TaskUs Inc - Ordinary Shares Class A Stock

Good afternoon, and welcome to TaskUs Second Quarter 2026 Investor Call. My name is James, and I will be your conference facilitator today. [Operator Instructions] Please be advised today's conference is being recorded.

I would now like to introduce Trent Thrash, Senior Vice President of Corporate Development and Investor Relations. Trent, please go ahead.

Hello, everyone, and thank you for joining us for today's TaskUs earnings call. 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 our website at ir.taskus.com. We have also posted supplemental information on our website, including an investor presentation and an Excel-based financial metrics file.

Before we start, I would like to remind you that the following discussions contain forward-looking statements within the meaning of the federal securities laws, including, but not limited to, statements regarding our 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 actual results to differ materially from those discussed here. You should not place undue reliance on any forward-looking statements. For details on the uncertainties and other factors that may cause our actual results to be materially different than those expressed in our forward-looking statements, see the Risk Factors section of our most recent annual report on Form 10-K, our quarterly reports on Form 10-Q and other documents filed with or furnished to the SEC. These filings, which may be supplemented with subsequent periodic reports are accessible on the SEC's website and our Investor Relations website.

Any forward-looking statements made on today's conference call, including responses to 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 discussions throughout today's call contain non-GAAP financial measures. For a reconciliation 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 of our website.

Now I will turn the call over to Bryce Maddock, our Co-Founder and Chief Executive Officer. Bryce?

Thank you, Trent. Good afternoon, everyone, and thank you for joining us. Before we dive into the quarter, I want to take a moment to warmly welcome Rishabh Khemka, our new Chief Financial Officer to his first TaskUs earnings call. Rishabh brings an extraordinary track record of financial leadership, operational excellence and disciplined growth across dynamic technology and service companies. He's hit the ground running and has already made an impact on our business in less than 2 months on the job. We're thrilled to have Rishabh on board, and I know he looks forward to partnering with many of you on today's call.

In the second quarter, we again delivered solid performance, generating $308.9 million in revenue, which outperformed the top end of our revenue guidance by $10.9 million or 3.6%. Our year-over-year revenue growth rate at 5% helped us generate $57.7 million in adjusted EBITDA or an adjusted EBITDA margin of 18.7%. This was 70 basis points ahead of our margin guidance and on a dollar basis, it was 7.5% ahead of the adjusted EBITDA implied by the top end of our Q2 revenue guidance.

Our business' ability to generate cash was on full display in Q2. We delivered $36.4 million in adjusted free cash flow, bringing our cash balance to $180.3 million. This brought our net leverage ratio down under 1.3x, giving us a very strong balance sheet with ample liquidity to continue to invest in our AI and growth initiatives. Those investments are paying off.

In Q2, we maintained our strong momentum by capitalizing on our biggest growth opportunities in Artificial Intelligence Services and AI-enabled Digital Customer Experience. Our Q2 performance underscores the resilience of our business in the AI era and reinforces our conviction in the strength of our client partnerships and the quality of TaskUs' team and solutions. We remain laser-focused on our long-term goal to increase revenue, EBITDA and earnings per share over a multiyear horizon at rates that are among the best in the industry.

Next, I'll provide some highlights from Q2, along with an update on our 2026 outlook. Then I'll hand it over to Rishabh to walk through our financials in more detail.

Again, Q2 revenue was $308.9 million, an increase of 5% on a year-over-year basis. As expected, revenue from our largest client declined by approximately 22% compared to Q2 of 2025. This decline was more than offset by growth from other clients, resulting in revenue concentration from our top client of 20% in Q2 compared to 26% in Q2 of 2025. As we shared in Q1, revenue in the second half of 2026 will reflect additional headwinds from our largest clients' automation and cost optimization efforts. However, our relationship with our largest client remains strong. Thanks to our high-quality delivery and proven agility in adapting to their evolving strategic priorities, TaskUs is positioned to benefit as this client consolidates vendors over the medium term.

I'm very proud to report that outside our largest client, performance across the rest of our business was once again very strong. If we exclude our largest client, revenue in the rest of our business grew approximately 15% year-over-year in the quarter. The primary engine behind this was our second through 20th largest client cohort, which grew approximately 30% on a year-over-year basis in Q2. Notably, these growth rates that exclude the impact of our largest client, all accelerated when compared to Q1. Our sales and client service teams carried their momentum into the second quarter, delivering another solid performance. Q2 was once again defined by the expansion of our established partnerships with more than 50% of signings coming from existing clients. Following exceptionally strong onshore signings in our AI Service offering in the first quarter, Q2 returned to a more normalized mix with heavier offshore delivery.

Next, let's look at our service line performance for the quarter in more detail. Digital Customer Experience delivered $175.7 million in revenue, representing year-over-year growth of 6.4%. DCX growth was primarily driven by clients in our mobility, logistics and travel, technology, health care, retail and e-commerce and entertainment and gaming verticals. We expect DCX growth in the mid- to high single digits for 2026, with growth rates likely to accelerate in the back half. It's important that we pause and highlight this. In the face of countless market headlines predicting that BPO customer care would all be automated, our customer care business is growing at an accelerating rate.

Our success is based on our 2-part approach. We're using AI to support the automation of simpler customer contacts while leveraging our talented teammates for premium human-led customer interactions. The accelerating growth of our DCX business in the AI era shows that our strategy is paying off. The future of customer care is combining AI technology with human talent to deliver better customer experiences.

Finally, I'll note that our investment in health care is also delivering results. During Q2, we're pleased to be named to [ Everest Group's Healthcare Customer Experience Management Intelligent Operations PEAK Matrix Assessment ] for 2026.

Turning to Trust and Safety. We generated $67.1 million in revenue, a decline of approximately 12.3% year-over-year. This was primarily driven by declining revenue from our clients in our social media vertical, partially offset by growth in our technology and financial service verticals. As we previously shared, as our largest social media clients invest in automating content moderation, we expect our Trust and Safety revenue to continue to decline year-over-year during the back half of 2026. We remain optimistic that these declines will stabilize in 2027 as we continue to support complex Trust and Safety workflows and benefit from vendor consolidation at our largest client.

Moving on to AI Services. This specialized service offering continues to be our fastest-growing service line with revenue increasing 26% year-over-year to $66.1 million. Here, our strong growth was primarily attributable to our ongoing ramp of clients in our mobility, logistics and travel vertical, including clients in the autonomous vehicle, autonomous delivery and robotics industries. This exceptional performance was partially offset by reductions in revenue in our social media vertical, driven by the end of certain AI automation projects at our largest client and other social media clients.

From an AI Services signings perspective, we saw strength in our technology and social media verticals during Q2. Given our results, we continue to believe our investments in our AI Service offerings focused on the world's leading foundational models, hyperscalers and autonomous vehicle, autonomous delivery and robotics companies are paying dividends. We're confident these investments will enable us to deliver strong growth in the second half of 2026.

In Q3, AI Services growth rates will be partly impacted by the sunsetting of the AI automation projects at the social media clients I mentioned earlier. In Q4, we expect AI Service growth rates will again accelerate to better than 30% year-over-year, driven by our continued growth with autonomous vehicle and robotics clients.

On that note, I'd like to provide an update on our strategy for the AI-driven future. As part of the first pillar of our AI strategy, we remain focused on building a highly differentiated solution set that strengthens our AI Services offerings, specifically within physical AI, autonomous vehicles, autonomous delivery and robotics. The strategic investments we've made over the past several quarters have positioned us to continue winning market share as these emerging sectors reach inflection points.

As part of our commitment to leading in emerging AI technologies, we recently established our first robotics and physical AI training lab in [ Noida ], India. A great example of our work here is our partnership with a leading developer of home-based autonomous robots. Here, our team collects, annotates and validates physical spatial data to train our clients' autonomous systems to complete daily tasks. This lab highlights our momentum in moving beyond pure digital AI into complex physical robots, positioning TaskUs at the center of our clients' most innovative initiatives.

Outside of our labs, we are also leveraging our Taskers platform to collect ego-centric data in diverse real-world settings, driving imitation learning for humanoid robotics. Here, we are making investments in our platform to optimize how we deploy and manage these specialized crowd-sourced workflows for complex physical AI tasks.

Finally, we continue to aggressively recruit domain-specific talent with deep expertise in autonomous vehicles, autonomous delivery and robotics. By combining modern platform infrastructure and specialized human expertise, TaskUs is solidifying its position as the critical operational partner for industry leaders across these emerging high-growth markets. From high-fidelity data capture and mapping to mission-critical remote assistance and roadside emergency response, our specialized workflows are integral to our clients' real-world deployments.

Turning to the second pillar of our AI strategy, investments in our AI consulting practice, I want to outline some improvements we've seen with Agentic solutions we've implemented for clients. These results are a direct reflection of our ability to leverage TaskUs' intimate knowledge of our clients' products, processes and workflows into higher-performing autonomous agents and deliver seamless orchestration between these technologies and the human intervention required for a more complex and nuanced resolution. Building on the success of our initial deployment of an Agentic customer support solution for a streaming client, we've driven a meaningful increase in the overall contact containment rate. Our deep knowledge of the clients' workflows has allowed our AI consulting team to quickly contain more than 70% of contacts in our recent performance. This progress was propelled by expanding our specialized technical troubleshooting capabilities into high-volume workflows, including account management, technical support and customer trial abuse mitigation.

As we've scaled this Agentic solutions, we have not compromised customer experience as evidenced by our 4.7 out of 5 [ CSAT ] score. Building on the success, we're now extending these proven conversational capabilities into our clients' e-mail channel with additional plans to expand into voice to drive further automation and unlock additional operational savings.

At another key client in a highly regulated industry, we deployed an AI voice agent capable of executing end-to-end appointment scheduling, rescheduling and the initiation of new customer intake. By integrating partner technology with our operational expertise, we've continuously increased containment rates while positively impacting overall booking rates. Complex and sensitive interactions seamlessly escalate to TaskUs teammates, allowing human empathy to shine where it matters most. Since April, first attempt AI agent resolution rates have improved nearly 30%, resulting in fewer human transfers. Our AI scheduling agents have also become more efficient with [ median ] AI agent talk time dropping by nearly 12%.

Finally, our agents delivered a reduction in appointment cancellations of over 60% in the past 3 months. Given our success in directly increasing our clients' revenues, we are exploring other work streams and agent capabilities, including adding outbound agent calling, which we anticipate to launch next quarter. Each of those successful Agentic deployments showcase our ability to move beyond pilots into production environments in which we're delivering a high-value end-to-end combination of Agentic solutions and talented humans that deepen client relationships.

The third and final cornerstone of our strategy for the AI era is the automation of our internal processes to drive margin expansion and operational excellence. Beyond our previously discussed Agentic AI deployments and our talent acquisition and HR help desk functions, we're developing custom solutions to address targeted real-world operational challenges. A critical focus area is putting AI directly into the hands of our frontline leaders, reducing their administrative burden and empowering them to focus entirely on their roles as coaches and leaders of our teammates.

A prime example of this is Maestro, our proprietary AI-powered platform for team leads. Maestro acts as an intelligent operational assistant, seamlessly blending automation, predictive AI and deep integrations with our existing delivery ecosystem. Maestro allows our team leads to explore their team's performance data using natural language. It automates routine administrative reporting and surfaces real-time performance insights, including schedule adherence, average call time, QA, [ CSAT ] analyses and personalized coaching recommendations. This empowers our team leads to focus on high-impact coaching, elevating delivery quality. This will also allow us to improve spans of control over time. By transforming how our frontline operates, Maestro serves as the powerful industry differentiator, positioning us to aggressively take market share from the competition.

Before handing it over to Rishabh to provide more details on our Q2 results, I want to touch on our 2026 outlook. In light of our strong results, sales momentum and continued strength of both our digital customer experience and AI Service offerings, we are raising our full year revenue outlook to $1.22 billion to $1.24 billion. This updated range accounts for the continued headwinds we expect to face at our largest client through the end of 2026. At the $1.23 billion midpoint of our revenue guidance, we expect full year adjusted EBITDA margins to be approximately 19%. We're also increasing our outlook for full year adjusted free cash flow by approximately 5% to between $110 million to $120 million. For the third quarter, we expect revenue to be between $300 million and $302 million or roughly 1% year-over-year revenue growth at the midpoint. Adjusted EBITDA margins are expected to be flat sequentially at approximately 18.7% in Q3.

Looking ahead to 2027, we plan to continue increasing our level of investment in emerging growth and AI transformation initiatives, including AI Services and AI-enabled DCX. These investments are likely to continue to impact margins. Our performance to date increases our conviction that these investments are the right strategic decision to position TaskUs for the future.

Overall, despite top client headwinds and a choppy overall macro environment, we're pleased to have delivered performance that exceeded our expectations in Q1 and Q2. We remain confident in the trajectory of our business, driven by resilient demand for our premium DCX offerings and strategic advancements in AI Services. I look forward to updating you on our Q3 results on our next call.

With that, I'll hand it over to Rishabh to go through our financials in more detail.

Thank you, Bryce, and good afternoon, everyone. Before I begin, I want to say how excited I am to join TaskUs and to speak with all of you. I'd like to thank Bryce, the Board and the entire TaskUs team for such a warm welcome.

In my first few weeks, my conviction in this business, its people, its client relationships and its position in the AI era has only grown. I look forward to meeting many of you in the coming months.

Now turning to our second quarter results. In the second quarter, we earned total revenues of $308.9 million, reflecting an increase of 5% compared to the previous year. This was $10.9 million ahead of the top end of our guidance for the quarter, driven by stronger-than-expected volumes in AI Services and Digital Customer Experience. Approximately 75% of our growth came from new clients. Our strong top line performance despite headwinds from our largest client, demonstrated the resilience of our business, our consistent focus on strategy execution and our ability to capture market share regardless of the macroeconomic environment.

As Bryce mentioned, we saw solid year-over-year growth in AI Services, which grew a remarkable 25.8% and DCX, which accelerated further in Q2 to 6.4% compared to the prior year. As contemplated by our Q2 guidance, Trust and Safety declined 12.3% on a year-over-year basis. In the second quarter, our largest client represented 20% of total revenue, down from 26% in Q2 of 2025. Our top 10 client concentration was 64%, up from 58% in Q2 of last year, and our top 20 clients accounted for 75% of our revenue, up from 71% in the prior year period.

Excluding our largest client, revenue from the rest of our business grew approximately 15% on a year-over-year basis in Q2 compared to approximately 13% growth in Q1 of 2026, a slight acceleration in growth on a sequential basis. Here, growth in clients from the rest of our portfolio more than offset a revenue decline in our largest account. These strong results from clients other than our largest client were primarily driven by new and existing client growth across a broad range of verticals during the quarter, showcasing the underlying momentum of our core business.

Looking at our geographic delivery mix. In the second quarter, we generated 51% of our revenues in the Philippines, 15% in the United States, 12% in India and 22% from the rest of the world, primarily in Latin America and Europe. In Q2, we saw particularly strong year-over-year revenue performance in the United States, Egypt and Mexico. We ended the quarter with approximately 63,200 global teammates, a decrease of approximately 1,200 teammates from the end of Q1. This was primarily the result of changes in the scope of work we perform in the Philippines for our largest client.

Next, I'd like to provide additional details about our service line performance. In the second quarter, our DCX offering generated $175.7 million in revenue and year-over-year growth of 6.4%. This growth was well balanced between new and existing clients with nearly 50% being attributable to clients we ramped up within the last year. Overall, DCX growth was primarily driven by strong performance from existing clients in our mobility, logistics and travel vertical and new technology vertical clients. This growth was partially offset by a decrease in revenue from existing clients in our financial services vertical.

In terms of DCX signings in Q2, we again demonstrated remarkable resilience that positions us well for continued strong growth in DCX during the back half of 2026. We saw broad-based strength in signings across most of our vertical markets, including technology, health care, mobility, logistics and travel, retail and e-commerce and financial services. In particular, we were pleased that more than 40% of our DCX signings in Q2 were comprised of high value-add sales and lead generation solutions.

Our Trust and Safety offering, which includes our content moderation and financial crime and compliance services, declined by 12.3% compared to Q2 of 2025, resulting in $67.1 million of revenue. Here, the drop in revenue from our largest client more than offset the remaining growth from other existing and new clients, which was otherwise well balanced. From a vertical perspective, the existing client decline in Trust and Safety was primarily driven by social media and retail and e-commerce, partially offset by an increase in technology vertical clients. New client growth was strongest in our professional services and financial services verticals.

AI Services demonstrated strong growth in excess of 25% for the seventh quarter in a row, resulting in $66.1 million in revenue. This was primarily as a result of expansion in services we provide to new and existing clients in our mobility, logistics and travel vertical, partially offset by a decrease from existing clients in our social media vertical.

Overall, existing clients contributed approximately 2/3 of AI Services total growth for the quarter, led by one of our long-term autonomous vehicle clients. From a signings perspective in Q2, we saw demand signals from a diversified set of AI Services clients, primarily within our technology, social media, retail and e-commerce and mobility, logistics and travel verticals.

Now moving on to the drivers of our income statement performance. In the second quarter of 2026, we earned adjusted EBITDA of [ $57.7 million ] and 18.7% margin, which compared favorably to the $53.5 million of adjusted EBITDA implied by the midpoint of our Q2 guidance. As a reminder, we anticipated a year-over-year and sequential margin decline to 18% for the quarter based on several factors, including geographic delivery mix shift to lower-margin U.S.-based delivery and our strategic investments in emerging growth opportunities and AI capabilities. However, we were largely able to minimize these impacts through revenue outperformance and disciplined cost controls across our operations and overhead functions.

Our cost of service as a percentage of revenue was 65.3% in the second quarter compared to 61.4% in Q2 of the prior year. The increase was primarily driven by several factors, including the impact of annual personnel cost inflation, delivery mix shift and a pricing environment that remains competitive. These factors were partially offset by the run rate benefit of operating efficiency improvements made during the second half of 2025 carrying over into 2026 and additional cost optimization initiatives we initiated during the quarter.

In the second quarter, our SG&A expenses were [ $54.6 ] million or 17.7% of revenue. This compares to SG&A in Q2 of 2025 of $68.4 million or 23.3% of revenue. This decline as a percentage of revenue reflected lower transaction costs in Q2 of 2026 on a year-over-year basis, our continuous efforts to optimize overhead costs and a reduction in stock-based compensation expense. These improvements in overhead expenses were partially offset by the AI and growth investments mentioned earlier.

Adjusted net income for the quarter was $30.6 million and adjusted earnings per share was $0.33. By comparison, in the year ago period, we earned adjusted net income of $39.7 million and adjusted EPS of $0.43. The year-over-year decline in adjusted net income was mainly due to higher interest expense from our refinancing and the impact of foreign exchange rates compared to the prior year. Our weighted average share count was relatively consistent and therefore, not a material driver of our adjusted EPS performance.

Now moving on to the balance sheet. Cash and cash equivalents were [ $180.3 million ] as of June 30, 2026, compared with the December 31, 2025 balance of $211.7 million. Here, we were pleased that our strong year-to-date free cash flows of nearly $69 million significantly offset declines related to our onetime special dividend and refinancing activities of approximately $84 million and the negative translation adjustment related to fluctuations in foreign exchange rates.

Our net leverage ratio continued to be healthy at less than 1.3x at the end of Q2. As a reminder, we calculate this ratio as total debt less cash divided by adjusted EBITDA for the trailing 12-month period. Our refinanced $500 million term loan maturing in March of 2031 bears interest of SOFR plus 2.75% and our new $100 million revolver remains undrawn. Cash generated from operations on a year-to-date basis was $89.4 million through Q2 of 2026 as compared to $53.3 million through Q2 of 2025. This increase of nearly 70% was primarily due to the positive impact of changes in working capital stemming from stronger cash collections and the timing of payments related to prepaid assets.

Year-to-date adjusted free cash flow was $78.7 million or 67.7% of adjusted EBITDA. These results bolstered our confidence in increasing our full year 2026 adjusted free cash flow guidance. Our Q2 year-to-date capital expenditures decreased to $20.7 million compared to [ $31.5 million ] through Q2 of 2025, primarily due to lower facility build-out and technology refresh expenditures. As a result, we expect CapEx to be approximately $47 million for the year, a reduction of $13 million compared to our initial 2026 outlook.

In terms of our financial outlook for the remainder of the year, we are increasing our full year 2026 revenue range to $1.22 billion to $1.24 billion, resulting in a midpoint of $1.23 billion. We also expect to earn full year 2026 adjusted EBITDA margins of approximately 19% at the midpoint of our revenue guidance. As mentioned earlier, we are increasing our full year adjusted free cash flow outlook to $115 million at the midpoint with a range of $110 million to $120 million. As a reminder, adjusted free cash flow excludes the impact of certain costs that are nonrecurring and outside the ordinary course of business.

For the third quarter, we expect revenues to be in the range of $300 million to $302 million, reflecting growth of 0.8% at the midpoint. We expect our adjusted EBITDA margins to be approximately 18.7%, which includes the impact of wage increases, geographic mix shift, pricing renegotiations and continued investments to support our revenue growth and AI transformation initiatives, offset by the operational and overhead efficiency initiatives we discussed earlier in the call.

As a reminder, our margin guidance is based on current foreign exchange rates. Deterioration in the value of the U.S. dollar would put downward pressure on our margin performance.

In closing, another solid quarter has positioned us to lift our full year top line and cash flow guidance. While we expect continued headwinds at our top client, the core engine of our business is performing exceptionally well. Pipeline and signings are building nicely, particularly in AI Services and our premium DCX practice continues to win share from the competition. None of this happens without our global team whose commitment to excellence drives our success every day.

Now I'll hand it back to Bryce to close us out.

Thank you, Rishabh. Before we open for questions, I'd like to share one of our TaskUs teammate stories. At TaskUs, we often talk about people and performance in the same sentence. And our commitment to frontline stability is a prime example of why that connection matters. Meet [ Rayelin ], a teammate who has been with TaskUs Philippines for nearly 6 years. Like many working parents, [ Rayelin ] has faced significant financial and emotional stress trying to cover tuition and school fees for her 2 elementary age children. That changed when she became a recipient of our [ next-gen ] scholarship program. The grant allowed [ Rayelin ] to enroll her children in a premier private school in La Union, fundamentally transforming their educational opportunities and removing a major source of financial strain for her family.

In her own words, "Having the support didn't just change my children's future, it gave me the peace of mind to focus, grow and build a long-term career here." As a parent myself, I know firsthand how much peace of mind matters when it comes to your children's education and well-being. Nothing makes me prouder than knowing that the programs we build at TaskUs create real generational impact for our frontline teammates.

But this sense of purpose also drives real operational value. When we invest in our communities through programs like the [ NextGen ] scholarship, we aren't just supporting families. We're investing in our best talent, talent that delivers the operational excellence TaskUs is known for. Eliminating major personal stressors for long-tenured teammates like [ Rayelin ] directly reduces burnout, drives industry-leading retention and protects the high-quality execution our clients rely on every day.

With that, I'll ask the operator to open our line for our question-and-answer session. Operator?

[Operator Instructions] And our first question comes from Jonathan Lee from Guggenheim Partners.

Rishabh, congrats on the new role. I want to start by asking about AI Services. But growth moderated from 36% in Q1 to [ 26% ] in Q2, ending what looks like a run of 6 consecutive quarters north of 30%. How much of that deceleration reflects tougher comps and base effects versus some large customer dynamics? And what's the right growth range to underwrite in the back half and in '27 as the base scales? What gives you confidence in that trajectory?

Thanks, Jonathan. Yes, AI Services has been our fastest-growing service line now for 7 quarters in a row. And this quarter, it grew by 26%. As we shared on the call, we anticipate AI Service growth in the third quarter will be similar to that rate before accelerating again to over 30% year-over-year in Q4 as we exit the year.

I think when we look at AI Services, it's important to double-click on the contract type. In general, we're signing master service agreements with long terms and are delivering this work either by unit or by hour. But in the case of AI Services, the dynamic nature of our clients' technology development and AI safety needs necessitates that we move from one project to the next with greater frequency than you'd see in a standard recurring customer service contract. So it's particularly true for AI training and AI safety work, where we're supporting foundational model developers and robotics companies and social media firms to see this kind of project scale up and scale down.

So in the call, we noted that in addition to the slowdown in revenue at our largest client, we experienced Q2 revenue declines at another social media client, and it's a good example of that sort of project-based dynamic which has made the year-over-year compares a little more challenging for Q2 and Q3. But as I said, we've got confidence given the growth we're seeing across the broader base of our AI Services business that, that growth rate is going to accelerate back above 30% for the end of the year.

And I'd also note that we're seeing a far greater level of stability in the autonomous vehicle and autonomous delivery work that we're doing inside AI Services. Here, the contracts tend to look a lot more like those recurring DCX contracts that we're used to. And the sustained growth of that business is going to lead to enduring growth rates for AI Services into 2027 and beyond.

Thanks, Bryce. And just as a follow-up on the outlook, your implied 4Q range spans roughly, call it, negative 3% to positive 3.5% year-on-year. What gets you towards the high end versus the low end within that range? [ Does ] upside primarily existing customer ramp conversion? Or does it require pipeline conversion? What's baked into the top customer trajectory at the midpoint versus the low end?

Yes. So we're raising the bottom end of the guidance range by $10 million today. And I think this just speaks to the confidence that we've developed over the course of the first half of the year. We're also providing guidance for Q3 of $300 million to $302 million in revenue. And I'll just note that, that quarterly guidance is actually higher than the guidance we provided for both Q1 and Q2.

As always, our goal is to meet or exceed the guidance that we provide. So we continue to be cautious in the guidance we're providing primarily because of the reductions that we're seeing at our largest client. As we noted on today's call, our revenue in Q2 grew by approximately 15% when we exclude the impact of our largest client. We anticipate the business will continue to grow like this in the back half of 2026. But our guidance also contemplates larger reductions at our largest client in the second half. So the path to meeting or exceeding our annual guidance is going to come from our ability to deliver on the growth opportunities across the rest of our client base, and we feel confident that we'll be able to do that.

Our next question comes from Maggie Nolan from William Blair.

On that largest client, at what point do you expect the vendor consolidation to outweigh some of these automation-driven volume reductions? And do you anticipate that even the revenue streams you'd receive through vendor consolidation could be subject to automation as well?

Yes. Thanks for the question, Maggie. So I'll start by saying that we're encouraged by the strength of the relationship that we've got at our largest client. I think they're very pleased with our agility and ability to deliver on the strategic objectives that they outlined for 2026. We know that we are going to be part of a very small subset of vendors that will benefit from vendor consolidation, so we anticipate that, that will begin to happen in 2027.

The rest of this year, we'll continue to see downward pressure driven by their automation and cost optimization initiatives. And we could see some of that continue into 2027. But over the medium term, we expect to see revenues of this client stabilize and perhaps even get back to growth depending on some of the dynamics in their business and our ability to continue to support growth initiatives at the business in areas like AI.

That's helpful. And then obviously, the AI Services growth is impressive and your outlook there continues to be robust. It's changing sort of the mix of the work that you perform. Is there evidence in your pipeline that you're seeing today that it's more than changing the mix that AI is actually expanding your addressable market for the future?

Yes. I think unquestionably, the AI Service market is pretty much all net new business, not only for us, but for the industry in general. And so we're seeing this kind of 3-part story play out where AI Services is creating just massive growth opportunities. And frankly, our ability to drive 26% growth this quarter and hopefully closer to 30% plus growth for the full year in AI Services is good. But I think we can do even better when we look at the broader market where we've seen companies be created that are generating hundreds of millions, if not billions of dollars in revenue from AI Services.

The story is obviously the opposite in Trust and Safety, where the impact of automation has truly been the most significant. There, we think that we'll continue to see downward pressure on Trust and Safety revenues this year. But we do think that there is enduring demand, both for more complex content moderation, which we don't believe is going to be automated and for growth that will be driven by things like financial crimes and compliance work where we saw growth this quarter.

And then I think the real surprise given the headlines over the last few years is we're seeing growth rates that are actually accelerating in our digital customer experience business. And there, I think we've put ourselves on the right side of the AI-driven automation of simple workflows and have proven ourselves to be a premium support provider who can grow in some of these areas like sales and premium customer experience where we see clients actually investing more as they automate simple volumes.

Our next question comes from Puneet Jain from JPMorgan.

Like always view new [ unicorns ] or the tech trends as long-term fuel for TaskUs growth. And it seems like we are in that up cycle once again as AI-based unicorns, new companies are generating a lot of energy in [ Silicon Valley ]. Is there a way to size the opportunities you're seeing from these clients? You talked about AI model companies, robotics clients. So the opportunities you are seeing in AI services or customer service? And how does that compare with some of the past cycles like social media or crypto or whatever? So if you can talk about that.

Yes. Thanks for the question, Puneet. I think in general, we -- at the start of the cycle, there was a lot of fear that these companies were going to be materially different than the companies that we really built our business on in the 2010s. And if you think about the businesses in on-demand transportation, food delivery, direct-to-consumer e-commerce, these were businesses that had quite labor-intensive processes.

And as a result of that, I think there was a fear that when we compare that to, say, some of these AI labs, they wouldn't be quite as labor intensive. I mean, just by the nature that they're using AI to automate lots of the workflows. And certainly, the headlines would indicate that. We hear about one-man start-ups generating millions of dollars in revenue, et cetera. But I think the story in reality is far more nuanced. We've been able to grow both AI Services and customer experience business with some of the foundational model developers into contracts that are worth tens of millions of dollars a year. We've seen demand from robotics, autonomous vehicles, autonomous delivery companies that are as big or larger than that number.

And so I think the opportunity set is as large as it's ever been. It is definitely different in that it's requiring us to develop new services and capabilities in this AI Service practice, certainly different than the core customer service expertise we built the business on. But the opportunity is definitely there.

Got it. And at your top client, will it be fair to say much of the revenue you generate from that client will be based on AI-enabled services when they're done with their automation initiatives?

Yes, I think so. I mean, certainly, the top client is investing heavily in using AI to automate and enable these services to be provided more efficiently. We're also, as we do with all of our customers, deploying our own tool set to make our teammates more effective at their jobs. And so I think as they move through these automation initiatives, the work that will remain will be far more complex and undergirded by both of our investments in AI-driven automation.

Our next question comes from Jacob Haggarty from Baird.

Great job. Just wanted to touch on the shift to the U.S. delivery that called out. How sticky is this shift with these new AI Services? And is this something where it might be a few years in the U.S. and then over time, we'll see this shift offshore again?

I think at this point, we've been surprised by how much demand there is for U.S. delivery. But AI Services is definitely the biggest driver of that revenue growth. And we expect that U.S. delivery revenue will continue to grow as we scale those AI Service engagements for the rest of this year.

Over the medium term, we do believe that a portion of this work will migrate to higher-margin offshore delivery locations. So while onshore delivery does come at lower margins, we're pleased by the fact that we're continuing to grow this AI Service business so significantly and obviously being responsive to wherever our clients want that work to be delivered from.

Yes, that makes sense. And then just following up on that with the DCX revenues, are they -- like is there a point where they're going to grow fast enough in the offshore regions to help offset some of the margin pressure from the U.S. delivery?

Yes. Certainly, that's our hope. Right now, the bulk of the offshore delivery is a blend of AI Service growth and DCX growth. And certainly, like at this point, we think we've got room to sell significantly into offshore locations like the Philippines and India. And so we're hyper focused on ability to do that just given those locations deliver higher margins.

At this time, I'm showing no further questions. This does conclude our conference for today. You may now disconnect.

Good day, and welcome to the TaskUs First Quarter 2026 Investor Call. My name is Rory, and I will be your conference facilitator today. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to introduce Trent Thrash, Interim Chief Financial Officer. Trent, you may begin.

Hello, everyone, and thank you for joining us for today's TaskUs earnings call. 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 our website at ir.taskus.com. We have also posted supplemental information on our website, including an investor presentation and an Excel-based financial metrics file.

Before we start, I would like to remind you that the following discussions contain forward-looking statements within the meaning of the federal securities laws, including, but not limited to, statements regarding our 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 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 these forward-looking statements can be found in our annual report on Form 10-K. This filing, which may be supplemented with subsequent periodic reports, is accessible on the SEC's website and our Investor Relations website. Any forward-looking statements made on today's conference call, including responses to 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 discussions throughout today's call contain non-GAAP financial measures. For a reconciliation 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 of our website.

Now I will turn the call over to Bryce Maddock, our Co-Founder and Chief Executive Officer. Bryce?

Thank you, Trent. Good afternoon, everyone, and thank you for joining us. In the first quarter, we delivered a solid start to the year, generating $306.3 million in revenue and outperformed the top end of our revenue guidance by $8.3 million or approximately 3%. Our year-over-year revenue growth rate of 10.3% helped us generate $58.6 million in adjusted EBITDA or an adjusted EBITDA margin of 19.1%. This is approximately 3.5% ahead of the adjusted EBITDA dollars implied by the top end of our Q1 margin guidance.

During the quarter, we successfully completed the previously announced refinancing of our credit facilities and returned more than $330 million to our shareholders in the form of a $3.65 per share special dividend.

Strong Q1 cash generation of $42.2 million in adjusted free cash flow allowed us to end the quarter with $152 million in cash and a net debt to adjusted EBITDA ratio of less than 1.4x after the distribution of that special dividend. This level of leverage enables us to continue investing in the business as we look to take advantage of emerging growth opportunities.

To that end, during Q1, we made progress on our strategic goals of expanding our Agentic AI consulting practice, enhancing our fast-growing AI service offerings and driving AI deeper into our internal operations.

In summary, this quarter's performance underscores the resilience of our business, the critical role we play in our clients' most complex operations and our steadfast focus on driving long-term shareholder value in the AI era.

In a dynamic macroeconomic environment where many enterprises are carefully scrutinizing vendor spend, clients are choosing TaskUs as a critical partner, and we continue to outpace the competition by offering an exceptional combination of quality, specialized expertise and technology-enabled efficiency. Throughout all of this, we remain laser-focused on long-term results. Our goal is to increase revenue, EBITDA and earnings per share over a multiyear horizon at a rate that is among the best in the industry.

Next, I'll go through some of the highlights of our Q1 performance and 2026 outlook. Then I'll hand it over to Trent to walk through our financials in more detail. Q1 revenue was $306.3 million, an increase of 10.3% on a year-over-year basis. As expected, growth from our largest client moderated to 1% compared to Q1 of 2025. As a result, revenue concentration from our top client was 24% in Q1, a 2% sequential and year-over-year decline. While our long-term strategic partnership with this client remains very strong, we continue to expect revenue to be negatively impacted by their automation efforts throughout 2026 before seeing the benefit of vendor consolidation in the medium-term.

Excluding our top client, year-over-year growth from all other clients was again robust at 13.5% for the quarter. This was fueled by strong growth from clients 2 through 20 of well north of 20%. Notably, both of these client cohorts growth rates accelerated when compared to Q4.

Our sales and client service teams sustained their impressive momentum from Q4 into the new year, delivering a remarkable performance in Q1 of 2026. Q1 was defined by the deepening of our established partnerships with more than 75% of signings driven by wins from existing clients. While signings remained well balanced across each of our verticals, we saw exceptional strength within our mobility, logistics and travel, social media, health care and technology verticals. Our Q1 signings and pipeline also included an acceleration of demand for onshore delivery in our AI service offering.

In summary, our continued signing success in high-growth sectors reinforces our trajectory for solid full year growth from clients outside of our largest client relationship.

Next, let's look at our service line performance for the quarter in more detail. Digital Customer Experience delivered $168.5 million in revenue, representing year-over-year growth of 5.4%. DCX growth was primarily driven by clients in our technology, mobility, logistics and travel, entertainment and gaming and health care verticals. Given our year-to-date revenue and signings performance, we continue to expect DCX growth in the mid- to high single digits for 2026. We continue to believe the execution of our strategic plan to invest in operational excellence and premium support offerings is enabling us to gain wallet share across our digital customer experience clients.

Turning to Trust and Safety. We generated $75.8 million in revenue, reflecting approximately 4.7% year-over-year growth. Here, our growth was primarily driven by clients in our financial services, technology and social media verticals. Trust and Safety growth rates have slowed because of our largest client automation efforts. Additionally, we've seen certain Trust and Safety revenue shift to our AI Services service line as we help clients automate certain moderation workflows while continuing to support our clients in the most sensitive areas that require nuanced human intervention. Given these factors, we expect our Trust and Safety revenues to decline year-over-year starting in Q2 and for the full year of 2026.

Moving on to AI Services. This specialized service offering continues to be our fastest-growing service line with revenue increasing 36% year-over-year to $61.9 million. Here, our strong growth was primarily attributable to the ongoing ramp of clients in our mobility, logistics and travel vertical, including our largest autonomous vehicle client and clients in the robotics industry and our technology vertical. In total, more than 40% of our Q1 signings were in AI Services, a positive indicator regarding the continued upward trajectory of this service line's performance for the remainder of 2026.

Our investments in our AI service offerings and talent to ensure the safety and accuracy of the world's leading foundational models, hyperscalers, autonomous vehicles and robotic technologies are paying off.

Moving on from service line highlights, I'd like to provide a brief update on our strategy for the AI-driven future. As part of the first pillar of our AI strategy, we're doubling down on our AI service offerings. Here, we're increasingly excited about the high-growth opportunities within physical AI, autonomous vehicles and robotics. Today, TaskUs provides a broad range of services to leading autonomous vehicle and robotic delivery companies. From data collection and mapping to critical remote assistance and roadside emergency response, we're building an entirely new practice to support this emerging sector. Over the past year, we've seen growth rates accelerate across this space, and we believe revenue from clients in this space will more than triple in 2026.

We are also seeing significant momentum for physical AI from companies building humanoid and other robots. Here, we provide high fidelity, ego-centric data capture and imitation learning to train general purpose robots for real-world tasks. We believe this market is set for material growth based on the pace of investment being made in the space.

Turning to the second pillar of our AI strategy, investments in our AI consulting practice, I want to highlight an example of our operational evolution with a streaming service client. This client challenged TaskUs to deploy AI agents to improve their time to resolve while dropping their overall support costs. In just a few weeks, we successfully integrated Agentic AI to transform the client's support ecosystem. Rather than simply routing tickets, our AI agents autonomously navigate the client's back-end systems to diagnose streaming and account issues across various hardware environments. By deploying autonomous agents, we're not only providing subscribers with instantaneous 24/7 resolution, but are also allowing our human teammates to focus on higher-value sales and retention workflows. This shift from manual troubleshooting to AI-led service delivery underscores our commitment to driving efficiency and superior customer experience for our high-growth technology clients.

Lastly, the third cornerstone of our strategy for the AI era remains the automation of our internal processes to drive margin expansion and operational excellence. While we previously discussed our successful incorporation of Agentic AI into our talent acquisition workflow, we're also leveraging Agentic AI to automate our HR help desk function, where our teammates generate tens of thousands of inquiries regarding benefits, payroll, lead management and policy clarification. Today, our Agentic AI HR specialist integrates directly into our internal communication channels and back-end systems and is able to autonomously solve approximately 50% of general HR inquiries. This shift allows our HR business partners to move away from ticket management and toward high-impact initiatives like employee engagement and leadership development. Use of Agentic AI across our support teams will ultimately enable us to reduce what we spend on support as a percentage of revenues and further improve our margins.

Before handing it over to Trent to provide more details on our Q1 results, I want to touch on our 2026 outlook. In light of our strong Q1 operational execution and sales momentum and our expectation that our largest clients' AI-driven efficiency initiatives are likely to negatively impact our Trust and Safety revenues in 2026, we're reiterating our full year revenue outlook of $1.21 billion to $1.24 billion. At the $1.225 billion midpoint of our revenue guidance, we expect full year adjusted EBITDA margins to remain approximately 19%. We're increasing our outlook for adjusted free cash flow by approximately 10% to $110 million at the midpoint with a range of $105 million to $115 million.

For the second quarter, we expect revenue to be between $296 million and $298 million or approximately 1% year-over-year revenue growth at the midpoint. Adjusted EBITDA margins are expected to approximate 18%. While this guidance implies a sequential quarterly revenue decline, the Q2 guidance range is the same as the range we provided for Q1 revenues on our last call. Q2 revenues will be impacted by the automation-driven revenue declines at our largest client. Here, we continue to have a very strong relationship and expect to benefit from vendor consolidation, but we will continue to face revenue headwinds at this client in 2026.

Q2 margins are impacted by 3 factors. First, our AI Service business is seeing disproportionate amounts of demand for onshore delivery. While this is accretive to revenue, onshore work generally comes at a lower margin profile. Second, our annual wage increases were made effective in April. And finally, our margins are and will be impacted by our ongoing investments in our emerging growth and AI transformation initiatives. We believe that those investments are paying off. As noted earlier, Q1 revenue at clients # 2 through 20 grew over 20%, while growth in our top 10 clients, excluding our largest client, was even more impressive at well over 30% for the quarter. We expect growth rates amongst clients 2 through 20 to remain in the strong double digits in Q2 and for the second half of 2026.

Given the overall macro backdrop in the BPO industry and the outlook for our largest client, we're pleased with the enduring strength of our performance, the demand for our premium DCX offerings and the advancements we're making to scale AI Services. I look forward to updating you on our Q2 results and 2026 guidance during our next call.

With that, I'll hand it over to Trent to go through our Q1 financials and 2026 outlook in more detail.

Thank you, Bryce, and good afternoon, everyone. In the first quarter, we earned total revenues of $306.3 million, reflecting an increase of 10.3% compared to the previous year. This was well ahead of our guidance and consensus analyst estimates for the quarter. Approximately 70% of our growth came from clients that have been with TaskUs longer than 1 year. This strong top line performance demonstrated our ability to consistently execute against our strategic priorities and capture market share, even amidst a dynamic macroeconomic backdrop.

As Bryce mentioned, we saw solid year-over-year growth across all 3 of our specialized service lines. AI Services grew a remarkable 36.1%. DCX growth was slightly improved over Q4 at 5.4% and Trust and Safety growth was 4.7%. These results were primarily due to strong volume performance and program expansions from existing clients as well as new client ramps exceeding expectations across a broad range of verticals during the quarter. The strong performance was partially offset by low single-digit growth from our largest client, which weighed on our consolidated and Trust and Safety growth rates.

In the first quarter, our largest client represented 24% of total revenue, down from 26% in 2025. Our top 10 client concentration was 63%, up from 57% in Q1 of last year, and our top 20 clients accounted for 75% of our revenue, up from 70% in the prior year period. Excluding our largest client, revenue from the rest of our business grew approximately 13.5% on a year-over-year basis in Q1 compared to approximately 12% growth in Q1 of 2025. This growth rate was slightly improved on a sequential basis despite the quarter-over-quarter impact from lower seasonal revenues and 2 fewer working days. These results are a direct reflection of our strategy to focus our resources on our largest opportunities. In doing so, we intentionally partner with the fastest-growing disruptors in the world. As they scale their operations and consolidate their vendor base, we scale with them, capturing an increasingly larger share of their outsourced spend.

Looking at our geographic delivery mix in the first quarter, we generated 53% of our revenues in the Philippines, 13% in the United States, 13% in India and 21% from the rest of the world, primarily in Latin America and Europe. In Q1, we saw particularly strong revenue performance in the United States, Colombia and Greece. We ended the quarter with approximately 64,400 global teammates, a decrease of approximately 1,100 teammates from the end of Q4. This was primarily the result of seasonal revenue falloff.

Next, I'd like to provide additional details about our service line performance. In the first quarter, our DCX offering generated $168.5 million in revenue and year-over-year growth of 5.4%. Of this growth, more than 40% was attributable to clients we ramped within the last year. Overall, DCX growth was primarily attributable to strong performance from existing clients in our entertainment and gaming, mobility, logistics and travel, health care and technology verticals and new clients in technology. This growth was partially offset by a decrease in revenue from existing clients in our financial services and retail and e-commerce verticals.

In terms of signings in Q1, DCX again demonstrated remarkable resilience in the first quarter. We saw broad-based strength in signings across most of our vertical markets, including mobility, logistics and travel, health care, technology, social media, financial services and professional services and industry.

Our Trust and Safety offering, which includes our content moderation and financial crime and compliance services, grew by 4.7% compared to Q1 of 2025, resulting in $75.8 million of revenue. Here, the contribution to growth from new and existing clients was well balanced at approximately 50% each. From a vertical perspective, existing client growth in Trust and Safety was primarily driven by technology, social media and financial services, offset by a decline in retail and e-commerce. New client growth was strongest in our financial services vertical.

Our AI Services topped 30% year-over-year growth for the sixth quarter in a row at 36.1%, resulting in $61.9 million in revenue. This was primarily as a result of expansion in services we provide to new and existing clients in our mobility, logistics and travel and technology verticals. Overall, existing clients contributed in excess of 80% of AI Services total growth for the quarter, led by one of our long-term autonomous vehicle clients. From a signings perspective, we're seeing strong demand signals for AI Services from clients within our mobility, logistics and travel and social media verticals.

Now moving on to the drivers of our income statement performance. In the first quarter of 2026, we earned adjusted EBITDA of $58.6 million, a 19.1% margin, which compared favorably to the $56.4 million of adjusted EBITDA implied by the midpoint of our initial Q1 guidance. As a reminder, our year-over-year and sequential margin declines were expected and reflect several factors, including geographic delivery mix shift to lower-margin U.S.-based delivery and our strategic investments in emerging growth opportunities and the strengthening of our AI capabilities.

Our cost of service as a percentage of revenue was 64.6% in the first quarter compared to 61.6% in Q1 of the prior year. The increase was primarily driven by several factors, including the impact of annual personnel cost inflation, new facility expansions and the delivery mix shift and growth investments I just mentioned. These factors were partially offset by the run rate benefit of operating efficiency improvements made during the second half of 2025 carrying over into Q1.

In the first quarter, our SG&A expenses were $58.3 million or 19% of revenue. This compares to SG&A in Q1 of 2025 of $57.4 million or 20.7% of revenue. The decline as a percentage of revenue reflected our continuous efforts to optimize overhead costs and a reduction in stock-based compensation expense. These factors were partially offset by transaction costs related to our special dividend and refinancing.

Adjusted net income for the quarter was $32.8 million and adjusted earnings per share was $0.35. By comparison, in the year ago period, we earned adjusted net income of $35.9 million and adjusted EPS of $0.38. Our weighted average share count was relatively consistent and therefore, not a material driver of our adjusted EPS performance.

Now moving on to the balance sheet. Cash and cash equivalents were $152.3 million as of March 31, 2026, compared with a December 31, 2025 balance of $211.7 million. The decline in cash was primarily due to special dividend and refinancing-related payments of approximately $84 million, offset by free cash flows for the quarter.

Our net leverage ratio continued to be healthy at less than 1.4x at the end of Q1. As a reminder, we calculate this ratio as total debt less cash divided by adjusted EBITDA for the trailing 12-month period.

Our refinanced $500 million term loan maturing in March of 2031 bears interest at SOFR plus 2.75% and our new $100 million revolver remains undrawn.

Cash generated from operations on a year-to-date basis was $46.3 million through Q1 of 2026 as compared to $36.3 million through Q1 of 2025-. The increase was primarily due to the positive impact of changes in working capital stemming from lower Q1 revenue and stronger cash collections. Year-to-date adjusted free cash flow was $42.2 million or 72.1% of adjusted EBITDA.

Our Q1 year-to-date capital expenditures decreased to $10.2 million compared to $14.5 million through Q1 of 2025, primarily due to lower facility build-out and technology refresh expenditures. As a result, we now expect CapEx to be approximately $50 million for the year, a reduction of $10 million compared to our initial 2026 outlook.

In terms of our financial outlook for the remainder of the year, we are reiterating our full year 2026 revenue range of $1.21 billion to $1.24 billion, resulting in a midpoint of $1.225 billion. We also still expect to earn full year 2026 adjusted EBITDA margins of approximately 19% at the midpoint of our guidance. We are increasing our full year adjusted free cash flow outlook to $110 million at the midpoint with a range of $105 million to $115 million. As a reminder, adjusted free cash flow excludes the impact of certain costs that are nonrecurring and outside the ordinary course of business.

For the second quarter, we expect revenues to be in the range of $296 million to $298 million, reflecting growth of 1% at the midpoint in Q2. We expect our adjusted EBITDA margin to be approximately 18%, which includes the impact of wage increases and continued investments to support our revenue growth and AI transformation initiatives.

As a reminder, our margin guidance is based on current foreign exchange rates. The deterioration in the value of the U.S. dollar would put downward pressure on our margin performance.

In summary, based on a successful Q1, we are reaffirming our annual guidance despite continued uncertainty at our largest client. Our sales and CS teams continue to deliver a strong pipeline and signings, particularly within AI Services. Within Digital Customer Experience, we continue to take share from the competition based on our premium support offerings, delivery excellence and advancements in AI transformation. None of this would be possible without the dedication of our talented teammates around the globe.

Now I'll hand it back to Bryce to close this out.

Thank you, Trent. Before we open for questions, I'd like to share another TaskUs teammate story. Our growth is anchored in a culture that empowers the individual, a philosophy captured by our core value, inspire others by believing in yourself. We see the tangible results of this daily.

Take [ Iza Shahbudin ], a quality analyst in Malaysia. On her own initiative, Iza launched a grassroots tuition program to help underprivileged youth demonstrating how our teammates' personal missions often become catalysts for community transformation. In alignment with Iza's mission, we have built a TaskUs next-gen scholarship program. In 2025, we awarded scholarships supporting nearly 2,700 children of our teammates around the world. This isn't just an investment in education. It's a retention engagement engine that secures the future of our teammates' families while empowering parents to reach their full career potential.

From Iza's local leadership to our global scholarship initiatives, TaskUs remains committed to a culture where personal confidence and corporate responsibility drive our collective success.

With that, I'll ask the operator to open the line for our question-and-answer session. Operator?

[Operator Instructions] Our first question comes from the line of Puneet Jain of JPMorgan.

Can you talk about like your expectations of contract margin revenue profile over its life when you provide AI consulting services to an existing DCX customer?

Puneet, thanks so much for the question. So, obviously, we're investing heavily upfront in every one of our AI consulting engagements. The goal is to drive these consulting engagements towards outcome-based pricing arrangements in which we combine both technology and talent in a single price per solution. At this stage, we've done a number of pilots on our in live production with a number of clients on our AI-enabled DCX solution. And in all of those cases, we're acting as a reseller for our partners, Decagon and Regal and marking up the preferential pricing that we're able to get from them. So that's the kind of the first phase of that engagement. But long term, we're hoping that we can wrap the AI solution as a single price for both the technology solution and the talent solution, getting paid for resolving cases. We think that will put us in control of our margin profile and really incentivize us to expand margins by driving greater AI efficiency gains.

Interesting. And then like the other area that's growing fast, like the AI Services. Can you talk about like scalability of that service line given like you use like a combination of freelancers and full-time employees in that business? Given like how fast that service has grown in the last couple of years and ongoing demand for AI Services, can you potentially double that service in the next couple of years operationally? Can you scale it up operationally to sustain current level of growth for next 2 or 3 years?

Yes, Puneet, thanks for that. So, obviously, this is the brightest spot in our business at the moment is our AI Services practice. In Q1, for the sixth quarter in a row, that practice grew at over 30% year-over-year. And we absolutely can double, if not more than double the size of this business. When we look out across the space, there are a number of players that have scaled into the hundreds of millions, if not $1 billion-plus revenue driven primarily or exclusively from AI Services. We're competing with those players today for the work that we're doing for foundational models and social media companies.

And we also have an interesting practice inside of autonomous vehicles where we're seeing significant growth. We think we're uniquely positioned to combine both freelancer and full-time talent to support the scaling of autonomous vehicles across, not only in the United States, but the globe. And so we're really excited about that part of the practice as well. We think it differentiates us from some of the other AI service players. So this is an incredibly exciting area of our business and will lead to the reinvention of other components of the business over time.

Our next question comes from the line of Jonathan Lee at Guggenheim.

You've talked about expectations for contraction of your largest client, and they've since formalized their AI-driven trust and safety road map publicly. At quarter end, is the pace of decline tracking to plan or accelerating? And can you size a floor where their outsourced spend may stabilize, especially given your expectation of benefit from vendor consolidation there?

Thanks, Jonathan. Yes. So at this stage, we've continued to have conversations regularly with our largest client. And we know that their plans and investments are all driven towards automating large swaths of the work that are currently done by outsourced vendors. We're in a privileged position given the geographic footprint that we've got for the client that aligns with where they're taking the business strategically in the future. And they've continued to reaffirm their commitment to consolidate share with us amongst a small handful of other vendors over time. So what we're seeing in these numbers is the original plan that we expected in terms of automation taking a portion of the volumes over the course of 2026. As we head into 2027, we expect to benefit from vendor consolidation.

The uncertainty we talked about on the call really comes down to the pace of that automation and whether it accelerates beyond those initial expectations. For the purposes of providing the guidance today, we kept that automation in line with the expectations that we provided at the start of the year, which is truly the latest guidance that we've received from that customer.

Got it. And just as a follow-up, you reiterated the full year outlook and Q2 is expected to be impacted by that largest client. That implies a pretty meaningful sequential step-up in the back half. What gives you confidence in that ramp? Is it signed deals yet to go live or pipeline you still need to convert?

These are ramp plans primarily with existing clients. So that -- the AI Services side of the business is seeing significant growth across a number of customers. And we expect that to lead to a material step-up in quarter-over-quarter revenue in the back half of the year.

I'll also say what I said on the call, which is while the guidance we're providing today for Q2 shows a step down in revenue from Q1 to Q2, the guidance itself is actually the same as the guidance we provided for Q1 when we initially provided our guidance. So we're providing guidance that we feel highly confident we'll be able to deliver upon or exceed for Q2.

Our next question comes from the line of Jacob Haggarty of Baird.

This is Jacob on for Dave Koning. So is there going to be a chance with the AI Services you said coming a lot on onshore, is there going to be a chance to eventually offshore this volume where we get a similar dynamic that we've seen for the past, call it, a decade or so, where you're getting that margin benefit from offshoring things that are currently onshore?

Yes. So there is. Right now, what we're seeing is a lot of these initial projects, the clients prefer to launch closer to their operations. And it sort of mirrors the trend that we saw inside Trust and Safety in the first few years of that business where there was large scale growth onshore. And we believe that this will probably follow the same trend and we will shift certain parts of that operation into offshore delivery over time.

With that being said, there are certain components of the onshore operations that will likely remain onshore. In some cases, that's because of cultural context around the type of data that's being collected and annotated. In other cases, it's actually because the operations require a physical market presence when dealing with things like autonomous vehicles or delivery robots. And so it will be an interesting dynamic to watch over time. But certainly, in the years to come, we would expect to see some of this revenue shift to a higher-margin offshore environment.

Got you. Nice. And then just as a follow-up here. So I think you guys called out social media clients in Trust and Safety actually being good this quarter. Are you seeing any other social media clients or other clients in Trust and Safety moving towards automation in the same way that your largest client has? Or is there still a lot of growth coming from those parts of Trust and Safety?

Yes. Overall, Trust and Safety was resilient in Q1. We do expect, as we said on the call, Trust and Safety revenues to decline for the full year. And so we'll see a decline in year-over-year revenue for Trust and Safety starting in Q2. That's being primarily driven by our largest client, but we've also seen somewhat similar trends across other social media customers where we're doing Trust and Safety work. Some of that work is being shifted into AI Services where the work that we've done to build the models that have automated Trust and Safety workflows requires ongoing maintenance of those models doing evals and ensuring that policies that are being updated are properly trained. And so there's going to be some shift of that revenue from Trust and Safety to AI Services. But the predominant reduction in Trust and Safety revenue is truly just being driven by automation. And at this stage, it's safe to say that automation is most materially impacting our Trust and Safety business.

Our next question comes from the line of Matt Dezort of William Blair.

This is Matt on for Maggie Nolan. I'm curious on the AV robotics and foundational model demand. I think you called out you expect those revenues to triple year-over-year now in 2026. I'm wondering if that's apples-to-apples with the doubling you laid out last quarter, how you're seeing that demand across new and existing clients? And I guess, just the durability of growth that you see in these verticals.

Within AI Services, this is the place that's growing the fastest, the work that we're doing for autonomous vehicles and robotics. And so what I'd say there is, we're seeing an incredible amount of investment go into this space. The autonomous vehicle rollout is much further along in its development. We've gone from 5 to 7 years ago, a period of collecting and annotating data to a period in which we're actually doing live, remote and field operations to actually bring these vehicles to customers and ferry customers around cities and the scale that's happening in that space over the next year is going to be pretty exponential.

Inside robotics, we're closer to where we were, say, 5 years ago in autonomous vehicles where the focus is primarily on data collection, data annotation and evals to get these physical AI models to work effectively. And so there, we're investing heavily in bringing in industry experts to really develop that practice and ensure that we capture the growth that we expect to see in that market.

We've seen other players inside AI Services build businesses that are worth hundreds of millions, if not billions of dollars around the expert answer space. And so a number of players that really help foundational models with recruiting experts. TaskUs did okay in that space, but it wasn't our core business. And so I would say that we didn't deliver as well as I would have hoped.

But when it comes to this robotics opportunity, we are determined not to miss the opportunity, and we think we're better positioned given the skill sets that are required to do this physical AI workflows. So I'm excited to keep track of that as well as the growth in the autonomous vehicle space in the quarters and years to come.

Appreciate that. And then, I guess, can you just double-click on macro versus 90 days ago? I guess what impacts are you seeing from lingering tariffs, straits being shut down. I know the Philippines moved to a 4-day work week. So just curious how, if at all, that's impacted your delivery operations and how you're thinking about the rest of the year?

Yes. Thanks so much for that. So on the demand side, there hasn't been a material impact that we've experienced from the macro deterioration. We are watching closely on the impact on our employees around the world. So earlier this quarter, I was in the Philippines and one of the topics on all of our teammates' minds was the increase in the cost of living in the Philippines. They recently put out numbers of 7.2% inflation, really fed mostly by fuel and food costs going up. And so this is something we're tracking closely in all of the markets that we operate in, the impact that, that's having on our teammates and their lives and ensuring that we're on the front foot, doing the right thing by our teammates to make our commitment known to them and really focused on attracting and retaining the best talent in the space.

And as we see the simpler workflows get automated, it really is the best strategy to ensure that we're attracting that top talent that can focus on the premium and complex work that's left behind. And so we continue to focus on being an employer of choice in all of these markets. And this is a time when we can demonstrate our commitment to our employees by ensuring they're fairly compensated as prices continue to rise.

This concludes the question-and-answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good afternoon, and welcome to the TaskUs Fourth Quarter and Full Year 2025 Earnings Call. My name is Victor, and I'll be your conference facilitator today. [Operator Instructions]

I would now like to introduce Trent Thrash, Senior Vice President of Corporate Development & Investor Relations. Trent, you may begin.

Hello, everyone, and thank you for joining us for today's earnings call. Joining me are Bryce Maddock, our Co-Founder and Chief Executive Officer; and Balaji Sekar, our 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. We have also posted supplemental information on our website, including an investor presentation and an Excel-based financial metrics file. Please note, this call is being simultaneously webcast on the Investor Relations section of our website.

Before we start, I would like to remind you that the following discussion contains forward-looking statements within the meaning of federal securities laws, including, but not limited to, statements regarding our 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 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 these forward-looking statements can be found in our Annual Report on Form 10-K, which was filed with the SEC in March of last year. This filing, which may be supplemented with subsequent periodic reports, is accessible on the SEC website and our Investor Relations website. We expect our next 10-K to be filed with the SEC in early March.

Any forward-looking statements made on today's conference call, including responses to 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.

These discussions throughout today's call contain non-GAAP financial measures. For a reconciliation 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 of our website.

Now I will turn the call over to Bryce Maddock, our Co-Founder and Chief Executive Officer. Bryce?

Thank you, Trent. Good afternoon, everyone, and thank you for joining us. As many of you may have seen, today, we announced that our long-time CFO, Balaji Sekar, is leaving TaskUs at the end of the quarter to pursue another opportunity with a private company outside the industry. So before discussing our 2025 results, I want to sincerely thank Balaji for his service to TaskUs.

During Balaji's nearly 10 years at TaskUs, we grew from being a start-up of a few thousand, based exclusively in the Philippines to a global corporation with over 65,000 teammates spread across 13 different countries. Along the way, Balaji was critical to developing our partnership with Blackstone and ultimately leading our successful IPO in 2021. Balaji has been a reliable, trusted adviser to our entire C-suite and our Board of Directors.

He's also been an incredible partner to me in the business and someone I'm very proud to call a friend. Balaji will be missed, but we are fortunate to have a deep bench of leadership while we execute on a search for a new CFO. I'm grateful for Balaji's willingness to support a seamless transition by continuing to serve as an adviser to me, our next CFO and Trent Thrash, who will serve as Interim TaskUs CFO.

Today, we also announced that we have secured commitments to amend our existing credit agreement to address our upcoming 2027 term loan maturity. As part of this comprehensive refinancing, we will increase our term loan to $500 million and obtain access to a $100 million revolving line of credit. In connection with the refinancing commitments, we also declared a $3.65 per share special dividend payable to all shareholders in March of 2026.

Depending on the share count on the record date, we currently estimate the total dividend payment will be approximately $333 million. As we discussed on our Q3 earnings call, these actions are consistent with our desire to return capital to shareholders at a time when we believe the market has fundamentally undervalued our strong track record of performance, including our healthy balance sheet and our consistent revenue, earnings and cash flow generation.

Following the closing of the refinancing and payment of the dividend, our balance sheet will have a net debt leverage ratio of approximately 1.5x our 2025 adjusted EBITDA. We believe this is a prudent level of leverage to maintain in the business. Importantly, this dividend does not change our plans to invest aggressively to transform our business for the AI era.

With our strong cash generation and the flexible terms of the amended credit agreement, we will have ample room to increase spending and accelerate our transformation. In 2026, we plan to spend more than $25 million on AI transformation and emerging growth initiatives.

With that, let's jump into our results. In the fourth quarter, we delivered $313 million in revenue, representing 14.1% year-over-year growth and another quarterly record revenue for TaskUs. As a result of the incredible work of our global teammates, we outperformed the top end of our quarterly guidance by nearly $10 million.

In terms of profitability, we delivered $61.4 million in adjusted EBITDA in the quarter for an adjusted EBITDA margin of 19.6%. For the full year 2025, we delivered $1.18 billion in revenue or 19% year-over-year growth and $249.1 million in adjusted EBITDA, representing an adjusted EBITDA margin of 21%.

We believe that both our revenue growth and adjusted EBITDA margins are among the best in the industry and that put together, they make TaskUs a clear leader in our space. On behalf of the entire TaskUs leadership team, I want to express my gratitude for our teammates who delivered outstanding results for our clients and drove record-breaking revenue and adjusted EBITDA for our shareholders in 2025.

Next, I'll recap some of the highlights from our Q4 and full year 2025 performance before discussing our 2026 outlook. Balaji will then walk through our financials and 2026 guidance in greater detail.

Q4 revenues were $313 million, a 14.1% increase on a year-over-year basis. While our largest client grew revenue 18% year-over-year, growth at clients outside our largest client accelerated once again to an annual rate of 12.7%. Our sales and client service teams once again delivered remarkable performance in Q4, positioning us for a solid start to 2026.

Approximately 60% of our Q4 signings were driven by wins from existing clients. We were pleased with the level of new and existing client bookings and that our signings were less weighted towards our largest client during the quarter. As a result, overall sales in Q4 were well balanced across our client portfolio and delivery locations.

Turning to our service line growth. Q4 Digital Customer Experience revenue increased by 4.8% compared to Q4 of 2024, resulting in over 8% full year growth. DCX growth was driven primarily by our technology and health care verticals.

I'm pleased to report that TaskUs was recently named a major contender and star performer in Everest Group's B2B Sales Service Peak Matrix Assessment for 2025. Additionally, for a third year in a row, we were also named a Major Contender and Star Performer in Everest Group's Customer Experience Management Services PEAK Matrix for 2025 for EMEA and a major contender for the Americas.

In terms of DCX signings in Q4, despite the ongoing narrative around AI, our sales team continued to see strong demand for CX solutions. We again saw broad-based signings primarily across our financial services, technology, retail and commerce and health care verticals.

While we're automating simple, repeatable customer interactions, our customers continue to invest in premium care offerings delivered by talented human beings. Here, we are seeing increases in our clients' investments to support their most valuable customers, intervene in the moments that matter and drive revenue growth through customer success and sales motions.

Moving on to Trust & Safety. This service line again delivered strong performance in Q4 with 18% year-over-year quarterly revenue growth, primarily driven by existing client growth in our social media vertical. For the full year, year-over-year growth was even stronger at nearly 24%.

We are proud that the quality of our content moderation solutions were again recognized by the Everest Group in 2025 with TaskUs being named a leader for Trust & Safety for a third year in a row.

The vast majority of our Q4 Trust & Safety signings were concentrated in both new and existing clients in our financial services, technology and entertainment and gaming verticals, further diversifying this vertical away from our largest client.

AI Services continue to be our fastest-growing service line, delivering 46% year-over-year growth in Q4 and nearly 59% for the full year. We believe this growth is a direct reflection of our investments in designing industry-leading solutions in AI safety, AI model development and maintenance and increasingly in our solutions focused on autonomous vehicles and robotics.

Q4's remarkable growth was driven by our ability to successfully deliver our AI Services across a broad set of client verticals, including travel and transportation, social media, technology and entertainment and gaming, amongst others.

AI Services made up nearly 40% of total signings in Q4. As a result, we believe that AI Services will once again be our fastest-growing service line in 2026. From a vertical perspective, AIS signings were strongest across both new and existing autonomous vehicle, social media and technology clients.

Moving on from our service lines. Let's turn to strategy. At the start of last year, I outlined a 3-part blueprint that would reinvent our business for the AI era. Our focus is to transform from a traditional service provider to a hybrid technology plus talent solutions partner. As part of this strategy, we envision a multiyear move away from selling time-based services towards selling solutions that combine agentic technology, consulting and human talent.

As we kick off 2026, I want to provide an update on each of the 3 parts of this strategy. How did we do in 2025 and where are we headed in 2026.

First, we're doubling down our AI Services offering. At more than $200 million in revenue for 2025, AI Services is our fastest-growing service line, delivering year-over-year revenue growth in excess of 30% for 5 consecutive quarters.

Here, we provide the human and technology-led services required to develop AI models. We collect, create and curate the data needed to develop both generative and agentic AI systems. We also evaluate these models, both pre and post deployment to ensure their quality and safety. In 2026, we expect to see significant growth from our AI safety, autonomous vehicles and robotics practices, all areas, we believe, will have enduring growth dynamics well into the future.

Second, we are significantly increasing investments in our agentic AI consulting practice to create an enduring new revenue stream from the AI revolution. This involves supporting the development, training, and maintenance of AI agents from partners like Regal and Decagon. These agentic agents automate a portion of client support volumes while humans continue to handle complex, critical and premium interactions.

To bring our agentic AI consulting strategy to life, I'd like to highlight a recent success with a client in a regulated industry. This client required a solution that could drive operational efficiencies without compromising the quality and tone their customers expect. They selected TaskUs to implement an AI-enabled workflow solution on top of TaskUs' traditional human-led CX services.

We leveraged the combination of technology from one of our partners, TaskUs' deep operational knowledge and our systems integration capabilities to design and deploy agentic conversational automation. We refined call flows, prompts and knowledge content, then integrated the solution into day-to-day operations.

The automated experience now handles a defined set of routine rules-based requests with seamless escalation to teammates for complex and sensitive cases. This shift enables our teammates to focus on the interactions where empathy and judgment matter most. This deployment underscores our ability to deliver comprehensive agentic solutions that make our client relationships deeper, stickier and more strategic.

In 2026, we expect to begin selling technology plus talent as a combined offering. Here, rather than paying one price for AI agents and another price for humans, our clients will pay a single price per contact. TaskUs will guarantee 100% resolution rate and meaningful per contact savings from day 1.

In exchange, our clients will allow us to deploy AI agents. It will be our responsibility to earn back the cost savings and additional margin by increasing the effectiveness of AI agents in these workflows. This model delivers immediate and guaranteed cost savings to clients frustrated by slow AI gains while giving TaskUs the opportunity to expand margins over time.

Lastly, the third cornerstone of our strategy for the AI era is the automation of internal workflows and support operations in order to expand margins and elevate our service delivery. Today, from recruitment to training, quality to business intelligence, workforce management to human resources, accounting to finance, TaskUs employs thousands of people to ensure our frontline teammates successfully deliver for clients. Implementing automation and AI in these areas represents a huge opportunity to drive down support ratios and the cost of these services as a percentage of our revenues.

A standout success this quarter was deploying AI agents into our talent acquisition engine. We developed an Agentic AI solution that works seamlessly across WhatsApp, Facebook Messenger, SMS and Workday. This agent corresponds with tens of thousands of TaskUs applicants gathering information, walking them through preemployment requirements, conducting candidate assessments and ultimately scheduling them for a final face-to-face interview.

The impact has been significant. After launching the AI agent, we've seen a 50% to 60% increase in hiring efficiency per recruiter. By eliminating these mundane administrative tasks, we're simultaneously reducing our cost to hire, improving the applicant experience and freeing our recruiters to focus on high-value candidate interviews, ensuring TaskUs remains the employer of choice.

In 2026, our goal is to replicate this success across all of our support teams and dramatically increase the efficiency of our support organization. We're pleased with the strategic progress we're making in the current environment. But as we acknowledged last quarter, our AI transformation journey will not be a straight line.

Our increased use of AI agents will automate work performed by human talent and may create short-term revenue headwinds. While our transformation investments will reduce our margins in the near term, ultimately, we believe this 3-part strategy will position TaskUs as an industry leader for business solutions delivered through a combination of technology and talent. Long term, we believe TaskUs can achieve durable double-digit revenue growth while maintaining industry-leading adjusted EBITDA margins.

Before handing it over to Balaji for more details on our Q4 results, I want to quickly outline our Q1 and full year 2026 revenue and margin outlook. In Q1, we expect to deliver revenues between $296 million and $298 million, representing year-over-year revenue growth of approximately 7% at the midpoint.

As discussed last quarter, Q1 revenue will be impacted by 2 factors on a sequential basis. Consistent with last year, first, we expect an approximately $9 million negative revenue impact from 2 fewer working days in the quarter. And second, we expect a decline in seasonal revenues of approximately $8 million. Combined, this is a total sequential impact of approximately $17 million compared to Q4 of 2025.

From a margin perspective, we expect to deliver 19% adjusted EBITDA margins for the first quarter. The decline from Q4 of 2025's 19.6% is driven by the sequential revenue declines I just mentioned, the increase in our AI transformation investments and the geo mix shift as recently signed AI Services contracts ramp in onshore locations where we typically realize lower margins.

Turning to the full year. We expect 2026 revenue to approximate $1.21 billion to $1.24 billion, reflecting approximately 3.5% growth at the $1.225 billion midpoint of our guidance range. This deceleration of growth compared to 2025 is primarily driven by our largest client.

As many of you are aware, since our Q3 2025 earnings call, our largest client has signaled they intend to leverage AI to drive efficiencies across their organization in 2026. We expect that this effort will impact some of the work that we do for them.

With that said, our relationship with our largest client remains very strong. We are one of their largest and most strategic suppliers, and we expect to benefit from vendor consolidation in the medium term. We're also encouraged by the fact that our client continues to turn to us to support emerging initiatives in areas such as AI and augmented reality.

We're optimistic about the growth prospects of the rest of the client portfolio in 2026. The growth will be led by the work we're doing for the autonomous vehicle and robotics sectors as well as foundational model developers. Combined, we expect revenue from companies in these categories to more than double in 2026.

In our core business, while clients continue to automate simple, repeatable interactions, we're benefiting from vendor consolidation and trends towards outsourcing increasingly sophisticated workflows. As evidence of this, we expect that our top 20 clients outside of our largest client will see revenue grow by approximately 15% in 2026.

Turning to margins. Consistent with Q1, we expect our adjusted EBITDA margins for the full year to be impacted by our AI transformation investments and that the timing of these investments will weigh most heavily in the second quarter of 2026.

Recall, this transformation will take time, and we anticipate short-term revenue and margin headwinds as we shift to selling AI-led outcome-based solutions that, in some cases, will displace the work performed by our teammates today.

We expect that this near-term revenue and margin pressure will improve over the course of 2026, resulting in anticipated full year adjusted EBITDA margins of approximately 19%.

With that, I'll hand it over to Balaji to go through the Q4 financials and our 2026 guidance in more detail.

Thank you, Bryce. It has been a privilege to serve as the CFO during such a transformative period for the company. I'm incredibly proud of the finance team we have built and the financial rigor we have put in place. While I'm looking forward to my next chapter, I remain a significant shareholder and have total confidence in TaskUs' long-term strategy. I'm working closely with the company over the coming months to ensure a smooth handoff.

I will now focus on our full year and Q4 2025 results before moving to 2026 guidance. In the fourth quarter, we earned total revenues of $313 million, once again beating our guidance range of $302.4 million to $304.4 million. Revenue increased by 14.1% compared to the previous year, exceeding our expectation of 10.6% growth at the midpoint of our guidance.

Our quarterly performance reflected strong year-over-year growth across all 3 of our service lines and higher-than-expected volumes from both new and existing clients across a broad range of verticals.

Full year 2025 revenue increased year-over-year by 19% to $1.184 billion, well above the top end of our guidance range of $1.175 billion. We ended the year with approximately 50% of our 200 clients delivering revenues in excess of $1 million.

More importantly, we successfully executed on our strategy of increasing share among our largest clients. Here, we grew our $5 million-plus cohort to 41 clients, up from 38 last year and expanded our $10 million-plus client cohort to 21 compared to 17 in 2024. This performance underscores the importance of diversifying our revenues among many large clients and our ability to capture a greater share in these critical relationships.

We continue to have a strong relationship with our largest client, which represents 26% of our total revenues in Q4 compared to 27% in Q3 of 2025 and 25% in Q4 of 2024. As we continue our efforts to diversify our revenue mix, we anticipate our top client revenue concentration will continue to decline over the course of 2026.

In Q4, our top 10 and top 20 clients accounted for 59% and 72% of our revenue compared to 57% and 69% in the previous year. In Q4, we saw a 19% year-over-year increase in the number of clients utilizing more than one of our service lines. Revenue from these clients grew approximately 19% year-over-year in Q4, again demonstrating the success of our strategy of cross-selling our suite of specialized services to our clients.

In the fourth quarter, we generated 52% of our revenues in the Philippines, 11% of our revenues in the United States, 14% of our revenues from India and 23% of our revenues from the rest of the world.

Our global delivery footprint continued to see robust expansion in the fourth quarter. Latin America continued to be our fastest-growing region, expanding by approximately 45% year-over-year in Q4. Europe also delivered strong momentum with growth exceeding 25%. Our Asia Pacific region grew more than 10% year-over-year, led by sustained demand in India and the Philippines.

As a reminder, geographic delivery location remains the primary driver of our gross margin, carrying more weight than this specific service line being delivered. We ended the year with approximately 65,500 global teammates, an increase of approximately 1,700 since the end of Q3 2025.

Now moving on to our service line performance. In the fourth quarter, our DCX offering generated $172.7 million for a year-over-year increase of 4.8%. From a vertical perspective, DCX's overall growth was primarily attributable to clients in our financial services, health care and technology verticals where our strategic focus again produced solid revenue results.

Our Trust & Safety business, which includes our content moderation and financial crime and compliance services, grew by 18.2% compared to Q4 of 2024, resulting in $82.7 million of revenue. Here, growth was predominantly driven by increased revenue from existing clients in our social media vertical. We continue to be excited about the long-term opportunities in this service line.

Our AI Services service line growth was 45.9% on a year-over-year basis in Q4, resulting in $57.5 million in revenue. This was primarily a result of growth from existing social media and travel and transportation clients requiring support for their generative AI development, training and testing and autonomous vehicle initiatives.

We expect AI Services to be sour fastest-growing service line again in 2026 as a result of recent wins and ongoing demand from developers of autonomous vehicles, robotics and foundational model technologies.

Now moving on to profitability. In Q4 of 2025, we earned adjusted EBITDA of $61.4 million, a 19.6% margin compared to $60.1 million of adjusted EBITDA implied by our midpoint guidance. This represents 14.1% year-over-year growth in adjusted EBITDA compared to $53.8 million we achieved in Q4 of 2024 and a consistent year-over-year margin of 19.6%.

For the full year, we achieved $249.1 million in adjusted EBITDA and adjusted EBITDA margin of 21%. This exceeded the $247.7 million in adjusted EBITDA implied by the midpoint of our guidance. On a year-over-year basis, we grew adjusted EBITDA by $39.2 million or 18.7%.

Our Q4 margins compared to the previous year were impacted by annual wage and benefits cost inflation, including mandatory statutory changes in certain offshore geographies, the addition of new sites, hiring and training initiatives and changing business mix due to higher growth in Latin America and Europe.

We also increased our investments in AI transformation in Q4, a trend we will continue to see throughout 2026. These impacts were partially offset by efficiency improvements in both cost of service and overhead functions, which we began implementing earlier in 2025.

Cost of service as a percentage of revenue was 63.6% in the fourth quarter compared to 61.9% in the prior year. The year-over-year increase was driven by a number of factors, including costs associated with annual wage and benefits cost inflation, the geography mix shift I just mentioned, and incremental hiring, training and facilities costs related to stronger growth. These factors were partially offset by operational improvements we began implementing earlier in 2025.

In the fourth quarter, SG&A expenses were $59.4 million or 19% of revenue compared to $67.8 million or 24.7% of revenue in the prior year. The decrease was primarily driven by lower personnel expenses, including a reduction in stock-based compensation and a reduction in litigation-related expenses.

Adjusted net income for the quarter was $37.1 million and adjusted EPS was $0.40. This reflects nearly 30% growth in our adjusted EPS versus the year ago period when we earned adjusted net income of $28.5 million and adjusted EPS of $0.31.

Our weighted average share count in both the periods were relatively consistent and therefore, not a material driver of our adjusted EPS improvement.

For the full year, adjusted net income was $151.7 million and adjusted EPS was $1.63. This compares to adjusted net income of $118.7 million and $1.29 of adjusted EPS for full year 2024.

Now moving on to our balance sheet and cash flow. Cash and cash equivalents were $211.7 million as of December 31, 2025, compared with the December 31, 2024 balance of $192.2 million. Our adjusted net debt leverage ratio declined further in Q4, ending the year at 0.1x of adjusted EBITDA. As a reminder, we calculate this ratio as total debt less cash divided by adjusted EBITDA for the trailing 12-month period.

Cash generated from operations for the full year 2025 was $137.2 million as compared to $138.9 million at the end of 2024. Higher net income in 2025 was offset by an increase in working capital related to our strong revenue growth in 2025.

For the full year, CapEx was $63.5 million or 5.4% of revenue compared with $39.1 million or 3.9% of revenue in 2024. This full year increase was driven largely by facility expansion due to revenue growth.

For the full year, adjusted free cash flow was $89.9 million or 36.1% of adjusted EBITDA. This was below our guidance of approximately $100 million, primarily due to working capital increases required to support our higher 2025 revenue performance compared to guidance.

In terms of our financial outlook for the full year, we anticipate full year 2026 total revenues to be in the range of $1.21 billion to $1.24 billion. This represents $1.225 billion and a 3.5% growth at the midpoint of our guidance.

We expect to earn full year 2026 adjusted EBITDA margin of approximately 19%. This margin captures the additional investments we are making to embrace generative AI and agentic AI technologies and typical wage inflation in excess of our ability to pass this on to our clients.

We expect to achieve approximately $100 million in adjusted free cash flow for 2026. We anticipate capital expenditures will decline slightly in 2026 due to fewer facility expansions, offset by the timing of payments for capital expenditures that started in 2025, routine refresh of technology assets and our continued investments in security infrastructure.

As we announced earlier today, we have secured commitments to refinance our existing credit facilities to address the upcoming 2027 maturities and return capital to our shareholders. The $500 million term loan and $100 million revolving credit facility mature in March 2031 and at our election will bear interest of SOFR plus 2.75%. We expect the term loan to fund in March prior to payment of the $3.65 per share special dividend we announced earlier today.

For the first quarter of 2026, we anticipate revenues to be in the range of $296 million to $298 million, reflecting approximately 7% year-over-year growth at the midpoint, and we expect to earn an adjusted EBITDA margin of approximately 19%.

First quarter revenue and adjusted EBITDA margin will be impacted by lower seasonal revenues and 2 fewer working days in the quarter compared to Q4 of 2025, a combined negative impact of approximately $17 million, along with the strategic investments in our AI transformation that Bryce discussed earlier.

Our guidance for the quarter and full year is based on current ForEx rate estimates, so any change to currency rates to the extent not hedged would impact our margins. As a reminder, the majority of our revenue is billed and collected in U.S. dollars, so we do not see the impact of U.S. dollar fluctuations in our revenue.

I will now hand it back to Bryce.

Thank you, Balaji. Before we take questions, I want to take a moment to highlight another incredible TaskUs teammate story. At TaskUs, our ridiculous culture isn't confined to our sites. It lives and breathes in the passions of our teammates.

Miles Nicole Gianan is a quality supervisor at our Lizzy's Watchtower site in Manila, Philippines. He's also the President of TUCLAS, the TaskUs Climbers Association.

TUCLAS started with a simple belief, human well-being is deeply connected to the health of the natural world. What began as a group of teammates going for hikes quickly turned into a deeper responsibility to protect the trails and the communities they visited. These hikes evolved into powerful volunteer initiatives, cleanup drives expanded into donation cycles, tree planting and community outreach.

In November, TUCLAS summitted Mount Pulag and in early 2026, completed a twin hike featuring trail cleanups and environmental workshops focused on sustainability. This organic movement is a shining example of TUgether We Serve, TaskUs' global campaign where our teammates contribute tens of thousands of hours to volunteer activities in the communities we support.

On a personal level, I've been inspired by TUCLAS and recently completed an incredibly rewarding trail cleanup mission of my own. With my 3 young kids in tow, it was a memory that I will never forget.

With that, I'll ask the operator to open the line for our question-and-answer session. Operator?

[Operator Instructions] Our first question will come from the line of Jonathan Lee from Guggenheim Partners.

Balaji, it's been a pleasure working with you over the years, wishing you the best and Trent, congratulations on the expanded role here.

First, I want to talk through sort of the '26 outlook here. What's contemplated there across the low end and the high end? And how much go get is needed? And can you talk through the expected service line acceleration versus deceleration in the near to medium term?

Yes, Jonathan, thank you so much for the question. So as always, we try to put forth an outlook that we feel like we can deliver and exceed. And so as we look at the range here, one of the biggest factors is just getting a sense of where the largest client will go in 2026.

As you know, we've been through periods of rapid expansion, as last year, we grew by 41% with our largest client. We've also been through periods where revenue has contracted there, which happened in 2023. And so we've been having conversations with them walking through plans to automate portions of their volume. Clearly, if those plans take effect in a more aggressive fashion that would drive us towards the low end. And if it takes longer, that would drive us towards the high end.

The other component here is we're seeing increase in demand for AI Services, both from foundational model developers as well as in our autonomous vehicle and robotics segment. And so those growth rates have been very aggressive.

As I mentioned on the call, we saw or we're forecasting that revenue from our AV and foundational model clients will more than double in 2026. And certainly, if we see an acceleration in those growth rates, we would be at or above the high end of the guidance range.

From a service line perspective, we anticipate continued growth in AI Services and in our DCX line of business. The line of business that is probably at most -- under most pressure in 2026 due to automation is the Trust & Safety volumes that we have at our largest client. So all that to say that it's the beginning of the year, and we have a track record of setting fairly conservative guidance, and our intention is to go out and really drive towards the high end of what we provided today.

Bryce, just as a follow-up, can you help us understand the types of investments you're looking to make through the year and how you're thinking about layering in those costs over the course of the year?

Yes. So we're already underway to expand the team that's focused on our AI transformation. We built out a strong AI consulting organization that is actively deploying pilots and production versions of agentic AI instances to our clients in the customer service space. I gave an example on the call of a really successful implementation with a client in a regulated industry. So that's a large investment for us.

We're also continuing to expand our investment in our internal technical team. We believe that we can drive material improvements in our support spending. Very encouraged by the increase in efficiency that we've seen in talent acquisition, where the AI agent that we launched in Q4 has increased our recruiters' ability to hire teammates by 50%. In 2026, we're looking to see similar gains across all of our support organizations from business intelligence, workforce management, quality, our internal help desks. And so we think that will help significantly with margin protection.

And then lastly, we're really leaning into AI Services and the demand that we're seeing there from foundational model developers and the autonomous vehicle and robotics segments. And so we're making heavy investments in bringing in talent to lead the go-to-market and consultative functions in those areas.

Our next question will come from the line of Antonio Jaramillo from Morgan Stanley.

I wanted to first start on pricing. Where are you guys finding opportunities to push through pricing versus where are you guys getting some more pushback? And then this might have been, like, disclosed during the call, but how are you factoring pricing into your margin guidance?

Yes, Antonio, thanks for the call. The pricing environment is definitely dynamic at the moment. Given the slow rate of growth in the overall industry, there is more competitiveness in pricing really over the last, I'd say, 18 months than we've seen historically.

With that being said, we feel like we're in a premium position, particularly in the services that we're offering in AI Services and some of the premium customer support services that we're offering. Our ability to go and continue to take share based on the quality of our operational delivery is part of what drove that growth story in 2025.

Again, we know that there was a huge amount of growth driven from our largest client. But even in Q4, we saw the growth rate from all clients outside of our largest client accelerate again to 12.7% year-over-year. And so I think that's just a testament to the strong operational execution that's giving us an ability to continue to command a premium price.

One thing that is weighing on the margins is a continued geo mix shift. So a lot of the work that we're going to be doing in the AI Services space is going to be done onshore. And so as a result of that growth, we tend to have lower margins in our onshore environments versus our offshore environments. And so as we contemplate 2026 revenue, we're seeing an uptick in revenue as a percentage or a percentage of overall revenue in our onshore environments versus our offshore environments like the Philippines and India, where gross margins tend to be higher. And so that's a factor that's weighing on margins, along with just our commitment to continue to invest more aggressively in our AI transformation.

Yes. That's helpful. And then as a follow-up, like good to see that you're going to see like your top 20 clients grow rev at 15%. Where are they trying to like lean into services across your portfolio?

Yes. So again, that stat is that if we exclude our largest client, we expect our top 20 clients, so the clients 2 through 20 to grow revenue 15% year-over-year in 2026, which is consistent with what we saw from that cohort in Q4 of 2025.

Really, this is a combination of taking share from competition. We're seeing pretty aggressive vendor consolidation across our biggest customers. Again, here, our strong operational execution is a big part of that story. We're also seeing some exponential growth rates in clients in emerging industries. Here, our relationships with the foundational model developers and the leaders in the autonomous vehicle spaces are driving significant revenue growth. If we look at just clients in those 2 spaces, revenue will more than double in 2026 when compared to 2025. So that's some of the underlying dynamics in that top 20 cohort.

Our next question will come from the line of David Koning from Baird.

Good job. And I guess, my first question, if we think of the big undertaking of kind of shifting some of the work to different types, when we look out a couple of years, few years maybe, how much of the revenue base at that time will be similar to what it is today? And I guess I'm asking the question, because is what you're adding going to be incremental to what you do today and you'll continue to do a lot of the same things? Or is a lot of it going to replace given your expectation that some of the revenue today will go away? I'm just kind of thinking through the mix of business, how it changes and how that churns.

Dave, thanks for the question. So historically, our industry and our business has seen consistent trends of automation and reinvention. And if I think back to when we started TaskUs, the first few clients we had were doing things like transcribing voice mail messages or transcribing receipts, things that have been automated for well over a decade now.

And we've been able to grow the business by discovering emergent forms of demand and then going into those forms of demand and developing a real expertise. And so, I'd say that what we're seeing today with all of the excitement around AI is very similar to what we've seen in the past, but just at an accelerated pace. So we're fully aware that the current trend will lead to automation of simple customer service volumes.

We're very lucky that most of the customer service work that we're embarking upon doing, we're doing at the moment is, our premium volumes where our clients have been certainly, in some cases, resistant to automating in other cases, actually interested in increasing their investment in these types as they automate simple work types. But I'd say if we look forward a few years to what our customer experience business will look like, it really is going to be that technology plus talent solution-based business. We're going to see our business evolve away from charging for hours to actually charging for outcomes where TaskUs owns the end-to-end experience, whether it's solved by an AI agent or a human expert.

If I think about areas where we've got real tailwinds, our AI Services business, which has been the fastest-growing service line for TaskUs for more than 5 quarters and will continue to be our fastest-growing service line as we go into 2026 is a real success story. Because whether it's our foundational model developers, our social media clients or emerging new forms of demand in autonomous vehicles and robotics, we're just seeing huge amounts of demand for data collection, data annotation, evals and other forms of work that are needed to make those endeavors function. And so I think we're going to see that business continue to scale and become a bigger and bigger portion of what we do.

I'd say the Trust & Safety business will continue to endure, but this is a business which I think will probably have the lowest growth rate in 2026, given the impact that automation is likely to have on some of those core content moderation volumes. So as we think about where the business will be in 3-plus years' time, I think we'll continue to see DCX transform into being a combination of technology and talent and the AI Services business continue to grow exponentially.

Yes. All makes sense. And my follow-up, just thinking about interest expense, it seems like there's 2 cash outflows, one being the $333 million dividend. But then it looked in the press release that there was $160 million non-recurring litigation payment that might be made as well. And just putting that in context with the new debt, just is interest expense going to be like $40 million or so going forward? Or how do we think of that?

So, Dave, thanks for the question. So in terms of the interest expense, like we called out today, it's going to be SOFR plus 2.75% from an interest cost perspective. And in terms of the -- just a reconciliation in terms of what we're going to be getting is like we will have about $100 million of revolver and about $500 million of new term loan that we're going to be getting. And then about $333 million will be paid out as a dividend.

And then just in terms of amortization, what is going to happen is that, we do have a payment holiday starting -- and we'll start paying about Q3 of 2026, then about 5% annually for the first 3 years and then about 7.5% in year 4 and 10% in year 5. And then in terms of interest cost, you're right. That's about approximately what that would be at SOFR plus 2.75%.

Our next question will come from the line of Puneet Jain from JPMorgan.

So this year's guidance implies like flat to modest positive growth by this year-end. And I know you talked about like headwinds at large client, which will impact growth rates. Is there a way to think about like how much of the existing book of business has exposure to AI-related automation similar to what you expect for the large client? And how much of would have happened by the year-end?

Yes. Thank you, Puneet. So obviously, we're not providing quarterly breakdowns of what the rest of the year is going to look like, but our intention is to continue to drive year-over-year revenue growth for every quarter of the year, and the team is obviously working very hard to do that.

There -- we understand the concern around AI-related exposure in our business. And clearly, there's been quite a lot of concern about this in really all service businesses off late. What we would say is we continue to see clients lean into automating simple, repeatable work types, and we certainly have been part of that solution in our Agentic AI consulting practice, where we're able to automate a significant portion of inbound calls, e-mails, chats that are fairly simple.

But many of these clients are also reinvesting a portion of that savings in improving their customer experience through human interactions for premium customers or in critical care situations. And so we're benefiting from growth across many of our clients. In fact, in -- amongst most of our largest customer experience clients revenue has grown in 2025, and we expect it to grow again in 2026. And so while there is automation taking place, in general, we continue to benefit from growth in industries that I think people felt were kind of squarely at the bull's eye of AI-related automation.

In the medium term, we want to be part of the solution. And so growing our agentic AI consulting practice, expanding our AI Services business is going to be part of reinventing TaskUs into the future service provider that we will become. And ultimately, we see ourselves as evolving from being mostly an hourly-based service into an outcome-based solution where people can come and purchase a combination of technology and talent to deliver for their clients.

Got it. And there has been like a lot of news flow around AI, agentic AI over the last few weeks. Are you seeing like your clients respond to all that news flow with a new sense of urgency? Like is there any change in client behavior as all this news around Anthropic and stuff? Like has that changed your clients' behavior in terms of the speed at which they are moving and trying to embrace some of those AI solutions at all?

It certainly has increased excitement. And amongst our clients, we're working actively to leverage that excitement into pilots and production versions of the AI agents that we are selling to customers in partnership with Decagon and with Regal. And also continue to expand our AI Services business, where we're seeing AI winners, foundational model developers, robotics companies, autonomous vehicle companies continue to spend more and more on data collection, data annotation and evals that are necessary to build out their models.

As far as the recent news and some of the agents that have been published in the last month or so, I'd say that most of our clients are still in a discovery phase. It's one thing to deploy AI agents as a consumer. It's a very different thing to think about deploying end-to-end autonomous agents into an enterprise environment. So there are security concerns and legal concerns that clients have that I think will make that type of adoption a bit slower. But certainly, it's on the road map for most of our clients. It's something that we expect to see over the medium term.

I agree. Bryce, I just wanted to follow up on one of the questions that Dave had on the cash flows. So David, just to clarify, the $160 million is net cash from operating activities that we're expecting for 2026, and that excludes any litigation payment that may happen. So that's the $160 million is actually the cash -- operating cash that we are planning for 2026, just to clarify.

Our next question will come from the line of Maggie Nolan from William Blair.

The AI Services, obviously, that's really robust growth, and it sounded like it was a substantial portion of the bookings as well. How sustainable do you view this level of growth? And how big do you think this segment could become in the next couple of years?

Bryce maybe -- you maybe on mute.

Can you guys hear me?

Yes.

Okay. Sorry, did not of my answer come through?

No, Bryce. I did not hear any...

Okay. Great. Sorry about that. Well, it was a brilliant answer, Maggie. I'll do my best to recreate it. So what I was saying about AI Services was, this is certainly the segment that we're the most excited about. When we think about the growth rate that it drove in 2025 and what we expect it to drive in 2026, we're seeing demand from foundational model developers, autonomous vehicle companies and robotics companies, all of which have healthy amounts of funding to spend on continuing to refine and improve their models through the type of work that we're doing, both in data collection, data annotation and in evals.

The one call out I would make is that AI Services tends to be more project-based in nature. And there is -- there are some work that we are doing for clients in the social media space that could make revenue growth rates inside the service line choppy at times. With all that being said, we expect AI Services to be our fastest-growing service line in 2026 overall, and it continues to be what we're most excited about in terms of driving growth in the business over the medium term.

Okay. Great. And then on the top clients, I mean, obviously, there's a concentration there in your revenue and they're able to probably move, I would assume, faster than maybe other clients in terms of things like, in the past it's been offshoring, now it's automation, those types of things. Can you maybe help us understand how you're assessing the potential for similar things to happen across your client portfolio versus the specific relationship and concentration that you have with that top client?

Yes. So first, in terms of the relationship with the top client, it remains very strong. We're one of their core vendors, and we anticipate that over the medium term, we will see vendor consolidation that will benefit TaskUs. As I said earlier, we go through periods of expansion and contraction with our largest client. Last year, revenue grew by 41%. We saw a contraction in 2023 of about 17%. And so as we head into 2026 and they are successfully investing in automating Trust & Safety volumes, we expect revenues to contract somewhat in this year. But as we look out to 2027 and beyond, we believe that we can get back to growth in that relationship.

As far as the other clients go, it is true that our largest client is very technically advanced and deploying models aggressively. But the same is true for many, if not most of our clients. We focused historically on high-growth technology businesses, and so these businesses are on the forefront of automation. And despite that, if we look at clients # 2 through 20, we're seeing a forecast for 2026 of about 15% revenue growth. And that's due to vendor consolidation. It's due to us working with these clients through our agentic AI consulting practice to embed solutions that combine technology and talent and just overall strong execution.

So I wouldn't say that what's happening at our largest client is a forecast for what's to come in other clients. If anything, I actually think over the medium term, we are in a position to get back to growth with our largest customer and sustain the growth that we're seeing with other large clients.

And with that, this will conclude today's conference call. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.

Greetings, and welcome to the TaskUs Third Quarter 2025 Investor Call. My name is Donna, and I will be your conference facilitator today. [Operator Instructions]

I would like to introduce Trent Thrash, Vice President of Corporate Development and Investor Relations. Trent, you may begin.

Good morning, and thank you for joining us for today's TaskUs earnings call. Joining me are Bryce Maddock, our Co-Founder and Chief Executive Officer; and Balaji Sekar, our 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 our website at ir.taskus.com. We have also posted supplemental information on our website, including an investor presentation and an Excel-based financial metrics file. Please note that this call is being simultaneously webcast on the Investor Relations section of our website.

Before we start, I'd like to remind you that the following discussions contain forward-looking statements within the meaning of the federal securities laws, including, but not limited to, statements regarding our 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 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 these forward-looking statements can be found in our annual report on Form 10-K. This filing, which may be supplemented with subsequent periodic reports is accessible on the SEC's website and our Investor Relations website.

Any forward-looking statements made on today's conference call, including responses to 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 discussions throughout today's call contain non-GAAP financial measures. For a reconciliation 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 of our website.

Now I will turn the call over to Bryce Maddock, our Co-Founder and Chief Executive Officer. Bryce?

Thank you, Trent. To begin, I want to briefly discuss the termination of the proposed take-private transaction we first announced in May. Please note that outside of these prepared remarks, we will not be responding to questions regarding the transaction during our Q&A session.

During our October 8th Special Meeting with Shareholders, the requisite company shareholders did not approve the adoption of the merger agreement. As a result, on October 9th, upon the recommendation of the special committee and the approval of the company's full Board of Directors, the company and the buyer group entered into a mutual agreement to terminate the merger agreement.

This mutual decision to terminate was not entered into lightly and followed true adjournments of our Special Meeting of Shareholders. The buyer group used this time to have multiple discussions regarding the level of price increase required to obtain the approval of certain shareholders, who believe that the $16.50 offer price undervalued the company.

Ultimately, we did not obtain the necessary shareholder vote, because the valuation gap persisted despite this engagement. While we recognize the uncertainty the take-private attempt created, we're encouraged by the high valuation expectations of our shareholders and see it as a testament of their belief in TaskUs and the opportunities ahead.

Throughout this process, I challenged our leaders and teammates to remain laser-focused on delivering the best-in-class specialized services that our customers have come to expect from TaskUs.

I believe our Q3 financial results and Q4 guidance are a direct reflection of this focus. I want to thank all of our shareholders, our Board Members and most importantly, all TaskUs teammates for their focus, effort and support during this process.

With that, let me turn briefly to our strong Q3 performance before outlining our plan for the future. In the third quarter, we once again set a record for the highest quarterly revenue in TaskUs' history and generated solid adjusted EBITDA.

We delivered $298.7 million in revenue, reflecting a 17% year-over-year growth rate and $63.5 million in adjusted EBITDA or an adjusted EBITDA margin of 21.2%. We generated $0.42 in adjusted earnings per share, reflecting approximately 14% year-over-year growth.

We ended the quarter with a very strong balance sheet. We have $210 million in cash and the net debt to adjusted EBITDA ratio of less than 0.2x. I'm very proud of the strength of our performance in this current environment.

Growth across the BPO industry has slowed as clients aim to reduce their costs by leveraging Generative AI to automate workflows previously done by employees and outsourced vendors. In 2025, TaskUs has performed significantly better than many of our competitors because of our relentless focus on operational excellence and strong client relationships.

But going forward, this will not be enough. To thrive in the AI era, we must shift from selling time-based services to selling solutions delivered by a combination of technology and talent.

Our strong balance sheet and cash flow generation position us well to make the investments required for this transformation. We will begin this journey by significantly increasing our spending on our Agentic AI consulting organization.

We've already signed multiple clients leveraging these capabilities. Here, we support the development, training and maintenance of AI agents from our partners, Regal and Decagon. These AI agents are able to automate a portion of our client support volumes, but TaskUs human teammates continue to deliver premium support services where the AI agents are unable to solve customer challenges.

Unlike pure technical solutions, our combined human and AI offering can address the 100% of customer issues at launch, while dramatically reducing the cost to serve. In the next few years, the quality of customer support will meaningfully improve, not only as a result of AI agents being able to quickly solve simple customer issues, but also because human support agents will be free to provide hyper-personalized support in the most critical moments.

As evidenced in this, our customers are reinvesting a portion of their cost savings to deliver better human-led support in the moments that matter or to their most valuable customers. The best customer support offering today is a combination of AI agents and human talent. By perfecting this combined offering, we aim to continue to take share and grow our business.

In addition to expanding our Agentic AI consulting practice, we will also increase our investments in AI services like AI safety and autonomous vehicle and robotics support and continue our investments in our own Generative AI development to automate internal processes.

These are the first steps in a transformation from a company that sells human-centric services to a company that combines Agentic technology, consulting and talent to deliver solutions.

This journey will not be a straight line. Our increased investment will reduce our margins in the near term. We may face short-term revenue headwinds as we increase the use of AI agents to support our clients and in some cases, automate services that our teammates previously provided.

Throughout all of this, we remain laser-focused on long-term results. Our goal is to increase revenue, EBITDA and earnings per share over a multiyear horizon at a rate that is higher than the rest of the industry.

While our primary focus will be on reinvesting our free cash flow into the business to drive transformation, our strong balance sheet and cash flow will also allow us to pursue a capital allocation strategy that enhances shareholder returns. I look forward to sharing more details on our annual earnings call early next year.

Next, I'll go through some of the highlights of our Q3 performance and 2025 outlook, then hand it over to Balaji to walk through our financials in more detail.

Q3 revenue was $298.7 million, an increase of 17% on a year-over-year basis. Diving into service line growth for the quarter, our digital customer experience service line saw single digit year-over-year growth of approximately 6%, consistent with the year-over-year increase we saw in Q3 of the prior year.

Given our year-to-date revenue and signings performance, we expect to report full year 2025 DCX growth in the high single digits. In terms of DCX signings in Q3, we saw broad-based strength in bookings across most of our vertical markets, including retail and e-commerce, travel and transportation, technology, financial services and health care.

Turning to Trust and Safety, we had another great quarter with revenue increasing 19.1% year-over-year, largely driven by the performance of our social media vertical. Earlier this year, we were pleased that our investment in our Trust and Safety specialized service line continued to garner industry accolades.

For the third year in a row, we were recognized as a leader in Everest Group's Trust and Safety Services PEAK Matrix Assessment. This recognition spotlights TaskUs' full spectrum of services across the Trust and Safety value chain, including AI safety, proprietary technology and our wellness as a service offering.

Moving on to AI services, as expected at the end of 2024, AI services has remained our fastest-growing service line throughout 2025. In Q3, AIS delivered 60.8% year-over-year revenue growth compared to just 17.8% in Q3 of 2024.

Here, this strong growth was partially attributable to the ongoing ramp of the new social media client we discussed on our Q4 call and the demand for AI services across multiple other client verticals, including travel and transportation.

We continue to be pleased with the results of the investments we've made in the service line and the resulting demand for AI services we're seeing with industry-leading clients in the Generative AI and autonomous vehicle and robotics industries.

The nature of our AI service line is more project-driven than the rest of our business. But given our expectation of well over 50% year-over-year revenue growth from the service line in 2025, it is clear that our investments are paying off.

Before handing it over to Balaji to provide more details on our Q3 results, I want to touch briefly on our 2025 outlook. As mentioned earlier, in light of our strong year-to-date operational execution and sales momentum, we now expect full year revenue of between $1.173 billion and $1.175 billion.

At the midpoint, this is $64 million or approximately 6% higher than the $1.11 billion midpoint of guidance we provided at the start of the year, which was subsequently withdrawn in connection with the proposed take-private transaction.

It also represents approximately 18% year-over-year growth at the midpoint, which compares favorably with the 7.6% growth we saw in 2024.

For Q4, we expect to set a new TaskUs record for revenue at $302 million to $304 million, resulting in approximately 11% year-over-year revenue growth at the midpoint. This deceleration to low double digit growth was expected due to the significant increase in revenue we saw from our largest client during the back half of 2024.

I'll note here that in Q3, our revenue growth, excluding our largest client was approximately 11% year-over-year and our forecast for Q4 revenue growth when we exclude our largest client is approximately 9% year-over-year. Given the overall macro backdrop in the BPO industry, we're very pleased with the enduring strength of our performance.

From a margin perspective, we expect Q4 to be impacted by seasonal expenses related to holiday pay and employee benefits and by a minimum wage increase in the Philippines. Our strong sales and top line revenue performance have also required us to continue investing in new facilities, hiring and training initiatives. We're also beginning to see some margin impact from our strategic growth investments in AI and other areas.

As a result of these factors, we expect adjusted EBITDA margins in Q4 to decline to approximately 19.8%. This drop is consistent with the size of the sequential Q3 to Q4 decline we saw in 2024, leading us to forecast Q4 EBITDA margins that are slightly better than those earned in 2024.

For the full year, we expect to deliver approximately 21.1% adjusted EBITDA margins. This is consistent with our expectations at the beginning of the year despite some of the factors mentioned earlier as our efficiency initiatives and G&A leverage continue to pay dividends and bring stability to our margins.

With this margin outlook, we now expect to deliver full year adjusted EBITDA of approximately $248 million, representing an increase of more than 18% when compared to 2024. We also expect to generate adjusted free cash flow of approximately $100 million in 2025.

As we look to the last quarter of 2025, we are pleased that the tireless work of our team has set the company up for a record-setting year of top line revenue and profitability, a performance that we believe to be among the best in our industry. I look forward to updating you on our Q4 results and providing our initial 2026 guidance during our call early next year.

With that, I'll hand it over to Balaji to go through the Q3 financials and our 2025 outlook in more detail.

Thank you, Bryce, and good morning, everyone. In the third quarter, we earned total revenues of $298.7 million, reflecting an increase of 17% compared to the previous year, well ahead of our expectations entering the year.

This was primarily the result of strong volume performance with existing clients and new client ramps exceeding expectations across a broad range of verticals during the quarter. While our DCX growth moderated to the mid-single digits for the quarter, growth in Trust and Safety and AI services delivered strong year-over-year growth of approximately 20% and 60%, respectively in Q3 of 2025.

This marks the eighth consecutive quarter of approximately 20% or higher growth in our Trust and Safety service line. It was also the fourth consecutive quarter in excess of 30% revenue growth for AI services.

We continue to grow across all our client cohorts, including growth in excess of 20% across our top 10 and top 20 cohorts. Our top 10 and top 20 clients represented 60% and 71% of total revenue in Q3, respectively, compared to 56% and 68% in Q3 of the previous year.

Our largest client accounted for 27% of total Q3 revenue, up from 26% in the previous quarter and 23% in the prior year. We also saw growth from clients outside of our top 20, which grew approximately 6% year-over-year.

Excluding our largest client, revenue from the rest of our business grew approximately 11%, accelerating from approximately 8% growth in Q3 of 2024. We are pleased with the strong broad-based growth across the business.

In Q3, we saw approximately 20% year-over-year growth in the number of clients engaging with multiple service lines. Revenue from these multiple service clients increased in excess of 20% compared to the prior year period, highlighting the effectiveness of our cross-sell strategy and the growing demand for our integrated suite of specialized offerings.

In the third quarter, we generated 54% of our revenues in the Philippines, 13% in India, 11% in the United States and 22% from the rest of the world, primarily in Latin America and Europe. In Q3, we saw particularly strong revenue growth in Colombia, India and Greece. We ended the quarter with approximately 63,800 global teammates, an increase of approximately 3,400 teammates from the end of Q2.

Now moving on to our service line performance. In the third quarter, our DCX offering delivered single digit growth, generating $164.2 million for a year-over-year growth of 5.8%, of which more than 30% was attributable to clients they ramped within the last year.

Overall, DCX growth was primarily attributable to strong performance from clients in our technology and health care verticals.

Our Trust and Safety offering, which includes our content moderation and financial crime and compliance services grew by 19.1% compared to Q3 of 2024, resulting in $75.8 million of revenue.

As discussed earlier, we are excited about the progress in this service line, which continues to be driven by the strength in our social media vertical.

Our AI services service line topped 50% growth for the third quarter in a row at 60.8% year-over-year, resulting in $58.7 million in revenues. This was primarily as a result of expansion in services we provide to clients in our social media vertical, led by a client signed in late Q3 of 2024, supporting their Generative AI and process automation initiatives as well as from increasing demand from developers of large language model-based technologies in our technology vertical.

Now moving on to the income statement. In the third quarter of 2025, we earned adjusted EBITDA of $63.5 million, a 21.2% margin, beating our expectations primarily due to strong 17% year-over-year revenue growth and our disciplined cost management.

Our cost of service as a percentage of revenue was 62.1% in the third quarter compared to 60.2% in Q3 of the prior year. The increase was primarily driven by the impact of merit increases, investments in physical and information security and ramp costs associated with our year-over-year revenue growth.

In the third quarter, our SG&A expenses were $59.7 million or 20% of revenue. This compares to SG&A in Q3 of 2024 of $62.7 million or 24.5% of revenue. The decline as a percentage of revenue was reflective of our continuous efforts to optimize overhead costs across our business, a reduction in stock-based compensation expense and lower litigation costs.

These declines were partially offset by higher personnel costs, including merit increases as well as transaction costs and costs related to our operational efficiency initiative.

Adjusted net income for the quarter was $39 million and adjusted earnings per share was $0.42. By comparison, in the year ago period, we earned adjusted net income of $34.3 million and adjusted EPS of $0.37.

Our adjusted EPS included the impact of our higher share count resulting from equity issued under our equity incentive plan, which were partially offset by a reduction in shares from our stock repurchase program earlier in the year.

Now moving on to the balance sheet. Cash and cash equivalents were $210 million as of September 30, 2025, compared with the June 30, 2025, balance of $181.9 million. Our net leverage ratio continues to be healthy at less than 0.2x at the end of Q3.

As a reminder, we calculate this ratio as total debt less cash divided by adjusted EBITDA for the trailing 12-month period.

Cash generated from operations on a year-to-date basis was $107.5 million through Q3 of 2025 as compared to $98.2 million through Q3 of 2024. The increase was primarily due to the flow-through of higher margin dollars in 2025, partially offset by changes in working capital.

Year-to-date adjusted free cash flow was $76.9 million or 41% of adjusted EBITDA. Our Q3 year-to-date capital expenditures increased to $43.8 million compared to $18.8 million through Q3 of 2024, primarily due to increasing revenues. As a result, we now expect CapEx to be approximately $65 million for the year.

In terms of our financial outlook for the remainder of the year, we now anticipate full year 2025 revenues to be in the range of $1.173 billion to $1.175 billion, resulting in a midpoint of $1.174 billion.

We expect to earn full year 2025 adjusted EBITDA margins of approximately 21.1%. We expect to generate adjusted free cash flow of approximately $100 million for the year. Our adjusted free cash flow guidance includes the impact of incremental capital expenditures related to our strong growth in certain new and existing geographies.

As a reminder, adjusted free cash flow excludes the impact of certain costs that are nonrecurring and outside the ordinary course of business.

For the fourth quarter, we expect revenues to be in the range of $302 million to $304 million, reflecting growth of 10.6% at the midpoint. We expect our adjusted EBITDA margin to be approximately 19.8%, which includes the impact of seasonal expenses that we typically see in Q4, minimum wage increases and continued investments to support our revenue growth and AI transformation.

Our margin guidance is based on current foreign exchange rates. Further deterioration in the value of the U.S. dollar would put downward pressure on our margin guidance.

I will now hand it back to Bryce.

Thank you, Balaji. Before we open for questions, I'd like to share another TaskUs teammate story. At TaskUs, we often talk about people and performance in the same sense and for good reason. The work our frontline teams do every day, especially in Trust and Safety is both operationally complex and emotionally demanding.

As part of our video series highlighting our teammates, [ Ayana ], one of our content moderators in Greece, recently shared her perspective. AI-supported tools and structured workflows enable high-volume moderation decisions to be made quickly and accurately.

But when it comes to edge cases where nuance, cultural context or intent matter, human judgment is critical for accurate and effective moderation. In her own words, AI can't feel what people feel. Only a person can make that type of call.

Ayana also takes pride as a parent knowing her decisions help protect children like her own. Since our last call, I'm now the father of 3 young children and nothing makes me prouder of working at TaskUs than the trust and safety and AI safety work that we do.

TaskUs teammates are protecting all of our children from the internet's most harmful content. This sense of purpose is powerful, but it also underscores the toll that this type of work can take.

That's why we've invested in programs that build resilience and support our teammates' wellbeing. Our in-house team of Ph.D. researchers and wellness and resiliency clinicians provides teammates with research-based wellness services, including confidential counseling, peer support groups and software-based tools that help them stay clear, focused and grounded.

Last year, our experts at sites around the world conducted 79,000 individual employee sessions and more than 22,000 group sessions supporting the wellbeing of the people who protect all of us online. These programs also support our operational performance.

They help us reduce burnout, improve retention and sustain high levels of quality in the most sensitive areas of our digital operations.

With that, I'll ask the operator to open the line for our question-and-answer session. Operator?

[Operator Instructions] Our first question is coming from Jim Schneider of Goldman Sachs.

Bryce, as you think about maybe the plans operationally you were -- you had contemplated as a potential private company, maybe talk about some of the operational things you had considered? And which of those you may bring to an ongoing operation as a public company that you considered having gone private?

Yes. I think given the outcome of the take-private transaction, I feel confident in following a strategy that will largely mirror what we would have done as a private company. As I shared on the call, we're planning to ramp up our investments and accelerate our transformation for the AI era.

So that starts with our investments in our Agentic AI consulting practice, where we're deploying AI agents on behalf of our clients to automate aspects of their customer support. We've announced partnerships with Decagon and Regal and we've signed multiple clients to this service.

In '26, we plan to make some key hires to lead this organization for us as an independent entity that will transform a large portion of the work that we're doing in the customer service space. We're also going to accelerate our investments in our AI services business line, which is where we're working with foundational model developers, doing AI safety work for social media companies and supporting companies across the autonomous vehicle and robotics space.

The success there has driven growth of over 50% year-over-year for this service line. And so we're really excited about what we're going to be able to do next year there.

And finally, we're using AI to drive efficiency internally. We're developing both proprietary technology and partnering with AI providers to automate everything from recruitment to training to quality.

And as a result of these investments, we're enabling the members of our support organizations to do more, so we can stretch the ratios, the number of teammates per quality analyst or the number of hires per recruiter. And we've seen some encouraging early signs and look forward to reporting more on that next year.

And then as a follow-up, maybe you could talk a little bit about the broad scope of your business pipeline right now and specifically talk about what the pipeline looks at within your largest customer?

The pipeline is strong. We're seeing strong demand for both new and existing clients. And as we head into Q4, we're seeing strong demand in the autonomous vehicle and robotics space.

We have 2 large deals with new clients in the robotics space as well as a very large scale-up with the leader in the autonomous vehicle industry. We've also seen significant growth at our large enterprise health care client, which is a testament to the success of our strategy to diversify into the health care space.

The relationship with our largest client remains very strong. As everyone knows, we went through a large ramp with them in the back of 2024 and into 2025. And so I think like all clients, there's a budgeting process that's going on as they're looking ahead to 2026 and we're deeply engaged in that process with them.

The next question is coming from Jonathan Lee of Guggenheim Partners.

Can you talk us through what's contemplated in your outlook, particularly around sequential growth contemplated in 4Q? Particularly are you just seeing a seasonally better 4Q driven by DCX? I wanted to better understand the modest implied sequential growth there.

Yes. So as always, our goal is to meet or exceed the guidance we provide. And coming back into being a company that's doing earnings calls on a quarterly basis, we wanted to make sure we set the bar at a level that we felt like we could deliver and exceed.

So in the back half of last year, we started a very large ramp with our largest client, which creates some challenging comps in Q4. Despite that, we're forecasting 11% year-over-year growth in Q4.

And when we exclude our largest client, we're forecasting 9% year-over-year growth, which we think is amongst the best in the industry. There are about $5 million worth of seasonal revenues that are contemplated in the forecast. Most of that is driven, as you said, from the DCX portion of our business from retail and health care.

And so at this point, we're going through the budgeting processes with our clients and just looking to ensure that we're providing guidance that we feel very confident we can deliver.

Great. And just as a follow-up, how should we think about your philosophy around the appropriate margins, as we think about the level of investment needed to advance your AI initiatives versus what the industry sees as potential deflationary pressure from AI?

Yes. I think ultimately, there's going to be a significant investment needed to transform our business. And we plan to be bold in that investment. We're very lucky in that we're starting from a place of EBITDA margins that are well north of 20% or adjusted EBITDA margins that are well north of 20%.

And so we want to continue to be one of the more profitable players in our industry, but also have the courage to trade short-term margins for long-term growth and margin expansion.

And so I think you'll see things like us beginning to break out those AI investments, which in 2024, the amount of money we're spending on these AI initiatives -- sorry, in 2025, the amount of money we're spending on these AI initiatives runs into the -- well into the multiple millions of dollars and will continue to increase into 2026. And so we'll do our best to call out those investments independent of the core of the business.

The next question is coming from Dave Koning of Baird.

Good job. And I guess kind of going back to that margin question a little bit. This year was a lower gross margin year, but a better SG&A year and it netted to margins being reasonably flat. I guess we just saw 6% employee growth. So you're definitely investing.

I would imagine that reflects a good pipeline, but that comes with some cost of employees, which hits the gross margin line. But kind of getting back to how does this balance out over time? Does gross margin keep falling, but you offset it with SG&A? And I guess, secondly, could margins actually go down somewhat? Or do they stay around the same?

Yes. I'll have Balji comment more on this. But let me just sort of say what we've seen. Certainly, there has been a decline in the gross margin over the last few years. It's a combination of diversification of geographic delivery and just a more dynamic pricing environment that we've seen as the industry itself has slowed in terms of growth.

I'm very proud of the disciplined approach our team has taken to optimizing our G&A spending in particular and being able to more than offset any gross margin decline to defend the adjusted EBITDA line. Certainly, that is something we're going to continue to do.

As I discussed in a previous question, we have a huge initiative to use AI to automate internal support functions and we've seen some very encouraging signs. As an example, in this last month, the number of hires per recruiter at TaskUs was the highest it's been in our company's history and that's because we've automated the entire candidate pipeline up until a face-to-face interview.

So everything from getting candidates' information to putting them through testing to doing background screening, ID verification, that process has been entirely automated. And that's a large administrative lift that allows us to further optimize our recruitment team and push the number of hires that we're making per recruiter. That's the type of initiative that we'll see as we go into 2026, which will give us better G&A as a percentage of revenue.

And then the investments we're making in terms of actually deploying AI for our clients and moving up the value chain in the service offerings into things like the AI services business, where we're seeing pretty significant growth this year should defend the gross margin and potentially expand the gross margin of the business over time. Balaji, do you want to add anything to that?

Yes. Yes. There's a couple of factors that I'll add to the gross margin trend. One is we do see the impact of annual merit inflation, including some certain statutory changes. As an example, one of the things that Bryce called out earlier in the call was the minimum wage increase in the Philippines.

Items like that are captured in the forecast. Second, we did have a significant ramp this year from a revenue growth perspective, which includes ramp costs, building out new facilities, which also is reflected in our CapEx number. So that does impact gross margins.

And the last is what Bryce mentioned in terms of the geography mix. As we continue to also see growth in geographies like Colombia and Greece, we do see some impact from a gross margin perspective. And we did see an offset.

We did kick off a efficiency project, which -- in the early part of 2025, which Bryce spoke about that, but that impacted both the gross margin line item and also G&A line item. And this program delivered millions of dollars in savings. And that's kind of reflective in our adjusted EBITDA dollars, which grew year-on-year compared to 2024.

Got you. And maybe just a quick follow-up. Your balance sheet has become very clean. You're roughly neutral cash debt position now. You can kind of take next year's cash flow, put it all into buybacks and buy back almost 10% of the shares at the current price. Like does that start entering your mind? Or are there other uses of cash you're thinking about?

Yes. I think right now, the primary use of cash is going to be on this AI transformation. We're very fortunate to have a very clean balance sheet and a net debt position that on the current trajectory, we think will basically be net debt free at some point in Q1.

So I think the first thing we're going to do is take the healthy cash flow the business generates and invest a significant portion of that into our Agentic AI consulting practice, into growing our AI services business, into continuing to transform the core of our business and really be as aggressive as we can in those investments.

As I said on the prepared remarks, we are fortunate enough to have enough cash to be able to do that and look for other ways to utilize our cash flow in a way that is the most constructive in terms of creating long-term returns for our shareholders.

The next question is coming from Maggie Nolan of William Blair.

Bryce, congrats on your growing family. It's fun to hear that kind of stuff. I wanted to ask about the sustainability of the AI services growth into 2026. There's a decel implied in the fourth quarter. So maybe just talk about the pipeline and whether or not that can sustain double digit growth over a slightly longer time frame?

Yes. We're very confident that AI services is going to be a double digit grower over the long term. The challenge we have in this service line that's different from the core DCX and some of the Trust and Safety business is that work.

And so the work we're doing here supporting the foundational model developers and the social media companies on projects around AI safety tends to be more project-based and sprint-based in nature.

And so some projects can spin up and then spin down and there can be the sort of lumpiness of revenues. So this is pretty common across the entire AI services industry. We've got a lot of competitors that are more like privately held businesses, but consistent with the information that we've been able to gather on how the industry is performing, it's just more project-based in nature.

With that being said, at this stage, we do anticipate that AI services will be a strong growth for us over the course of 2026. But as you point out, there's a deceleration as we head into Q4.

Understood. And then maybe still thinking a little bit more kind of medium term, some of the expectations you have for how year-over-year comps will be impacted by some of your larger customer sets, ones that were ramping up last year. How difficult is it to lap that this year? Help us think through those dynamics.

Yes. Ultimately, we're going to provide the full 2026 guidance on the next earnings call. But I'd say that we're really proud of the results that we've put up in 2025 and our goal is certainly to continue to grow well above the industry average, while also embarking on a transformation that's going to require us to make some short-term trade-offs for long-term growth and margin expansion.

The next question is coming from James Faucette of Morgan Stanley.

It's [ Antonio ] on for James. I wanted to focus on your largest customer. Could you just give us a sense on the durability of that spend as we head into next year? And then as far as their spend goes, like how that's trending within AI services and within Trust and Safety?

Yes. So as I said, we've seen massive growth at our largest customer over the course of the last 18 months and we continue to have a very strong relationship with them. I was with them just yesterday down in our site here in New Braunfels and we'll be with them again in December in Dublin.

So right now, I think we're very well positioned in their vendor network. Clearly, like all of our clients, there's big investments that are going into AI. A lot of those investments we're benefiting from, as we're helping to support the development of their AI models.

And then there's also trade-offs that will happen as a result of some of the work that we're doing, automating other parts of our business. So as we head into 2026, we feel very confident in the enduring relationship that we have with our largest customer.

Clearly, the growth that we've seen in '25 is unlikely to happen again, but we don't have a significant amount of concern that we would see the opposite in 2026.

That's helpful. And then as a follow-up, I wanted to ask on your investment strategy that you outlined. How far along are you guys in that investment cycle? And based off of the investments that you've already made, like where have you like really seen that like really shine within the P&L?

Sorry, Antonio, I lost you there. Do you mind restating the question?

Yes. No, I was just asking on the investment strategy and like how far you are in your like investment cycle? And then where like you've seen that shine within the P&L?

Great. Yes. So ultimately, when it comes to the AI transformation strategy, I feel like we're still very much in the first inning. We've made some serious success in 2025 as we look to transform internal aspects of our business.

As I mentioned, improving recruiter productivity significantly with the use of AI and scaling our use of AI across things like quality, workforce management and other elements of the business.

The -- when it comes to our implementations with customers, we're really encouraged that our partnerships with Decagon and Regal are beginning to pay off and we're seeing clients begin to adopt this technology and be open to contracting in a way where we're able to deliver meaningful cost savings upfront in exchange for a longer-term transformation program. And so we think we'll see the impact of that beginning in 2026.

Again, it's not a straight line. There is going to be the cannibalization of some of our own revenues in order to position ourselves to be a long-term beneficiary of that AI transformation. But we're in a position now where we feel very confident and courageous in being able to go out and make those bold decisions to trade off some short-term growth for long-term results.

The next question is coming from Puneet Jain of JPMorgan.

And good to be back on these calls. So Bryce, perhaps talk to us about like as clients embrace AI in automating some of the processes you service for them in digital customer care, talk to us like why they need your Agentic AI solution?

Especially I'm thinking about like the large technology customers. Many of them have their own significant AI capabilities. Why do they need like TaskUs' Agentic AI solutions to automate some of their customer care processes?

Yes. I think there certainly is going to be different classes of customers. The big technology companies, the big tech, the Mag 7 are probably going to develop a lot of this technology in-house.

Certainly, we've been helping a number of our customers in that category with their own AI transformation. But we've got lots of customers who are medium- to large-sized technology companies that have shown a real appetite for working with partners and consultants to drive their own AI transformation.

At this stage, more than 3 years on from the launch of ChatGPT, I think leaders are getting frustrated with the slow speed at which AI is being adopted and truly completely transforming their operations.

And so we've seen our clients announce partnerships with Agentic AI firms even in the last few weeks, where maybe previously, they would have tried to develop that technology themselves.

The unique offering that TaskUs has is an ability to manage both AI agents and human agents. And so unlike pure technology solutions, we can come in and solve 100% of our customers' issues from day 1.

For existing clients, we have spent the last 17 years training and managing human agents. And so we're taking our expertise -- in doing that, taking our expertise in our clients' processes and policies and applying that to training agents on their behalf. And we've seen a real appetite amongst our clients for help with these types of transformations.

So Puneet, to answer your question directly, like the largest of the large technology companies are not going to turn to TaskUs or any of the AI agent companies to do this work for them. But most of the other companies have shown a willingness and eagerness and an appetite to work with partners on their AI transformation.

That's great. And then on your Trust and Safety, like from a year ago, there was like a big focus on diversifying some of that revenue like across multiple clients. Can you talk to us like of that segment, like how much of that revenue stems from your largest customer?

And you did announce like a few wins in that space this quarter. Maybe talk to us about that efforts to diversify revenue in that segment?

Yes. We've been very focused on that. And in the Trust and Safety space, there's a high concentration of spend amongst the largest buyers, which are the largest entertainment and social media platforms.

We've done a good job of diversifying. We've gone from working with our largest client to working with the 2 other largest players in the space. One of those clients has become a very significant client for TaskUs in the tens of millions of dollars and driven significant growth over the last year.

And in all of these initiatives now we're helping clients with both Trust and Safety and with AI safety workflows. And so I'm encouraged by the enduring relationship, the enduring nature of those relationships.

Thank you. Ladies and gentlemen, this brings us to the end of the question-and-answer session and today's conference. We would like to thank you for your participation and interest in TaskUs.

This concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.