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目錄
美國
證券交易委員會
華盛頓特區20549
_______________________
表格 10-Q
_______________________
（標記一）
x根據1934年證券交易法第13或15(d)節的季度報告
截至季度結束日期的財務報告2024年9月30日
or
o根據1934年證券交易法第13或15(d)節的轉型報告書
在_____________到______________的過渡期間
委託文件編號：001-39866001-40482
_______________________
TaskUs, Inc.
(根據其章程規定的註冊人準確名稱)
_______________________
特拉華州83-1586636
（設立或組織的其他管轄區域）（納稅人識別號碼）
1650 Independence Drive, 100套房
New Braunfels, 得克薩斯州
78132
，（主要行政辦公地址）(郵政編碼)
(888) 400-8275
(註冊人電話號碼，包括區號)
N/A
（前名稱、地址及財政年度，如果自上次報告以來有更改）
_______________________
在法案第12(b)條的規定下注冊的證券：
每一類的名稱交易標誌在其上註冊的交易所的名稱
A類普通股，每股面值0.01美元。任務納斯達克證券交易所 LLC
請勾選以下選項以指示註冊人是否在過去12個月內(或在註冊人需要提交此類報告的較短時間內)已提交證券交易法1934年第13或15(d)條所要求提交的所有報告，並且在過去90天內已受到此類報告提交要求的影響。x Yes o否
請在以下勾選方框表示註冊人是否已在Regulation S-T Rule 405規定的前12個月(或在註冊人需要提交此類文件的較短期間內)提交了每個互動數據文件。x Yes o 否
請勾選標記以說明註冊人是大型快速申報人、加速申報人、非加速申報人、較小的報告公司還是新興成長型公司。請查看《交易所法》第120億.2條中「大型快速申報人」、「加速申報人」、「較小的報告公司」和「新興成長型公司」的定義。
大型加速文件申報人o加速文件提交人x
 
非加速文件提交人o更小的報告公司o
 
成長型公司x
如果公司無法符合證券交易法第13(a)條規定，使用延長過渡期來遵守任何新的或修訂的財務會計準則，請在複選框中指示。 o
請打勾表明註冊人是否爲殼公司（根據證券交易法規則12b-2定義）。 o 是的 x 否
截至2024年11月1日，註冊人普通股的流通股數如下：A類普通股，每股面值$0.01： 19,274,866；B類普通股，每股面值$0.01： 70,032,694.

目錄
TASKUS，公司。
第10-Q表的季度報告
2024年9月30日結束的季度期間
目錄
頁碼

目錄
關於前瞻性聲明的注意事項
本季度報告表格10-Q（以下簡稱"季度報告"）中包含根據1995年《私人證券訴訟改革法》的前瞻性聲明。前瞻性聲明還可能包含在我們根據1933年修訂版《證券法》第27A條和1934年修訂版《交易法》第21E條提交的其他報告中，這涉及一定的已知和未知風險與不確定性。前瞻性聲明包括所有非歷史事實的聲明。在某些情況下，您可以通過使用"展望"，"相信"，"預期"，"潛力"，"持續"，"可能"，"將"，"應該"，"可以"，"尋找"，"預測"，"打算"，"趨勢"，"計劃"，"估計"，"預期"，"定位我們"或這些詞的負面版本或其他可比較的詞來識別這些前瞻性聲明。這樣的前瞻性聲明受各種風險與不確定性影響。因此，將會或已經有可能導致實際結果與這些聲明中所示結果有重大差異的重要因素。請注意，對這些前瞻性聲明不要過分依賴，這些聲明僅代表聲明發布日期的看法。我們假定沒有義務公開更新或修訂任何前瞻性聲明，除非根據法律要求。
我們的實際結果可能與任何前瞻性聲明中表達或暗示的結果存在顯著差異。可能導致我們的實際結果與我們的前瞻性聲明不同的主要風險因素摘要如下。以下僅爲可能對我們的業務、財務狀況和經營結果產生重大不利影響的主要風險摘要。這些因素不應被視爲窮盡，並應與本季度報告和公司在證券交易委員會（「SEC」）提出的其他文件中包含的其他警示性陳述結合閱讀，以及我們爲截至2023年12月31日的年度報告（我們的「年度報告」）在SEC提交的形式10-k中第I部分第1A項「風險因素」中詳盡討論的風險因素，這些風險因素可能會隨時在我們向SEC提交的週期性文件中更新，這些文件可在SEC網站www.sec.gov上獲取。此類風險和不確定性包括但不限於以下內容：
•我們的業務取決於重要客戶，丟失重要客戶可能會對我們的業務和運營結果產生不利影響。
•Our clients may terminate contracts before completion or choose not to renew contracts and loss of business or non-payment from clients could materially affect our 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.
•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.
•Utilization of artificial intelligence by our clients or our failure to incorporate artificial intelligence into our operations could adversely affect our business, reputation, or financial results.
•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.
•Unauthorized or improper disclosure of personal or other sensitive information, or security breaches and incidents, whether inadvertent or purposeful, including as the result of a cyber-attack, could result in liability and harm our reputation, each of which could adversely affect our business, financial condition, results of operations and prospects.
•Trust and Safety, including content monitoring and moderation services, is a large portion of our business. The long-term impacts on the mental health and well-being of our employees doing this work are unknown. This work may lead to stress disorders and may create liabilities for us. This work is also subject to significant press and regulatory scrutiny. 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.
•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.
•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 business is heavily dependent upon our international operations, particularly in the Philippines and India, and any disruption to those operations would adversely affect us.
•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. Any failure to comply with applicable data privacy and security laws and regulations could harm our business, results of operations and financial condition.
•Fluctuations against the U.S. dollar in the local currencies in the countries in which we operate could have a material effect on our results of operations.
•Our business depends on a strong brand and corporate reputation, and if we are not able to maintain and enhance our brand, our ability to expand our client base could be impaired and our business and operating results will be adversely affected.
•Pricing pressure may reduce our revenue or gross profits and adversely affect our financial results.
•Our results of operations have been, and could in the future be, adversely affected by volatile, unfavorable or uncertain economic and political conditions, particularly in the markets in which our clients and operations are concentrated, and the effects of these conditions on our clients’ businesses.
•The success of our business depends on our senior management and key employees.
•Increases in employee expenses as well as changes to labor laws could reduce our profit margin.
•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.
•We may face difficulties as we expand our operations into countries or industries in which we have no prior operating experience and in which we may be subject to increased business, economic and regulatory risks that could impact our results of operations.
•Our business relies heavily on owned and third-party technology and computer systems, which subjects us to various uncertainties.
•Our profitability will suffer if we are not able to maintain asset utilization levels, price appropriately and control our costs.
•Certain investment funds associated with Blackstone Inc. and our Co-Founders control us and their interests may conflict with ours or yours in the future.
•The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our common stock prior to the completion of our June 2021 initial public offering, and it may depress the trading price of our Class A common stock.
•The market price of shares of our Class A common stock has been, and may continue to be, volatile and may decline regardless of our operating performance, which could cause the value of your investment to decline.
We urge you to carefully consider the foregoing summary together with the risks discussed under "Risk Factors" in the Annual Report, and in Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Quarterly Report.
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WEBSITE AND SOCIAL MEDIA DISCLOSURE
We use our website (www.taskus.com) and our social media outlets, such as Facebook, Instagram, LinkedIn, YouTube and X (formerly known as Twitter) as channels of distribution of Company information. The information we post through these channels may be deemed material. Financial and other important information regarding the Company is routinely posted on and accessible through the Company’s website at ir.taskus.com, its Facebook page at facebook.com/TaskUs/, its Instagram page at instagram.com/taskus/, its LinkedIn page at linkedin.com/company/taskus/, its YouTube account at youtube.com/c/Taskus/ and its X account at twitter.com/taskus. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive email alerts and other information about the Company when you enroll your email address by visiting the “Email Alerts” section of our investor relations website at ir.taskus.com. The contents of our website and social media channels are not, however, a part of this Quarterly Report.
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PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
TASKUS, INC.
Unaudited Condensed Consolidated Balance Sheets
(in thousands, except share data)
September 30,
2024		December 31,
2023
Assets
Current assets:
Cash and cash equivalents$180,381 $125,776 
Accounts receivable, net of allowance for credit losses of $1,836 and $1,978, respectively
200,780 176,812 
Income tax receivable8,472 2,021 
Prepaid expenses and other current assets29,777 23,909 
Total current assets419,410 328,518 
Noncurrent assets:
Property and equipment, net65,127 68,893 
Operating lease right-of-use assets47,352 44,326 
Deferred tax assets6,651 4,857 
Intangibles178,084 192,958 
Goodwill218,359 218,108 
Other noncurrent assets7,114 6,542 
Total noncurrent assets522,687 535,684 
Total assets$942,097 $864,202 
Liabilities and Shareholders’ Equity
Liabilities:
Current liabilities:
Accounts payable and accrued liabilities$38,464 $26,054 
Accrued payroll and employee-related liabilities59,514 40,291 
Current portion of debt13,122 8,059 
Current portion of operating lease liabilities18,116 15,872 
Current portion of income tax payable6,239 7,451 
Deferred revenue3,646 4,077 
Total current liabilities139,101 101,804 
Noncurrent liabilities:
Income tax payable4,678 4,621 
Long-term debt246,325 256,166 
Operating lease liabilities31,677 31,475 
Accrued payroll and employee-related liabilities5,212 3,978 
Deferred tax liabilities25,229 25,214 
Other noncurrent liabilities85 233 
Total noncurrent liabilities313,206 321,687 
Total liabilities452,307 423,491 
Commitments and Contingencies (See Note 10)
Shareholders’ equity:
Class A common stock, $0.01 par value. Authorized 2,500,000,000; 32,555,207 issued and 19,415,430 outstanding and 30,522,570 issued and 18,725,947 outstanding, respectively
326 305 
Class B convertible common stock, $0.01 par value. Authorized 250,000,000; 70,032,694 and 70,032,694 shares issued and outstanding, respectively
700 700 
Additional paid-in capital714,471 683,117 
Accumulated deficit(52,973)(89,984)
Accumulated other comprehensive loss(13,324)(9,551)
Treasury stock, at cost. 13,139,777 and 11,796,623 shares, respectively
(159,410)(143,876)
Total shareholders’ equity489,790 440,711 
Total liabilities and shareholders’ equity$942,097 $864,202 
See accompanying notes to unaudited condensed consolidated financial statements.
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TASKUS, INC.
Unaudited Condensed Consolidated Statements of Income
(in thousands, except share and per share data)
Three months ended September 30,Nine months ended September 30,
2024202320242023
Service revenue$255,345 $225,626 $720,743 $690,101 
Operating expenses:
Cost of services153,765 130,139 433,052 401,455 
Selling, general, and administrative expense62,650 57,114 171,830 179,583 
Depreciation9,758 9,762 30,525 29,502 
Amortization of intangible assets4,988 5,027 14,955 15,276 
Loss (gain) on disposal of assets(10)640 (93)772 
Total operating expenses231,151 202,682 650,269 626,588 
Operating income24,194 22,944 70,474 63,513 
Other expense (income), net898 2,895 (2,007)34 
Financing expenses5,504 5,712 16,532 16,141 
Income before income taxes17,792 14,337 55,949 47,338 
Provision for income taxes5,093 4,565 18,938 17,925 
Net income$12,699 $9,772 $37,011 $29,413 
Net income per common share:
Basic$0.14 $0.11 $0.42 $0.31 
Diluted$0.14 $0.10 $0.40 $0.30 
Weighted-average number of common shares outstanding:
Basic88,978,159 92,480,316 88,701,787 95,522,026 
Diluted92,579,919 94,035,111 92,019,911 97,729,230 
See accompanying notes to unaudited condensed consolidated financial statements.
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TASKUS, INC.
Unaudited Condensed Consolidated Statements of Comprehensive Income
(in thousands)
Three months ended September 30,Nine months ended September 30,
2024202320242023
Net income$12,699 $9,772 $37,011 $29,413 
Unrealized gain on derivative contracts247 — 247 — 
Retirement benefit reserves(20)(14)2 13 
Foreign currency translation adjustments7,025 (3,559)(4,022)(3,682)
Comprehensive income$19,951 $6,199 $33,238 $25,744 
See accompanying notes to unaudited condensed consolidated financial statements.
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TASKUS, INC.
Unaudited Condensed Consolidated Statements of Shareholders’ Equity
(in thousands, except share data)
Capital stock and additional paid-in capitalAccumulated
deficit		Accumulated
other
comprehensive
loss		Total
shareholders’
equity
Class A common stockClass B convertible common stockAdditional
paid-in
capital		Treasury stock
SharesAmountSharesAmountSharesAmount
Balance as of December 31, 2022
29,257,651 $293 70,032,694 $700 $631,908 $(135,674)$(10,647)1,649,931 $(30,967)$455,613 
Issuance of common stock for settlement of equity awards246,537 2 — — 207 — — — — 209 
Shares withheld related to net share settlement(14,293)— — — (257)— — — — (257)
Repurchase of common stock— — — — — — — 389,801 (6,374)(6,374)
Stock-based compensation expense— — — — 13,464 — — — — 13,464 
Net income— — — — — 9,509 — — — 9,509 
Other comprehensive income— — — — — — 3,591 — — 3,591 
Balance as of March 31, 2023
29,489,895 $295 70,032,694 $700 $645,322 $(126,165)$(7,056)2,039,732 $(37,341)$475,755 
Issuance of common stock for settlement of equity awards338,035 3 — — 187 — — — — 190 
Shares withheld related to net share settlement(23,705)— — — (293)— — — — (293)
Repurchase of common stock— — — — — — — 3,223,283 (38,338)(38,338)
Stock-based compensation expense— — — — 15,040 — — — — 15,040 
Net income— — — — — 10,132 — — — 10,132 
Other comprehensive loss— — — — — — (3,687)— — (3,687)
Balance as of June 30, 2023
29,804,225 $298 70,032,694 $700 $660,256 $(116,033)$(10,743)5,263,015 $(75,679)$458,799 
Issuance of common stock for settlement of equity awards661,158 7 — — 148 — — — — 155 
Shares withheld related to net share settlement(136,501)(1)— — (1,484)— — — — (1,485)
Repurchase of common stock— — — — — — — 4,541,983 (48,753)(48,753)
Stock-based compensation expense— — — — 13,833 — — — — 13,833 
Net income— — — — — 9,772 — — — 9,772 
Other comprehensive loss— — — — — — (3,573)— — (3,573)
Balance as of September 30, 2023
30,328,882 $304 70,032,694 $700 $672,753 $(106,261)$(14,316)9,804,998 $(124,432)$428,748 

Capital stock and additional paid-in capitalAccumulated
deficit		Accumulated
other
comprehensive
loss		Total
shareholders’
equity
Class A common stockClass B convertible common stockAdditional
paid-in
capital		Treasury stock
SharesAmountSharesAmountSharesAmount
Balance as of December 31, 2023
30,522,570 $305 70,032,694 $700 $683,117 $(89,984)$(9,551)11,796,623 $(143,876)$440,711 
Issuance of common stock for settlement of equity awards620,835 6 — — 189 — — — — 195 
Shares withheld related to net share settlement(122,480)(1)— — (1,573)— — — — (1,574)
Repurchase of common stock— — — — — — — 285,611 (3,379)(3,379)
Stock-based compensation expense— — — — 10,235 — — — — 10,235 
Net income— — — — — 11,714 — — — 11,714 
Other comprehensive loss— — — — — — (3,308)— — (3,308)
Balance as of March 31, 2024
31,020,925 $310 70,032,694 $700 $691,968 $(78,270)$(12,859)12,082,234 $(147,255)$454,594 
Issuance of common stock for settlement of equity awards722,711 7 — — 1,849 — — — — 1,856 
Shares withheld related to net share settlement(40,437)— — — (500)— — — — (500)
Repurchase of common stock— — — — — — — 1,024,556 (11,759)(11,759)
Stock-based compensation expense— — — — 11,121 — — — — 11,121 
Net income— — — — — 12,598 — — — 12,598 
Other comprehensive loss— — — — — — (7,717)— — (7,717)
Balance as of June 30, 2024
31,703,199 $317 70,032,694 $700 $704,438 $(65,672)$(20,576)13,106,790 $(159,014)$460,193 
Issuance of common stock for settlement of equity awards977,511 10 — — 1,240 — — — — 1,250 
Shares withheld related to net share settlement(125,503)(1)— — (1,805)— — — — (1,806)
Repurchase of common stock— — — — — — — 32,987 (396)(396)
Stock-based compensation expense— — — — 10,598 — — — — 10,598 
Net income— — — — — 12,699 — — — 12,699 
Other comprehensive income— — — — — — 7,252 — — 7,252 
Balance as of September 30, 2024
32,555,207 $326 70,032,694 $700 $714,471 $(52,973)$(13,324)13,139,777 $(159,410)$489,790 
    
See accompanying notes to unaudited condensed consolidated financial statements.
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TASKUS, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Nine months ended September 30,
20242023
Cash flows from operating activities:
Net income$37,011 $29,413 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation30,525 29,502 
Amortization of intangibles14,955 15,276 
Amortization of debt financing fees447 447 
Loss (gain) on disposal of assets(93)772 
Benefit from credit losses(25)— 
Unrealized foreign exchange losses (gains) on forward contracts(166)6,020 
Deferred taxes(1,813)(255)
Stock-based compensation expense31,954 42,337 
Changes in operating assets and liabilities:
Accounts receivable(23,452)(680)
Prepaid expenses and other current assets(5,807)(4,403)
Operating lease right-of-use assets11,883 10,670 
Other noncurrent assets(809)(123)
Accounts payable and accrued liabilities3,318 (9,063)
Accrued payroll and employee-related liabilities20,904 (4,093)
Operating lease liabilities(12,423)(10,217)
Income tax payable(7,592)(1,278)
Deferred revenue(442)(278)
Other noncurrent liabilities(145)(152)
Net cash provided by operating activities98,230 103,895 
Cash flows from investing activities:
Purchase of property and equipment(18,821)(22,904)
Investment in loan receivable— (1,000)
Net cash used in investing activities(18,821)(23,904)
Cash flows from financing activities:
Payments for deferred business acquisition consideration(144)(145)
Payments on long-term debt(5,063)(2,025)
Proceeds from employee stock plans3,301 554 
Payments for taxes related to net share settlement(3,880)(2,035)
Payments for stock repurchases(15,468)(92,683)
Net cash used in financing activities(21,254)(96,334)
Increase (decrease) in cash and cash equivalents58,155 (16,343)
Effect of exchange rate changes on cash(3,550)(3,033)
Cash and cash equivalents at beginning of period125,776 133,992 
Cash and cash equivalents at end of period$180,381 $114,616 
See accompanying notes to unaudited condensed consolidated financial statements.
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TASKUS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
1. Description of Business and Organization
TaskUs, Inc. ("TaskUs," together with its subsidiaries, the "Company," "we," "us" or "our") was formed by investment funds affiliated with Blackstone Inc. (“Blackstone”) as a vehicle for the acquisition of TaskUs Holdings, Inc. ("TaskUs Holdings") on October 1, 2018 (the "Blackstone Acquisition"). Prior to the Blackstone Acquisition, TaskUs had no operations and TaskUs Holdings operated as a standalone entity. TaskUs, Inc. was incorporated in Delaware in July 2018, and is headquartered in New Braunfels, Texas.
The Company is a provider of outsourced digital services and next-generation customer experience to the world’s most innovative companies, helping its clients represent, protect and grow their brands. The Company’s global, omni-channel delivery model is focused on providing its clients three key services - Digital Customer Experience, Trust and Safety, and Artificial Intelligence ("AI") Services. The Company has designed its platform to enable it to rapidly scale and benefit from its clients’ growth. Through its agile and responsive operational model, the Company delivers services from multiple delivery sites that span globally from the United States, the Philippines, India and other parts of the world.
The Company’s major service offerings are described in more detail below:
•Digital Customer Experience: Principally consists of omni-channel customer care services, primarily delivered through digital (non-voice) channels.
•Trust and Safety: Principally consists of review and disposition of user and advertiser generated visual, text and audio content for purposes which include removal or labeling of policy violating, offensive or misleading content. 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.
2. Summary of Significant Accounting Policies
(a) Basis of Presentation
The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). Our Annual Report on Form 10-K for the year ended December 31, 2023 (the "Annual Report"), as filed with the Securities and Exchange Commission (the "SEC"), includes a discussion of the significant accounting policies used in the preparation of our consolidated financial statements. Other than the Company designating certain derivatives as cash flow hedges, there have been no changes to the Company’s significant accounting policies described in the Annual Report that have had a material impact on the Company’s condensed consolidated financial statements and related notes. See Note 5, "Forward Contracts" for information on the accounting policy for cash flow hedges.
These unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with US GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements and should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2023 included in the Annual Report. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of September 30, 2024 and its results of operations, comprehensive income and shareholders’ equity for the three and nine months ended September 30, 2024 and 2023, and cash flows for the nine months ended September 30, 2024 and 2023. The condensed consolidated balance sheet as of December 31, 2023, was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements.
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(b) Use of Estimates
The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the determination of useful lives and impairment of fixed assets; allowances for credit losses; the valuation of deferred tax assets; the measurement of lease liabilities and right-of-use assets; valuation of forward contracts; valuation of stock-based compensation; valuation of acquired intangible assets and goodwill, as well as related impairment assessments; and reserves for income tax uncertainties and other contingencies.
(c) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The Company has no variable interest entities in its corporate structure.
(d) Concentration Risk
Most of the Company’s customers are located in the United States. Clients outside of the United States are concentrated in Europe.
For the three and nine months ended September 30, 2024 and 2023, the following client represented greater than 10% of the Company’s service revenue:
ClientService revenue percentage
Three months ended September 30,Nine months ended September 30,
2024202320242023
A23 %19 %21 %19 %
As of September 30, 2024 and December 31, 2023, the following clients represented greater than 10% of the Company’s accounts receivable:
Accounts receivable percentage
ClientSeptember 30, 2024December 31, 2023
A24 %16 %
BLess than 10%12 %
The Company’s principal operations, including the majority of its employees and the fixed assets owned by its wholly owned subsidiaries, are located in the Philippines.
(e) Recent Accounting Pronouncements
The Company currently qualifies as an "emerging growth company" under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Accordingly, the Company is provided the option to adopt new or revised accounting guidance either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods as private companies. The Company has elected to adopt new or revised accounting guidance within the same time period as private companies.
Recently issued accounting pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This standard requires enhanced disclosure of significant segment expenses, and other segment items, on an annual and interim basis. This ASU will be effective for the Company for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. This ASU will be applied retrospectively to all periods presented in the financial statements. The Company is currently reviewing this ASU, but does not expect its adoption to have a material impact on its consolidated financial statements.
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In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This standard improves the transparency of rate reconciliation and income taxes paid disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. The standard also improves the effectiveness and comparability of disclosures by (1) adding disclosures of pretax income (loss) and income tax expense (benefit) and (2) removing disclosures that no longer are considered cost beneficial or relevant. This ASU will be effective for the Company for fiscal years beginning after December 15, 2025. Early adoption is permitted. This ASU will be applied prospectively, with retrospective application permitted. The Company is currently reviewing this ASU, but does not expect its adoption to have a material impact on its consolidated financial statements.
3. Business Combination
On April 15, 2022 (the "Closing Date"), the Company completed the acquisition of 100% of the equity interests of Parsec d.o.o. and Q Experience d.o.o. (collectively, "heloo") for $35.4 million. The former shareholders of heloo were also eligible to receive contingent earn-out payments not to exceed €20 million, based on performance compared to prescribed EBITDA targets outlined in the purchase agreement during each of the one year periods ending April 30, 2023 and 2024, respectively. The second earnout period expired as of April 30, 2024, with no additional amount paid, and the total fair value of remaining contingent earn-out payments was determined to be $0.0 million as of December 31, 2023. Since these payments were contingent on future service conditions, they were recognized as compensation expense ratably over the required service period. The Company recognized compensation expense related to the contingent earn-out payments included in selling, general, and administrative expenses of $0.0 million for the three and nine months ended September 30, 2024, and $(0.1) million and $7.9 million for the three and nine months ended September 30, 2023, respectively. The Company paid $18.3 million related to the contingent earn-out during the nine months ended September 30, 2023, which is included in net cash provided by operating activities. The Company paid $0.1 million and $0.1 million related to holdback cash consideration during the nine months ended September 30, 2024 and 2023, respectively, which is included in payments for deferred business acquisition consideration.
4. Revenue from Contracts with Customers
Disaggregation of Revenue
The Company's revenues are derived from contracts with customers related to business outsourcing services that it provides. The following table presents the breakdown of the Company’s revenues by service offering:
Three months ended September 30,Nine months ended September 30,
(in thousands)2024202320242023
Digital Customer Experience$155,170 $145,952 $447,013 $454,004 
Trust and Safety63,676 48,687 178,014 134,494 
AI Services36,499 30,987 95,716 101,603 
Service revenue$255,345 $225,626 $720,743 $690,101 
The majority of the Company’s revenues are derived from contracts with customers who are located in the United States. However, the Company delivers its services from geographies outside of the United States. The following table presents the breakdown of the Company’s revenues by geographical location, based on where the services are provided from:
Three months ended September 30,Nine months ended September 30,
(in thousands)2024202320242023
Philippines$143,300 $126,419 $412,821 $380,539 
United States31,238 32,421 82,095 116,318 
India31,088 29,379 89,465 86,617 
Rest of World49,719 37,407 136,362 106,627 
Service revenue$255,345 $225,626 $720,743 $690,101 
Contract Balances
Accounts receivable, net of allowance for credit losses includes $87.0 million and $77.2 million of unbilled revenue as of September 30, 2024 and December 31, 2023, respectively.
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5. Forward Contracts
The Company transacts business in various foreign currencies and has international sales and expenses denominated in foreign currencies, subjecting the Company to foreign currency exchange rate risk. During 2024 and 2023, the Company entered into foreign currency exchange rate forward contracts, with four commercial banks as the counterparties, with maturities of generally 12 months or less, to reduce the volatility of cash flows, primarily related to forecasted costs denominated in Philippine pesos, Indian rupees, Mexican pesos and Colombian pesos. In addition, the Company utilizes foreign currency exchange rate contracts to mitigate foreign currency exchange rate risk associated with foreign currency-denominated assets and liabilities, primarily intercompany balances. The Company does not use foreign currency exchange rate contracts for trading purposes.
ASC Topic 815, Derivatives and Hedging, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and hedging activities. It requires the recognition of all derivative instruments as assets (prepaid expenses and other current assets) or liabilities (accrued payroll and employee-related liabilities) on the Company’s consolidated balance sheets and measurement of those instruments at fair value. The resulting cash flows are reported as cash from operating activities. The accounting treatment of changes in fair value is dependent upon whether or not a derivative instrument is designated as a hedge and if so, the type of hedge.
Cash Flow Hedges
The Company designates certain foreign currency forward contracts as cash flow hedges to hedge certain forecasted costs denominated in currencies other than the U.S. dollar. The Company performs an assessment, on the designation date and on an ongoing basis, to determine whether the cash flow hedges are expected to be highly effective at offsetting changes in the hedged item. For the effective portion of cash flow hedges, the change in fair value is recorded in accumulated other comprehensive loss and is reclassified into cost of service, selling, general, and administrative expense and depreciation on the consolidated statements of income in the period the hedged transactions occur. All cash flow hedges were determined to be highly effective for the periods presented.
For the three and nine months ended September 30, 2024, the Company did not settle any cash flow hedges.
The following table presents the Company's outstanding forward contracts designated as cash flow hedges:
(in thousands)September 30, 2024December 31, 2023
Notional amount of outstanding forward contracts in Philippine pesos$31,047 $— 
Notional amount of outstanding forward contracts in Indian rupees8,519 — 
Notional amount of outstanding forward contracts in Mexican pesos4,196 — 
Notional amount of outstanding forward contracts in Colombian pesos8,696 — 
Total notional amount of outstanding forward contracts designated as cash flow hedges$52,458 $— 
Unrealized gains on cash flow hedges for the three and nine months ended September 30, 2024 was $0.2 million. As of September 30, 2024, the net accumulated gain on our foreign currency cash flow hedges expected to be reclassed from accumulated other comprehensive loss into earnings within the next 12 months was $0.2 million.
Derivatives Not Designated as Hedging Instruments
The Company also enters into foreign currency forward contracts that are not designated as hedging instruments. Any gains or losses resulting from changes in the fair value of these contracts are recognized in other expense (income), net in the statements of income. The forward contract receivable (payable) resulting from changes in fair value is recorded under prepaid expenses and other current assets (accounts payable and accrued liabilities).
The following table presents the Company's settled forward contracts and realized and unrealized losses (gains) associated with derivative contracts not designated as hedging instruments:
Three months ended September 30,Nine months ended September 30,
(in thousands)2024202320242023
Notional amount of settled forward contracts in Philippine pesos$40,447 $46,800 $128,101 $175,050 
Notional amount of settled forward contracts in Indian rupees10,217 11,447 33,110 18,545 
Total notional amount of settled forward contracts$50,664 $58,247 $161,211 $193,595 
Realized losses (gains) from settlement of forward contracts$1,131 $(3,386)$3,900 $(3,561)
Unrealized losses (gains) on forward contracts$(3,629)$7,669 $(166)$6,020 
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The following table presents the Company's outstanding forward contracts not designated as hedging instruments:
(in thousands)September 30,
2024		December 31,
2023
Notional amount of outstanding forward contracts in Philippine pesos$40,928 $169,029 
Notional amount of outstanding forward contracts in Indian rupees12,083 45,193 
Total notional amount of outstanding forward contracts not designated as hedging instruments$53,011 $214,222 
Fair Value Measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset and include situations where there is little, if any, market activity for the asset.
The Company’s derivatives are carried at fair value using various pricing models that incorporate observable market inputs, such as interest rate yield curves and currency rates, which are Level 2 inputs. By entering into derivative contracts, the Company is exposed to counterparty credit risk, or the failure of the counterparty to perform under the terms of the derivative contract. Derivative valuations incorporate credit risk adjustments that are necessary to reflect the probability of default by the counterparty or by the Company. For the periods presented, the non-performance risk of the Company and the counterparties did not have a material impact on the fair value of the derivative instruments.
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For financial statement presentation purposes, the Company offsets assets and liabilities for forward contracts with the same counterparty that it has the right and intent to net settle upon maturity; however, it does not offset assets and liabilities under master netting arrangements that it does not intend to net settle. The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value, at September 30, 2024 and December 31, 2023:
September 30, 2024
Fair value measurements usingTotal Gross Fair ValueEffect of Counter-party NettingNet Amounts on Balance Sheet
Effect of Master Netting Arrangements
Net Amounts
(in thousands)Level 1
inputs		Level 2
inputs		Level 3
inputs
Assets
Money market funds$42,689 $— $— $42,689 $— $42,689 $— $42,689 
Derivatives designated as hedging instruments:
Forward contracts receivable$— $673 $— $673 $— $673 $(673)$— 
Derivatives not designated as hedging instruments:
Forward contracts receivable$— $72 $— $72 $— $72 $— $72 
Liabilities
Derivatives designated as hedging instruments:
Forward contracts payable$— $426 $— $426 $— $426 $(297)$129 
Derivatives not designated as hedging instruments:
Forward contracts payable$— $595 $— $595 $— $595 $(376)$219 
December 31, 2023
Fair value measurements usingTotal Gross Fair ValueEffect of Counter-party NettingNet Amounts on Balance Sheet
Effect of Master Netting Arrangements
Net Amounts
(in thousands)Level 1 inputsLevel 2 inputs
Level 3 inputs
 
Assets
Derivatives not designated as hedging instruments:
Forward contracts receivable
$— $95 $— $95 $— $95 $(95)$— 
Liabilities
Derivatives not designated as hedging instruments:
Forward contracts payable
$— $784 $— $784 $— $784 $(95)$689 
6. Property and Equipment, net
The components of property and equipment, net as of September 30, 2024 and December 31, 2023, were as follows:
(in thousands)September 30,
2024		December 31,
2023
Leasehold improvements$70,276 $67,552 
Technology and computers113,267 105,375 
Furniture and fixtures7,336 7,392 
Construction in process10,361 1,140 
Other property and equipment14,999 14,238 
Property and equipment, gross216,239 195,697 
Accumulated depreciation(151,112)(126,804)
Property and equipment, net$65,127 $68,893 
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The Company’s principal operations are in the Philippines where the majority of property and equipment resides under its wholly owned subsidiaries. The table below presents the Company’s total property and equipment by geographic location as of September 30, 2024 and December 31, 2023:
(in thousands)September 30,
2024		December 31,
2023
Philippines$24,397 $29,765 
United States5,739 7,308 
India13,354 17,452 
Rest of World21,637 14,368 
Property and equipment, net$65,127 $68,893 
7. Goodwill and Intangibles
The changes in the carrying amount of goodwill during the period were as follows:
(in thousands)
Balance as of December 31, 2023
$218,108 
Foreign currency translation251 
Balance as of September 30, 2024
$218,359 
Intangible assets consisted of the following as of September 30, 2024 and December 31, 2023:
September 30, 2024December 31, 2023
(in thousands)Intangibles,
Gross		Accumulated
Amortization		Intangibles,
Net		Intangibles,
Gross		Accumulated
Amortization		Intangibles,
Net
Customer relationships$252,023 $(99,079)$152,944 $251,899 $(86,176)$165,723 
Trade names41,900 (16,760)25,140 41,900 (14,665)27,235 
Other intangibles179 (179)— 236 (236)— 
Total$294,102 $(116,018)$178,084 $294,035 $(101,077)$192,958 
8. Long-Term Debt
The balances of current and noncurrent portions of debt consisted of the following as of September 30, 2024 and December 31, 2023:
September 30, 2024December 31, 2023
(in thousands)CurrentNoncurrentTotalCurrentNoncurrentTotal
Term Loan$13,500 $247,050 $260,550 $8,438 $257,175 $265,613 
Less: Debt financing fees(378)(725)(1,103)(379)(1,009)(1,388)
Total$13,122 $246,325 $259,447 $8,059 $256,166 $264,225 
2022 Credit Agreement
On September 7, 2022, the Company amended and restated its prior credit agreement (as amended and restated the "2022 Credit Agreement"), which includes a $270.0 million term loan (the "2022 Term Loan Facility") and a $190.0 million revolving credit facility (the "2022 Revolving Credit Facility" and, together with the 2022 Term Loan Facility, the "2022 Credit Facilities").
The 2022 Term Loan Facility matures on September 7, 2027. We have elected to pay interest on borrowings under the 2022 Term Loan Facility based on the SOFR rate. The interest rate in effect for the 2022 Term Loan Facility as of September 30, 2024 was 6.954% per annum. Due to its variable interest rates, the carrying amount of debt approximates fair value based on the present value of future cash flows using Level 2 inputs.
The 2022 Revolving Credit Facility terminates on September 7, 2027. As of September 30, 2024, the Company had no balance outstanding and $190.0 million of borrowing availability under the 2022 Revolving Credit Facility.
The Company was in compliance with all debt covenants as of September 30, 2024.
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9. Leases
The following table presents operating lease costs recorded to cost of services:
Three months ended September 30,Nine months ended September 30,
(in thousands)2024202320242023
Operating lease costs - Cost of services$5,069 $4,266 $14,188 $12,801 
Operating lease costs recorded to selling, general, and administrative expenses were immaterial.
The following table presents the weighted average remaining lease term and weighted average discount rate for the Company's operating leases as of September 30, 2024 and December 31, 2023:
September 30, 2024December 31, 2023
Weighted average remaining lease term3.4 years3.5 years
Weighted average discount rate6.3 %6.3 %
The following table presents supplemental cash flow information related to the Company's operating leases:
Nine months ended September 30,
(in thousands)20242023
Cash paid for amounts included in the measurement of operating lease liabilities$14,779 $12,487 
ROU assets obtained in exchange for operating lease liabilities17,724 14,725 
The future lease payments on the Company's operating lease liabilities as of September 30, 2024 were as follows:
(in thousands)
2024-remainder of year$5,322 
202519,633 
202613,598 
20278,449 
20284,485 
Thereafter3,987 
     Total lease payments55,474 
Less: imputed interest(5,681)
     Total lease liabilities$49,793 

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10. Commitments and Contingencies
The Company is subject to various legal proceedings, claims, and litigation arising in the ordinary course of business. Although the outcomes of such matters cannot be predicted with certainty, the Company believes that resolution of all such pending matters will not, either individually or in the aggregate, have a material adverse effect on its business, operating results, cash flows, or financial condition. However, given the inherent unpredictability of litigations, arbitrations, claims, inquiries, investigations and proceedings, it is possible that an adverse outcome in certain matters could have a material adverse effect on our business, operating results, cash flows, or financial condition in any future period. In addition, there can be no assurance that material losses will not be incurred from claims where potential losses have not yet been determined to be probable or possible and reasonably estimable.
On February 23, 2022, a purported class action lawsuit captioned Lozada v. TaskUs, Inc. et al., No. 22-cv-1479-JPC, was filed in the United States District Court for the Southern District of New York against the Company, our Chief Executive Officer, our President, and our Chief Financial Officer. The complaint alleges that the registration statement filed in connection with the Company’s initial public offering and the Company’s second and third quarter 2021 earnings calls contained materially false and misleading information in violation of the federal securities laws. On October 20, 2022, the Court entered an order appointing Humberto Lozada as lead plaintiff in the lawsuit. On December 16, 2022, lead plaintiff filed an amended complaint, alleging additional misstatements in certain of the Company’s 2021 earnings releases filed on Form 8-K and at an investor conference, and asserting additional securities claims, including against members of TaskUs’s board of directors as well as BCP FC Aggregator L.P. The complaint seeks unspecified damages and an award of costs and expenses, including reasonable attorneys’ fees, as well as equitable relief. We believe that the lawsuit is without merit and intend to defend the lawsuit vigorously. On February 17, 2023, TaskUs and the other named defendants filed a motion to dismiss. On October 16, 2023, the plaintiffs voluntarily dismissed with prejudice certain claims based on certain theories of liability. On January 5, 2024, the Court granted in part and denied in part the defendants' motion to dismiss. Defendants filed an answer to the complaint on February 9, 2024, and an initial pretrial conference was held on February 16, 2024 after which a Case Management Plan and Scheduling Order was entered by the Court on February 20, 2024. Discovery is ongoing. Plaintiffs filed a motion for class certification on May 10, 2024. Briefing on that motion was completed on September 20, 2024 and the motion is currently pending. The Company cannot predict at this point the length of time that this action will be ongoing or the liability, if any, which may arise therefrom.
The Company is currently defending three lawsuits that present in large degree the same legal or factual issues, with allegations that are similar in nature. We believe that these three lawsuits are without merit and intend to defend each vigorously. The Company cannot predict at this point the length of time that these actions will be ongoing or the liability, if any, which may arise therefrom. As these actions are still in preliminary phases, any potential loss or impact on financial position or results of operations cannot yet be estimated.
On April 1, 2022, a purported class action lawsuit captioned Gregory Forsberg, Christopher Gunter, Samuel Kissinger, and Scott Sipprell vs. TaskUs, Inc. and Shopify, Inc., Shopify Holdings (USA), Inc., Shopify (USA) Inc., No. 1:22-cv-00436-UNA, was filed in the United States District Court for the District of Delaware. The complaint alleges the named defendants failed to exercise reasonable care in securing and safeguarding consumer information in connection with a 2020 data breach impacting Ledger SAS cryptocurrency hardware wallets, resulting in the unauthorized public release of approximately 272,000 pieces of detailed personally identifiable information, including Plaintiffs’ and class members’ full names, email addresses, postal addresses, and telephone numbers. The four named plaintiffs allege aggregate losses of approximately $140,000, and allege that the damages exceed $5 million for purposes of class action jurisdiction. On April 8, 2022, the Company filed a motion to dismiss, which is currently pending. This case is currently stayed.
On September 16, 2022, a lawsuit captioned My Choice Software, LLC vs. TaskUs, Inc., Tassilo Heinrich, Shopify, Inc., Shopify Holdings (USA) Inc., Shopify (USA) Inc., Does 1-50, No. 22-cv-1710 was filed in the United States District Court, Central District of California. The complaint alleges the defendants profited off of the plaintiff's information. The complaint seeks unspecified damages and an award of costs and expenses, including reasonable attorneys’ fees, as well as equitable and injunctive relief. On February 13, 2023, we filed a motion to dismiss the amended complaint. In May 2023, the Court issued an Order dismissing certain parties, staying the case as to the Company and denying as moot the Company's previously filed motion to dismiss. This case is currently stayed.
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On November 22, 2023, TaskUs was added as an additional defendant in a lawsuit captioned Naeem Seirafi, Edward Baton, Anthony Comilla, Brett Deeney, and Abraham Vilinger, individually and on behalf of all others similarly situated v. Ledger SAS, Shopify (USA) Inc., Shopify Inc., and TaskUs, Inc., No. 21-cv-02470 pending in the United States District Court, Northern District of California. The complaint alleges defendants failed to exercise reasonable care in securing and safeguarding consumer information in connection with a 2020 data breach impacting Ledger cryptocurrency hardware wallets, resulting in the unauthorized public release of approximately 272,000 pieces of detailed personally identifiable information, including Plaintiffs’ and “Class” members’ full names, email addresses, postal addresses, and telephone numbers. The complaint asserts claims against TaskUs for negligence, negligence per se, declaratory and injunctive relief, and for violations of the New York Deceptive Trade Practices Act. The named plaintiffs’ alleged damages of approximately $557,000 and an award of costs and expenses, including reasonable attorneys’ fees, as well as declaratory and injunctive relief, and other damages. On February 5, 2024, TaskUs filed a motion to dismiss. On July 16, 2024, the Court granted in part and denied in part the motion to dismiss. On August 23, 2024, the plaintiffs filed an amended complaint. On September 19, 2024, TaskUs filed a motion to dismiss, which remains pending.
Indemnification
In addition, in the ordinary course of business, the Company enters into agreements of varying scope and terms pursuant to which it agrees to indemnify clients, vendors and other business partners with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, cybersecurity breach, services to be provided by the Company or from intellectual property infringement claims made by third parties. Historically, the Company has not experienced significant losses on these types of indemnification obligations.
11. Stock-Based Compensation
The following table summarizes the stock option, restricted stock unit ("RSU") and performance stock unit ("PSU") activity for the nine months ended September 30, 2024:
OptionsRSUsPSUs
Number of
options		Weighted -
average
exercise price		Number of
RSUs		Weighted -
average
grant date fair value		Number of
PSUs		Weighted -
average
grant date fair value
Outstanding at January 1, 2024
7,523,971 $14.19 3,864,319 $23.60 3,373,417 $4.02 
Granted
— $— 2,447,091 $12.53 320,000 $11.58 
Exercised or released(822,122)$4.02 (1,498,935)$22.62 — $— 
Forfeited, cancelled or expired(1,383,040)$7.02 (332,870)$19.66 — $— 
Outstanding at September 30, 2024
5,318,809 $17.62 4,479,605 $18.18 3,693,417 $4.67 
The following table summarizes the components of stock-based compensation expense recognized for the periods presented:
Three months ended September 30,Nine months ended September 30,
(in thousands)2024202320242023
Cost of services$560 $687 $1,741 $2,602 
Selling, general, and administrative expense10,038 13,146 30,213 39,735 
Total$10,598 $13,833 $31,954 $42,337 
As of September 30, 2024, there was $3.2 million, $32.5 million and $3.6 million of unrecognized compensation expense related to the Company’s unvested stock options, RSUs and PSUs, respectively, that is expected to be recognized over a weighted-average period of 1.0 year, 1.4 years and 1.4 years, respectively. Certain PSUs contain performance conditions, which may result in a different amount of expense recognized over the term of the awards.
12. Income Taxes
In determining its interim provision for income taxes, the Company used an estimated annual effective tax rate, which is based on expected income before taxes, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the period in which they occur and can be a source of variability in the effective tax rate from quarter to quarter.
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The Company recorded provision for income taxes of $5.1 million and $4.6 million in the three months ended September 30, 2024 and 2023, respectively. The effective tax rate was 28.6% and 31.8% for the three months ended September 30, 2024 and 2023, respectively.
The Company recorded provision for income taxes of $18.9 million and $17.9 million in the nine months ended September 30, 2024 and 2023, respectively. The effective tax rate was 33.8% and 37.9% for the nine months ended September 30, 2024 and 2023, respectively. The difference between the effective tax rate and the 21% federal statutory rate in the nine months ended September 30, 2024 was primarily due to Global Intangible Low-Taxed Income ("GILTI") inclusion, nondeductible compensation of officers, nondeductible costs and state taxes, partially offset by tax benefits from foreign jurisdictions. The difference between the effective tax rate and the 21% federal statutory rate in the nine months ended September 30, 2023 was primarily due to nondeductible compensation of officers and GILTI inclusion.
13. Earnings Per Share
The Company has Class A common stock and Class B common stock outstanding. Because the only difference between the two classes of common stock are related to voting, transfer and conversion rights, the Company has not presented earnings per share under the two-class method, as earnings per share are the same for both Class A common stock and Class B common stock.
The following table summarizes the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2024 and 2023:
Three months ended September 30,Nine months ended September 30,
(in thousands, except share and per share data)2024202320242023
Numerator:
Net income$12,699 $9,772 $37,011 $29,413 
Denominator:
Weighted-average common shares outstanding – basic88,978,159 92,480,316 88,701,787 95,522,026 
Effect of dilutive securities3,601,760 1,554,795 3,318,124 2,207,204 
Weighted-average common shares outstanding – diluted92,579,919 94,035,111 92,019,911 97,729,230 
Net income per common share:
Basic$0.14 $0.11 $0.42 $0.31 
Diluted$0.14 $0.10 $0.40 $0.30 
The Company excluded 3,195,006 and 3,339,438 potential common stock equivalents from the computation of diluted EPS for the three and nine months ended September 30, 2024, respectively, and 6,487,091 and 5,809,048 potential common stock equivalents from the computation of diluted EPS for the three and nine months ended September 30, 2023, respectively, because the effect would have been anti-dilutive. There were 3,693,417 and 5,208,719 potential common stock equivalents outstanding as of September 30, 2024 and 2023, respectively, with market or performance conditions which were not met at the relevant date, that were excluded from the calculation of diluted EPS.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q (this "Quarterly Report"), the financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2023 (the "Annual Report"), as filed with the Securities and Exchange Commission (the "SEC") and the information included under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report. In addition to historical data, the following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in our forward-looking statements as a result of various factors, including but not limited to those discussed under "Cautionary Note Regarding Forward-Looking Statements" in this Quarterly Report and under Part I, Item 1A, "Risk Factors" in the Annual Report.
This Quarterly Report includes certain historical consolidated financial and other data for TaskUs, Inc. ("we," "us," "our" or the "Company"). The following discussion provides a narrative of our results of operations and financial condition for the three and nine months ended September 30, 2024 and 2023.
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.
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. 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.
At TaskUs, culture is at the heart of everything we do. Many of the companies operating in the digital economy are well-known for their obsession with creating a world-class employee experience. 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.
2024 Developments
Return to Revenue Growth
During 2024, we have seen some of the challenges and market uncertainty we faced in 2023 begin to subside. Through our continued focus on partnering with our clients and strategic investments we have made in sales and marketing, including our focus on landing enterprise clients and cross-selling our specialized services, we achieved revenue growth of 13.2% during the three months ended September 30, 2024 compared to the three months ended September 30, 2023. Given our performance in the nine months ended September 30, 2024, we expect our revenue growth to continue in the remainder of 2024. This acceleration of revenue growth requires additional investments in operations, facilities, hiring and training. Additionally, we have seen an increase in pricing pressure as our clients remain focused on cost reduction and competitors reduce their rates. While we believe we are a premium provider of specialized services, we have and expect to continue to price our services competitively in order to achieve above market growth rates and take share from our competitors. These factors may impact our margins and cash flow.
Recent Financial Highlights
For the three months ended September 30, 2024, we recorded service revenue of $255.3 million, a 13.2% increase from $225.6 million for the three months ended September 30, 2023. For the nine months ended September 30, 2024, we recorded service revenue of $720.7 million, a 4.4% increase from $690.1 million for the nine months ended September 30, 2023.

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Net income for the three months ended September 30, 2024 increased to $12.7 million from $9.8 million for the three months ended September 30, 2023. This increase is due primarily to revenue growth, the impact of foreign currency exchange rate changes, including forward contracts not designated as hedging instruments, and interest income. These increases were partially offset by higher cost of services and certain litigation costs. Adjusted Net Income for the three months ended September 30, 2024 increased 14.4% to $34.3 million from $30.0 million for the three months ended September 30, 2023. Adjusted EBITDA for the three months ended September 30, 2024 increased 3.4% to $54.2 million from $52.5 million for the three months ended September 30, 2023. Adjusted Net Income and Adjusted EBITDA are non-GAAP financial measures. For definitions and reconciliations to net income, the most directly comparable measure in accordance with GAAP, see "Non-GAAP Financial Measures."

Net income for the nine months ended September 30, 2024 increased to $37.0 million from $29.4 million for the nine months ended September 30, 2023. This increase is due primarily to revenue growth, lower stock-based compensation expense, earn-out consideration and severance, as well as higher interest income. These increases were partially offset by higher cost of services, certain litigation costs and bonus expense, associated with higher company performance. Adjusted Net Income for the nine months ended September 30, 2024 decreased 4.4% to $90.2 million from $94.3 million for the nine months ended September 30, 2023. Adjusted EBITDA for the nine months ended September 30, 2024 decreased 3.5% to $156.1 million from $161.8 million for the nine months ended September 30, 2023.
Our operating results in any period are not necessarily indicative of the results that may be expected for any future period.
Results of Operations
Comparison of the Three Months Ended September 30, 2024 and 2023
The following tables set forth certain historical consolidated financial information for the three months ended September 30, 2024 and 2023:
Three months ended September 30,Period over Period Change
(in thousands, except %)20242023($)(%)
Service revenue$255,345 $225,626 $29,719 13.2 %
Operating expenses:
Cost of services153,765 130,139 23,626 18.2 %
Selling, general, and administrative expense62,650 57,114 5,536 9.7 %
Depreciation9,758 9,762 (4)— %
Amortization of intangible assets4,988 5,027 (39)(0.8)%
Loss (gain) on disposal of assets(10)640 (650)NM
Total operating expenses231,151 202,682 28,469 14.0 %
Operating income24,194 22,944 1,250 5.4 %
Other expense, net898 2,895 (1,997)(69.0)%
Financing expenses5,504 5,712 (208)(3.6)%
Income before income taxes17,792 14,337 3,455 24.1 %
Provision for income taxes5,093 4,565 528 11.6 %
Net income$12,699 $9,772 $2,927 30.0 %
NM = not meaningful
Service revenue
Service revenue by service offering
The following table presents the breakdown of our service revenue by service offering for each period:
Three months ended September 30,Period over Period Change
(in thousands, except %)20242023($)(%)
Digital Customer Experience$155,170 $145,952 $9,218 6.3 %
Trust and Safety63,676 48,687 14,989 30.8 %
AI Services36,499 30,987 5,512 17.8 %
Service revenue$255,345 $225,626 $29,719 13.2 %
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Digital Customer Experience was primarily driven by an increase from new clients in FinTech, HealthTech and Professional Services + Industry, as well as existing clients in FinTech. These increases were partially offset by decreases from existing clients in HealthTech and On Demand Travel + Transportation.
Trust and Safety was primarily driven by an increase from existing clients in Social Media and FinTech. These increases were partially offset by decreases from existing clients in On Demand Travel + Transportation.
AI Services was primarily driven by an increase from existing clients in Social Media, as well as new clients in Professional Services + Industry.
Service revenue by delivery geography
We deliver our services from multiple locations around the world; however, the majority of our service revenues are derived from contracts that require payment in United States dollars, regardless of whether the clients are located in the United States.
The following table presents the breakdown of our service revenue by geographical location, based on where the services are provided, for each period:
Three months ended September 30,Period over Period Change
(in thousands, except %)20242023($)(%)
Philippines$143,300 $126,419 $16,881 13.4 %
United States31,238 32,421 (1,183)(3.6)%
India31,088 29,379 1,709 5.8 %
Rest of World49,719 37,407 12,312 32.9 %
Service revenue$255,345 $225,626 $29,719 13.2 %
Philippines: Trust and Safety contributed 6.9% of the total increase primarily driven by clients in Social Media and FinTech. Digital Customer Experience contributed 5.8% of the total increase primarily driven by clients in FinTech and Entertainment + Gaming. AI Services contributed 0.7% of the total increase primarily driven by clients in On Demand Travel + Transportation.
United States: Digital Customer Experience contributed 15.5% of the total decrease primarily driven by clients in Entertainment + Gaming, Technology and On Demand Travel + Transportation. The decrease was partially offset by a 7.6% increase contributed by AI Services and a 4.3% increase contributed by Trust and Safety, primarily driven by clients in Social Media.
India: AI Services contributed 6.1% of the total increase primarily driven by clients in Social Media and Professional Services + Industry. Trust and Safety contributed 2.9% of the total increase primarily driven by clients in Social Media. The increase was partially offset by a 3.2% decrease contributed by Digital Customer Experience, primarily driven by clients in On Demand Travel + Transportation and FinTech, partially offset by clients in Retail + E Commerce.
Rest of World: Digital Customer Experience contributed 21.2% of the total increase primarily driven by clients in FinTech, Professional Services + Industry and On Demand Travel + Transportation. Trust and Safety contributed 10.8% of the total increase, primarily driven by clients in Social Media and FinTech. AI Services contributed 0.9% of the total increase. Growth in the Rest of World was led by Latin America and Europe.
Operating expenses
Cost of services
The increase was primarily driven by higher personnel costs of $17.4 million associated with increased headcount. The remaining increase included facilities and recruiting costs associated with site expansion and increasing headcount associated with accelerating growth.
Selling, general, and administrative expense
The increase was primarily driven by certain litigation costs of $4.4 million, which we expect to continue in future periods. The remaining increase includes higher personnel costs of $0.5 million, due primarily to an increase in headcount and bonus expense, associated with higher company performance, mostly offset by a reduction in stock-based compensation expense of $3.1 million.
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Loss (gain) on disposal of assets
Loss on disposal of assets for the three months ended September 30, 2023 was associated with optimizing our footprint in the United States.
Other expense, net
Changes are driven by our exposure to foreign currency exchange risk resulting from our operations in foreign geographies, primarily the Philippines, including economic hedges using foreign currency exchange rate forward contracts, as well as higher interest income. See Part I, Item 3., "Quantitative and Qualitative Disclosures About Market Risk" in this Quarterly Report for additional information on how foreign currency impacts our financial results.
Financing expenses
Changes in financing expense are primarily driven by payments on long-term debt and the rate of SOFR used to calculate the interest rate of our debt.
Provision for income taxes
The effective tax rate for the three months ended September 30, 2024 and 2023 was 28.6% and 31.8%, respectively. Costs related to the issuance of stock-based compensation and litigation costs within the provision for income taxes calculation are adjusted for Non-GAAP purposes. If those costs are removed, the provision for income taxes would have been $6.1 million and $7.5 million and the effective tax rate would have been 18.6% and 26.5% for the three months ended September 30, 2024 and 2023, respectively.
Comparison of the Nine Months Ended September 30, 2024 and 2023
The following tables set forth certain historical consolidated financial information for the nine months ended September 30, 2024 and 2023:
Nine months ended September 30,Period over Period Change
(in thousands, except %)20242023($)(%)
Service revenue$720,743 $690,101 $30,642 4.4 %
Operating expenses:
Cost of services433,052 401,455 31,597 7.9 %
Selling, general, and administrative expense171,830 179,583 (7,753)(4.3)%
Depreciation30,525 29,502 1,023 3.5 %
Amortization of intangible assets14,955 15,276 (321)(2.1)%
Loss (gain) on disposal of assets(93)772 (865)NM
Total operating expenses650,269 626,588 23,681 3.8 %
Operating income70,474 63,513 6,961 11.0 %
Other expense (income), net(2,007)34 (2,041)NM
Financing expenses16,532 16,141 391 2.4 %
Income before income taxes55,949 47,338 8,611 18.2 %
Provision for income taxes18,938 17,925 1,013 5.7 %
Net income$37,011 $29,413 $7,598 25.8 %
NM = not meaningful
Service revenue
Service revenue by service offering
The following table presents the breakdown of our service revenue by service offering for each period:
Nine months ended September 30,Period over Period Change
(in thousands, except %)20242023($)(%)
Digital Customer Experience$447,013 $454,004 $(6,991)(1.5)%
Trust and Safety178,014 134,494 43,520 32.4 %
AI Services95,716 101,603 (5,887)(5.8)%
Service revenue$720,743 $690,101 $30,642 4.4 %
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Digital Customer Experience was primarily driven by a decrease from existing clients in On Demand Travel + Transportation, Entertainment + Gaming, HealthTech and Social Media. These decreases were partially offset by an increase from existing clients in FinTech, as well as new clients in FinTech, Professional Services + Industry, HealthTech and On Demand Travel + Transportation.
Trust and Safety was primarily driven by an increase from existing clients in Social Media, FinTech and On Demand Travel + Transportation.
AI Services was primarily driven by a decrease from existing clients in Social Media and On Demand Travel + Transportation, partially offset by an increase from new clients in Professional Services + Industry and Technology, as well as existing clients in Technology.
Service revenue by delivery geography
We deliver our services from multiple locations around the world; however, the majority of our service revenues are derived from contracts that require payment in United States dollars, regardless of whether the clients are located in the United States.
The following table presents the breakdown of our service revenue by geographical location, based on where the services are provided, for each period:
Nine months ended September 30,Period over Period Change
(in thousands, except %)20242023($)(%)
Philippines$412,821 $380,539 $32,282 8.5 %
United States82,095 116,318 (34,223)(29.4)%
India89,465 86,617 2,848 3.3 %
Rest of World136,362 106,627 29,735 27.9 %
Service revenue$720,743 $690,101 $30,642 4.4 %
Philippines: Trust and Safety contributed 6.8% of the total increase primarily driven by clients in Social Media and FinTech. Digital Customer Experience contributed 3.1% of the total increase primarily driven by clients in FinTech. The increase was partially offset by a 1.4% decrease contributed by AI Services, primarily driven by clients in Social Media, partially offset by clients in Technology.
United States: Digital Customer Experience contributed 27.9% of the total decrease primarily driven by clients in On Demand Travel + Transportation, Entertainment + Gaming, Social Media, HealthTech and Technology. AI Services contributed 2.7% of the total decrease primarily driven by clients in On Demand Travel + Transportation, partially offset by clients in Social Media. The decrease was partially offset by a 1.2% increase contributed by Trust and Safety, primarily driven by clients in On Demand Travel + Transportation.
India: Trust and Safety contributed 10.1% of the total increase primarily driven by clients in Social Media and On Demand Travel + Transportation. AI Services contributed 2.2% of the total increase primarily driven by clients in Professional Services + Industry. The increase was partially offset by a 9.0% decrease contributed by Digital Customer Experience, primarily driven by clients in On Demand Travel + Transportation, partially offset by clients in Retail + E-Commerce.
Rest of World: Digital Customer Experience contributed 20.2% of the total increase primarily driven by clients in FinTech, On Demand Travel + Transportation and Professional Services + Industry. Trust and Safety contributed 7.2% of the total increase primarily driven by clients in FinTech and Social Media. AI Services contributed 0.5% of the total increase. Growth in the Rest of World was led by Latin America and Asia.
Operating expenses
Cost of services
The increase was primarily driven by higher personnel costs of $21.4 million associated with increased headcount. The remaining increase included facilities and recruiting costs associated with site expansion and increasing headcount to prepare for accelerating growth.
Selling, general, and administrative expense
The decrease was primarily driven by lower personnel costs of $11.9 million, due primarily to a reduction in stock-based compensation expense of $9.5 million, earn-out compensation of $7.9 million and severance costs of $1.1 million, partially offset by an increase in headcount and bonus expense, associated with higher company performance. The remaining decrease included lower insurance expense based on renegotiated rates. These decreases were partially offset by certain litigation costs of $7.0 million, which we expect to continue in future periods.
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Depreciation
The increase in depreciation is a result of capital expenditures for leasehold improvements, furniture and fixtures and other office equipment associated with site expansions. These increases were mostly offset by a reduction in the pace of technology and computers purchases associated with certain employees returning to the office driving higher utilization of equipment.
Loss (gain) on disposal of assets
Loss on disposal of assets for the nine months ended September 30, 2023 was associated with optimizing our footprint in the United States.
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, offset by economic hedges using foreign currency exchange rate forward contracts. The remaining increase is associated with higher interest income. See Part I, Item 3., "Quantitative and Qualitative Disclosures About Market Risk" in this Quarterly Report for additional information on how foreign currency impacts our financial results.
Financing expenses
Changes in financing expense are primarily driven by payments on long-term debt and the rate of SOFR used to calculate the interest rate of our debt.
Provision for income taxes
The effective tax rate for the nine months ended September 30, 2024 and 2023 was 33.8% and 37.9%, respectively. 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. If those costs are removed, the provision for income taxes would have been $22.8 million and $22.9 million and the effective tax rate would have been 23.7% and 23.0% for the nine months ended September 30, 2024 and 2023, respectively.
Revenue by Top Clients
The table below sets forth the percentage of our total service revenue derived from our largest clients for the three and nine months ended September 30, 2024 and 2023:
Three months ended September 30,Nine months ended September 30,
2024202320242023
Top ten clients56 %55 %56 %55 %
Top twenty clients68 %67 %68 %69 %
Many of our clients are part of the rapidly growing digital economy and they rely on our suite of digital solutions to drive their continued success. For our existing clients, we benefit from our ability to grow as they grow and to cross sell new solutions, further deepening our entrenchment.
For the three months ended September 30, 2024 and 2023, we generated 23% and 19%, respectively, of our service revenue from our largest client. For the nine months ended September 30, 2024 and 2023, we generated 21% and 19%, respectively, of our service revenue from our largest client.
We continue to identify and target high growth industry verticals and clients. Our strategy is to acquire 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. Fluctuations in foreign currencies impact the amount of total assets, liabilities, revenue, operating expenses and cash flows that we report for our foreign subsidiaries upon the translation of these amounts into U.S. dollars. See Part I, Item 3., "Quantitative and Qualitative Disclosures About Market Risk" in this Quarterly Report for additional information on how foreign currency impacts our financial results.
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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, as key measures to assess the performance of our business.
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. Such measures have limitations as analytical tools, and you should not consider any of such measures in isolation or as substitutes for our results as reported under GAAP. Additionally, Adjusted Net Income, Adjusted EPS, EBITDA, and Adjusted EBITDA exclude items that can have a significant effect on our profit or loss and should, therefore, be used in conjunction with profit or loss for the period. Our management compensates for the limitations of using non-GAAP financial measures by using them to supplement GAAP results to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. Because not all companies use identical calculations, these measures may not be comparable to other similarly titled measures of other companies.
Adjusted Net Income
Adjusted Net Income is a non-GAAP profitability measure that represents net income or loss for the period before the impact of amortization of intangible assets and certain items that are considered to hinder comparison of the performance of our businesses on a period-over-period basis or with other businesses. 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. Our 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.
The following table reconciles net income, the most directly comparable GAAP measure, to Adjusted Net Income for the three months ended September 30, 2024 and 2023:
Three months ended September 30,Period over Period Change
(in thousands, except %)20242023($)(%)
Net income$12,699 $9,772 $2,927 30.0 %
Amortization of intangible assets4,988 5,027 (39)(0.8)%
Earn-out consideration(1)
— (53)53 (100.0)%
Foreign currency losses(2)
2,490 3,494 (1,004)(28.7)%
Loss (gain) on disposal of assets(10)640 (650)NM
Severance costs(3)
— 60 (60)(100.0)%
Litigation costs(4)
4,412 — 4,412 100.0 %
Stock-based compensation expense(5)
10,742 13,946 (3,204)(23.0)%
Tax impacts of adjustments(6)
(1,044)(2,925)1,881 (64.3)%
Adjusted Net Income$34,277 $29,961 $4,316 14.4 %
Net Income Margin(7)
5.0 %4.3 %
Adjusted Net Income Margin(7)
13.4 %13.3 %
NM = not meaningful
(1) Represents earn-out consideration recognized as compensation expense related to the acquisition of heloo.
(2) Realized and unrealized foreign currency losses include the effect of fair market value changes of forward contracts not designated as hedging instruments and remeasurement of U.S. dollar-denominated accounts to foreign currency.
(3) Represents severance payments as a result of certain cost optimization measures we undertook during the period to restructure support roles.
(4) Represents only those litigation costs that are considered non-recurring and outside of the ordinary course of business.
(5) Represents stock-based compensation expense, as well as associated payroll tax.
(6) Represents tax impacts of adjustments to net income which resulted in a tax benefit during the period, including stock-based compensation expense and litigation costs. After these adjustments, we applied a non-GAAP effective tax rate of 18.6% and 26.5% for the three months ended September 30, 2024 and 2023, respectively, to non-GAAP income before income taxes.
(7) Net Income Margin represents net income divided by service revenue and Adjusted Net Income Margin represents Adjusted Net Income divided by service revenue.
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The following table reconciles net income, the most directly comparable GAAP measure, to Adjusted Net Income for the nine months ended September 30, 2024 and 2023:
Nine months ended September 30,Period over Period Change
(in thousands, except %)20242023($)(%)
Net income$37,011 $29,413 $7,598 25.8 %
Amortization of intangible assets14,955 15,276 (321)(2.1)%
Transaction costs(1)
— 245 (245)(100.0)%
Earn-out consideration(2)
— 7,863 (7,863)(100.0)%
Foreign currency losses(3)
2,192 1,316 876 66.6 %
Loss (gain) on disposal of assets(93)772 (865)NM
Severance costs(4)
487 1,628 (1,141)(70.1)%
Litigation costs(5)
7,030 — 7,030 100.0 %
Stock-based compensation expense(6)
32,434 42,725 (10,291)(24.1)%
Tax impacts of adjustments(7)
(3,832)(4,944)1,112 (22.5)%
Adjusted Net Income$90,184 $94,294 $(4,110)(4.4)%
Net Income Margin(8)
5.1 %4.3 %
Adjusted Net Income Margin(8)
12.5 %13.7 %
NM = not meaningful
(1) Represents professional service fees related to non-recurring transactions.
(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.
(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.
(7) Represents tax impacts of adjustments to net income which resulted in a tax benefit during the period, including stock-based compensation expense, earn-out consideration, litigation costs and severance. After these adjustments, we applied a non-GAAP effective tax rate of 23.7% and 23.0% for the nine months ended September 30, 2024 and 2023, respectively, to non-GAAP income before income taxes.
(8) Net Income Margin represents net income divided by service revenue and Adjusted Net Income Margin represents Adjusted Net Income divided by service revenue.
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. 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.
The following table reconciles GAAP diluted EPS, the most directly comparable GAAP measure, to Adjusted EPS for the three and nine months ended September 30, 2024 and 2023:
Three months ended September 30,Nine months ended September 30,
2024202320242023
GAAP diluted EPS$0.14 $0.10 $0.40 $0.30 
Per share adjustments to net income(1)
0.23 0.22 0.58 0.66 
Adjusted EPS$0.37 $0.32 $0.98 $0.96 
Weighted-average common shares outstanding – diluted92,579,919 94,035,111 92,019,911 97,729,230 
(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.
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EBITDA and Adjusted EBITDA
EBITDA is a non-GAAP profitability measure that represents net income or loss for the period before the impact of the benefit from or provision for income taxes, financing expenses, depreciation, and amortization of intangible assets. EBITDA eliminates potential differences in performance caused by variations in capital structures (affecting financing expenses), tax positions (such as the availability of net operating losses against which to relieve taxable profits), the cost and age of tangible assets (affecting relative depreciation expense) and the extent to which intangible assets are identifiable (affecting relative amortization expense).
Adjusted EBITDA is a non-GAAP profitability measure that represents EBITDA before certain items that are considered to hinder comparison of the performance of our businesses on a period-over-period basis or with other businesses. 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. 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.
The following table reconciles net income, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA for the three months ended September 30, 2024 and 2023:
Three months ended September 30,Period over Period Change
(in thousands, except %)20242023($)(%)
Net income$12,699 $9,772 $2,927 30.0 %
Provision for income taxes5,093 4,565 528 11.6 %
Financing expenses5,504 5,712 (208)(3.6)%
Depreciation9,758 9,762 (4)— %
Amortization of intangible assets4,988 5,027 (39)(0.8)%
EBITDA$38,042 $34,838 $3,204 9.2 %
Earn-out consideration(1)
— (53)53 (100.0)%
Foreign currency losses(2)
2,490 3,494 (1,004)(28.7)%
Loss (gain) on disposal of assets(10)640 (650)NM
Severance costs(3)
— 60 (60)(100.0)%
Litigation costs(4)
4,412 — 4,412 100.0 %
Stock-based compensation expense(5)
10,742 13,946 (3,204)(23.0)%
Interest income(6)
(1,461)(473)(988)208.9 %
Adjusted EBITDA$54,215 $52,452 $1,763 3.4 %
Net Income Margin(7)
5.0 %4.3 %
Adjusted EBITDA Margin(7)
21.2 %23.2 %
NM = not meaningful
(1) Represents earn-out consideration recognized as compensation expense related to the acquisition of heloo.
(2) Realized and unrealized foreign currency losses include the effect of fair market value changes of forward contracts not designated as hedging instruments and remeasurement of U.S. dollar-denominated accounts to foreign currency.
(3) Represents severance payments as a result of certain cost optimization measures we undertook during the period to restructure support roles.
(4) Represents only those litigation costs that are considered non-recurring and outside of the ordinary course of business.
(5) Represents stock-based compensation expense, as well as associated payroll tax.
(6) Represents interest earned on short-term savings, time-deposits and money market funds.
(7) Net Income Margin represents net income divided by service revenue and Adjusted EBITDA Margin represents Adjusted EBITDA divided by service revenue.
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The following table reconciles net income, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA for the nine months ended September 30, 2024 and 2023:
Nine months ended September 30,Period over Period Change
(in thousands, except %)20242023($)(%)
Net income$37,011 $29,413 $7,598 25.8 %
Provision for income taxes18,938 17,925 1,013 5.7 %
Financing expenses16,532 16,141 391 2.4 %
Depreciation30,525 29,502 1,023 3.5 %
Amortization of intangible assets14,955 15,276 (321)(2.1)%
EBITDA$117,961 $108,257 $9,704 9.0 %
Transaction costs(1)
— 245 (245)(100.0)%
Earn-out consideration(2)
— 7,863 (7,863)(100.0)%
Foreign currency losses(3)
2,192 1,316 876 66.6 %
Loss (gain) on disposal of assets(93)772 (865)NM
Severance costs(4)
487 1,628 (1,141)(70.1)%
Litigation costs(5)
7,030 — 7,030 100.0 %
Stock-based compensation expense(6)
32,434 42,725 (10,291)(24.1)%
Interest income(7)
$(3,939)$(1,025)(2,914)284.3 %
Adjusted EBITDA$156,072 $161,781 $(5,709)(3.5)%
Net Income Margin(8)
5.1 %4.3 %
Adjusted EBITDA Margin(8)
21.7 %23.4 %
NM = not meaningful
(1) Represents professional service fees related to non-recurring transactions.
(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.
(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.
(7) Represents interest earned on short-term savings, time-deposits 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. Free Cash Flow is calculated as net cash provided by operating activities in the period minus cash used for purchase of property and equipment in the period. Our management believes that the inclusion of this non-GAAP measure, when considered with our GAAP results, provides management and investors with an additional understanding of our ability to generate additional cash for ongoing business operations and other capital deployment.
The following table reconciles net cash provided by operating activities, the most directly comparable GAAP measure, to Free Cash Flow for the nine months ended September 30, 2024 and 2023:
Nine months ended September 30,
20242023
Net cash provided by operating activities$98,230 $103,895 
Purchase of property and equipment(18,821)(22,904)
Free Cash Flow$79,409 $80,991 
Conversion of Adjusted EBITDA to Free Cash Flow(1)
50.9 %50.1 %
(1) Conversion of Adjusted EBITDA to Free Cash Flow represents Free Cash Flow divided by Adjusted EBITDA.
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Liquidity and Capital Resources
As of September 30, 2024, our principal sources of liquidity were cash and cash equivalents totaling $180.4 million, which were held for working capital purposes, as well as the borrowing availability under the 2022 Revolving Credit Facility of $190.0 million.
As of September 30, 2024, our total indebtedness, net of debt financing fees was $259.4 million. The interest rate in effect for the 2022 Term Loan Facility as of September 30, 2024 was 6.954% per annum. We were in compliance with all debt covenants as of September 30, 2024. See Note 8, "Long-Term Debt" in the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for additional information regarding our debt.
During the nine months ended September 30, 2024, we repurchased 1,343,154 shares of our Class A common stock under the share repurchase program for $15.4 million, which we funded principally with available cash. As of September 30, 2024, $41.8 million remained available for share repurchases under our share repurchase program. For additional information about our share repurchase program, see Part II, Item 2., "Unregistered Sales of Equity Securities and Use of Proceeds—Issuer Purchases of Equity Securities" in this Quarterly Report.
Historically, we have financed our operations and made investments in supporting the growth of our business primarily through cash provided by operations. We expect to continue to make similar investments in the future. We believe our existing cash and cash equivalents and our 2022 Credit Facilities will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months.
Cash Flows
The following table presents a summary of our consolidated cash flows from operating, investing and financing activities for the periods indicated:
Nine months ended September 30,
(in thousands)20242023
Net cash provided by operating activities$98,230 $103,895 
Net cash used in investing activities(18,821)(23,904)
Net cash used in financing activities(21,254)(96,334)
Operating Activities
Net cash provided by operating activities for the nine months ended September 30, 2024 was $98.2 million compared to net cash provided by operating activities of $103.9 million for the nine months ended September 30, 2023. Net cash provided by operating activities for the nine months ended September 30, 2024 reflects net income of $37.0 million and the add back for non-cash charges totaling $75.8 million, partially offset by changes in operating assets and liabilities of $14.6 million. Non-cash charges primarily consisted of $32.0 million in stock-based compensation expense, $30.5 million of depreciation and $15.0 million of amortization related to intangibles. Net cash provided by operating activities for the nine months ended September 30, 2023 reflects net income of $29.4 million, as well as the add back for non-cash charges totaling $94.1 million, partially offset by changes in operating assets and liabilities of $19.6 million. Non-cash charges primarily consisted of $42.3 million in stock-based compensation expense, $29.5 million of depreciation and $15.3 million of amortization related to intangibles.
Investing Activities
Net cash used in investing activities for the nine months ended September 30, 2024 was $18.8 million compared to net cash used in investing activities of $23.9 million for the nine months ended September 30, 2023. Purchase of property and equipment decreased primarily due to lower site build-out costs.
Financing Activities
Net cash used in financing activities for the nine months ended September 30, 2024 was $21.3 million compared to net cash used by financing activities of $96.3 million for the nine months ended September 30, 2023. The decrease was due primarily to lower payments to acquire shares under our share repurchase program.
Critical Accounting Estimates
There have been no material changes to our critical accounting estimates as reported in our Annual Report.
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Recent Accounting Pronouncements
For additional information regarding recent accounting pronouncements adopted and under evaluation, refer to Note 2, "Summary of Significant Accounting Policies" in the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our activities expose us to a variety of financial risks: market risk (includes foreign currency), interest rate risk and credit risk.
Foreign Currency Risk
Our exposure to market risk arises principally from exchange rate risk. 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 nine months ended September 30, 2024 and 2023. We also incur expenses in U.S. dollars, and currencies of the other countries in which we have operations. The 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.
The following table presents a summary of foreign currency exchange rates and changes for the periods indicated:
Philippine PesoIndian RupeeMexican PesoColombian Peso
Average exchange rate against the U.S. dollar
Nine months ended September 30, 2024
56.99 83.41 17.72 3,979.96 
Nine months ended September 30, 2023
55.48 82.35 17.81 4,411.48 
Depreciation (appreciation)2.7 %1.3 %(0.5)%(9.8)%
Based on our level of operations during the nine months ended September 30, 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 PesoIndian RupeeMexican PesoColombian Peso
10% appreciation$29,690 $7,665 $3,290 $4,946 
10% depreciation$(24,292)$(6,271)$(2,692)$(4,046)
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.
These contracts must be settled on the day of maturity or may be canceled subject to the receipts or payments of any gains or losses, respectively, equal to the difference between the contract exchange rate and the market exchange rate on the date of cancellation. We do not enter into foreign currency forward contracts for speculative or trading purposes. These derivative instruments do not subject us to material balance sheet risk due to exchange rate movements because gains and losses on the settlement of these derivatives are intended to offset payment for the transactions being hedged.
See Note 5, "Forward Contracts" in the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly 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. All of our borrowings outstanding under the 2022 Credit Facilities as of September 30, 2024 accrue interest at SOFR plus 2.25%. As of September 30, 2024 our total principal balance outstanding was $260.5 million and the interest rate in effect was 6.954% per annum. Based on the outstanding balances and interest rates under the 2022 Credit Facilities as of September 30, 2024, a hypothetical 10% increase or decrease in SOFR would cause an increase or decrease in interest expense of approximately $1.2 million over the next 12 months.
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Credit Risk
As of September 30, 2024, we had accounts receivable, net of allowance for credit losses, of $200.8 million, of which $48.5 million was owed by one of our clients. Collectively, this client represented approximately 24% of our gross accounts receivable as of September 30, 2024.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2024. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2024, the design and operation of the our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings
The information required with respect to this item can be found under Note 10, "Commitments and Contingencies" in the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report and is incorporated by reference into this Item 1.
Item 1A. Risk Factors
We are subject to various risks that could have a material adverse impact on our financial position, results of operations or cash flows. Although it is not possible to predict or identify all such risks and uncertainties, they may include, but are not limited to, the factors discussed under "Risk Factors" in the Annual Report. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our financial position, results of operations or cash flows. There have been no material changes to the risk factors included in the Annual Report. You should carefully consider the risk factors set forth in the Annual Report and the other information set forth elsewhere in this Quarterly Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
During the three months ended September 30, 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 ProgramsApproximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
(in thousands)
July 1, 2024 through July 31, 2024— $— — $— 
August 1, 2024 through August 31, 2024— — — — 
September 1, 2024 through September 30, 202432,987 11.98 32,987 41,819 
Total32,987 $11.98 32,987 
(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. Pursuant to our share repurchase program, we may repurchase shares of our Class A common stock from time to time through open market purchases, in privately negotiated transactions or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act. Open market repurchases are expected to be structured to occur within the pricing volume requirements of Rule 10b-18. The timing and total amount of stock repurchases will depend upon, business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, restrictions under the terms of our loan agreements and other relevant considerations. 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.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
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Item 5. Other Information
Section 13(r) Disclosure
Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, which added Section 13(r) of the Exchange Act, we hereby incorporate by reference herein Exhibit 99.1 of this report, which includes disclosures regarding activities at Mundys S.p.A., which may be, or may have been at the time considered to be, an affiliate of Blackstone and, therefore, our affiliate.
Rule 10b5-1 Trading Arrangements
On September 13, 2024, Steven Amaya, our Chief Accounting Officer and Treasurer, adopted a Rule 10b5-1 trading arrangement (the “Amaya 10b5-1 Plan”), which provides for the potential sale of up to 244,687 shares of the Company’s Class A Common Stock, including shares obtained from the exercise of vested stock options and the vesting of restricted stock units (subject to reduction for any shares withheld to satisfy tax withholding obligations). The Amaya 10b5-1 Plan is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act and unless otherwise terminated pursuant to its terms, provides for sales from December 13, 2024 to December 31, 2025 or an earlier date on which all shares thereunder are sold.
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Item 6. Exhibits
Exhibit
No.		Description
3.1
3.2
3.3
31.1*
31.2*
32.1**
32.2**
99.1*
101.INSXBRL Instance Document– the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*    Filed herewith.
**    Furnished herewith.
The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure except for the terms of the agreements or other documents themselves, and you should not rely on them for other than that purpose. In particular, any representations and warranties made by the Company in these agreements or other documents were made solely within the specific context of the relevant agreement or document and do not apply in any other context or at any time other than the date they were made.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
TASKUS, INC.
(Registrant)
Date:November 7, 2024By:/s/ Balaji Sekar
Balaji Sekar
Chief Financial Officer
(Principal Financial Officer)
(Authorized Signatory)
Date:November 7, 2024By:/s/ Steven Amaya
Steven Amaya
Chief Accounting Officer and Treasurer
(Principal Accounting Officer)
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