Global business process management firm Startek Inc, merged with Indian BPM firm Aegis in 2018, will focus on new revenue streams this year, said Rajiv Ahuja, COO.
The fully integrated company reported its first annual results on Friday. Addressing analysts after these were announced, Startek chief executive Aparup Sengupta said: “Health care presents a significant near-term opportunity for us, as we're seeing strong levels of interest from prospects across the globe. For perspective on our execution, our non-telco verticals accounted for 62 per cent of the revenue in calendar 2019, up significantly from 51 per cent in 2018.”
Private equity firm Capital Square Partners (CSP) has gone under water on the deal. It had bought StarTek shares at $12 each; these now trade at less than $8. CSP owns about 55 per cent of the firm.StarTek says it is focusing on a turnaround this year and is encouraged by the recent results. “In 2020, we are leading very aggressive goals. We are poised for growth; what we need is new revenue. Our overall numbers are healthy and a turnaround is in place,” Ahuja told Business Standard.
At end-December 2019, cash and restricted cash increased to $32.6 million, from $24.6 million a year before. Total debt was down to $174.8 million, from $185.7 million at the end of 2018. This resulted in a reduction of net debt to $142.2 million, from $161.1 million.
Net revenue for the quarter ended December 31 increased eight per cent to $171.6 mn. Gross profit in the quarter was up 10 per cent to $27.6 million from the one a year before. Selling, general and administrative expenses decreased to $19.4 million, from $21.9 million.
The net loss attributable to StarTek shareholders for the quarter was $5.3 million, compared to one of $9.7 million or $0.26 per share in the year-ago quarter. Net loss in the fourth quarter of 2019 included a $7.1 million goodwill impairment, primarily related to Argentina and South Africa.
Sengupta said the firm continued to “see softness with our telco business in India. We have taken steps to mitigate the impact, including our decision not to renew an engagement with one of our low-margin Indian telco clients during Q4. We will continue working to improve our margins in the region, as opposed to chasing unprofitable revenue”.
On the Covid-19 pandemic, Ahuja said the company expected to see far less impact. “We haven’t seen any major softness. At this point, the safety, security and health of our employees is of paramount importance.”