AgileThought, Inc.

Q1 2023 revenue was $41.8 million, down 5.4% year over year and 2.8% sequentially. Gross margin was 34.2%, up 290 basis points year over year and 260 basis points sequentially; gross profit increased 3.4% year over year and 5.2% sequentially. Adjusted operating income was negative $1.2 million versus positive $1.1 million in Q1 2022; adjusted net income was negative $4.2 million versus negative $0.4 million; adjusted diluted EPS was negative $0.09 versus negative $0.01. Cash and cash equivalents were $3.2 million as of March 31, 2023, and total debt net of unamortized issuance costs was $84.5 million. Full-year 2023 guidance: revenue of $185 million, implying 4.6% organic year-over-year growth; gross margin of 34.5% to 35.5%; adjusted operating income of at least $13.7 million, implying at least 20.2% year-over-year growth.

Manuel Senderos framed the quarter as a transition toward a more focused and higher-quality business model. He emphasized pruning small, burdensome accounts, building a sales force that is now almost 50% larger, and targeting clients that can scale into $10 million-plus relationships. He was upbeat on AI-related demand, announcing an Applied AI guild and a Gaming guild, and said the company expects a much stronger second half as deal activity starts to recover.

Amit Singh highlighted the numbers behind the strategy shift: revenue of $41.8 million, gross margin of 34.2%, adjusted operating income of negative $1.2 million, adjusted net income of negative $4.2 million, and adjusted diluted EPS of negative $0.09. He said SG&A optimization has reduced the full-year SG&A forecast by more than 15% and should support a higher full-year adjusted operating income than previously expected. He also noted cash of $3.2 million, debt repayment of $2.1 million in the quarter, $2.1 million of interest expense, and $0.9 million of debt-related cash expenses, while acknowledging ongoing discussions with lenders after the forbearance agreement ended on May 10.

Analysts focused on whether refinancing stress was hurting new-logo wins, whether margins would improve through the year, and how much of the $185 million revenue guide was already visible. Management said they have not seen a degradation in new-logo activity, are looking at up to 20 new logos in Q2, and are about 80% confident in the $185 million target. They also said Q2 gross margin could be flat to down before improving later in the year, while SG&A should step down meaningfully in the second half as one-time hiring costs roll off.