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What changed in TaskUs, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of TaskUs, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+464 added−456 removedSource: 10-K (2025-03-06) vs 10-K (2024-03-08)

Top changes in TaskUs, Inc.'s 2024 10-K

464 paragraphs added · 456 removed · 370 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

61 edited+28 added−17 removed39 unchanged
Biggest changeTaskUs Digital CX Consulting : TaskUs provides a suite of services to our clients that need assistance designing their customer experience programs and optimizing their operating environments, including D igital CX strategy, operational excellence and technology assessment & recommendations. 1 Table of Contents Trust and Safety As a result of government regulations and cultural norms, online platforms must maintain increasingly distinct content policies in different geographies which are dynamically updated in response to the latest threats and evolving bad actor behavior.
Biggest changeOur expertise in this space earned us recognition in January 2025 as a Major Contender in the Everest Group’s Sales Services PEAK Matrix® Assessment 2024. 1 Table of Contents TaskUs Digital CX Consulting : TaskUs provides a suite of services to our clients that need assistance designing their customer experience programs and optimizing their operating environments, including D igital CX strategy, operational excellence and technology assessment and recommendations.
Solutions and Services The TaskUs platform is purpose-built and organized around three service offerings: Digital Customer Experience, Trust and Safety and Artificial Intelligence Services.
Solutions and Services The TaskUs platform is purpose-built and organized around three service offerings: Digital Customer Experience, Trust + Safety and Artificial Intelligence Services.
Our employee-centric culture, our focus on employee wellness and satisfaction and our employee-centric site selection enable us to meet that challenge and motivate our employees to stay for the long term. Our happy, motivated and hardworking employees in turn produce high-quality work for our clients.
Our employee-centric culture, focus on employee wellness and satisfaction, and employee-centric site selection enable us to meet that challenge and motivate our employees to stay for the long term. Our happy, motivated and hardworking employees in turn produce high-quality work for our clients.
We aim to bolster our portfolio of highly complementary service capabilities by integrating consultative expertise, process automation, and technology that further expand our value proposition to clients. This may include evaluating M&A opportunities to expand into higher value, specialized services, gain vertical market expertise, or additional capabilities and technologies.
We aim to bolster our portfolio of highly complementary service capabilities by integrating consultative expertise, process automation, and technology that further expand our value proposition to clients. This may include evaluating M&A opportunities to expand into higher value, specialized services, gain vertical market expertise, or acquire additional capabilities and technologies.
Under these agreements, our fees are generally subject to minimums and maximums, depending on whether the actual volume of services provided falls below or exceeds periodic volume forecasts provided by these clients.
Under our client agreements, our fees are generally subject to minimums and maximums, depending on whether the actual volume of services provided falls below or exceeds periodic volume forecasts provided by these clients.
We offer the following: • Global Life Coaching: We partner with employees in their pursuit of personal well-being through transformative coaching conversations. • The Resiliency Studio: A psychological health and safety program providing innovative interventions to bolster brain health and equip individuals with the tools to cope with the unique challenges they may encounter. • Division of Wellness + Resiliency Research: A dedicated team focused on behavioral health to advance teammates’ mental health and well-being through innovative research and comprehensive data collection. • Wellness Technology: We specialize in assessing, creating, and deploying culturally competent and comprehensive well-being tools.
We offer the following: • Global Life Coaching: We partner with employees in their pursuit of personal well-being through transformative coaching conversations. • The Resiliency Studio: A psychological health and safety program providing innovative interventions to bolster brain health and equip individuals with the tools to cope with their unique challenges. • Division of Wellness + Resiliency Research: A dedicated team focused on behavioral health to advance teammates’ mental health and well-being through innovative research and comprehensive data collection. • Wellness Technology: We specialize in assessing, creating, and deploying culturally competent and comprehensive well-being tools.
Anti-Corruption The Foreign Corrupt Practices Act (“FCPA”) prohibits United States businesses and their representatives from offering to pay, paying, promising to pay or authorizing the payment of money or anything of value to a foreign official in order to influence any act or decision of the foreign official in his or her official capacity or to secure any other improper advantage in order to obtain or retain business.
Anti-Corruption The Foreign Corrupt Practices Act of 1977, as amended (“FCPA”) prohibits United States businesses and their representatives from offering to pay, paying, promising to pay or authorizing the payment of money or anything of value to a foreign official in order to influence any act or decision of the foreign official in his or her official capacity or to secure any other improper advantage in order to obtain or retain business.
Our Digital Customer Experience solutions include: Omni-Channel Customer Care: Protecting and maintaining our clients’ brands makes up a significant portion of our Digital CX services. We differentiate our performance with our focus on driving efficiency, based on frontline insights and advanced analytics, and our culture of employee engagement which enhances the customer experience they provide.
Our Digital Customer Experience solutions include: Omnichannel Customer Care: Protecting and maintaining our clients’ brands makes up a significant portion of our Digital CX services. We differentiate our performance with our focus on driving efficiency, based on frontline insights and advanced analytics, and our culture of employee engagement which enhances the customer experience they provide.
We require our employees to enter into written agreements upon the commencement of their relationships with us, which assign to us all deliverables and work product made, developed or conceived by them in connection with their employment or provision of services, including the intellectual property rights therein.
We require our employees to enter into written agreements upon the commencement of their relationships with us, which assign to us all deliverables and work product made, developed or conceived by them during their employment or provision of services, including the intellectual property rights therein.
Our website and the information contained on or connected to that site are not incorporated into this Annual Report on Form 10-K. 10 Table of Contents
Our website and the information contained on or connected to that site are not incorporated into this Annual Report. 10 Table of Contents
We have dedicated leadership in each geography to support our Cirrus model that allows employees to work from home predominantly, with sites for orientation, training and team activities. As of December 31, 2023 , more than 45% of our teammates were working 100% remotely or utilizing a hybrid model.
We have dedicated leadership in each geography to support our Cirrus model that allows employees to work from home predominantly, with sites for orientation, training and team activities. As of December 31, 2024 , more than 40% of our teammates were working 100% remotely or utilizing a hybrid model.
Our Content Moderation experts possess deep domain knowledge, as well as broad cultural and market expertise, which helps them discern context, parse novel slang, and identify images that have been modified to intentionally avoid detection.
Our Content Moderation experts possess deep domain knowledge, as well as broad cultural and market expertise, which helps them discern context, parse novel slang, and identify content that has been modified to intentionally avoid detection.
This includes opportunities for both New Clients and Existing Clients. 3 Table of Contents Deep Domain Expertise: Our Sales and Client Services teams are organized in industry verticals which allows us to develop deep domain expertise to better attract and grow with clients, understand their pain points, and provide superior solutions.
This includes opportunities for both New Clients and Existing Clients. Deep Domain Expertise: Our Sales and Client Services teams are organized in industry verticals which allows us to develop deep domain expertise to better attract and grow with clients, understand their pain points, and provide superior solutions.
Risk and Response Risk and Response pertains to services designed to protect end users, detect and eliminate fraud, address unwanted user activity, and manage regulatory compliance. Our Risk and Response services include: • Identity: We help safeguard client platforms while accounting for and servicing know-your-customer (“KYC”) and know-your-business (“KYB”) requirements.
Financial Crimes + Compliance Financial Crimes + Compliance pertains to services designed to protect end users, detect and eliminate fraud, address unwanted user activity, and manage regulatory compliance. Our Financial Crimes + Compliance services include: • Identity: We help safeguard client platforms while accounting for and servicing know-your-customer (“KYC”) and know-your-business (“KYB”) requirements.
We believe that the TaskVerse platform could help us supplement our capabilities to meet these needs. 5 Table of Contents ______________ * Headcount numbers are approximate Human Capital We believe that serving frontline employees helps us to better serve our clients.
We believe that the TaskVerse platform could help us supplement our capabilities to meet these needs. ______________ * Headcount numbers are approximate Human Capital We believe that serving frontline employees helps us to better serve our clients.
In 2023, our eNPS was 59, and 69% of our employees who participated rated us 9 or 10 on a scale of 10. We believe happy employees deliver better results, and our ability to maintain high eNPS scores enables us to drive real business impact, including improved attendance and higher retention.
In 2024, our eNPS was 63, and 72% of our employees who participated rated us 9 or 10 on a scale of 10. We believe happy employees deliver better results, and our ability to maintain high eNPS scores enables us to drive real business impact, including improved attendance and higher retention.
In 2023, 83% o f our Digital CX reve nues were generated from non-voice, digital channels or omni-channel services, while the remaining 17% were generated purely from voice channels; even our pure voice work is supported by cloud-based and generative AI infrastructure.
In 2024, 79% o f our Digital CX reve nues were generated from non-voice, digital channels or omni-channel services, while the remaining 21% were generated purely from voice channels; even our pure voice work is supported by cloud-based and generative AI infrastructure.
See “Risk Factors—Risks Related to Our Business and Industry—Our business is subject to a variety of U.S. federal and state, as well as international laws and regulations, including those regarding data privacy and security, and we or our clients may be subject to regulations related to the processing of certain types of sensitive and confidential information.
See “Risk Factors—Risks Related to Our Business and Industry—Our business is subject to a variety of state, federal and international laws and regulations, including those related to data privacy and security, and we or our clients may be subject to regulations related to the processing of certain types of personal and sensitive information.
We use data science, process automation and transformation, and generative AI to achieve technology-driven efficiency gains. We believe that our distinctive culture which prioritizes investments in the training, well-being, and financial success of our frontline employees helps us attract, develop, and retain talent while differentiating our services to better serve our clients.
In combination with well-trained human talent, we use data science, process automation and transformation, and generative AI to achieve technology-driven efficiency gains and improved business outcomes. We believe our distinctive culture, which prioritizes investments in our frontline employees’ training, well-being, and financial success, helps us attract, develop, and retain talent while differentiating our services to better serve our clients.
Our Competition We compete in a large, rapidly changing, and fragmented global market which includes onshore and offshore business process outsourcing providers, information technology service providers, consulting firms, and in-house departments of our target clients.
Our Competition We compete in a large, rapidly changing, and fragmented global market that includes onshore, nearshore and offshore business process outsourcing providers, information technology service providers, consulting firms, and our target clients’ in-house operations.
Setting the engagement from the top and actively championing inclusive decisions and/or practices. • Environment & Culture: Fostering an environment that aligns our values with our business strategies and practices to create a DEI-inclusive environment that drives innovation, productivity and a powerful People First culture. • Continuous Evaluation & Improvement: Consistently evaluating and gauging the effectiveness of DEI initiatives by analyzing data and gathering feedback to pinpoint areas for enhancement and propel advancement.
Setting the engagement from the top and actively championing inclusive decisions and/or practices. • Environment & Culture: Fostering an environment that aligns our values with our business strategies and practices to create a DEI-inclusive environment that drives innovation, productivity and a powerful People First culture. • Continuous Evaluation & Improvement: Consistently evaluating and gauging the effectiveness of DEI initiatives by analyzing data and gathering feedback to pinpoint areas for enhancement and propel advancement. 7 Table of Contents As of December 31, 2024, women comprised 49% of our workforce and 46% of our managers at all levels.
For the fiscal year ended December 31, 2023 , Digital Customer Experience, Trust and Safety and Artificial Intelligence Services represented 66%, 20% and 14%, respectively, of our total service revenue of $924.4 million compared to 66%, 19% and 15%, respectively, of our total service revenue of $960.5 million for the year ended December 31, 2022.
For the fiscal year ended December 31, 2024 , Digital Customer Experience, Trust + Safety and Artificial Intelligence Services represented 61%, 25% and 14%, respectively, of our total service revenue of $995.0 million compared to 66%, 20% and 14%, respectively, of our total service revenue of $924.4 million for the year ended December 31, 2023.
In some countries we also have common law rights to certain trademarks and service marks. Our ability to obtain trademark registrations varies from country to country, as does the duration of trademark and service mark registrations, which may generally be renewed indefinitely as long as the marks are in use and their registrations are properly maintained.
Our ability to obtain trademark registrations varies from country to country, as does the duration of trademark and service mark registrations, which may generally be renewed indefinitely as long as the marks are in use and their registrations are properly maintained.
We believe the principal competitive factors in our business include company culture; ability to act as partners and support innovation; quality of personnel and service; breadth of offering; scalability and global coverage; ability to apply technology to improve efficiency and quality; and pricing.
We believe the principal competitive factors that drive decisions by clients include: expertise in the vertical industries our clients operate in; ability to apply technology to improve efficiency and quality; company culture ; ability to act as partners and support innovation; quality of personnel and service; breadth of offering; scalability and global coverage; and competitive value and pricing.
As we have expanded across the globe, we strive to champion our vision of operational excellence through an employee-centric culture everywhere we operate. As of December 31, 2023, our worldwide Headcount totaled approximately 48,200 people across 28 sites in 12 countries delivering services in more than 30 languages.
As we expand globally, we strive to champion our vision of operational excellence through an employee-centric culture everywhere we operate. As of December 31, 2024, our worldwide Headcount totaled approximately 59,000 people across 28 sites in 12 countries capable of delivering services in more than 30 languages.
Remote/Hybrid: W e utilize an internally developed cloud-based operating model, Cirrus, which enables our employees to deliver services remotely. Our Cirrus strategy follows our client needs with some clients deciding to work 100% remotely and other clients utilizing a hybrid model.
As of December 31, 2024, we operated across 28 locations in 12 countries in 2024. Remote/Hybrid: W e utilize an internally developed cloud-based operating model, Cirrus, which enables our employees to deliver services remotely. Our Cirrus strategy follows our client needs with some clients deciding to work 100% remotely and other clients utilizing a hybrid model.
We believe companies choose TaskUs because of our deep expertise in working with the world’s most innovative companies , corporate culture, leading employee wellness programs, high quality teammates and strong employee engagement, understanding of complex and rapidly changing industry dynamics, differentiated tech-enabled offerings combined with value added consulting services, and proven ability to rapidly scale. 7 Table of Contents Intellectual Property The success of our business depends, in part, on our proprietary technology and intellectual property, including our proprietary processes and know-how.
We believe companies choose TaskUs because of our deep expertise in working with the world’s most innovative companies , corporate culture, speed and agility, leading employee wellness programs, high-quality teammates, strong employee engagement, understanding of complex and rapidly changing industry dynamics, differentiated tech-enabled offerings combined with value-added consulting services, and proven ability to rapidly scale.
We serve our clients to support their end customers’ urgent needs, navigate an increasingly-complex compliance landscape, handle sensitive tasks, including online content moderation and enable artificial intelligence technology and automation.
We serve our clients by supporting their end customers’ urgent needs, helping them navigate an increasingly-complex compliance landscape, handling sensitive tasks, including online content moderation, and enabling artificial intelligence technology and automation.
These agreements also provide that any confidential or proprietary information disclosed or otherwise made available by us remains confidential. We also enter into confidentiality and non-disclosure agreements with our clients. These customary agreements cover our use of our clients’ software systems and platforms as our clients often own the intellectual property in the products we develop for them.
These agreements also provide that any confidential or proprietary information disclosed or otherwise made available by us remains confidential. We also enter into confidentiality and non-disclosure agreements with our clients. These customary agreements cover our use of our clients’ confidential information which is often defined to include our clients’ software systems and platforms.
We believe clients choose TaskUs in part because they view our company culture as aligned with their own, which enables us to act as a natural extension of their brands and gives us an advantage in the recruitment of highly engaged frontline teammates who produce better results.
We believe clients choose TaskUs in part because they view our company culture as aligned with their own, which enables us to act as a natural extension of their brands and gives us an advantage in the recruitment of highly engaged frontline teammates who produce better results. 6 Table of Contents Our philosophy is simple: treat people well and they will deliver a better end customer experience which leads to happy clients and a thriving business.
As our clients grow in size, and the complexity of their outsourcing needs increases, we believe we have an opportunity to increase the addressable spend available to TaskUs, including partnering with clients to optimize their outsourcing spend and cross-selling our full portfolio of services. In 2023, 58 current clients signed new statements of work with us.
We won 39 new clients in 2024, achieving a new client win rate of 45%. As our clients grow in size, and the complexity of their outsourcing needs increases, we believe we have an opportunity to increase the addressable spend available to TaskUs, including partnering with clients to optimize their outsourcing spend and cross-selling our full portfolio of services.
We continually work on our company culture like it is a product we sell in the market, by listening to our employees like we listen to our clients. We leverage this feedback to drive continuous improvement of our employee experience globally. Our primary employee-related metric is eNPS, the barometer we use to measure employee engagement.
We continually work on our company culture by listening to our employees and leveraging their feedback to drive continuous improvement of our employee experience globally. Our primary employee-related metric is eNPS, the barometer we use to measure employee engagement.
Our Clients As of December 31, 2023 , we served nearly 200 clients, the majority of which are innovative technology companies in attractive, high growth industry verticals, including social media, e-commerce, gaming, streaming media, food delivery and ride sharing, Technology, FinTech and HealthTech.
As of December 31, 2024 , we supported approximately 200 clients, most of which are innovative companies in attractive, high growth industry verticals, including social media, e-commerce, gaming, streaming media, food delivery and ride sharing , technology, financial services, and healthcare.
We are also subject to the self-regulatory standards that require companies that process payment card data to implement certain data security measures. HIPAA Certain clients require solutions that ensure security due to nature of the content being distributed and associated applicable regulatory requirements. In particular, our employees may access protected health information, which triggers our required compliance with HIPAA.
We are also subject to the self-regulatory standards that require companies that process payment card data to implement certain data security measures. 9 Table of Contents HIPAA Certain clients require solutions that ensure security due to nature of the content being distributed and associated applicable regulatory requirements.
The combination of onsite leadership with scaled shared services allows us to support our Site CEO model in a cost effective manner and execute processes with the appropriate consistency globally while accounting for local nuance.
The combination of onsite leadership with scaled shared services allows us to support our Site CEO model in a cost-effective manner and execute processes with the appropriate consistency globally while accounting for local nuance. This is our long-standing model where we surround our teammates with vibrant workspaces, on-site counseling services, daycare and on-site support to increase their performance and retention.
We rely on a combination of laws, security and confidentiality procedures, and contractual provisions to protect our intellectual property and proprietary information.
Intellectual Property The success of our business depends, in part, on our proprietary technology and intellectual property, including our proprietary processes and know-how. We rely on a combination of laws, security and confidentiality procedures, and contractual provisions to protect our intellectual property and proprietary information.
Sales and Go-To-Market * Deal duration reflects the number of days between the creation of an opportunity in our opportunity management system and when a contract is signed or lost.
Our global reach enables the collection of high-quality, ethically sourced data that meets precise demographic and technical specifications. 3 Table of Contents Sales and Go-To-Market * Deal duration reflects the number of days between the creation of an opportunity in our opportunity management system and when a contract is signed or lost.
Our philosophy is simple: treat people well and they will deliver a better end customer experience which leads to happy clients and a thriving business. Our employees are the core of our business. Our success depends on our ability to attract, hire, train and retain sufficient numbers of employees in a timely fashion at our sites to support our operations.
Our employees are the core of our business. Our success depends on our ability to attract, hire, train and retain sufficient numbers of employees in a timely fashion at our sites to support our operations.
We have complemented our sales team with seasoned talent, experienced in selling into enterprise markets, and invested in additional resources and programs to attract and capture new business opportunities with traditional enterprise-class brands.
TaskUs has advanced its recognition and positioning with leading industry analysts and advisors, whom many enterprise buyers turn to for feedback early in their buying journey. We have complemented our sales team with seasoned talent, experienced in selling into enterprise markets, and invested in additional resources and programs to attract and capture new business opportunities with traditional enterprise-class brands.
Our Technology We maintain an innovative, flexible, scalable, resilient, and reliable technology infrastructure that helps us deliver our services and solutions to our clients. We utilize what we believe are industry-leading hardware and software components to provide for and enable the rapid growth of our business.
We utilize what we believe are industry-leading hardware and software components to provide for and enable the rapid growth of our business.
The FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions requiring us to maintain books and records, which in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the corporation, including international subsidiaries, if any, and to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements. 9 Table of Contents Globally, other countries in which we operate have enacted anti-bribery laws and/or regulations similar to the FCPA, such as the Anti-Graft and Corrupt Practices Act in the Philippines and the United Kingdom Bribery Act 2010, all of which prohibit companies and their intermediaries from bribing government officials for the purpose of obtaining or keeping business or otherwise obtaining favorable treatment.
The FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions requiring us to maintain books and records, which in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the corporation, including international subsidiaries, if any, and to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements.
Furthermore, we sometimes grant a perpetual, worldwide, royalty-free, nonexclusive, transferable and irrevocable license to our clients to use our pre-existing intellectual property, but only to the extent necessary in order to use the software or systems we develop for them. We have registered or are registering various trademarks and service marks in the United States and other countries.
When agreements require TaskUs to develop software specifically for our clients that include any of our pre-existing intellectual property, we grant a perpetual, worldwide, royalty-free, nonexclusive, transferable and irrevocable license to our clients to use our pre-existing intellectual property that is embedded in the software developed for them, but only to the extent necessary in order to use the software or systems we develop for them.
Our fraud investigators identify systemic threats and manage cases to maintain tolerance limits. We deploy workflows, automation, and case management tools to quickly process chargebacks and disputes, and validate transactions. • Digital Transformation: We build automation technology into our solutions to deliver better quality outcomes faster, improve efficiency and reduce risks.
We deploy workflows, automation, and case management tools to quickly process chargebacks and disputes, and validate transactions. • Digital Transformation: We build automation technology into our solutions to deliver better quality outcomes faster, improve efficiency and reduce risks. 2 Table of Contents Artificial Intelligence Services With over a decade of experience, we specialize in helping clients deploy and maintain sophisticated AI solutions.
New geographies mean new languages and/or capabilities to offer to our clients and increasing opportunities to win new business, including clients headquartered in the new countries into which we have expanded. We have grown from 23 sites in 10 countries in 2021 to 28 locations in 12 countries in 2023.
We plan to continue expanding our geographic footprint to drive growth, which may include evaluating M&A opportunities. New geographies mean new languages and/or capabilities to offer to our clients and increasing opportunities to win new business, including clients headquartered in the new countries into which we have expanded.
We work with a broad range of clients in different stages of their lifecycle, ranging from start-up companies to well-capitalized and established public companies with scaled operations. Many of our clients retain us on a non-exclusive basis.
We have a demonstrated track record of scaling in the industries that we target, working with a broad range of clients in different stages of their lifecycle, ranging from hyper-growth companies to well-capitalized and established public companies with scaled operations.
We also have and maintain certain trade secrets arising out of the authorship or creation of proprietary applications, systems and business practices. Confidentiality is maintained primarily through contractual clauses, and in the case of computer programs and information maintained in our electronic systems and networks, system access controls, tracking and authorization processes.
We also have and maintain certain trade secrets arising out of the authorship or creation of proprietary applications, systems and business practices.
Our delivery model is tailored to meet the needs of modern businesses and digital re-inventors. Our cloud-based technology infrastructure is designed to enable clients to set up operations quickly and seamlessly and allows clients to outsource many of their core processes throughout their company lifecycle.
Our cloud-based technology infrastructure is designed to enable us to set up and scale operations quickly and seamlessly while allowing clients to rely on us to optimize delivery across many of their core business and administrative processes.
Utilizing primarily offshore and near-shore markets is a central tenet of our service delivery strategy . Since 88% of our revenue in 2023 wa s delivered from non-voice, digital channels or omni-channel services, we are particularly well positioned to leverage an off-shore/near-shore model.
Since 87% of our revenue in 2024 wa s delivered from non-voice, digital channels or omnichannel services, we are particularly well positioned to leverage an off-shore/near-shore model. The Philippines is our largest off-shore market with approximately 35,500 people, or 60%, of Headcount of approximately 59,000 people worldwide.
New Client Wins and Current Client Growth: We leverage our deep domain expertise and highly effective sales team to continue to diversify our client base and add more enterprise-class brands to our portfolio. We won 47 new clients in 2023, achieving a new client win rate of 35%.
We believe this approach lowers the total cost of our sales function and creates repeatability and sustainability by maintaining the entire sales funnel at all times. 4 Table of Contents New Client Wins and Current Client Growth: We leverage our deep domain expertise and highly effective sales team to continue to diversify our client base and add more enterprise-class brands to our portfolio.
Expanding our Addressable Market: We use our strong reputation and expertise serving the digital economy to attract new innovators and enterprise-class brands looking to transform. TaskUs has advanced its recognition and positioning with leading industry analysts and advisors, whom many enterprise buyers turn to for feedback early in their buying journey.
In 2024, 63 current clients signed new statements of work with us. Expanding our Addressable Market: We use our strong reputation and expertise serving the digital economy to attract new innovators and enterprise-class brands looking to transform.
The voluntary attrition rate for employees who were employed by TaskUs for more than 180 days was 25.2% f or the year ended December 31, 2023 . Teammate Development We invest heavily in our teammates' personal and career development. We believe that employees can be their best at work when they are happy, included, and empowered.
The voluntary attrition rate for employees who were employed by TaskUs for more than 180 days was 22.2% f or the year ended December 31, 2024 . Teammate Development: Investing in Our People At the heart of our strategy is an unwavering commitment to the personal and professional growth of our teammates.
We provide a suite of in-house tools, packaged as TaskGPT, harnessing the power of Generative AI to streamline our work for maximum efficiency. • Data Science and Analytics: Our Business Intelligence teams apply data science to client data to drive insights back into our operations in a cycle of continuous improvement.
We provide a suite of in-house tools, packaged as TaskGPT, harnessing the power of generative AI to streamline our work for maximum efficiency. • Modern Service Excellence : We use real-time dashboards and KPI management to meet and exceed our clients’ expectations.
We identify emerging industry verticals or those going through transformative changes, and we find attractive sub-segments to address these clients’ needs. We have a demonstrated track record of scaling in the industries that we target.
Our Clients We identify emerging and high-growth industry verticals or enterprise brands going through transformative changes, and find attractive solutions to address these clients’ needs.
This is our long-standing model where we surround our teammates with vibrant workspaces, on-site counseling services, daycare and on-site support to increase their performance and retention. This model is particularly important for certain clients and specialized services that require continued operation of physical sites, due to regulatory compliance or our clients’ preference.
This model is particularly important for certain clients and specialized services that require continued operation of physical sites, due to regulatory compliance or our clients’ preference. 5 Table of Contents Utilizing primarily offshore and near-shore markets is a central tenet of our service delivery strategy .
Content Moderation Content Moderation pertains to the review and disposition of user and advertiser generated content, which may include removal or labeling of policy violating, offensiv e or misleading content. We may rely on certain technology to remove content that is commonly understood to be objectionable; however, as a result of increasingly complex policies, decisions are often ambiguous.
We may rely on certain technology to remove content commonly understood or defined by our client’s policies to be objectionable; however, due to increasingly complex policies, decisions are often ambiguous.
As of December 31, 2023, we served nearly 200 clients spanning established and emerging industry segments, including e-commerce, FinTech, food delivery and ride sharing, gaming, Technology, HealthTech, social media and streaming media. Our global, omni-channel delivery model is focused on providing our clients three key services – Digital Customer Experience (“Digital CX”), Trust and Safety and Artificial Intelligence (“AI”) Services.
As of December 31, 2024, we supported approximately 200 clients spanning established and emerging industry sectors, including social media, e-commerce, gaming, streaming media, food delivery and ride-sharing, technology, financial services, and healthcare.
These teams take advantage of skilled proposal, marketing and demand generation resources offshore for support. We believe this approach lowers the total cost of our sales function and creates repeatability and sustainability by maintaining the entire sales funnel at all times.
These teams take advantage of skilled proposal, marketing and demand generation resources offshore for support.
To deliver to these standards we offer: • Subject Matter Expertise: We have “SME” teams in each of our primary services. • Project Management Organization: Our “PMO” is the linchpin between sales and operations, leading the launch process to plan, execute and deliver for client success. • Modern Service Excellence : We use real-time dashboards and KPI management to meet and exceed our clients’ expectations.
Our process discipline has allowed us to achieve multiple certifications and compliance standards including Service Organization Report (“SOC 2 Type 2”), ISO 27001, HITRUST and PCI-DSS. • Subject Matter Expertise: We have “SME” teams in each of our primary services that have deep domain and functional knowledge. • Project Management Organization: Our “PMO” is the linchpin between sales and operations, leading the launch process to plan, execute and deliver for client success. • Data Science and Analytics: Our Business Intelligence teams apply data science to client data to drive insights back into our operations in a cycle of continuous improvement.
Any failure to comply with applicable data privacy and security laws and regulations could harm our business, results of operations and financial condition.” 8 Table of Contents Tax Several of our sites in the Philippines, India, Mexico and Croatia receive tax incentives based on our compliance with specific criteria.
Additionally, breaches of regulatory requirements could result in litigation, increased scrutiny from regulatory bodies and loss of customer trust, all of which may adversely affect our business, financial condition, operational results and long term prospects.” Tax Several of our sites in the Philippines, India, Mexico and Croatia receive tax incentives based on our compliance with specific criteria.
In 2023, our cNPS was 73, where 83% of all respondents agreed or strongly agreed that their programs’ operational performance expectations are regularly met.
In 2024, our cNPS was 71, where 79% of all respondents agreed or strongly agreed that their programs’ operational performance expectations are regularly met. To deliver to these standards we offer: • Agile Automation and Generative AI (TaskGPT): We continuously strive to improve our efficiency and quality with a combination of proprietary and third-party technology.
Our top 10 and top 20 clients accounted for 55% and 68% of our revenue for the fiscal year ended December 31, 2023 , respectively. Our largest client, Meta, generated 19% of our revenue for the fiscal year ended December 31, 2023 .
During 2024, we generated revenue in excess of $1.0 million from 102 of these clients, the number of clients using multiple service lines increased to 64, and we signed agreements to support 39 new clients. Our top 10 and top 20 clients accounted for 56% and 68% of our revenue for the fiscal year ended December 31, 2024 , respectively.
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Our Trust and Safety organization partners with clients to apply best practices to policy development and distribution, product design, quality, and training. Trust and Safety consists of two primary areas of service: Content Moderation and Risk and Response.
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Our global, omnichannel delivery model is focused on providing our clients with three key services – Digital Customer Experience (“Digital CX”), Trust + Safety and Artificial Intelligence (“AI”) Services. Our delivery model is tailored to meet the needs of modern businesses and digital re-inventors.
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Artificial Intelligence Services We first began supporting AI applications over a decade ago. Today, our AI Services have increased in sophistication and complexity as AI applications have evolved in emerging industries, such as generative AI, where we have invested in specialized skills and digital innovation to meet growing demand.
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Trust + Safety Government regulations and cultural norms require online platforms to maintain increasingly distinct content policies in different geographies, which are dynamically updated in response to the latest threats and evolving bad actor behavior. Our Trust + Safety teams partner with clients to apply best practices to policy development and distribution, product design, quality, and training.
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Our Artificial Intelligence Services solutions include: Data Annotation: We refine large sets of training data for our clients by annotating videos, photos, audio clips and text based on their policy specifications.
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TaskUs was recognized as a Leader in the Everest Group’s Trust and Safety Services PEAK Matrix® Assessment 2024 and its Financial Crime and Compliance (FCC) PEAK Matrix® Assessment 2024. Trust + Safety consists of two primary areas of service: Content Moderation and Financial Crimes + Compliance (formerly known as Risk and Response).
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The quality of this training data is based on the accuracy of our annotation and plays a large role in the success of the resulting AI algorithm. 2 Table of Contents Examples of the applications that Data Annotation powers include: Computer Vision: Algorithms which allow a computer to interpret and analyze the visual world simulating the human eye requires millions of high-quality labeled images.
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Content Moderation Content Moderation pertains to the process of monitoring, reviewing and managing user and advertiser-generated content on online platforms to ensure it complies with community guidelines, legal regulations, and platform-specific policies. Our Content Moderation solutions help our clients create an appropriate environment for their end users while helping mitigate risks such as abuse, fraud, intellectual property violations and exploitation.
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For mission critical applications, such as autonomous vehicles, these images often must be labeled down to a single pixel. Natural Language Processing: To understand the meaning of phrases, algorithms are trained with large sets of written text that has been annotated based on parts of speech, meaning and sentiment.
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Our fraud investigators identify systemic threats and manage cases to maintain tolerance limits.
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Video Processing: Understanding videos requires the segmentation and recombination of two distinct training data sets—audio and visual. The audio file must be transcribed and annotated to enable natural language processing and objects in the image files must be tagged to enable Computer Vision.
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As AI capabilities have evolved—especially in areas like generative AI—we have developed specialized teams and processes to meet the growing sophistication of market demands. We were also recognized as a Leader in the Everest Group’s Data Annotation and Labeling (DAL) PEAK Matrix® Assessment 2024.
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Sensor Processing: Refining algorithms which make decisions based on sensor data requires annotated sets of sensor data from sources such as the LiDAR systems of autonomous vehicles. We group our algorithm training services into three phases: learning, generalizing, and predicting. Each of the three phases of development requires distinct support methodologies including quality, training, and knowledge management.
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Our teams support key stages across our customers’ machine learning lifecycle: pre-training data collection and preparation, post-training evaluation, and continuous model assessment. Each stage is backed by specialized quality frameworks and domain expertise. Our Artificial Intelligence Services solutions include: Large Language Model Support: Providing support for generative AI development through specialized feedback, testing, maintenance and evaluation services.
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Beyond Data Annotation: We have begun moving up the value chain in AI Services to troubleshooting and remediation of AI applications online and in the field. Our generative AI services span a wide range of reinforcement learning from human feedback tasks to support the development of multimodal Large Language Models (“LLMs”).
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Our teams combine multilingual capabilities with domain expertise across STEM fields like biology, chemistry, coding, and mathematics, to help clients refine and improve their language models through structured human feedback processes. Data Quality Services: Enhancing AI training datasets through precise annotation of images, video, audio, and text according to client specifications.
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Our process discipline has allowed us to achieve multiple certifications and compliance standards including Service Organization Report (“SOC 2 Type 2”), ISO 27001, HITRUST and PCI-DSS. 4 Table of Contents • Agile Automation and Generative AI (TaskGPT): We continuously strive to improve our efficiency and quality with our own technology.
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The accuracy of our work directly impacts the performance of our clients' AI systems and algorithms.
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The Philippines is our largest off-shore market with approximately 30,400 people, or 63%, of Headcount of approximately 48,200 people worldwide. We plan to continue expanding our geographic footprint to drive growth, which may include evaluating M&A opportunities.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAmong other things, these provisions: • provide that our board of directors will be divided into three classes, as nearly equal in size as possible, with directors in each class serving three-year terms and with terms of the directors of only one class expiring in any given year; 40 Table of Contents • provide for the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% in voting power of the outstanding shares of our capital stock entitled to vote, if the parties to our stockholders agreement and their affiliates cease to beneficially own less than 30% of the total voting power of all then outstanding shares of our capital stock entitled to vote generally in the election of directors and provide that specified directors designated pursuant to the stockholders agreement may not be removed without cause without the consent of the specified designating party; • our dual class common stock structure, which provides our holders of Class B common stock with the ability to significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding Class A common stock and Class B common stock; • provide that, subject to the rights of the holders of any preferred stock and the rights granted pursuant to the stockholders agreement, vacancies and newly created directorships may be filled only by the remaining directors, if the parties to our stockholders agreement and their affiliates cease to beneficially own less than 30% of the total voting power of all then outstanding shares of our capital stock entitled to vote generally in the election of directors; • would allow us to authorize the issuance of shares of one or more series of preferred stock, including in connection with a stockholder rights plan, financing transactions or otherwise, the terms of which series may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of common stock; • prohibit stockholder action by written consent from and after the date on which the parties to our stockholders agreement and their affiliates cease to beneficially own at least 30% of the total voting power of all then outstanding shares of our capital stock entitled to vote generally in the election of directors and require the consent of our Sponsor in any action by written consent; • provide for certain limitations on convening special stockholder meetings; • provide that the board of directors is expressly authorized to make, alter, or repeal our bylaws and that our stockholders may only amend our bylaws with the approval of 66 2/3% or more of all of the outstanding shares of our capital stock entitled to vote, if the parties to our stockholders agreement and their affiliates beneficially own less than 30% of the total voting power of all then outstanding shares of our capital stock entitled to vote generally in the election of directors; • provide that certain provisions of our amended and restated certificate of incorporation may be amended only by the affirmative vote of the holders of at least 66 2/3% in voting power of the outstanding shares of our capital stock entitled to vote thereon, if the parties to our stockholders agreement and their affiliates cease to beneficially own less than 30% of the total voting power of all then outstanding shares of our capital stock entitled to vote generally in the election of directors; • establish advance notice requirements for nominations for elections to our board or for proposing matters that can be acted upon by stockholders at stockholder meetings; and • provide that, subject to the rights of holders of any preferred stock and the terms of our stockholders agreement, the total number of directors shall be determined exclusively by resolution adopted by the board.
Biggest changeAmong other things, these provisions: • provide that our board of directors will be divided into three classes, as nearly equal in size as possible, with directors in each class serving three-year terms and with terms of the directors of only one class expiring in any given year; • provide for the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% in voting power of the outstanding shares of our capital stock entitled to vote, if the parties to our stockholders agreement and their affiliates cease to beneficially own less than 30% of the total voting power of all then outstanding shares of our capital stock entitled to vote generally in the election of directors and provide that specified directors designated pursuant to the stockholders agreement may not be removed without cause without the consent of the specified designating party; • our dual class common stock structure, which provides our holders of Class B common stock with the ability to significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding Class A common stock and Class B common stock; • provide that, subject to the rights of the holders of any preferred stock and the rights granted pursuant to the stockholders agreement, vacancies and newly created directorships may be filled only by the remaining directors, if the parties to our stockholders agreement and their affiliates cease to beneficially own less than 30% of the total voting power of all then outstanding shares of our capital stock entitled to vote generally in the election of directors; • would allow us to authorize the issuance of shares of one or more series of preferred stock, including in connection with a stockholder rights plan, financing transactions or otherwise, the terms of which series may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of common stock; • prohibit stockholder action by written consent from and after the date on which the parties to our stockholders agreement and their affiliates cease to beneficially own at least 30% of the total voting power of all then outstanding shares of our capital stock entitled to vote generally in the election of directors and require the consent of our Sponsor in any action by written consent; • provide for certain limitations on convening special stockholder meetings; • provide that the board of directors is expressly authorized to make, alter, or repeal our bylaws and that our stockholders may only amend our bylaws with the approval of 66 2/3% or more of all of the outstanding shares of our capital stock entitled to vote, if the parties to our stockholders agreement and their affiliates beneficially own less than 30% of the total voting power of all then outstanding shares of our capital stock entitled to vote generally in the election of directors; • provide that certain provisions of our amended and restated certificate of incorporation may be amended only by the affirmative vote of the holders of at least 66 2/3% in voting power of the outstanding shares of our capital stock entitled to vote thereon, if the parties to our stockholders agreement and their affiliates cease to beneficially own less than 30% of the total voting power of all then outstanding shares of our capital stock entitled to vote generally in the election of directors; • establish advance notice requirements for nominations for elections to our board or for proposing matters that can be acted upon by stockholders at stockholder meetings; and • provide that, subject to the rights of holders of any preferred stock and the terms of our stockholders agreement, the total number of directors shall be determined exclusively by resolution adopted by the board. 41 Table of Contents We have opted out of Section 203 of the General Corporation Law of the State of Delaware (the “DGCL”); however, our amended and restated certificate of incorporation contains similar provisions providing that we may not engage in certain “business combinations” with any “interested stockholder” for a three-year period following the time that the stockholder became an interested stockholder, unless the transaction fits within an enumerated exception, such as board approval of the business combination or the transaction that resulted in such stockholder becoming an interested stockholder.
If we provide inadequate service or cause disruptions in our clients’ businesses or fail to comply with the quality standards required by our clients under our agreements, it could result in significant costs to us, the loss of our clients and damage to our corporate reputation.
If we provide inadequate service or cause disruptions in our clients’ businesses, or if we fail to comply with the quality standards required by our clients under our agreements, it could result in significant costs to us, the loss of our clients and damage to our corporate reputation.
The successful assertion of one or more large claims against us in amounts greater than those covered by our current insurance policies could materially adversely affect our business, financial condition and results of operations. Even if such assertions against us are unsuccessful, we may incur reputational harm and substantial legal fees.
The successful assertion of one or more large claims against us in amounts greater than those covered by our current insurance policies could materially adversely affect our business, financial condition or results of operations. Even if such assertions against us are unsuccessful, we may incur reputational harm and substantial legal fees.
Any such failure to recognize the importance of such technology, a decision not to invest in and develop or adopt such technology that keeps pace with evolving industry standards and changing client demands, or an inability to attract and retain the technologists necessary to develop and implement such technology could have a material adverse effect on our business, financial condition, results of operations and prospects.
Any such failure to recognize the importance of such technology, a decision not to invest in and develop or adopt such technology that keeps pace with evolving industry standards and changing client demands, or an inability to attract and retain the technologists necessary to develop and implement such technology could have a material adverse effect on our business, financial condition, results of operations or prospects.
As a result, we may be subject to negative publicity or liability, or face difficulties recruiting and retaining employees, any of which could have an adverse effect on our reputation, business, financial condition and results of operations.
As a result, we may be subject to negative publicity or liability, or face difficulties recruiting and retaining employees, any of which could have an adverse effect on our reputation, business, financial condition or results of operations.
In addition to Prohibited Content, employees review posts that are political in nature, which may constitute objectionable content to them. Some of our employees work as content moderators on behalf of our clients, screening posts for Prohibited Content.
Some of our employees work as content moderators on behalf of our clients, screening posts for Prohibited Content. In addition to Prohibited Content, our employees review posts that are political in nature, which may constitute objectionable content to them.
Any such employee claims or demands could result in increased costs, and could lead us to limit our content moderation business entirely, any of which would adversely impact our business, financial condition and results of operations.
Any such employee claims or demands could result in increased costs, and could lead us to limit our content moderation business entirely, any of which would adversely impact our business, financial condition or results of operations.
Changes to CDA Section 230 remain uncertain, and could have a significant impact on our business, including by requiring us to comply with additional regulations, subjecting our business, and the businesses of our clients, to increased liability for content moderation activities, significantly increasing our expenses to comply with applicable laws and regulations, or shrinking the market for content moderation, any of which would adversely impact our business, financial condition and results of operations.
Changes to CDA Section 230 remain uncertain, and could have a significant impact on our business, including by requiring us to comply with additional regulations, subjecting our business, and the businesses of our clients, to increased liability for content moderation activities, significantly increasing our expenses to comply with applicable laws and regulations, or shrinking the market for content moderation, any of which would adversely impact our business, financial condition or results of operations.
We also conduct operations in Mexico, Taiwan, Ireland, Greece, Croatia, Serbia, Colombia, Malaysia and other international locations which are subject to various risks germane to those locations.
We also conduct operations in Colombia, Mexico, Taiwan, Ireland, Greece, Croatia, Serbia, Malaysia and other international locations, which are subject to various risks germane to those locations.
Changing demand patterns from economic and political volatility and uncertainty or otherwise, including as a result of increasing geopolitical tensions, inflation, economic downturns, changes in consumer behavior, changes in government regulations, global health emergencies and their impact on us and our clients, could have a significant negative impact on our business, financial condition and results of operations.
Changing demand patterns from economic and political volatility and uncertainty or otherwise, including as a result of increasing geopolitical tensions, inflation, economic downturns, changes in consumer behavior, changes in government regulations, global health emergencies and their impact on us and our clients, could have a significant negative impact on our business, financial condition or results of operations.
Increased competition, our inability to compete successfully, pricing pressures or loss of market share could result in reduced operating profit margins and diminished financial performance, which would have a material adverse effect on our business, financial condition, results of operations and prospects.
Increased competition, our inability to compete successfully, pricing pressures or loss of market share could result in reduced operating profit margins and diminished financial performance, which would have a material adverse effect on our business, financial condition, results of operations or prospects.
In addition, wage increases or other expenses related to the termination of our employees may reduce our profit margins and have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects.
In addition, wage increases or other expenses related to the termination of our employees may reduce our profit margins and have a material adverse effect on our business, financial condition, results of operations, cash flows or prospects.
A strike, work stoppage or slowdown by our employees or significant dispute with our employees, whether or not related to negotiations, could result in a significant disruption of our operations or higher ongoing labor costs and could have a material adverse effect on our business, financial condition, results of operations and prospects and harm our reputation.
A strike, work stoppage or slowdown by our employees or significant dispute with our employees, whether or not related to negotiations, could result in a significant disruption of our operations or higher ongoing labor costs and could have a material adverse effect on our business, financial condition, results of operations or prospects and harm our reputation.
In addition, our failure to attract, train and retain personnel with the experience and skills necessary to fulfill the needs of our existing and future clients or to assimilate new employees successfully into our operations could have a material adverse effect on our business, financial condition, results of operations and prospects by impacting our ability to maintain and renew existing client engagements, obtain new business, and increase our margins.
In addition, our failure to attract, train and retain personnel with the experience and skills necessary to fulfill the needs of our existing and future clients or to assimilate new employees successfully into our operations could have a material adverse effect on our business, financial condition, results of operations or prospects by impacting our ability to maintain and renew existing client engagements, obtain new business, and increase our margins.
Further, we may incur additional expenses in rehiring and retraining employees and/or bridging the gap between internal assignments, creating inelasticity of our labor costs relative to short-term movements in client demand. Additionally, the hiring and training of our employees in response to increased demand takes time and results in additional short-term expenses.
Further, we may incur additional expenses in rehiring and retraining employees or bridging the gap between internal assignments, creating inelasticity of our labor costs relative to short-term movements in client demand. Additionally, the hiring and training of our employees in response to increased demand takes time and results in additional short-term expenses.
These factors constrain our ability to adjust our labor costs for short-term movements in demand, which could have a material adverse effect on our business, financial condition and results of operations. There may be adverse tax and employment law consequences if the independent contractor status of some of our personnel or the exempt status of our employees is successfully challenged.
These factors constrain our ability to adjust our labor costs for short-term movements in demand, which could have a material adverse effect on our business, financial condition or results of operations. There may be adverse tax and employment law consequences if the independent contractor status of some of our personnel or the exempt status of our employees is successfully challenged.
If a government authority or court makes any adverse determination with respect to project classifications in general or one or more of our independent contractors specifically, we could incur significant costs, including for prior periods, in respect of tax withholding, social security taxes or payments, workers’ compensation and unemployment contributions, and recordkeeping, or we may be required to modify our business model, any of which could materially adversely affect our business, financial condition and results of operations and increase the difficulty in attracting and retaining personnel.
If a government authority or court makes any adverse determination with respect to project classifications in general or one or more of our independent contractors specifically, we could incur significant costs, including for prior periods, in respect of tax withholding, social security taxes or payments, workers’ compensation and unemployment contributions, and recordkeeping, or we may be required to modify our business model, any of which could materially adversely affect our business, financial condition or results of operations and increase the difficulty in attracting and retaining personnel.
Any decision by our clients to enter into or further expand insourcing activities in the future could cause us to lose a significant volume of business and may materially adversely affect our business, financial condition, results of operations and prospects.
Any decision by our clients to enter into or further expand insourcing activities in the future could cause us to lose a significant volume of business and may materially adversely affect our business, financial condition, results of operations or prospects.
The introduction of such laws and regulations or the change in interpretation of existing laws and regulations could adversely affect our business, financial condition, results of operations and prospects. 25 Table of Contents The consolidation of our clients or potential clients may adversely affect our business, financial condition, results of operations and prospects.
The introduction of such laws and regulations or the change in interpretation of existing laws and regulations could adversely affect our business, financial condition, results of operations or prospects. 25 Table of Contents The consolidation of our clients or potential clients may adversely affect our business, financial condition, results of operations or prospects.
Our business prospects will suffer if we are unable to continue to anticipate our clients’ needs by adapting to market and technology trends, investing in technology as it develops, and adapting our services and solutions to changes in technology and client expectations.
Our business prospects will suffer if we are unable to continue to anticipate our clients’ needs by adapting to market and technology trends, investing in technology as it develops, and adapting our services and solutions to changes in technology and client expectations.
In addition, we may experience technical problems and additional costs as we introduce new solutions, deploy future iterations of our solutions and integrate new solutions with existing client systems and workflows. If any of these or related problems were to arise, our business, financial condition, results of operations and prospects could be adversely affected.
In addition, we may experience technical problems and additional costs as we introduce new solutions, deploy future iterations of our solutions and integrate new solutions with existing client systems and workflows. If any of these or related problems were to arise, our business, financial condition, results of operations or prospects could be adversely affected.
If we are unable to fund our working capital requirements, access financing at competitive rates or make investments to meet the expanding business of our existing and potential new clients, our business, financial condition, results of operations and prospects could be adversely affected.
If we are unable to fund our working capital requirements, access financing at competitive rates or make investments to meet the expanding business of our existing and potential new clients, our business, financial condition, results of operations or prospects could be adversely affected.
An increase to our level of indebtedness could: • require us to dedicate an increased portion of our cash flow from operations to payments on our indebtedness, which could reduce the availability of cash flow to fund acquisitions, start-ups, working capital, capital expenditures and other general corporate purposes; • limit our ability to borrow money or sell stock for working capital, capital expenditures, debt service requirements and other purposes; • limit our flexibility in planning for, and reacting to, changes in our industry or business; • make us more vulnerable to unfavorable economic or business conditions; and • limit our ability to make acquisitions or take advantage of other business opportunities.
An increase to our level of indebtedness could: • require us to dedicate an increased portion of our cash flow from operations to payments on our indebtedness, which could reduce the availability of cash flow to fund acquisitions, start-ups, working capital, capital expenditures and other general corporate purposes; • limit our ability to borrow money or sell stock for working capital, capital expenditures, debt service requirements and other purposes; • limit our flexibility in planning for, and reacting to, changes in our industry or business; • make us more vulnerable to unfavorable economic or business conditions; or • limit our ability to take advantage of other business opportunities.
If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges, or unforeseen circumstances could be significantly limited, and our business, financial condition and results of operations could be materially adversely affected.
If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges, or unforeseen circumstances could be significantly limited, and our business, financial condition or results of operations could be materially adversely affected.
Our board of directors may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries to us and such other factors as our board of directors may deem relevant.
Our board of directors may take into account general and economic conditions, our financial condition or results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries to us and such other factors as our board of directors may deem relevant.
If a court were to find these provisions of our amended and restated certificate of incorporation inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.
If a court were to find these provisions of our amended and restated certificate of incorporation inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations or result in a diversion of the time and resources of our management and board of directors.
There are a number of factors relating to our clients that are outside of our control, which have in some cases led them to terminate or not renew a contract or project with us, be unable to pay us, or restrict our agreements with other clients, including: • financial difficulties; • a demand for price reductions by that client; • corporate restructuring, or mergers and acquisitions activity; • change in our client’s outsourcing strategy to retain the same type and volume of work with TaskUs but to enter into lower cost contracts and move work to another lower-cost TaskUs support location; • change in strategic priorities or economic conditions, resulting in elimination of the impetus for the project or a reduced level of technology related spending; • change in outsourcing strategy resulting in moving more work to the client’s in-house departments or to our competitors or transfer to a lower cost TaskUs support location; • increasing reliance on technology and AI to improve customer experience and automate tasks; • government regulation that affects our clients’ business; • restrictions on serving certain potential clients that may be viewed as competing with certain existing clients; • replacement of existing software with packaged software supported by licensors; and • uncertainty and disruption to the global markets. 11 Table of Contents Termination or non-renewal of a client contract could cause us to experience a higher than expected number of unassigned employees and thus compress our margins until we are able to reallocate our headcount.
There are a number of factors relating to our clients that are outside of our control, which have in some cases led them to terminate or not renew a contract or project with us, be unable to pay us, or restrict our agreements with other clients, including: • financial difficulties; • a demand for price reductions by that client; • corporate restructuring, or mergers and acquisitions activity; • change in our client’s outsourcing strategy to retain the same type and volume of work with TaskUs but to enter into lower cost contracts and move work to another lower-cost TaskUs support location; • change in strategic priorities or economic conditions, resulting in elimination of the impetus for the project or a reduced level of technology related spending; • change in outsourcing strategy resulting in moving more work to the client’s in-house departments or to our competitors or transfer to a lower cost TaskUs support location; • increasing reliance on technology and AI to improve customer experience and automate tasks; • government regulation that affects a particular client’s business; • restrictions on serving certain potential clients that may be viewed as competing with certain existing clients; • replacement of existing software with packaged software supported by licensors; and • uncertainty and disruption to the global markets. 11 Table of Contents Termination or non-renewal of a client contract could cause us to experience a higher than expected number of unassigned employees and thus compress our margins until we are able to reallocate our headcount.
Our inability to expand our operations to such locations may impact our ability to secure new and additional business from clients, and could adversely affect our growth and results of operations. 24 Table of Contents We may fail to attract, hire, train and retain sufficient numbers of skilled employees in a timely fashion at our sites to support our operations, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
Our inability to expand our operations to such locations may impact our ability to secure new and additional business from clients, and could adversely affect our growth or results of operations. 24 Table of Contents We may fail to attract, hire, train and retain sufficient numbers of skilled employees in a timely fashion at our sites to support our operations, which could have a material adverse effect on our business, financial condition, results of operations or prospects.
If we are unable to manage our asset utilization levels, there could be a material adverse effect on our business, financial condition and results of operations. The pricing of our services and solutions is usually included in statements of work entered into with our clients. We may not accurately price certain contracts to reflect the true cost of providing services.
If we are unable to manage our asset utilization levels, there could be a material adverse effect on our business, financial condition or results of operations. The pricing of our services and solutions is usually included in statements of work entered into with our clients. We may not accurately price certain contracts to reflect the true cost of providing services.
Companies that currently may be or may have been at the time considered our affiliates have from time to time publicly filed and/or provided to us the disclosure reproduced on Exhibit 99.1 of this Annual Report, which disclosure is hereby incorporated by reference herein. We do not independently verify or participate in the preparation of these disclosures.
Companies that currently may be or may have been at the time considered our affiliates have from time to time publicly filed or provided to us the disclosure reproduced on Exhibit 99.1 of this Annual Report, which disclosure is hereby incorporated by reference herein. We do not independently verify or participate in the preparation of these disclosures.
In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, services, products, personnel or operations of acquired companies, particularly if the key personnel of the acquired company choose not to work for us, the acquired company’s technology is not easily compatible with ours or we have difficulty retaining the clients of any acquired business due to changes in management or otherwise.
In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, services, products, personnel, culture, or operations of acquired companies, particularly if the key personnel of the acquired company choose not to work for us, the acquired company’s technology is not easily compatible with ours or we have difficulty retaining the clients of any acquired business due to changes in management, culture, or otherwise.
Our clients, regulators, or other third parties may attempt to hold us liable, through contractual indemnification clauses or directly, for any such losses or damages resulting from such an attack. 14 Table of Contents Trust and Safety, including content monitoring and moderation services, is a large portion of our business.
Our clients, regulators or other third parties may attempt to hold us liable, through contractual indemnification clauses or directly, for any such losses or damages resulting from such an attack. 14 Table of Contents Trust + Safety, including content moderation and monitoring services, is a large and growing portion of our business.
We also cannot assure you that our employees, agents and other third parties will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible, including entering into contracts or agreements with third parties without our knowledge or consent that would result in such violation.
We also cannot assure you that our employees, contractors, agents or other third parties will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible, including entering into contracts or agreements with third parties without our knowledge or consent that would result in such violation.
We may need to increase employee compensation more than in previous periods to remain competitive in attracting the quantity and quality of employees that our business requires, which may reduce our profit margins and have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects.
We may need to increase employee compensation more than in previous periods to remain competitive in attracting the quantity and quality of employees that our business requires, which may reduce our profit margins and have a material adverse effect on our business, financial condition, results of operations, cash flows or prospects.
Global economic and political conditions, especially in the social media and meal delivery and transport industries from which we generate significant revenue, could adversely affect our business, results of operations, financial condition and prospects. Our results of operations may vary based on the impact of changes in the global economy and political environment on us and our clients.
Global economic and political conditions, especially in the social media and meal delivery and transport industries from which we generate significant revenue, could adversely affect our business, financial condition, results of operations or prospects. Our results of operations may vary based on the impact of changes in the global economy and political environment on us and our clients.
Any unauthorized access, acquisition, use, or destruction of data we collect, use, store, process or transmit, the unavailability of such data, or other disruptions of our ability to provide services and solutions to our clients, regardless of whether it originates or occurs on our systems or those of third party service providers or our clients, could expose us to significant liability under our contracts, as well as to regulatory actions, litigation, investigations, remediation obligations, damage to our reputation and brand, supplemental disclosure obligations, loss of client, customer, consumer, and partner confidence in the security of our applications, impairment to our business, and corresponding fees, fines, costs, expenses, loss of revenues, and other potential liabilities as well as increased costs or loss of revenue or other harm to our business.
Any unauthorized access, acquisition, use, or destruction of data we collect, use, store, process or transmit, and any associated fraud, the unavailability of such data, or other disruptions of our ability to provide services and solutions to our clients, regardless of whether it originates or occurs on our systems or those of third party service providers or our clients, could expose us to significant liability under our contracts, as well as to regulatory actions, litigation, investigations, remediation obligations, damage to our reputation and brand, supplemental disclosure obligations, loss of client, customer, consumer, and partner confidence in the security of our applications, impairment to our business, and corresponding fees, fines, costs, expenses, loss of revenues, and other potential liabilities as well as increased costs or loss of revenue or other harm to our business.
While it is often difficult to predict the impact of general economic and political conditions on our business, unfavorable economic or political conditions could adversely affect the demand for some of our clients’ products and services and, in turn, could cause a decline in the demand for our services and solutions and materially adversely affect our revenues, financial condition and results of operations.
While it is often difficult to predict the impact of general economic and political conditions on our business, unfavorable economic or political conditions could adversely affect the demand for some of our clients’ products and services and, in turn, could cause a decline in the demand for our services and solutions and materially adversely affect our business, financial condition or results of operations.
Any failure to maintain effective internal control over financial reporting could adversely affect the results of annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our periodic reports that are filed with the SEC.
Any failure to maintain effective internal control over financial reporting could adversely affect the results of annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our annual reports that are filed with the SEC.
Such events could also adversely affect global economies, worldwide financial markets and our clients’ levels of business activity and could potentially lead to economic recession, which could impact our clients’ purchasing decisions and reduce demand for our services and solutions and, consequently, adversely affect our business, financial condition, results of operations and cash flows.
Such events could also adversely affect global economies, worldwide financial markets and our clients’ levels of business activity and could potentially lead to economic recession, which could impact our clients’ purchasing decisions and reduce demand for our services and solutions and, consequently, adversely affect our business, financial condition, results of operations or cash flows.
In addition, our ability to manage our business and conduct our operations internationally requires considerable management attention and resources and is subject to the particular challenges of supporting a rapidly growing business in an environment of multiple languages, cultures, customs, legal and regulatory systems, alternative dispute systems, and commercial markets.
Our ability to manage our business and conduct our operations internationally requires considerable management attention and resources and is subject to the particular challenges of supporting a rapidly growing business in an environment of multiple languages, cultures, customs, legal and regulatory systems, alternative dispute systems, and commercial markets.
Although we filed claims for payment of amounts we are owed in these cases, we may not ultimately recover amounts owed. We also face risk from international clients that file for bankruptcy protection in foreign jurisdictions, particularly given that the application of foreign bankruptcy laws may be more difficult to predict.
Although we may file claims for payment of amounts we are owed in these cases, we may not ultimately recover amounts owed. We also face risk from international clients that file for bankruptcy protection in foreign jurisdictions, particularly given that the application of foreign bankruptcy laws may be more difficult to predict.
If we fail to accurately estimate future wage inflation rates, unhedged currency exchange rates or our costs, or if we fail to accurately estimate the productivity benefits we can achieve under a contract, it could have a material adverse effect on our business, financial condition and results of operations.
If we fail to accurately estimate future wage inflation rates, unhedged currency exchange rates or our costs, or if we fail to accurately estimate the productivity benefits we can achieve under a contract, it could have a material adverse effect on our business, financial condition or results of operations.
Since we operate or have operations in a number of foreign jurisdictions, our plans for expansion or our results of operations in such jurisdictions could be adversely affected if adopted proposals resulted in an increase in our tax burden, costs of our tax compliance or otherwise adversely affected our results of operations and cash flows.
Since we operate or have operations in a number of foreign jurisdictions, our plans for expansion or our results of operations in such jurisdictions could be adversely affected if adopted proposals resulted in an increase in our tax burden, costs of our tax compliance or otherwise adversely affected our results of operations or cash flows.
If our operating metrics are not accurate representations of our business, or if investors do not perceive our operating metrics to be accurate, or if we discover material inaccuracies with respect to these figures, our reputation may be significantly harmed, and our operating and financial results could be adversely affected.
If our operating metrics are not accurate or complete representations of our business, or if investors do not perceive our operating metrics to be accurate or complete, or if we discover material inaccuracies with respect to these figures, our reputation may be significantly harmed, and our operating and financial results could be adversely affected.
Any violations of these or other laws, regulations and procedures by our employees, independent contractors, subcontractors and agents, including third parties we associate with or companies we acquire, could expose us to administrative, civil or criminal penalties, fines or business restrictions, which could have a material adverse effect on our results of operations and financial condition and would adversely affect our reputation and the market for shares of our Class A common stock and may require certain of our investors to disclose their investment in us under certain state laws.
Any violations of these or other laws, regulations and procedures by our employees, independent contractors, subcontractors and agents, including third parties we associate with or companies we acquire, could expose us to administrative, civil or criminal penalties, fines or business restrictions, which could have a material adverse effect on our business, financial condition or results of operations and could adversely affect our reputation and the market for shares of our Class A common stock and require certain of our investors to disclose their investment in us under certain state laws.
The reduction in revenue or loss of all or a portion of our business with, or the failure to retain a significant amount of business with, any of our key clients could have a material adverse effect on our business, financial condition and results of operations.
The reduction in revenue or loss of all or a portion of our business with, or the failure to retain a significant amount of business with, any of our key clients could have a material adverse effect on our business, financial condition or results of operations.
The Company’s Philippines sites are primarily located within special economic zones benefit from favorable tax treatment provided by registrations with Philippine Economic Zone Authority (“PEZA”) and the Philippine Board of Investment (“BOI”).
The Company’s Philippines sites are primarily located within special economic zones that benefit from favorable tax treatment provided by registrations with Philippine Economic Zone Authority (“PEZA”) and the Philippine Board of Investment (“BOI”).
Any of these events, their consequences or the costs related to mitigation or remediation could have a material adverse effect on our business, financial condition, results of operations and prospects.
Any of these events, their consequences or the costs related to mitigation or remediation could have a material adverse effect on our business, financial condition, results of operations or prospects.
Any claims or litigation, even if fully indemnified or insured, could damage our reputation and make it more difficult to compete effectively or to obtain adequate insurance in the future.
Moreover, any claims or litigation, even if fully indemnified or insured, could damage our reputation and make it more difficult to compete effectively or to obtain adequate insurance in the future.
Some types of insurance are not available on reasonable terms or at all in some countries in which we operate, and we cannot insure against damage to our reputation.
Additionally, some types of insurance are not available on reasonable terms or at all in some countries in which we operate, and we cannot insure against damage to our reputation.
At times our actual results have not, and may in the future not always be, in line with or exceed any guidance we have provided, especially in times of economic uncertainty.
At times our actual results have not been, and may in the future not always be, in line with or exceed any guidance we have provided, especially in times of economic uncertainty.
Our business, and those of our clients, are subject to laws related to content moderation in some jurisdictions. In the United States, the Communications Decency Act (“CDA”) Section 230 provides protection to those who provide “interactive computer services” (e.g., websites and social media platforms) from being liable for the speech of their users (with certain exceptions).
Our business, and those of our clients, are subject to laws related to content moderation in some jurisdictions globally. For example, in the United States, the Communications Decency Act (“CDA”) Section 230 provides protection to those who provide “interactive computer services” (e.g., websites and social media platforms) from being liable for the speech of their users (with certain exceptions).
The loss of any of our major clients or a significant decrease in the volume of work they outsource to us or the price they are willing or able to pay us, if not replaced by new service engagements and revenue, could cause us to incur expenses, including related to severance payments, and materially adversely affect our revenues and results of operations.
The loss of any of our major clients or a significant decrease in the volume of work they outsource to us or the price they are willing or able to pay us, if not replaced by new service engagements and revenue, could cause us to incur expenses, including related to severance payments, and materially adversely affect our revenues, financial condition or results of operations.
We may fail to cost-effectively acquire and retain new clients, which would adversely affect our business, financial condition and results of operations.
We may fail to cost-effectively acquire and retain new clients, which would adversely affect our business, financial condition or results of operations.
Our failure to detect and deter criminal or fraudulent activities or other misconduct by our employees, or third parties such as contractors and consultants that may have access to our data, could result in loss of trust from our clients and negative publicity, which would have an adverse effect on our business and results of operations.
Our failure to detect and deter criminal or fraudulent activities or other misconduct by our employees, or third parties such as contractors and consultants that may have access to our data, could result in loss of trust from our clients and negative publicity, which would have an adverse effect on our business, financial condition or results of operations.
Our Sponsor and our Co-Founders are parties to a stockholders agreement and, as of the date of this Annual Report, beneficially own approximately 97.6% of the combined voting power of all classes of our stock entitled to vote generally in the election of directors. As a result, we are a “controlled company” within the meaning of Nasdaq corporate governance standards.
Our Sponsor and our Co-Founders are parties to a stockholders agreement and, as of the date of this Annual Report, beneficially own approximately 97.5% of the combined voting power of all classes of our stock entitled to vote generally in the election of directors. As a result, we are a “controlled company” within the meaning of Nasdaq corporate governance standards.
In the event we incur additional indebtedness, the risks described above could increase. In addition, the interest rate on our 2022 Credit Facilities is variable. An increase in the variable rate used to determine the interest we are required to pay could have a material adverse effect on our business, financial condition, results of operations and prospects.
In the event we incur additional indebtedness, the risks described above could increase. In addition, the interest rate on our 2022 Credit Facilities is variable. An increase in the variable rate used to determine the interest we are required to pay could have a material adverse effect on our business, financial condition, results of operations or prospects.
Such loss of trust and negative publicity could cause our existing clients to terminate or reduce the scope of their dealings with us and harm our ability to attract new clients, which would have an adverse effect on our business and results of operations.
Such loss of trust and negative publicity could cause our existing clients to terminate or reduce the scope of their dealings with us and harm our ability to attract new clients, which would have an adverse effect on our business, financial condition or results of operations.
See Part II, Item 7A, in this Annual Report, “Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk.” Our ability to raise additional capital through traditional means may be limited or impractical, causing us to seek funds through other types of financing, including private or public equity or debt offerings, which may result in dilution and harm our business and our ability to compete.
See Part II, Item 7A, in this Annual Report, “Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk.” 35 Table of Contents Our ability to raise additional capital through traditional means may be limited or impractical, causing us to seek funds through other types of financing, including private or public equity or debt offerings, which may result in dilution and harm our business and our ability to compete.
Moreove r, we nominated to our board of directors individuals designated by our Sponsor and our Co-Founders in accordance with the stockholders agreement we entered into in connection with our IPO. Our Sponsor and our Co-Founders retained the right to designate directors subject to the maintenance of certain ownership requirements in the Company.
Moreove r, we nominated to our board of directors individuals designated by our Sponsor and our Co-Founders in accordance with the stockholders agreement we entered into in connection with our IPO. Our Sponsor and our Co-Founders retain the right to designate directors subject to the maintenance of certain ownership requirements in the Company.
Operating internationally subjects us to new risks and may increase risks that we currently face, including risks associated with: • compliance with applicable international laws and regulations, including laws and regulations with respect to privacy, data protection, consumer protection, and unsolicited email, and the risk of penalties to our users and individual members of management or employees if our practices are deemed to be out of compliance; • recruiting and retaining talented and capable employees, and maintaining our company culture across our sites; • providing our services and solutions and operating our business across a significant distance, in different languages and among different cultures, including the potential need to modify our services and solutions to ensure that they are culturally appropriate and relevant in different countries; • management of an employee base in jurisdictions, such as Mexico, Greece and Ireland, that do not give us the same employment and retention flexibility as does the United States; • operating in jurisdictions that do not protect intellectual property rights to the same extent as does the United States; • compliance by us and our business partners with anti-corruption laws, import and export control laws, tariffs, trade barriers, economic sanctions, and other regulatory limitations on our ability to provide our platform in certain international markets; • foreign exchange controls that might require significant lead time in setting up operations in certain geographic territories and might prevent us from repatriating cash earned outside the United States; • political and economic instability; • changes in diplomatic and trade relationships, including the imposition of new trade restrictions, trade protection measures, import or export requirements, trade embargoes and other trade barriers; • double taxation of our international earnings and potentially adverse tax consequences due to changes in the income and other tax laws of the United States or the international jurisdictions in which we operate; and • higher costs of doing business internationally, including increased accounting, travel, infrastructure, and legal compliance costs.
Operating internationally subjects us to new risks and may increase risks that we currently face, including risks associated with: • compliance with applicable international laws and regulations, including laws and regulations with respect to privacy, data protection, consumer protection, and unsolicited email, and the risk of penalties to our clients and individual members of management or employees if our practices are deemed to be out of compliance; • recruiting and retaining talented and capable employees, and maintaining our company culture across our sites; • providing our services and solutions and operating our business across a significant distance, in different languages and among different cultures, including the potential need to modify our services and solutions to ensure that they are culturally appropriate and relevant in different countries; • management of an employee base in jurisdictions, such as Mexico, Colombia, Greece and Ireland, that do not give us the same employment and retention flexibility as does the United States and that generally favor employees in labor disputes; • operating in jurisdictions that do not protect intellectual property rights to the same extent as does the United States; 21 Table of Contents • compliance by us and our business partners with anti-corruption laws, import and export control laws, tariffs, trade barriers, economic sanctions, and other regulatory limitations on our ability to provide our platform in certain international markets; • foreign exchange controls that might require significant lead time in setting up operations in certain geographic territories and might prevent us from repatriating cash earned outside the United States; • political and economic instability; • changes in diplomatic and trade relationships, including the imposition of new trade restrictions, trade protection measures, import or export requirements, trade embargoes and other trade barriers; • double taxation of our international earnings and potentially adverse tax consequences due to changes in the income and other tax laws of the United States or the international jurisdictions in which we operate; and • higher costs of doing business internationally, including increased accounting, travel, infrastructure, and legal compliance costs.
In addition, our Sponsor may have an interest in our pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its investment, even though such transactions might involve risks to us and our stockholders. 37 Table of Contents We are a “controlled company” within the meaning of Nasdaq rules and, as a result, we qualify for exemptions from certain corporate governance requirements.
In addition, our Sponsor may have an interest in our pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its investment, even though such transactions might involve risks to us and our stockholders. We are a “controlled company” within the meaning of Nasdaq rules and, as a result, we qualify for exemptions from certain corporate governance requirements.
In addition, our operating results may fail to match our past performance and could be below the expectations of public market analysts and investors due to a number of potential factors, including variations in our quarterly operating results, any decision by significant clients to terminate or reduce our services (including failure to renew their contracts with us), additions or departures of key management personnel, failure to meet analysts’ earnings estimates, publication of research reports about our industry, the performance of direct and indirect competitors, litigation and government investigations, changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business, adverse market reaction to any indebtedness we may incur or securities we may issue in the future, changes in market valuations of similar companies, announcements by our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments, adverse publicity about the industries we participate in or individual scandals.
In addition, our operating results may fail to match our past performance and could be below the expectations of public market analysts and investors due to a number of potential factors, including variations in our quarterly operating results, any decision by significant clients to terminate or reduce our services (including failure to renew their contracts with us), additions or departures of key management personnel, failure to meet analysts’ earnings estimates, publication of research reports about our industry, the performance of direct and indirect competitors, technological advancements, including AI, that negatively impact our operating results, litigation and government investigations, changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business, adverse market reaction to any indebtedness we may incur or securities we may issue in the future, changes in market valuations of similar companies, announcements by our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments, adverse publicity about the industries we participate in or individual scandals.
Such consolidation may encourage clients to apply increasing pressure on us to lower the prices we charge for our solutions, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
Such consolidation may encourage clients to apply increasing pressure on us to lower the prices we charge for our solutions, which could have a material adverse effect on our business, financial condition, results of operations or prospects.
We are required to separately file with the SEC a notice when such activities have been disclosed, and the SEC is required to post such notice of disclosure on its website and send the report to the President and certain U.S. Congressional committees.
We are required to separately file with the SEC a notice when such activities have been disclosed, and the SEC is required to post such notice of disclosure on its website and send the report to the President of the United States and certain U.S. Congressional committees.
Any of these risks could materially and adversely affect our business, financial condition, results of operations and prospects.
Any of these risks could materially and adversely affect our business, financial condition, results of operations or prospects.
See Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Trends and Factors Affecting our Performance.” 18 Table of Contents As we increase our revenues from non-U.S. sites or expand our solution delivery or back office footprint to other international locations, this effect may be magnified.
See Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Trends and Factors Affecting our Performance.” As we increase our revenues from non-U.S. sites or expand our solution delivery or back office footprint to other international locations, this effect may be magnified.
In addition, we may become subject to taxation in jurisdictions where we would not otherwise be so subject as a result of the amount of time that our employees spend in any such jurisdiction in any given year.
Additionally, we may become subject to taxation in jurisdictions where we would not otherwise be so subject as a result of the amount of time that our employees spend in any such jurisdiction in any given year.
We also could be required to seek funds through arrangements with partners or others that may require us to relinquish rights or jointly own some aspects of our technologies or products that we would otherwise pursue on our own. 35 Table of Contents We track certain operational metrics with internal systems and tools and do not independently verify such metrics.
We also could be required to seek funds through arrangements with partners or others that may require us to relinquish rights or jointly own some aspects of our technologies or products that we would otherwise pursue on our own. We track certain operational metrics with internal systems and tools and do not independently verify such metrics.
We have in the past and may, but are not obligated to, continue to provide public guidance on our expected operating and financial results for future periods. Any such guidance will be comprised of forward-looking statements subject to the risks and uncertainties described in this Annual Report and in our other public filings and public statements.
We have in the past and may, but are not obligated to, continue to provide public guidance on our expected operating and financial results for future periods. Any such guidance will consist of forward-looking statements subject to the risks and uncertainties described in this Annual Report and in our other public filings and public statements.
We may not be successful in anticipating or responding to our client expectations and interests in adopting evolving technology solutions, and their integration in our offerings may not achieve the intended enhancements or cost reductions.
We may not be successful in anticipating or responding to our clients’ expectations and interests in adopting evolving technology solutions, and their integration in our offerings may not achieve the intended enhancements or cost reductions.
If we are unable to comply with these laws and regulations or manage the complexity of our global operations successfully, our business, financial condition and results of operations could be adversely affected. 22 Table of Contents We face substantial competition in our business. The markets in which we compete are highly competitive, highly fragmented and continuously evolving.
If we are unable to comply with these laws and regulations or manage the complexity of our global operations successfully, our business, financial condition or results of operations could be adversely affected. We face substantial competition in our business. The markets in which we compete are highly competitive, highly fragmented and continuously evolving.
Our past rapid growth was fueled in part by the rapid growth of our major clients in high-growth industries, such as social media, meal delivery and transport, e-commerce and FinTech. We may not be able to sustain revenue growth consistent with our recent history or at all.
Our past rapid growth was fueled in part by the rapid growth of our major clients in high-growth industries, such as social media, meal delivery and transport, e-commerce and financial services. We may not be able to sustain revenue growth consistent with our recent history or at all.
Our operating metrics are not necessarily indicative of the historical performance of our business or the results that may be expected for any future period. Our sites operate on leasehold property, and our inability to renew our leases on commercially acceptable terms or at all may adversely affect our results of operations. Our sites operate on leasehold property.
Additionally, our operating metrics are not necessarily indicative of the historical performance of our business or the results that may be expected for any future period. Our sites operate on leasehold property, and our inability to renew our leases on commercially acceptable terms or at all may adversely affect our business, financial condition or results of operations.
In addition, we have filed a registration statement on Form S-8 under the Securities Act to register shares of our Class A common stock issuable in respect of equity awards issued pursuant to our 2019 Stock Incentive Plan and our 2021 Omnibus Incentive Plan and in the future, we may file additional Form S-8s to cover additional equity awards.
We have filed registration statements on Form S-8 under the Securities Act to register shares of our Class A common stock issuable in respect of equity awards issued pursuant to our 2019 Stock Incentive Plan and our 2021 Omnibus Incentive Plan, and in the future, we may file additional Form S-8s to cover additional equity awards.
Risks Related to Our Business and Industry Our business is dependent on key clients, and the loss of a key client could have an adverse effect on our business and results of operations. We derive a substantial portion of our revenue from a few key clients who generally retain us across multiple service offerings.
Risks Related to Our Business and Industry Our business is dependent on key clients, and the loss of a key client could have an adverse effect on our business, financial condition or results of operations. We derive a substantial portion of our revenue from a few key clients who generally retain us across multiple service offerings.
Competition, fueled by rapidly changing consumer demands and constant technological developments, renders the industry in which we operate one in which success and performance metrics are difficult to predict and measure.
Competition, fueled by rapidly changing consumer demands and constant technological advancements, renders the industry in which we operate one in which success and performance metrics are difficult to predict and measure.
The transportation, hospitality, entertainment, e-commerce, FinTech (including cryptocurrency) and retail industries are particularly sensitive to the economic environment, and tend to decline during general economic downturns. In the past we have experienced, and may in the future experience, substantial variation in revenues from our consumer technology clients, including our FinTech (including cryptocurrency) clients.
The transportation, hospitality, entertainment, e-commerce, financial services (including cryptocurrency) and retail industries are particularly sensitive to the economic environment, and tend to decline during general economic downturns. In the past we have experienced, and may in the future experience, substantial variation in revenues from our consumer technology clients, including our financial services (including cryptocurrency) clients.
Our contracts are typically one to three years in length with automatic renewal provisions, but certain contracts may provide for termination at the client’s convenience with advance notice and may or may not include penalties or required payments in the event the termination right is exercised.
Our contracts are typically one to three years in length with automatic renewal provisions, but certain contracts may provide for termination for cause under certain circumstances or at the client’s convenience with advance notice and may or may not include penalties or required payments in the event the termination right is exercised.
Damage to our reputation could also reduce the value and effectiveness of our “TaskUs” brand name and investor confidence in us and result in a decline in the price of our Class A common stock. Pricing pressure may reduce our revenue or gross profits and adversely affect our financial results.
Damage to our reputation could also reduce the value and effectiveness of our “TaskUs” brand name and investor confidence in us and result in a decline in the price of our Class A common stock. Pricing pressure may reduce our revenue or gross profits and adversely affect our business, financial condition or results of operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changePrior to onboarding, we review the cybersecurity risk profile of third party vendors to ensure that they employ appropriate safeguards to comply with our internal standards and current industry regulations.
Biggest changeFurthermore, we engage third-party vendors to support our cybersecurity program. Prior to onboarding, we review the cybersecurity risk profile of third party vendors to ensure that they employ appropriate safeguards to comply with our internal standards and current industry regulations.
Our current DVP, Information Security has led the information security program at TaskUs for eight years, and has over a decade of prior experience in cybersecurity operations, risk assurance and internal audit.
Our current DVP, Information Security has led the information security program at TaskUs for nine years, and has over a decade of prior experience in cybersecurity operations, risk assurance and internal audit.
We memorialize our findings and review the results of these assessments with management and, where appropriate, our board of directors. Relevant modifications are incorporated into our cybersecurity framework to ensure that our systems functionally align with our cybersecurity strategies. Furthermore, we engage third-party vendors to support our cybersecurity program.
We memorialize our findings and review the results of these assessments with management and, where appropriate, our board of directors. Relevant modifications are incorporated into our cybersecurity framework to ensure that our systems functionally align with our cybersecurity strategies.
Added
Additionally, as the threat environment evolves, we have continued to refine our cybersecurity program in response to prior cyber incidents that have specifically impacted us, and that have more expansively impacted other companies; for example, we have recently instituted an incentive program for reporting of fraud threats and modified our employee training programs.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties As of December 31, 2023 , we leased approximately 1.6 million square feet of office space around the world, including our designated corporate headquarters located in New Braunfels, Texas. Our leases usually have a range of expiration dates from two to five years, and typically include a renewal option for an additional term.
Biggest changeItem 2. Properties As of December 31, 2024 , we leased approximately 1.8 million square feet of office space around the world, including our designated corporate headquarters located in New Braunfels, Texas. Our leases usually have a range of expiration dates from two to five years, and typically include a renewal option for an additional term.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities During the three months ended December 31, 2023, our purchases of Class A common stock were as follows: Period Total number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in thousands) October 1, 2023 through October 31, 2023 1,236,503 $ 8.88 1,236,503 $ 65,515 November 1, 2023 through November 30, 2023 695,971 10.83 695,971 57,974 December 1, 2023 through December 31, 2023 59,151 12.09 59,151 57,260 Total 1,991,625 $ 9.66 1,991,625 (1) On May 8, 2023, the Company announced that the Board of Directors of the Company authorized a $100.0 million increase to the Company's share repurchase program, increasing the total authorization to $200.0 million, with the total amount remaining available after the increase being exclusive of any commissions, fees or excise taxes.
Biggest changeIssuer Purchases of Equity Securities During the three months ended December 31, 2024, our purchases of Class A common stock were as follows: Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in thousands) October 1, 2024 through October 31, 2024 184,200 $ 11.83 184,200 $ 39,640 November 1, 2024 through November 30, 2024 — — — — December 1, 2024 through December 31, 2024 — — — — Total 184,200 $ 11.83 184,200 (1) On December 6, 2024, the Company announced a one-year extension of its share repurchase authorization, extending the previously authorized $200.0 million authorization through December 31, 2025.
Because many of our shares of Class A common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders. As of December 31, 2023, there were seven stockholders of record of our Class B common stock.
Because many of our shares of Class A common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders. As of December 31, 2024, there were three stockholders of record of our Class B common stock.
Our Class B common stock is not listed on any stock exchange nor traded on any public market. Holders of Record As of December 31, 2023, there were 110 stockholders of record of our Class A common stock, and the closing price of our Class A common stock was $13.07 per share as reported on the Nasdaq.
Our Class B common stock is not listed on any stock exchange nor traded on any public market. Holders of Record As of December 31, 2024, there were 112 stockholders of record of our Class A common stock, and the closing price of our Class A common stock was $16.94 per share as reported on the Nasdaq.
The repurchase program terminates on December 31, 2024, and may be modified, suspended or discontinued at any time at our discretion. The program does not obligate the Company to acquire any amount of Class A common stock. (2) Average price paid per share excludes commissions and other costs associated with the repurchases.
The repurchase program may be modified, suspended or discontinued at any time at the Company’s discretion and does not obligate the Company to acquire any amount of Class A common stock. (2) Average price paid per share excludes commissions and other costs associated with the repurchases. Recent Sale of Unregistered Securities and Use of Proceeds None.
Removed
Recent Sale of Unregistered Securities and Use of Proceeds None.
Added
The share repurchase program was initially announced in September 2022 for up to $100.0 million of shares of our Class A common stock and capacity was increased to a total authorization of $200.0 million of shares of our Class A common stock (exclusive of any commissions, fees or excise taxes) in May 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

82 edited+32 added−39 removed48 unchanged
Biggest changeOur management believes that the inclusion of supplementary adjustments to net income applied in presenting Adjusted Net Income are appropriate to provide additional information to investors about certain material non-cash items and about unusual items that we do not expect to continue at the same level in the future. 54 Table of Contents The following table reconciles net income, the most directly comparable GAAP measure, to Adjusted Net Income for the years ended December 31, 2023 and 2022: Year ended December 31, Period over Period Change (in thousands, except %) 2023 2022 ($) (%) Net income $ 45,690 $ 40,422 $ 5,268 13.0 % Amortization of intangible assets 20,346 19,882 464 2.3 % Transaction costs (1) 245 953 (708) (74.3) % Earn-out consideration (2) 7,863 9,729 (1,866) (19.2) % Foreign currency losses (3) 431 7,967 (7,536) (94.6) % Loss on disposal of assets 1,322 31 1,291 NM Severance costs (4) 1,852 821 1,031 125.6 % Stock-based compensation expense (5) 53,179 69,452 (16,273) (23.4) % Tax impacts of adjustments (6) (4,386) (6,442) 2,056 (31.9) % Adjusted Net Income $ 126,542 $ 142,815 $ (16,273) (11.4) % Net Income Margin (7) 4.9 % 4.2 % Adjusted Net Income Margin (7) 13.7 % 14.9 % NM = not meaningful (1) Represents professional service fees primarily related to the acquisition of heloo in 2022 and other non-recurring transactions.
Biggest changeThe following table reconciles net income, the most directly comparable GAAP measure, to Adjusted Net Income for the years ended December 31, 2024 and 2023: Year ended December 31, Period over Period Change (in thousands, except %) 2024 2023 ($) (%) Net income $ 45,870 $ 45,690 $ 180 0.4 % Amortization of intangible assets 19,935 20,346 (411) (2.0) % Transaction costs (1) — 245 (245) (100.0) % Earn-out consideration (2) — 7,863 (7,863) (100.0) % Foreign currency losses (3) 1,302 431 871 202.1 % Loss (gain) on disposal of assets (80) 1,322 (1,402) NM Severance costs (4) 487 1,852 (1,365) (73.7) % Litigation costs (5) 15,423 — 15,423 100.0 % Stock-based compensation expense (6) 42,391 53,179 (10,788) (20.3) % Tax impacts of adjustments (7) (6,644) (4,386) (2,258) 51.5 % Adjusted Net Income $ 118,684 $ 126,542 $ (7,858) (6.2) % Net Income Margin (8) 4.6 % 4.9 % Adjusted Net Income Margin (8) 11.9 % 13.7 % NM = not meaningful (1) Represents professional service fees related to non-recurring transactions.
During the periods presented, we excluded from Adjusted Net Income amortization of intangible assets, transaction costs, earn-out consideration, the effect of foreign currency gains and losses, gains and losses on disposals of assets, non-recurring severance costs, stock-based compensation expense and associated employer payroll tax and the related effect on income taxes of certain pre-tax adjustments, which include costs that are required to be expensed in accordance with GAAP.
During the periods presented, we excluded from Adjusted Net Income amortization of intangible assets, transaction costs, earn-out consideration, the effect of foreign currency gains and losses, gains and losses on disposals of assets, non-recurring severance costs, certain non-recurring litigation costs, stock-based compensation expense and associated employer payroll tax and the related effect on income taxes of certain pre-tax adjustments, which include costs that are required to be expensed in accordance with GAAP.
During the periods presented, we excluded from Adjusted EBITDA transaction costs, earn-out consideration, the effect of foreign currency gains and losses, gains and losses on disposals of assets, non-recurring severance costs, stock-based compensation expense and associated employer payroll tax and interest income, which include costs that are required to be expensed in accordance with GAAP.
During the periods presented, we excluded from Adjusted EBITDA transaction costs, earn-out consideration, the effect of foreign currency gains and losses, gains and losses on disposals of assets, non-recurring severance costs, certain non-recurring litigation costs, stock-based compensation expense and associated employer payroll tax and interest income, which include costs that are required to be expensed in accordance with GAAP.
We have designed our platform to enable us to rapidly scale and benefit from our clients’ growth. We believe our ability to deliver “ridiculously good” outsourcing will enable us to continue to grow our client base. We use our strong reputation and expertise serving the digital economy to attract new innovators and enterprise-class brands looking to transform.
We have designed our platform to enable us to rapidly scale and benefit from our clients’ growth. We believe our ability to deliver “ridiculously good” outsourcing will enable us to continue growing our client base. We use our strong reputation and expertise serving the digital economy to attract new innovators and enterprise-class brands looking to transform.
We were in compliance with all debt covenants as of December 31, 2023. Substantially all assets of our direct wholly owned subsidiary TU MidCo, Inc., its wholly owned subsidiary TU BidCo, Inc. and its material wholly owned domestic subsidiaries are pledged as collateral under the 2022 Credit Agreement, subject to certain customary exceptions.
We were in compliance with all debt covenants as of December 31, 2024. Substantially all assets of our direct wholly owned subsidiary TU MidCo, Inc., its wholly owned subsidiary TU BidCo, Inc. and its material wholly owned domestic subsidiaries are pledged as collateral under the 2022 Credit Agreement, subject to certain customary exceptions.
These changes in geographic mix may result in fluctuations in revenue and cost of service which are driven by the geography in which the work is being performed. These fluctuations are in line with our business model, which aims to deliver service out of the optimal geography for our clients.
These changes in geographic mix may result in fluctuations in revenue and cost of service which are driven by the geography in which the work is being performed. These fluctuations align with our business model, which aims to deliver service out of the optimal geography for our clients.
Net cash provided by operating activities for the year ended December 31, 2023 reflects net income of $45.7 million, as well as the add back for non-cash charges totaling $110.0 million, primarily driven by $52.8 million in stock-based compensation expense, $40.4 million of depreciation and $20.3 million of amortization of intangible assets, partially offset by deferred taxes of $8.0 million.
Net cash provided by oper ating activities for the year ended December 31, 2023 reflects net income of $45.7 million, as well as the add back for non-cash charges totaling $110.0 million, primarily driven by $52.8 million in stock-based compensation expense, $40.4 million of depreciation and $20.3 million of amortization of intangible assets, partially offset by deferred taxes of $8.0 million.
As we enter new geographies and make new capabilities available, clients may elect to move current work with TaskUs in one geography to another geography to optimize cost or to provide additional business continuity to their operations.
As we enter new geographies and make new capabilities available, clients may elect to move current work with TaskUs from one geography to another to optimize cost or provide additional business continuity to their operations.
Borrowings under the 2022 Credit Agreement, with the exception of swing line borrowings, bear interest, at our option, either at (i) an adjusted Term Secured Overnight Financing Rate (“SOFR rate”) plus a margin of 2.25% per annum, subject to a SOFR rate floor of 0.00% or (ii) an alternative base rate plus a margin of 1.25% per annum, subject to an alternative base rate floor of 1.00%, Any borrowings under the swing line will be subject to the base rate.
Borrowings under the 2022 Credit Agreement, with the exception of swing line borrowings, bear interest, at our option, either at (i) an adjusted Term Secured Overnight Financing Rate (“SOFR rate”) plus a margin of 2.25% per annum, subject to a SOFR rate floor of 0.00% or (ii) an alternative base rate plus a margin of 1.25% per annum, subject to an alternative base rate floor of 1.00%.
The proceeds of the 2022 Term Loan Facility were used to repay all borrowings under the 2019 Credit Facilities, to pay related fees and expenses and for general corporate purposes.
The proceeds of the 2022 Term Loan Facility were used to repay all borrowings under the 2019 Credit Agreement, to pay related fees and expenses and for general corporate purposes.
A discussion regarding our financial condition and results of operations for the fiscal year ended December 31, 2022 compared to the fiscal year ended December 31, 2021 can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 6, 2023, which is incorporated herein by reference.
A discussion regarding our financial condition and results of operations for the fiscal year ended December 31, 2023 compared to the fiscal year ended December 31, 2022 can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 8, 2024, which is incorporated herein by reference.
The following discussion provides a narrative of our financial condition and results of operations for the fiscal year ended December 31, 2023 compared to the fiscal year ended December 31, 2022 .
The following discussion provides a narrative of our financial condition and results of operations for the fiscal year ended December 31, 2024 compared to the fiscal year ended December 31, 2023 .
As of December 31, 2023, we had no balance outstanding and $190.0 million of borrowing availability under the 2022 Revolving Credit Facility.
As of December 31, 2024, we had no balance outstanding and $190.0 million of borrowing availability under the 2022 Revolving Credit Facility.
Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations. Income Taxes Income taxes are accounted for under the asset and liability method.
Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations. 59 Table of Contents Income Taxes Income taxes are accounted for under the asset and liability method.
As of December 31, 2023 and 2022, our Headcount included approximately 350 and 500, respectively, of contractor and agency teammates who support our heloo operations. (2) “Net revenue retention rate” is an important metric we calculate annually to measure the retention and growth in the use of our services by our existing clients.
As of December 31, 2024 and 2023, our Headcount included approximately 150 and 350, respectively, of contractor and agency teammates who support our heloo operations. (2) “Net revenue retention rate” is an important metric we calculate annually to measure the retention and growth in the use of our services by our existing clients.
Key Components of Our Results of Operations Service Revenue We derive revenues from the following three service offerings: • Digital Customer Experience: Principally consists of omni-channel customer care services primarily delivered through digital (non-voice) channels.
Key Components of Our Results of Operations Service Revenue We derive revenues from the following three service offerings: • Digital Customer Experience : Principally consists of omnichannel customer care services, primarily delivered through digital (non-voice) channels.
Other Expense (Income), Net Other expense (income), net primarily consists of gains and losses resulting from changes in the fair value of our foreign currency exchange rate forward contracts which are not designated as hedging instruments. Other income also includes gains and losses resulting from the remeasurement of U.S.-denominated accounts to foreign currency and interest income.
Other income, net Other income, net primarily consists of gains and losses resulting from the remeasurement of U.S.-denominated accounts to foreign currency, gains and losses resulting from changes in the fair value of our foreign currency exchange rate forward contracts which are not designated as hedging instruments, as well as interest income.
(2) Represents earn-out consideration recognized as compensation expense related to the acquisition of heloo. (3) Realized and unrealized foreign currency losses include the effect of fair market value changes of forward contracts and remeasurement of U.S. dollar-denominated accounts to foreign currency.
(2) Represents earn-out consideration recognized as compensation expense related to the acquisition of heloo. (3) Realized and unrealized foreign currency losses include the effect of fair market value changes of forward contracts not designated as hedging instruments and remeasurement of U.S. dollar-denominated accounts to foreign currency.
(2) Represents earn-out consideration recognized as compensation expense related to the acquisition of heloo. (3) Realized and unrealized foreign currency losses include the effect of fair market value changes of forward contracts and remeasurement of U.S. dollar-denominated accounts to foreign currency.
(2) Represents earn-out consideration recognized as compensation expense related to the acquisition of heloo. (3) Realized and unrealized foreign currency losses include the effect of fair market value changes of forward contracts not designated as hedging instruments and remeasurement of U.S. dollar-denominated accounts to foreign currency.
The interest rate in effect for the 2022 Term Loan Facility as of December 31, 2023 was 7.705% per annum. The 2022 Credit Agreement contains a financial covenant requiring compliance with a maximum total net leverage ratio and certain other covenants, including, among other things, covenants restricting additional borrowings, investments (including acquisitions) and distributions.
The interest rate in effect for the 2022 Term Loan Facility as of December 31, 2024 was 6.679% per annum. The 2022 Credit Agreement contains a financial covenant requiring compliance with a maximum total net leverage ratio and certain other covenants, including, among other things, covenants restricting additional borrowings, investments (including acquisitions) and distributions.
These changes were partially offset by changes in operating assets and liabilities of $12.1 million.
These changes were partially offset by changes in operating assets and liabilities of $2.1 million.
Key Operational Metrics We regularly monitor the below operating metrics in order to measure our current performance and estimate our future performance: Year ended December 31, 2023 2022 Headcount (approx. at period end) (1) 48,200 49,500 Net revenue retention rate (2) 89 % 114 % (1) “Headcount” refers to the total number of TaskUs teammates globally as of the end of a given measurement period.
Key Operational Metrics We regularly monitor the below operating metrics in order to measure our current performance and estimate our future performance: Year ended December 31, 2024 2023 Headcount (approx. at period end) (1) 59,000 48,200 Net revenue retention rate (2) 102 % 89 % (1) “Headcount” refers to the total number of TaskUs teammates globally as of the end of a given measurement period.
The 2022 Revolving Credit Facility also requires a commitment fee of 0.40% per annum of undrawn commitments to be paid quarterly in arrears. We have elected to pay interest on borrowings under the 2022 Term Loan Facility based on the SOFR rate.
Any borrowings under the swing line will be subject to the base rate. The 2022 Revolving Credit Facility also requires a commitment fee of 0.40% per annum of undrawn commitments to be paid quarterly in arrears. We have elected to pay interest on borrowings under the 2022 Term Loan Facility based on the SOFR rate.
Also included in this area are our offerings for risk management, compliance, identity management and fraud. • AI Services: Principally consists of high-quality data labeling services, annotation, context relevance and transcription services performed for the purpose of training and tuning machine learning algorithms, enabling them to develop cutting-edge AI systems.
Also included in this offering are our services for risk management, compliance, identity management and fraud. • AI Services : Principally consists large language model support and high-quality data labeling services, annotation, context relevance and transcription services performed for the purpose of training and tuning machine learning algorithms, enabling them to develop cutting-edge AI systems.
Trends and Factors Affecting our Performance There are a number of key factors and trends affecting our results of operations. New client wins and growing with our current clients We won 47 new clients in 2023, and we achieved a 35% new client win rate for every dollar of new client opportunities we pursued.
Trends and Factors Affecting our Performance There are a number of key factors and trends affecting our results of operations. New client wins and growing with our current clients We won 39 new clients in 2024, and we achieved a 45% new client win rate for every dollar of new client opportunities we pursued.
These changes were partially offset by changes in operating assets and liabilities of $6.1 million. Investing Activities Net cash used in investing activities for the year ended December 31, 2023 was $32.0 million compared to net cash used in investing activities of $68.0 million for the year ended December 31, 2022.
These changes were partially offset by changes in operating assets and liabilities of $12.1 million. Investing Activities Net cash used in investing activities for the year ended December 31, 2024 was $39.1 million compared to net cash used in investing activities of $32.0 million for the year ended December 31, 2023.
Our global, omni-channel delivery model is focused on providing our clients three key services – Digital Customer Experience (“Digital CX”), Trust and Safety and Artificial Intelligence (“AI”) Ser vices. 88% of our revenue for the year ended December 31, 2023 was delivered from non-voice, digital channels or omni-channel services which allow us to utilize resources efficiently, thereby driving higher profitability.
Our global, omnichannel delivery model is focused on providing our clients three key services – Digital Customer Experience (“Digital CX”), Trust + Safety, and Artificial Intelligence (“AI”) Ser vices. 87% of our revenue for the year ended December 31, 2024 wa s delivered from non-voice, digital channels or omnichannel services which allow us to utilize resources efficiently, thereby driving higher profitability.
AI Services contributed 0.2% of the total increase primarily driven by clients in On Demand Travel + Transportation and Social Media, mostly offset by clients in HealthTech and Retail + E-Commerce. Digital Customer Experience reduced 2.5% of the total increase primarily driven by clients in On Demand Travel + Transportation, partially offset by clients in Technology and Retail + E-Commerce.
AI Services contributed 4.2% of the total increase primarily driven by clients in Professional Services + Industry and Social Media. Digital Customer Experience reduced 4.9% of the total increase primarily driven by clients in On Demand Travel + Transportation, partially offset by clients in Retail + E-Commerce.
Our strategy is to win new clients and further grow with our existing ones in order to achieve meaningful client and revenue diversification over time. 53 Table of Contents Foreign Currency As a global company, we face exposure to movements in foreign currency exchange rates.
We continue to identify and target high growth industry verticals and clients. Our strategy is to win new clients and further grow with our existing ones in order to achieve meaningful client and revenue diversification over time. Foreign Currency As a global company, we face exposure to movements in foreign currency exchange rates.
General and administrative expenses consist of personnel costs and related expenses for technology, human resources, legal, finance, global shared services, and executives as well as professional fees, insurance premiums, cloud-based capabilities and other corporate expenses.
Additionally, it includes costs of marketing and promotional events, corporate communications, and other brand-building activities. General and administrative expenses consist of personnel costs and related expenses for technology, human resources, legal, finance, global shared services, and executives as well as professional fees, insurance premiums, cloud-based capabilities and other corporate expenses.
The following table reconciles net cash provided by operating activities, the most directly comparable GAAP measure, to Free Cash Flow for the years ended December 31, 2023 and 2022: Year ended December 31, 2023 2022 Net cash provided by operating activities $ 143,670 $ 147,095 Purchase of property and equipment (30,995) (43,758) Free Cash Flow $ 112,675 $ 103,337 Conversion of Adjusted EBITDA (1) 51.0 % 46.3 % (1) Conversion of Adjusted EBITDA represents Free Cash Flow divided by Adjusted EBITDA 57 Table of Contents Liquidity and Capital Resources As of December 31, 2023, our principal sources of liquidity were cash and cash equivalents totaling $125.8 million, which were held for working capital purposes, as well as the available balance of our 2022 Credit Facilities, described further below.
The following table reconciles net cash provided by operating activities, the most directly comparable GAAP measure, to Free Cash Flow for the years ended December 31, 2024 and 2023: Year ended December 31, 2024 2023 Net cash provided by operating activities $ 138,888 $ 143,670 Purchase of property and equipment (39,104) (30,995) Free Cash Flow $ 99,784 $ 112,675 Conversion of Adjusted EBITDA to Free Cash Flow (1) 47.5 % 51.0 % (1) Conversion of Adjusted EBITDA to Free Cash Flow represents Free Cash Flow divided by Adjusted EBITDA. 56 Table of Contents Liquidity and Capital Resources As of December 31, 2024, our principal sources of liquidity were cash and cash equivalents totaling $192.2 million, which were held for working capital purposes, as well as the available balance of our 2022 Credit Facilities, described further below.
If those costs are removed, the provision for income taxes would have bee n $33.7 million and $30.6 million and the effective tax rate would have been 24.5% and 21.4% for the years ended December 31, 2023 and December 31, 2022, respectively.
If those costs are removed, the provision for income taxes would have been $35.0 million and $33.7 million and the effective tax rate would have been 26.4% and 24.5% for the years ended December 31, 2024 and December 31, 2023, respectively.
AI Services contributed 4.6% of the total decrease primarily driven by clients in Social Media, On Demand Travel + Transportation and Retail + E-Commerce, partially offset by clients in HealthTech. India: Trust and Safety contributed 15.2% of the total increase primarily driven by clients in On Demand Travel + Transportation and Social Media.
AI Services was flat driven by a decrease in clients in On Demand Travel + Transportation, mostly offset by clients in Social Media. India: Trust + Safety contributed 7.6% of the total increase primarily driven by clients in Social Media, On Demand Travel + Transportation and Retail + E-Commerce.
Expanding geographically We expanded our presence from 27 sites in 13 countries as of December 31, 2022 to 28 sites in 12 countries as of December 31, 2023.
Expanding geographically We expanded our presence to 28 sites in 12 countries as of December 31, 2024.
Net cash provided by oper ating activities for the year ended December 31, 2022 reflects the net income of $40.4 million, as well as the add back for non-cash charges totaling $112.8 million, primarily driven by $69.0 million in stock-based compensation expense, $37.9 million of depreciation and $19.9 million of amortization of intangible assets, partially offset by deferred taxes of $11.8 million.
Net cash provided by operating activities for the year ended December 31, 2024 reflects net income of $45.9 million, as well as the add back for non-cash charges totaling $90.9 million, primarily driven by $41.8 million in stock-based compensation expense, $40.2 million of depreciation and $19.9 million of amortization of intangible assets, partially offset by deferred taxes of $10.9 million.
(7) Net Income Margin represents net income divided by service revenue and Adjusted EBITDA Margin represents Adjusted EBITDA divided by service revenue. Free Cash Flow Free Cash Flow is a non-GAAP liquidity measure that represents our ability to generate additional cash from our business operations.
(7) Represents interest earned on short-term savings, time-deposit and money market funds. (8) Net Income Margin represents net income divided by service revenue and Adjusted EBITDA Margin represents Adjusted EBITDA divided by service revenue. Free Cash Flow Free Cash Flow is a non-GAAP liquidity measure that represents our ability to generate additional cash from our business operations.
Adjusted EPS Adjusted EPS is a non-GAAP profitability measure that represents earnings available to shareholders excluding the impact of certain items that are considered to hinder comparison of the performance of our business on a period-over-period basis or with other businesses. Adjusted EPS is calculated as Adjusted Net Income divided by our diluted weighted-average number of shares outstanding.
(8) Net Income Margin represents net income divided by service revenue and Adjusted Net Income Margin represents Adjusted Net Income divided by service revenue. 54 Table of Contents Adjusted EPS Adjusted EPS is a non-GAAP profitability measure that represents earnings available to shareholders excluding the impact of certain items that are considered to hinder comparison of the performance of our business on a period-over-period basis or with other businesses.
Cash Flows The following table presents a summary of our consolidated cash flows from operating, investing and financing activities for the periods indicated: Year ended December 31, (in thousands) 2023 2022 Net cash provided by operating activities $ 143,670 $ 147,095 Net cash used in investing activities (31,995) (67,993) Net cash used in financing activities (119,085) (4,035) 59 Table of Contents Operating Activities Net cash provided by operating activities for the year ended December 31, 2023 was $143.7 million compared to net cash provided by operating activities of $147.1 million for the year ended December 31, 2022.
Cash Flows The following table presents a summary of our consolidated cash flows from operating, investing and financing activities for the periods indicated: Year ended December 31, (in thousands) 2024 2023 Net cash provided by operating activities $ 138,888 $ 143,670 Net cash used in investing activities (39,104) (31,995) Net cash used in financing activities (25,176) (119,085) 58 Table of Contents Operating Activities Net cash provided by operating activities for the year ended December 31, 2024 was $138.9 million compared to net cash provided by operating activities of $143.7 million for the year ended December 31, 2023.
While we incurred certain costs associated with these changes, including severance in some cases, we believe these actions will have long-term benefits to the goal of enabling our future growth and profitability.
We reviewed our cost structure and invested in process and technology improvements in order to drive efficiencies across functions. While we incurred certain costs associated with these activities, including severance in some cases, we believe these actions will have long-term benefits to the goal of enabling our future growth and profitability.
During the year ended December 31, 2023, we repurchased 10,146,692 shares of our Class A common stock under the share repurchase program for $111.8 million, which we funded principally with available cash. As of December 31, 2023, approximately $57.3 million remained available for share repurchases under our share repurchase program.
During the year ended December 31, 2024, we repurchased 1,527,354 shares of our Class A common stock under the share repurchase program for $17.6 million , which we funded principally with available cash. As of December 31, 2024, approximately $39.6 million remained available for share repurchases under our share repurchase program.
We believe our focus on employee culture leads to lower employee attrition levels. Apart from driving our high client satisfaction and retention metrics, lower employee attrition leads to lower hiring and training costs and higher employee productivity.
We seek to retain sufficient employees to serve our clients’ increasing business needs and position ourselves for growth. We believe our focus on employee culture leads to lower employee attrition levels. Apart from driving our high client satisfaction and retention metrics, lower employee attrition leads to lower hiring and training costs and higher employee productivity.
Recent Accounting Pronouncements For additional information regarding recent accounting pronouncements adopted and under evaluation, refer to Note 2, “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements.
Recent Accounting Pronouncements For additional information regarding recent accounting pronouncements adopted and under evaluation, refer to Note 2, “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements. JOBS Act Accounting Election We qualify as an emerging growth company pursuant to the provisions of the JOBS Act.
Each of the measures are not recognized under accounting principles generally accepted in the United States of America ("GAAP") and do not purport to be an alternative to net income or cash flow as a measure of our performance.
Non-GAAP Financial Measures We use Adjusted Net Income, Adjusted Earnings Per Share (“EPS”), EBITDA, Adjusted EBITDA, Free Cash Flow and Conversion of Adjusted EBITDA to Free Cash Flow, as key measures to assess the performance of our business. 53 Table of Contents Each of the measures are not recognized under accounting principles generally accepted in the United States of America ("GAAP") and do not purport to be an alternative to net income or cash flow as a measure of our performance.
As of December 31, 2023, we served nearly 200 clients spanning established and emerging industry segments, including e-commerce, FinTech, food delivery and ride sharing, gaming, Technology, HealthTech, social media and streaming media.
As of December 31, 2024, we supported approximately 200 clients spanning established and emerging industry sectors, including social media, e-commerce, gaming, streaming media, food delivery and ride-sharing, technology, financial services, and healthcare.
Loss on disposal of assets The increase in loss on disposal of asset s is associated with optimizing our footprint, resulting in exiting certain sites in the United States and the Philippines.
Loss (gain) on disposal of assets The change wa s associated with optimizing our footprint in 2023, resulting in exiting certain sites in the United States and the Philippines. Other income, net Increase is due primarily to higher interest income.
On September 7, 2022, we entered into the 2022 Credit Agreement (as defined below) and the total outstanding debt under the 2019 Credit Facilities of $267.2 million was fully repaid. 58 Table of Contents 2022 Credit Agreement On September 7, 2022, we entered into a credit agreement (the “2022 Credit Agreement”) with both new and existing lenders which amended and restated the 2019 Credit Agreement.
Indebtedness As of December 31, 2024, our total indebtedness, net of debt financing fees was $256.2 million . 57 Table of Contents 2022 Credit Agreement On September 7, 2022, we entered into a credit agreement (the “2022 Credit Agreement”) with both new and existing lenders which amended and restated the 2019 Credit Agreement.
Our management believes that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA are appropriate to provide additional information to investors about certain material non-cash items and about unusual items that we do not expect to continue at the same level in the future. 56 Table of Contents The following table reconciles net income, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA for the years ended December 31, 2023 and 2022: Year ended December 31, Period over Period Change (in thousands, except %) 2023 2022 ($) (%) Net income $ 45,690 $ 40,422 5,268 13.0 % Provision for income taxes 29,342 24,111 5,231 21.7 % Financing expenses 21,717 11,921 9,796 82.2 % Depreciation 40,391 37,915 2,476 6.5 % Amortization of intangible assets 20,346 19,882 464 2.3 % EBITDA 157,486 134,251 23,235 17.3 % Transaction costs (1) 245 953 (708) (74.3) % Earn-out consideration (2) 7,863 9,729 (1,866) (19.2) % Foreign currency losses (3) 431 7,967 (7,536) (94.6) % Loss on disposals of assets 1,322 31 1,291 NM Severance costs (4) 1,852 821 1,031 125.6 % Stock-based compensation expense (5) 53,179 69,452 (16,273) (23.4) % Interest income (6) (1,581) — (1,581) (100.0) % Adjusted EBITDA $ 220,797 $ 223,204 $ (2,407) (1.1) % Net Income Margin (7) 4.9 % 4.2 % Adjusted EBITDA Margin (7) 23.9 % 23.2 % NM = not meaningful (1) Represents professional service fees related to the acquisition of heloo in 2022 and other non-recurring transactions.
Our management believes that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA are appropriate to provide additional information to investors about certain material non-cash items and about unusual items that we do not expect to continue at the same level in the future. 55 Table of Contents The following table reconciles net income, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA for the years ended December 31, 2024 and 2023: Year ended December 31, Period over Period Change (in thousands, except %) 2024 2023 ($) (%) Net income $ 45,870 $ 45,690 $ 180 0.4 % Provision for income taxes 28,311 29,342 (1,031) (3.5) % Financing expenses 21,549 21,717 (168) (0.8) % Depreciation 40,223 40,391 (168) (0.4) % Amortization of intangible assets 19,935 20,346 (411) (2.0) % EBITDA 155,888 157,486 (1,598) (1.0) % Transaction costs (1) — 245 (245) (100.0) % Earn-out consideration (2) — 7,863 (7,863) (100.0) % Foreign currency losses (3) 1,302 431 871 202.1 % Loss (gain) on disposal of assets (80) 1,322 (1,402) NM Severance costs (4) 487 1,852 (1,365) (73.7) % Litigation costs (5) 15,423 — 15,423 100.0 % Stock-based compensation expense (6) 42,391 53,179 (10,788) (20.3) % Interest income (7) (5,544) (1,581) (3,963) 250.7 % Adjusted EBITDA $ 209,867 $ 220,797 $ (10,930) (5.0) % Net Income Margin (8) 4.6 % 4.9 % Adjusted EBITDA Margin (8) 21.1 % 23.9 % NM = not meaningful (1) Represents professional service fees related to non-recurring transactions.
Recent Financial Highlights For the year ended December 31, 2023, we recorded service revenue of $924.4 million, a 3.8% decrease from $960.5 million for the year ended December 31, 2022.
Recent Financial Highlights For the year ended December 31, 2024, we recorded service revenue of $995.0 million, a 7.6% increase from $924.4 million for the year ended December 31, 2023.
AI Services reduced 0.4% of the total increase primarily driven by clients in Social Media and On Demand Travel + Transportation, partially offset by clients in HealthTech, Retail + E-Commerce, Entertainment + Gaming and Technology.
Digital Customer Experience contributed 4.0% of the total increase primarily driven by clients in Financial Services, Technology and Healthcare, partially offset by clients in Retail + E-Commerce. AI Services reduced 0.5% of the total increase primarily driven by clients in Social Media.
Net cash used in financing activities for the year ended December 31, 2023 consisted primarily of payments to acquire shares under our share repurchase program.
Financing Activities Net cash used in financing activities for the year ended December 31, 2024 was $25.2 million compared to net cash used in financing activities of $119.1 million for the year ended December 31, 2023. The decrease was due primarily to lower payments to acquire shares under our share repurchase agreement.
Digital Customer Experience contributed 23.4% of the total decrease primarily driven by clients in FinTech, Social Media and Entertainment + Gaming, partially offset by clients in On Demand Travel + Transportation and Technology. Trust and Safety contributed 13.1% of the total decrease primarily driven by clients in Social Media and FinTech.
United States: Digital Customer Experience contributed 23.5% of the total decrease primarily driven by clients in On Demand Travel + Transportation, Entertainment + Gaming, Technology, Social Media, Healthcare and Retail + E-Commerce. Trust + Safety reduced 2.7% of the total decrease primarily driven by clients in Social Media and On Demand Travel + Transportation.
As of December 31, 2023 , we served nearly 200 of the world’s leading technology companies. As our clients grow in size and the complexity of their outsourcing needs increases, we believe we have an opportunity to increase the addressable spend available to TaskUs through enhanced penetration of current services as well as cross-selling new services.
As our clients grow in size and the complexity of their outsourcing needs increases, we believe we have an opportunity to increase the addressable spend available to TaskUs through enhanced penetration of current services as well as cross-selling new services. We continue to see meaningful opportunities from recent industry consolidation as clients diversify their vendor networks.
Adjusted Net Income for the year ended December 31, 2023 decreased 11.4% to $126.5 million from $142.8 million for the year ended December 31, 2022. Adjusted EBITDA for the year ended December 31, 2023 decreased 1.1% to $220.8 million from $223.2 million for the year ended December 31, 2022.
Adjusted Net Income for the year ended December 31, 2024 decreased 6.2% to $118.7 million from $126.5 million for the year ended December 31, 2023. Adjusted EBITDA for the year ended December 31, 2024 decreased 5.0% to $209.9 million from $220.8 million for the year ended December 31, 2023.
Rest of World: Digital Customer Experience contributed 45.6% of the total increase primarily driven by clients in FinTech, On Demand Travel + Transportation, Entertainment + Gaming, Retail + E-Commerce and HealthTech, partially offset by clients in Social Media. Trust and Safety and AI Services contributed 0.9% and 0.5%, respectively, of the total increase.
Rest of World: Digital Customer Experience contributed 17.6% of the total increase primarily driven by clients in Financial Services, Professional Services + Industry, On Demand Travel + Transportation and Technology. Trust + Safety contributed 9.9% of the total increase primarily driven by clients in Social Media and Financial Services.
Provision for income taxes Our effective tax rate for the years ended December 31, 2023 and 2022 was 39.1% and 37.4%, respectiv ely. Costs related to the issuance of stock-based compensation, the acquisition of heloo and severance within the provision for income taxes calculation are adjusted for Non-GAAP purposes.
Costs related to the issuance of stock-based compensation, the acquisition of heloo, litigation costs and severance within the provision for income taxes calculation are adjusted for Non-GAAP purposes.
(4) Represents severance payments as a result of certain cost optimization measures we undertook during the period to restructure support roles. (5) Represents stock-based compensation expense, as well as associated payroll tax. (6) Represents tax impacts of adjustments to net income which resulted in a tax benefit during the period, including stock-based compensation expense and earn-out consideration.
(4) Represents severance payments as a result of certain cost optimization measures we undertook during the period to restructure support roles. (5) Represents only those litigation costs that are considered non-recurring and outside of the ordinary course of business. (6) Represents stock-based compensation expense, as well as associated payroll tax.
Service revenue from fixed-price contracts is recognized monthly as service revenue is earned and obligations are fulfilled. Service revenue from outcome oriented contracts is recognized when it is reasonably certain that the desired outcome has been achieved.
Service revenue from fixed-price contracts is recognized monthly as service revenue is earned and obligations are fulfilled.
We have elected to use the extended transition period until we are no longer an emerging growth company or until we choose to affirmatively and irrevocably opt out of the extended transition period.
We have elected to use the extended transition period until we are no longer an emerging growth company or until we choose to affirmatively and irrevocably opt out of the extended transition period. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements applicable to public companies.
(4) Represents severance payments as a result of certain cost optimization measures we undertook during the period to restructure support roles. (5) Represents stock-based compensation expense, as well as associated payroll tax. (6) Represents interest income earned on short-term savings and time-deposit funds beginning in 2023.
(4) Represents severance payments as a result of certain cost optimization measures we undertook during the period to restructure support roles. (5) Represents only those litigation costs that are considered non-recurring and outside of the ordinary course of business. (6) Represents stock-based compensation expense, as well as associated payroll tax.
Other expense (income), net Changes are primarily driven by our exposure to foreign currency exchange risk resulting from our operations in foreign geographies, primarily the Philippines and India, offset by economic hedges using foreign currency exchange rate forward contracts . The remaining increase is associated with higher interest income.
This increase was partially offset by changes driven by our exposure to foreign currency exchange risk resulting from our operations in foreign geographies, offset by economic hedges using foreign currency exchange rate forward contracts .
For definitions and reconciliations to net income, the most directly comparable measure in accordance with GAAP, see " — Non-GAAP Financial Measures below." Our operating results in any period are not necessarily indicative of the results that may be expected for any future period. 47 Table of Contents 2023 Developments Macroeconomic Trends Macroeconomic factors, including global economic and geopolitical developments, increased inflation rates, interest rate changes, and foreign currency exchange rate changes, have direct and indirect impacts on our results of operations that are difficult to isolate and quantify.
For definitions and reconciliations to net income, the most directly comparable measure in accordance with GAAP, see " — Non-GAAP Financial Measures below." Our operating results in any period are not necessarily indicative of the results that may be expected for any future period.
Our management believes that the inclusion of supplementary adjustments to earnings per share applied in presenting Adjusted EPS are appropriate to provide additional information to investors about certain material non-cash items and about unusual items that we do not expect to continue at the same level in the future. 55 Table of Contents The following table reconciles GAAP diluted EPS, the most directly comparable GAAP measure, to Adjusted EPS for the years ended December 31, 2023 and 2022 : Year ended December 31, 2023 2022 GAAP diluted EPS $ 0.48 $ 0.39 Per share adjustments to net income (1) 0.84 1.00 Adjusted EPS $ 1.32 $ 1.39 Weighted-average common stock outstanding – diluted 96,173,071 102,603,179 (1) Reflects the aggregate adjustments made to reconcile net income to Adjusted Net Income, as noted in the above table, divided by the GAAP diluted weighted-average number of shares outstanding for the relevant period.
The following table reconciles GAAP diluted EPS, the most directly comparable GAAP measure, to Adjusted EPS for the years ended December 31, 2024 and 2023 : Year ended December 31, 2024 2023 GAAP diluted EPS $ 0.50 $ 0.48 Per share adjustments to net income (1) 0.79 0.84 Adjusted EPS $ 1.29 $ 1.32 Weighted-average common stock outstanding – diluted 92,304,270 96,173,071 (1) Reflects the aggregate adjustments made to reconcile net income to Adjusted Net Income, as noted in the above table, divided by the GAAP diluted weighted-average number of shares outstanding for the relevant period.
Overview We are a provider of outsourced digital services and next-generation customer experience to the world’s most innovative companies, helping our clients represent, protect and grow their brands. We serve our clients to support their end customers’ urgent needs, navigate an increasingly-complex compliance landscape, handle sensitive tasks, including online content moderation and enable artificial intelligence technology and automation.
Overview We are a provider of outsourced digital services and next-generation customer experience to the world’s most innovative companies, helping our clients represent, protect and grow their brands.
Business Highlights During 2023, we continued to support our current clients, and win new clients, as they navigated prolonged macroeconomic challenges. We expanded our client portfolio, winning 47 new clients in 2023, achieving a 35% new client win rate, and expanded work with our current clients, with 58 current clients signing new statements of work.
Business Highlights During 2024, we supported both new and existing clients as they navigated an uncertain global macroeconomic environment. We expanded our client portfolio, winning 39 new clients in 2024 and achieving a 45% new client win rate, and increasing the scope of services provided to our current clients, with 63 current clients signing new statements of work.
Provision for (Benefit From) Income Taxes Provision for (benefit from) income taxes consists primarily of income taxes related to U.S. federal and state income taxes and income taxes in foreign jurisdictions in which we conduct business. 50 Table of Contents Results of Operations Comparison of the Years Ended December 31, 2023 and 2022 The following table sets forth certain historical consolidated financial information for the years ended December 31, 2023 and 2022: Year ended December 31, Period over Period Change (in thousands) 2023 2022 ($) (%) Service revenue $ 924,365 $ 960,489 $ (36,124) (3.8) % Operating expenses: Cost of services 538,745 558,761 (20,016) (3.6) % Selling, general, and administrative expense 228,523 260,003 (31,480) (12.1) % Depreciation 40,391 37,915 2,476 6.5 % Amortization of intangible assets 20,346 19,882 464 2.3 % Loss on disposal of assets 1,322 31 1,291 NM Total operating expenses 829,327 876,592 (47,265) (5.4) % Operating income 95,038 83,897 11,141 13.3 % Other expense (income), net (1,711) 7,443 (9,154) NM Financing expenses 21,717 11,921 9,796 82.2 % Income before income taxes 75,032 64,533 10,499 16.3 % Provision for income taxes 29,342 24,111 5,231 21.7 % Net income $ 45,690 $ 40,422 $ 5,268 13.0 % NM: not meaningful Service revenue Service revenue by service offering The following table presents the breakdown of our service revenue by service offering for each period: Year ended December 31, Period over Period Change (in thousands) 2023 2022 ($) (%) Digital Customer Experience $ 605,943 $ 637,587 $ (31,644) (5.0) % Trust and Safety 186,742 178,409 8,333 4.7 % AI Services 131,680 144,493 (12,813) (8.9) % Service revenue $ 924,365 $ 960,489 $ (36,124) (3.8) % Digital Customer Experience was primarily driven by a decrease from existing clients in FinTech, Social Media, On Demand Travel + Transportation and HealthTech.
Provision for income taxes Provision for income taxes consists primarily of income taxes related to U.S. federal and state income taxes and income taxes in foreign jurisdictions in which we conduct business. 50 Table of Contents Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 The following table sets forth certain historical consolidated financial information for the years ended December 31, 2024 and 2023: Year ended December 31, Period over Period Change (in thousands) 2024 2023 ($) (%) Service revenue $ 994,985 $ 924,365 $ 70,620 7.6 % Operating expenses: Cost of services 602,898 538,745 64,153 11.9 % Selling, general, and administrative expense 239,585 228,523 11,062 4.8 % Depreciation 40,223 40,391 (168) (0.4) % Amortization of intangible assets 19,935 20,346 (411) (2.0) % Loss (gain) on disposal of assets (80) 1,322 (1,402) NM Total operating expenses 902,561 829,327 73,234 8.8 % Operating income 92,424 95,038 (2,614) (2.8) % Other income, net (3,306) (1,711) (1,595) 93.2 % Financing expenses 21,549 21,717 (168) (0.8) % Income before income taxes 74,181 75,032 (851) (1.1) % Provision for income taxes 28,311 29,342 (1,031) (3.5) % Net income $ 45,870 $ 45,690 $ 180 0.4 % NM: not meaningful Service revenue Service revenue by service offering The following table presents the breakdown of our service revenue by service offering for each period: Year ended December 31, Period over Period Change (in thousands) 2024 2023 ($) (%) Digital Customer Experience $ 611,837 $ 605,943 $ 5,894 1.0 % Trust + Safety 248,041 186,742 61,299 32.8 % AI Services 135,107 131,680 3,427 2.6 % Service revenue $ 994,985 $ 924,365 $ 70,620 7.6 % Digital Customer Experience was primarily driven by an increase from new clients, including Financial Services, Healthcare and Professional Services + Industry.
AI Services was primarily driven by a decrease from existing clients in Social Media and On Demand Travel + Transportation, partially offset by an increase from existing clients in Entertainment + Gaming. 51 Table of Contents Service revenue by delivery geography The majority of our service revenues are derived from contracts with clients who are either located in the United States, or with clients who are located outside of the United States but whereby the contract specifies payment in United States Dollars.
This increase was partially offset by a decrease from existing clients, including On Demand Travel + Transportation, partially offset by Technology. 51 Table of Contents Service revenue by delivery geography We deliver our services from multiple locations around the world; however, the majority of our service revenues are derived from contracts that require payment in United States dollars, regardless of whether the clients are located in the United States.
See Part II, Item 7A., "Quantitative and Qualitative Disclosures About Market Risk" in this Annual Report for additional information on how foreign currency impacts our financial results.
See Part II, Item 7A., "Quantitative and Qualitative Disclosures About Market Risk" in this Annual Report for additional information on how foreign currency impacts our financial results. 52 Table of Contents Financing expense Changes in financing expense are primarily driven by changes in the rate of SOFR used to calculate the interest rate of our deb t, as well as quarterly payments.
We offer our employees competitive wages with annual increases and also invest in their well-being. Our employee benefits and employee engagement costs may vary from period to period based on employee participation. We seek to retain sufficient employees to serve our clients’ increasing business needs and position ourselves for growth.
Hiring and retention of employees In order to efficiently and effectively provide services to our clients, we must be able to quickly hire, train and retain employees. We offer our employees competitive wages with annual increases and also invest in their well-being. Our employee benefits and employee engagement costs may vary from period to period based on employee participation.
The following table presents the breakdown of our service revenue by geographical location, based on where the services are provided: Year ended December 31, Period over Period Change (in thousands) 2023 2022 ($) (%) Philippines $ 511,298 $ 504,361 $ 6,937 1.4 % United States 148,708 252,457 (103,749) (41.1) % India 115,777 102,561 13,216 12.9 % Rest of World 148,582 101,110 47,472 47.0 % Service revenue $ 924,365 $ 960,489 $ (36,124) (3.8) % Philippines: Trust and Safety contributed 5.0% of the total increase primarily driven by clients in Social Media, On Demand Travel + Transportation, FinTech and Technology.
The following table presents the breakdown of our service revenue by geographical location, based on where the services are provided: Year ended December 31, Period over Period Change (in thousands) 2024 2023 ($) (%) Philippines $ 563,032 $ 511,298 $ 51,734 10.1 % United States 117,773 148,708 (30,935) (20.8) % India 123,804 115,777 8,027 6.9 % Rest of World 190,376 148,582 41,794 28.1 % Service revenue $ 994,985 $ 924,365 $ 70,620 7.6 % Philippines: Trust + Safety contributed 6.6% of the total increase primarily driven by clients in Social Media and Financial Services.
Operating Expenses Cost of Services Cost of services consists primarily of costs related to delivery of services, and consists primarily of personnel costs like salaries and wages, employee welfare, employee engagement, recruiting, professional development and stock-based compensation expense. Additionally, cost of services includes expenses related to sites and technology costs that can be directly attributed to the delivery of services.
Additionally, cost of services includes expenses related to sites and technology, recruiting, professional development and employee engagement costs that can be directly attributed to the delivery of services. Selling, general, and administrative Selling expenses consist of personnel costs, travel expenses, and other expenses for our client services, sales and marketing teams.
In 2023, 58 current clients signed new statements of work with us. 48 Table of Contents Expanded service offerings We closely watch trends and work closely with current and potential clients to develop offerings that we believe align with our core competencies and present an attractive market opportunity.
Expanded service offerings We watch trends and work closely with current and potential clients to develop offerings that we believe align with our core competencies and present an attractive market opportunity. This approach has earned us the opportunity to support some of the most innovative companies and has enabled significant expansion opportunities with large global enterprises.
Revenue by Top Clients The table below sets forth the percentage of our total service revenue derived from our largest clients for the years ended December 31, 2023 and 2022: Year ended December 31, 2023 2022 Top ten clients 55 % 58 % Top twenty clients 68 % 72 % Our clients are part of the rapidly growing Digital Economy and they rely on our suite of digital solutions to drive their continued success.
Revenue by Top Clients The table below sets forth the percentage of our total service revenue derived from our largest clients for the years ended December 31, 2024 and 2023: Year ended December 31, 2024 2023 Top ten clients 56 % 55 % Top twenty clients 68 % 68 % For the years ended December 31, 2024 and 2023, we generated 22% and 19%, respectively, of our service revenue from our largest client.
During 2023, we significantly increased our Headcount outside of the U.S., the Philippines and India (the “Rest of World”) from approximately 4,100 employees as of December 31, 2022 to approximately 6,000 as of December 31, 2023, with particularly strong growth in Colombia and Mexico.
During 2024, we significantly increased our Headcount outside of the U.S., the Philippines and India (the “Rest of World”) from approximately 6,000 employees as of December 31, 2023 to approximately 8,700 as of December 31, 2024, with particularly strong growth in Colombia and Greece. 48 Table of Contents We plan to continue expanding our geographic footprint to drive growth with both existing and new clients, which may result in one-time costs that may impact profitability.
This allows us to serve our clients better in the long-term in most cases and deepens our relationship as we tend to grow and operate over multiple geographies contemporaneously with our larger clients over time as they grow. These fluctuations might be especially noticeable in a particular service line or geography on a period over period basis.
This allows us to serve our clients better in the long term in most cases and deepens our relationship as we tend to grow and operate over multiple geographies with our larger clients over time as they grow. As of December 31, 2024, we supported 83 clients from more than one geography, an increase of 32% year-over-year.
These decreases were partially offset by an increase from existing clients in Technology, as well as new clients in Retail + E-Commerce, HealthTech and On Demand Travel + Transportation. Trust and Safety was primarily driven by an increase from existing clients in On Demand Travel + Transportation, Technology and Entertainment + Gaming, as well as new clients in FinTech.
This increase was mostly offset by a decrease from existing clients, including On Demand Travel + Transportation and Entertainment + Gaming, partially offset by an increase in Financial Services. Trust + Safety was primarily driven by an increase from existing clients, including Social Media and Financial Services.
Contractual Obligations The following table summarizes our contractual obligations as of December 31, 2023 : Payments Due by Period (in thousands) Total Current Noncurrent Long-term debt obligations $ 265,613 $ 8,438 $ 257,175 Operating lease obligations 52,993 18,292 34,701 Technology solution obligations 25,372 14,760 10,612 Total $ 343,978 $ 41,490 $ 302,488 Technology solution obligations relate mainly to third-party cloud infrastructure agreements and subscription arrangements used to facilitate our operations at the enterprise level.
Contractual Obligations The following table summarizes our contractual obligations as of December 31, 2024 : Payments Due by Period (in thousands) Total Current Noncurrent Long-term debt obligations $ 257,176 $ 15,188 $ 241,988 Operating lease obligations 54,900 18,421 36,479 Technology solution obligations 40,330 17,869 22,461 Total $ 352,406 $ 51,478 $ 300,928 Technology solution obligations relate mainly to third-party cloud infrastructure agreements and subscription arrangements used to facilitate our operations at the enterprise level.
In May 2023, the Company announced that our Board of Directors authorized a $100.0 million increase to the share repurchase program, increasing the total authorization to $200.0 million, with the total amount remaining available after the increase being exclusive of any commissions, fees or excise taxes.
The share repurchase program was initially announced in September 2022 for up to $100.0 million of shares of our Class A common stock and capacity was increased to a total authorization of $200.0 million of shares of our Class A common stock (exclusive of any commissions, fees or excise taxes) in May 2023.
The voluntary attrition rate for employees who were employed by TaskUs for more than 180 days was 25.2% for the year ended December 31, 2023 . Foreign currency fluctuations We are subject to foreign currency exposure, primarily related to costs from the international locations in which we have operations.
The voluntary attrition rate for employees who were employed by TaskUs for more than 180 days was 22.2% for the year ended December 31, 2024 .
As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements applicable to public companies. 60 Table of Contents Critical Accounting Estimates Our consolidated financial statements and the related notes included elsewhere in this Annual Report are prepared in accordance with accounting principles generally accepted in the United States.
We have not included any such indemnification provisions in the contractual obligations table above. Historically, we have not experienced significant losses on these types of indemnification obligations. Critical Accounting Estimates Our consolidated financial statements and the related notes included elsewhere in this Annual Report are prepared in accordance with accounting principles generally accepted in the United States.
For the year ended December 31, 2023, we recorded net income of $45.7 million an increase from $40.4 million for the year ended December 31, 2022, due primarily to lower stock-based compensation expense, cost optimization and the benefit from foreign currency exchange rate changes and forward contracts, partially offset by rising interest rates and higher income taxes.
For the year ended December 31, 2024, we recorded net income of $45.9 million consistent with $45.7 million for the year ended December 31, 2023, due primarily to higher revenue growth and higher interest income, mostly offset by higher cost of services and certain litigation costs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+1 added−7 removed3 unchanged
Biggest changeBased upon our level of operations during the year ended December 31, 2023, and excluding any forward contract arrangements that we had in place during that period, a 10% appreciation/depreciation in the Indian rupee against the U.S. dollar would have increased or decreased our expenses incurred and paid in the Indian rupee by approximately $9.0 million or $7.3 million, respectively, in the year ended December 31, 2023. 61 Table of Contents In order to mitigate our exposure to foreign currency fluctuation risks and minimize the earnings and cash flow volatility associated with forecasted transactions denominated in certain foreign currencies, and economically hedge our intercompany balances and other monetary assets and liabilities denominated in currencies other than functional currencies, we enter into foreign currency forward contracts.
Biggest changeThe exchange rates among the Philippine peso, Indian rupee, Mexican peso, Colombian peso and the U.S. dollar have changed substantially in recent years and may fluctuate substantially in the future. 60 Table of Contents The following table presents a summary of foreign currency exchange rates and changes for the periods indicated: Philippine Peso Indian Rupee Mexican Peso Colombian Peso Average exchange rate against the U.S. dollar Year ended December 31, 2024 57.28 83.67 18.31 4,072.86 Year ended December 31, 2023 55.61 82.58 17.74 4,325.15 Depreciation (appreciation) 3.0 % 1.3 % 3.2 % (5.8) % Based on our level of operations during the year ended December 31, 2024 , and excluding any forward contract arrangements that we had in place during that period, a 10% appreciation (depreciation) of each foreign currency against the U.S. dollar would have increased (decreased) our expenses incurred and paid in that foreign currency as follows: (in thousands) Philippine Peso Indian Rupee Mexican Peso Colombian Peso 10% appreciation $ 40,123 $ 10,492 $ 4,396 $ 7,305 10% depreciation $ (32,828) $ (8,585) $ (3,597) $ (5,977) In order to mitigate our exposure to foreign currency fluctuation risks and minimize the earnings and cash flow volatility associated with forecasted transactions denominated in certain foreign currencies, and economically hedge our intercompany balances and other monetary assets and liabilities denominated in currencies other than functional currencies, we enter into foreign currency forward contracts.
Although substantially all of our revenues are denominated in U.S. dollars, a substantial portion of our expenses were incurred and paid in the Philippine peso and Indian rupee in the year ended December 31, 2023. We also incur expenses in U.S. dollars, and currencies of the other countries in which we have operations.
Although substantially all of our revenues are denominated in U.S. dollars, a substantial portion of our expenses were incurred and paid in the Philippine peso, Indian rupee, Mexican peso, and the Colombian peso in the year ended December 31, 2024. We also incur expenses in U.S. dollars, and currencies of the other countries in which we have operations.
Our total principal balance outstanding as of December 31, 2023 was $265.6 million. Based on the outstanding balances and interest rates under the 2022 Credit Facilities as of December 31, 2023, a hypothetical 10% increase or decrease in SOFR would cause an increase or decrease in interest expense of $1.4 million over the next 12 months.
Based on the outstanding balances and interest rates under the 2022 Credit Facilities as of December 31, 2024, a hypothetical 10% increase or decrease in SOFR would cause an increase or decrease in interest expense of $1.1 million over the next 12 months.
Credit Risk As of December 31, 2023, we had accounts receivable, net of allowance for credit losses, of $176.8 million, of which $49.8 million was owed by two of our clients. Collectively, these clients represented 28% of our gross accounts receivable as of December 31, 2023. 62 Table of Contents
Credit Risk As of December 31, 2024, we had accounts receivable, net of allowance for credit losses, of $199.0 million, of which $60.1 million was owed by two of our clients. Collectively, these clients represented 30% of our gross accounts receivable as of December 31, 2024. 61 Table of Contents
Interest Rate Risk Our exposure to market risk is influenced by the changes in interest rates paid on any outstanding balance on our borrowings, mainly under our 2022 Credit Facilities. All of our borrowings outstanding under the 2022 Credit Facilities as of December 31, 2023 accrue interest at SOFR pl us 2.25%.
All of our borrowings outstanding under the 2022 Credit Facilities as of December 31, 2024 accrue interest at SOFR pl us 2.25%. Our total principal balance outstanding as of December 31, 2024 was $257.2 million.
Removed
The exchange rates among the Philippine peso, Indian rupee and the U.S. dollar have changed substantially in recent years and may fluctuate substantially in the future.
Added
See Note 5, “Forward Contracts” in the Notes to Consolidated Financial Statements included in this Annual Report for additional information regarding our forward contracts. Interest Rate Risk Our exposure to market risk is influenced by the changes in interest rates paid on any outstanding balance on our borrowings, mainly under our 2022 Credit Facilities.
Removed
The average exchange rate of the Philippine peso against the U.S. dollar increased from 54.49 pesos during the year ended December 31, 2022 to 55.61 pe sos during the year ended December 31, 2023, representing a depreciation of the Philippine peso of 2.1%.
Removed
Based upon our level of operations during the year ended December 31, 2023, and excluding any forward contract arrangements that we had in place during that period, a 10% appreciation/depreciation in the Philippine peso against the U.S. dollar would have increased or decreased our expenses incurred and paid in the Philippine peso by approximately $37.1 million or $30.3 million, respectively, in the year ended December 31, 2023.
Removed
The average exchange rate of the Indian rupee against the U.S. dollar increased from 78.51 rupees during the year ended December 31, 2022 to 82.58 rupees during the year ended December 31, 2023, representing a depreciation of the Indian rupee of 5.2%.
Removed
These derivatives have not been designated as hedges under ASC Topic 815, Derivatives and Hedging (“ASC 815”). Changes in the fair value of these derivatives are recognized in the consolidated statements of income and are included in other expense (income), net.
Removed
For the years ended December 31, 2023 and 2022, we realized losses (gains) of $(2.6) million and $13.3 million, respectively, resulting from the settlement of forward contracts were included within other expense (income), net. For the years ended December 31, 2023 and 2022, we had outstanding forward contracts.
Removed
The forward contract receivable (payable) resulting from change in fair value was recorded under prepaid expenses and other current assets (accounts payable and accrued liabilities). For the years ended December 31, 2023 and 2022, unrealized losses (gains) on the forward contracts of $2.5 million and $(4.6) million, respectively, were included within other expense (income), net.

Other TASK 10-K year-over-year comparisons