Operator: 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.

Trent Thrash: 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?

Bryce Maddock: 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.

Balaji Sekar: 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.

Bryce Maddock: 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?

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

James Schneider: 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?

Bryce Maddock: 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.

James Schneider: 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?

Bryce Maddock: 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.

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

Yu Lee: 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.

Bryce Maddock: 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.

Yu Lee: 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?

Bryce Maddock: 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.

Operator: The next question is coming from Dave Koning of Baird.

David Koning: 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?

Bryce Maddock: 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?

Balaji Sekar: 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.

David Koning: 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?

Bryce Maddock: 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.

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

Margaret Nolan: 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?

Bryce Maddock: 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.

Margaret Nolan: 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.

Bryce Maddock: 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.

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

Unknown Analyst: 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?

Bryce Maddock: 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.

Unknown Analyst: 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?

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

Unknown Analyst: 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?

Bryce Maddock: 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.

Operator: The next question is coming from Puneet Jain of JPMorgan.

Puneet Jain: 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?

Bryce Maddock: 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.

Puneet Jain: 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?

Bryce Maddock: 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.

Operator: 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.

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TASKUS INC

Q3 2025

Earnings Transcript

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