey is in all verticals, clients started. You know, there were disruptors in all verticals.
You know, whether you think of things like Amazon and the e-commerce and, you know, kind of retail space, and if you think about Netflix, and then all the way even to companies like Lyft and Uber, all of a sudden, there were these disruptors to traditional business models. One common characteristic is, the customer experience, the customer loyalty was key in that. As it related to how they interacted with their customers and members around interactions, they looked and said, "This needs to be an extension of our brand." Decisions started being made on who can be the best extension of our great brand. All of a sudden, it wasn't a cost labor arbitrage-driven business, but it became a business of who could differentiate, who could raise the bar, who could deliver great experiences.
This created an enormous opportunity for disruptors like ibex to come in and go into this space where the other guys were not geared towards and win and win big. That's what we've done. Kind of a common characteristic, if you fast-forward to today, is the companies that still live in yesterday are negative growth, they're flat growth, you know, they're really struggling, declining margins, highly leveraged balance sheets from M&A. On the other hand, when you look at, you know, companies in this BPO 2.0, we're growing higher, you know, common characteristics with high growth, double-digit growth, expanding margins, and a strong balance sheet. We think we built ourselves into the best disruptor. How we've done that is really putting this, what we call this, you know, BPO 2.0 power stack together.
It takes our culture, it takes a really powerful, tech stack, which we call Wave iX, and then a business insights organization that provides amazing insights for our clients around customer dissatisfaction and points of friction. We create this total solution that's geared around creating great experiences, enhancing loyalty with their customer base. Now, those things are easy to say, but the proof points that I like to highlight on this is culture. Okay. It's easy to say we have great culture, but we measure this. Our employee Net Promoter is 77. That's world-class. That's significantly better than any of our competitors, where I would render a guess that they would be at a 20 or lower. What this means is our agents care about this. They show up, they stay with us, and they're passionate about their job.
If they're engaged with great brands, they're gonna deliver a great experience. If you take this great agent that has, you know, enormous loyalty, outfit them with technology and deep analytics, we've created a differentiated value proposition that the labor arbitrage guys don't have, where they're just throwing bodies at things. At the end of the day, this all works out well, and we measure this. Our clients value us, and they say, "You are a trusted partner." They have our client Net Promoter is 71, which we think is world-class, significantly better than anybody else. We don't lose clients. We have about a 98.5% revenue retention among our clients. Clients don't leave us.
We've created this flywheel where we have this differentiated offer that allows us to go win trophy clients. We win, they have a large spend. We grow, we expand with them into new geographies, new lines of business. They don't leave us, and it just creates this flywheel for growth. New logos, grow them, land and expand them, and they don't leave us, and we take market share from the big guys. That's the business that we've built. Now, what we think we are the best in is where this industry is going, which I call we are defining BPO 3.0. This is where we layer in AI on top of what we are doing. AI to help us transform the operations, and AI where we complement our human agents with AI agents.
We're providing this end-to-end solution. We think that positions us well going forward, as this industry is going. We've done this on the big stage. We've done this in what I call trophy clients time and time and time again, where we go, we win these clients with our differentiated value proposition. We land and expand, we grow. We've created a roster of clients that all have large amounts of spend, and we're taking market share away from our competitors to you know, fuel our growth. I'll give you an example of one of these. If you look at kind of towards the center, the number one healthcare payer in the world had a roster of multi-billion dollar players that they had been servicing them for 10, 15 years.
It had been 6 years since they brought in a new challenger to that. It took us about 3 years to sell into there, but we finally got into there. Within 90 days, we were outperforming the status quo significantly. So much so that they launched us within 90 days into a second site and more lines of business and continued to grow. Well, we're now 4 years into that journey. In the first 3 years, we were their innovator of the year in year 1, partner of the year in year 2, partner of the year in year 3. No provider has ever won back-to-back. We're consistently outperforming kind of their status quo legacy, much larger partners, fueling significant growth to our business and to our healthcare vertical.
I can tell that story time and time again. We've created this competitive moat that allows us to win these new logos, take market share from our competitors, land and expand. We don't lose them, and that's created what I think is a long-term, you know, kinda long-term, many-year, trajectory up into the right. With that, I'm gonna pass it over to Taylor. We think we have a great investment thesis that pulls all of those things together. With that, Taylor, over to you.
Thanks, Bob. As Bob mentioned, we have a very strong financial profile, and it's not just a one-hit wonder, right? We have a long track record of growth in all our key financial metrics. On the slide in front of us, we have some of these metrics and kind of the growth over time we've seen. If we start in the graph in the upper left-hand corner, it shows revenue, and this is our organic revenue growth. All our growth over, you know, recent history has been organic and not through M&A. You can see our four-year compound annual growth rate on the revenue side is 6%. You'll also see that there was a little pause in growth between fiscal year 2023 and 2024.
This was sort of the time period when AI first started being discussed and made an introduction into the market, and people were kind of holding off on their purchasing decisions. If you look past that year, our average growth has probably been closer to 10%. As Bob mentioned in one of his slides, if you look at calendar year 2025, it's 16%. Our growth has been building and continues to have great momentum. Moving over to the graph in the upper right-hand corner where we have Adjusted EBITDA, you'll see that EBITDA growth has been almost twice our revenue growth. We're getting good leverage on the P&L, which is what we wanna see. What's really driving that is the vectors of growth are our high-margin services.
We're seeing the vertical markets that carry higher margins, driving our growth, and we're also seeing our geographies, higher-margin geographies, the geographies where we're seeing growth. That's certainly a very good characteristic of the business. Moving ahead to the bottom left-hand graph, this is where we have our adjusted EPS, and we're seeing even more leverage, right? You know, 6% revenue growth, 11% EBITDA growth, and then on EPS, 19% EPS growth. You know, key factors there, obviously, the strong operating performance that's showing up on EBITDA is driving our EPS growth. We've also been active in share repurchase, and we have repurchased about 30% of our shares over the past 2-3 years. Been aggressive with share repurchase as well.
Finally, moving to the bottom right-hand side where we have Free Cash Flow. You know, Free Cash Flow is strong, it's predictable, and it's growing. It's a very nice characteristic of the business that we have good visibility in the cash flow. Moving ahead to our more recent results, just to take a snapshot of our more recent results. Here are our Q2 results. For us, our fiscal year ends on June 30th, so our second quarter is the quarter which ended December 31st. Here, if you look on the right-hand side, you can see we had, you know, 17% revenue growth, 32% net income growth, and 45% EPS growth. These are GAAP results.
Once again, you know, similar to the longer-term trends, even in the short term for Q2, you're seeing nice leverage throughout the income statement. That's great to see. What's really driving the results, as I mentioned earlier, you know, the vectors of growth are our high-margin vertical markets and offshore geographies. You can see where our HealthTech vertical grew 35%, travel transportation 20%, and retail 17%. Those high-margin vertical markets are driving our growth. Then we're also doing a really good job managing our SG&A expenses to make sure they're growing more slowly than our revenue growth.
SG&A expenses year over year went from 18.3% down to 16.8% of revenue, so 150 basis point improvement, which is another good leverage for our business. We have a nice platform that we're able to layer revenue on and scale the business. Moving ahead to our non-GAAP results. Very similar to our GAAP results, you know, we don't make many non-GAAP adjustments. You know, the big ones are stock comp and then also foreign currency gains and losses. But you can see EBITDA grew 25%, adjusted net income grew 33%, and adjusted EPS grew 46%. Very similar to our GAAP results.
Our EBITDA margins, we've done a good job year-over-year driving those, 80 basis points, from 11.8% to 12.6%. You know, once again, it's the growth where we're getting the growth and also managing our SG&A expenses is what's allowing us to continue to expand our margins. Moving ahead, Bob touched on this. You know, he had a slide where he showed kind of our some of our top clients, and on that slide it said that we had 60 clients $1 million or more in revenue. So we have great diversity among our clients, which is unique for BPOs. We probably have greater diversity than most BPOs. Not only do we have great diversity among our clients, but we also have great diversity among our vertical markets.
You can see here we have our vertical markets, and they're all probably between 10% and 25% roughly of our overall revenue. You know, they're all growing nicely outside of telecommunications, and that's intentional. That vertical tends to have lower margins, and so we're not putting resources against it. We put our resources against the higher-margin verticals. You know, as I mentioned when I was discussing our long-term revenue trends, this is all organic growth, right? We're not doing acquisitions to hit certain revenue targets. We're growing organically. A good example is the healthcare vertical where 4 years ago we had 0 revenue, and now exiting this year we're gonna have close to $100 million of revenue, all organically grown. You know, we have leading healthcare providers and payers.
It's a nice vertical that's higher margin and one that we still are bullish on, I think we can continue to grow. That's just an example of kind of our land and expand and our ability to grow our business organically. Finally, wrapping up, it's important for us to maintain a strong balance sheet. If you see that we have virtually no debt, our cash balance is roughly $15 million. You know, recently, in the first half of this year, we've had record operating cash flow both in Q1 and Q2, so we're keeping up this trend. We're using that cash flow, right, to reinvest in the business. We expand our capacity, but we build our capacity to meet demand, not ahead of demand.
A lot of times we build a new facility, we're getting a payback in as little as a year, so that's a good area we're investing in. We also continue to be active in share repurchase. Repurchased about 200,000 shares in the first half of this year. We're proud of the fact that we maintain a strong balance sheet, and we feel like this positions us very well to enable us for future growth in terms of adding capacity, adding sales resources, you know, technology solutions, all the above. We're very well positioned to continue our growth with our strong balance sheet. With that, I will just wanna thank everybody for joining the call, and we're open up to questions.
Thank you so much, Bob and Taylor. For the audience, if you have a question, you can submit it in the Q&A function at the bottom of your screen. I'll just kick it off here while we wait for the questions to populate. What kind of visibility do you have on the revenue, and how sticky is the business with your customers?
Yeah, Anja, thank you and really, really good question and appreciate that. Look, start with the second part of that, the stickiness. Our stickiness is, we have enormous stickiness on this. First of all, it's driven by great performance, you know, and doing a job, better job than, you know, kind of the other competitors that we're competing against on each client. That, you know, that drives the day. If you look at the metric that I shared of our, you know, kind of our revenue retention, you know, we have less than 1.5% revenue exiting the business. So I think that is enormous stickiness in this space. Most of our competitors are kind of in that 10% going out the back door.
We have strong stickiness driven by performance, the tech stack, and the insights that we're providing for our clients. Now, the question to visibility is kinda one of those. It's a really good question. You know, it starts with the client's visibility. I would say most of our clients have good visibility about two to three quarters out. They project 12 months out, most of those, but their visibility to their business is, you know, kinda out in that, you know, quarter four and latter part of quarter three is less accurate. We feel we have good visibility. You know, to that point, we've guided this business.
We've been on a beat, you know, beat and raise, beat and raise for quite a few quarters in a row, as we did in our most recent quarter. You know, we feel very confident in where we're gonna finish for our fiscal year, which will end in June. You know, we kinda feel like there's strong growth in that. You know, we are now starting the planning process for FY 2027. You know, look, we feel like kinda what we've built here, that's representative of where the trajectory of this business is.
Okay, thank you. You also had a pretty impressive employee retention and score. What do you attribute that to?
Sure. You know, it starts with the thesis of the Richard Branson quote, "If you take care of your employees, they'll take care of your customers," or in this case, we call them clients. The clients take care of your shareholders, right? That's kind of what we've built here. The first thing that you know creates that is the fact that our agents really are loyal to ibex. That creates our ability to deliver consistently month-over-month, week-over-week, day-over-day for our clients and not be up and down on, you know, quality. Consistently outperforming the others, driven by those agents and that tech stack, and that's kinda what we've built.
Look, if you look at our employee Net Promoter in every geography that we operate in, it's off the charts. We have the confidence that we can go into every region that we operate and take that model and out-execute. That's what we've done, and that's what we've built. It's repeatable. That's probably the most important thing. That's, you know, that's why we're, you know, really feel confident in the trajectory of this business.
Okay, thank you. A question from the audience: Can you share thoughts on how much of your growth has come from clients outsourcing your assignments versus market share gains from competitors?
Yeah, we do measure that. Okay. It's interesting. When we win a new logo, okay, in its first year of revenue, we're ramping. We're starting, we're scaling, we're ramping. Usually in that first year, we'll do an expansion based on doing a really good job out of the gates. We'll expand with a new line of business and new geography. It's really interesting. If you look at the trajectory of a new logo, the revenue we get out of the new logo in year 1 will be about 2.5x that in year 2. We have a long track record of seeing this. Then in year 3, it'll grow another 50%.
You know, kinda, we look very carefully at the cohorts of the new business that we bring in. Now, in year, those new logos, 'cause they're ramping, they have a smaller impact in the first year. As they scale in year 2, they move the needle. You know, so we kinda look and say, year 1, those new logos will probably have, you know, if we're growing at 15%, they'll have a small percentage of that. It might be 2%-3%, but that new logo will have a big impact in year 2, you know. Look, we're, you know, we. I'll give you. I shared this in our earnings call last.
Our top 10 clients, we grew at 20% this past quarter from prior year. You know, we're getting strong growth there, and then we're getting, you know, the right new logos that can then scale significantly, you know, in those year 2 and 3, and that creates this flywheel. Thanks for that question.
Okay, thank you. Another question here. What are the key catalysts for clients to outsource assignments?
I'm sorry, Anja, could you repeat that again? Sorry.
Yeah. What are the key catalysts for a client to outsource assignments to you rather than have it in-house?
Oh, yeah. Great.
Value proposition do you have?
Yeah, sure. Great question. I'll give you an example. One of the, you know, most clients that we've seen, you know, Fortune 100s that are outsourcing, you know, a sizable amount of their work, and they'll probably have some captives themselves. We actually had one of the very large home improvement companies had all of their work in captive. Their first move, they were looking at because of the cost challenges that they have, and they realize that they're paying, you know, $85,000-$100,000 a year for an agent sitting in, you know, in North Carolina. You know, as margins are getting challenged, compressed, everybody's looking at all areas of the organization.
They looked at us, they looked at the industry and said, "Hey, we're, you know, we wanna outsource first time." We brought to them a solution in a nearshore environment, where it could be done at a fraction, you know, probably at about a 60% savings of what their captive onshore operation were. Now they didn't make the decision on price. They made the decision on in that market, who could actually provide the best solution. When we brought in our story of our culture, and this, we launched in Jamaica, and then we quickly expanded into Nicaragua with them, and now we have about 80% of their. They only have about 20% left in the captive, and the 80% is outsourced to that. That's been a kind of a two-year journey. It's.
You know, they look at big cost gains, but they wanted to make sure that when they moved into the region, that it wasn't something that was gonna deteriorate their customer relationships. Actually, the reason they've gone from 0 to 80% with us is 'cause we're outperforming what their captive operations are. You know, it's the old commercial, the and. It's quality and cost a lot of times is the play that's the solution that we solve for them.
Okay. Thank you. Another question here. Do you anticipate AI to be a greater demand driver going forward, and how might that play out for you?
Boy, that's a great question. AI, you know, we see AI as a significant opportunity for us to take. What we've done, I'll just share with you, we've partnered with a couple of the best AI companies in the world that are, you know, creating AI agents. The value that we're able to bring is we take our business insights organization that for all of our clients, we understand customer journeys, we understand what as a result of that, what is appropriate to use AI to automate and what isn't. We think leveraging this powerful engine with what we have, you create the Ferrari of AI. That's how our clients are viewing us as, you know, kinda able to take that and build that great solution, leveraging our capabilities.
What's exciting about that is that when we bring that solution, the margin in that offer is significantly higher than the margins that we have in our current business. You know, kinda our margins, you know, in our current business operate about 30%, you know, 30, 31, you know, kind of bounces around a little bit. When we look at that AI solution, that's more than double that. We think that that's gonna be a high growth vector for us, and then again, another growth vector that's gonna be a significant margin expansion. We're really excited about our position as being well ahead of our competitors in delivering that solution. By winning, we're excited about, you know, having a, you know, a growth vector be a very, very strong margin expansion vector. Thanks for the question.
Thank you. We're kind of out of time, but we have 2 good questions here I'm gonna squeeze in. One is kind of a follow-up to the one we just touched on. What percentage of your total customer interactions are currently handled end-to-end by AI with zero human intervention? And what's the fully loaded cost per resolution compared to human agent?
Boy, that's a great question. Look, we are early in the journey on the AI. You know, we're kind of on this high growth, but it's starting from zero. You know, it's still small, right, and not material. We believe that that's all future upside, okay? In today's results, it's really not moving the needle yet. That's what we're excited about, is those are futures, okay? Now, high level, I look at it and say, if an interaction is serviced in the U.S., it's between $8 and $10 an interaction. If it's in a market like the Philippines, it's probably $3 an interaction. When you look at AI, it's probably about $1.50 an interaction.
Just to give some kind of just ballpark, you know, and each client's gonna be different, but just, that just kinda gives you the scale and magnitude of that. It's really compelling, you know, if you can do it effectively. Interestingly enough is most early solutions that have been built by tech-only companies, etc. , have not really been successful. You know, MIT did a study that said 90% of them have not been effective at all. What we're building is that solution that doesn't lead with your chin, that, you know, really says, "These solutions you should automate," because we as consumers would like those to be answered quickly, fast, not have us be on hold, all of that stuff.
You know, kind of excited about, you know, about all of that and our ability to really solve what's needed, which is the right amount of automation for the right interactions, and do that successfully. With that, Anja, I think we'll probably come to the end of the time. Thank you guys all. Love the questions. They were spot on, and hopefully, you know. Look, we are really confident in our journey. We've done this over long term and, you know, it keeps getting stronger. You know, we love that, what we've built here, and thanks for your time.
Thank you so much, Bob and Taylor. Yeah, it looks like you have a very, very strong story here. I know you have a strong one-on-one schedule as well here, but if anyone in the audience would like to catch up with the management and learn more about the company, you can reach out to us at Sidoti or the company directly, and I'm sure they will make themselves available. With that, I'll hope you all have a good rest of your day. Thank you.
Thank you.
You as well. Thanks for your time.
Bye-bye.