TaskUs (Nasdaq: TASK) reported fiscal Q2 2026 service revenue of $308.9 million, up 5.0% year over year, while diluted EPS increased 9.1% to $0.24 from $0.22. AI Services remained the fastest-growing service line, but higher service delivery costs reduced adjusted profitability even as operating cash flow improved substantially.
Core earnings data
Revenue finished $10.9 million above the high end of TaskUs’ own quarterly guidance. GAAP operating income and net income increased, but adjusted net income and adjusted EBITDA declined, showing that the underlying cost picture was weaker than the GAAP earnings growth alone suggests.
Gross profit, calculated as service revenue less cost of services, fell approximately 5.6%. Cost of services increased 11.7%, more than twice the rate of revenue growth, reducing the calculated gross margin by about 3.9 percentage points.
| Metric | Q2 2026 | Q2 2025 | YoY change |
|---|---|---|---|
| Service revenue | $308.9 million | $294.1 million | +5.0% |
| Gross profit and calculated margin | Approx. $107.2 million; 34.7% | Approx. $113.5 million; 38.6% | Approx. -5.6% |
| Operating income and margin | $33.3 million; 10.8% | $30.4 million; 10.3% | Approx. +9.7% |
| Net income and margin | $22.0 million; 7.1% | $20.0 million; 6.8% | +9.6% |
| Diluted EPS | $0.24 | $0.22 | +9.1% |
| Adjusted net income and margin | $30.6 million; 9.9% | $39.7 million; 13.5% | -22.8% |
| Adjusted EBITDA and margin | $57.7 million; 18.7% | $65.0 million; 22.1% | -11.2% |
| Operating cash flow | $43.1 million | $17.0 million | +153.4% |
| Free cash flow | $32.6 million | $0.04 million | NM |
GAAP earnings rose while adjusted margins contracted
The difference between GAAP and adjusted results is central to understanding the quarter. Selling, general and administrative expense declined to $54.6 million from $68.4 million, helping operating income rise despite the reduction in gross profit.
The non-GAAP reconciliation also shows that Q2 2025 included $10.2 million of transaction costs, compared with none in the current quarter. Stock-based compensation included in the reconciliation fell to $3.8 million from $8.4 million, while TaskUs recorded a $3.9 million foreign-currency gain compared with a small loss a year earlier. These items benefited the GAAP comparison but are removed when calculating adjusted results.
Meanwhile, the cost of delivering services rose to $201.7 million from $180.6 million. That increase explains why adjusted EBITDA declined and its margin narrowed to 18.7% from 22.1%, even though reported revenue and GAAP net income increased. Financing expense also rose to $8.8 million from $4.6 million, adding pressure below the operating-income line.
Business and service-line performance
AI Services grew 25.8% year over year and remained TaskUs’ fastest-growing service line for a sixth consecutive quarter. The company did not disclose the service line’s absolute revenue, but its growth rate was more than five times the company-wide rate.
Digital Customer Experience revenue grew 6.4%, an acceleration compared with Q2 2025. Management also reported mid-teens growth from clients other than TaskUs’ largest client, indicating that broader client diversification contributed meaningfully to the quarter. However, the company did not quantify revenue or growth from its largest client, limiting visibility into the remaining concentration effect.
TaskUs ended the quarter with approximately 63,200 employees, or “teammates,” supporting its combination of AI capabilities and specialized human services.
Cash flow and balance sheet
Quarterly operating cash flow increased to $43.1 million, while free cash flow reached $32.6 million. Adjusted free cash flow was $36.4 million, equal to 63.2% of adjusted EBITDA, compared with a 10.0% conversion rate in the prior-year quarter.
For the six months ended June 30, operating cash flow was $89.4 million versus $53.3 million a year earlier. The year-to-date cash flow statement shows that accounts receivable provided $8.2 million of cash, compared with using $31.3 million in the prior-year period. Capital expenditures also declined to $20.7 million from $31.5 million, helping six-month free cash flow rise to $68.7 million.
The balance sheet changed materially following the March 2026 refinancing and special dividend. Cash was $180.3 million at June 30, down from $211.7 million at the end of 2025, while total debt increased to approximately $492.0 million from $241.4 million. During the first half, TaskUs received $500.0 million of new debt proceeds, repaid $242.0 million of debt and distributed $332.8 million in dividends. The company also had $100.0 million of available revolving-credit capacity at quarter-end.
Earnings guidance
TaskUs raised the bottom of its full-year revenue range by $10 million, lifting the midpoint of the outlook. The company also raised adjusted free cash flow guidance for the second consecutive quarter, although the previous cash flow range was not included in the supplied release.
The Q3 outlook implies slower near-term revenue growth than the 5.0% recorded in Q2. At the same time, the approximately 19% full-year adjusted EBITDA margin target is slightly above the second-quarter level of 18.7%.
| Metric | Latest guidance | Previous guidance or disclosed change |
|---|---|---|
| Q3 2026 revenue | $300 million to $302 million | Not provided |
| Q3 revenue growth at midpoint | 0.8% | Not provided |
| Q3 adjusted EBITDA margin | Approximately 18.7% | Not provided |
| FY2026 revenue | $1.22 billion to $1.24 billion | Lower end increased by $10 million |
| FY2026 revenue growth at midpoint | 3.9% | Midpoint raised |
| FY2026 adjusted EBITDA margin | Approximately 19.0% | Not provided |
| FY2026 adjusted free cash flow | $110 million to $120 million | Raised for the second consecutive quarter |
At the $115 million midpoint, adjusted free cash flow would represent 9.3% of revenue. The company expects approximately $162 million of full-year operating cash flow and $47 million of capital expenditures at the midpoint, excluding specified payments such as transaction costs, liability stock-based compensation awards and operational-efficiency costs.
Recent insider transactions
The supplied insider data reports 636,295 shares purchased across 24 transactions and 36,406 shares sold in one transaction during the past six months, producing net purchases of 599,889 shares. Because the data does not identify the nature or pricing of the reported purchases, it does not establish that they were open-market purchases.
| Date | Insider | Role | Transaction | Shares | Reported value |
|---|---|---|---|---|---|
| April 2, 2026 | Jarrod Johnson | Officer | Sale at $6.78–$6.89 per share | 36,406 | $248,114 |
The transaction data alone does not support a conclusion about insiders’ outlook for the company.
Risks investors should watch
- Service delivery costs: Cost of services grew 11.7% against revenue growth of 5.0%, reducing calculated gross margin and adjusted EBITDA margin. Continued cost growth above revenue growth would make the full-year margin target harder to achieve.
- Slower near-term growth: Q3 guidance implies only 0.8% year-over-year growth at the midpoint, a clear slowdown from Q2. Performance in AI Services and clients outside the largest account will need to offset weaker areas for full-year revenue to remain within the updated range.
- Higher leverage and financing expense: Total debt approximately doubled from year-end, while quarterly financing expense increased to $8.8 million. Higher debt-service requirements could reduce financial flexibility despite improved cash generation.
- Client concentration: Clients other than TaskUs’ largest customer grew at a mid-teens rate, but the company continues to identify dependence on key clients as a risk. The release did not quantify the largest customer’s current contribution.
- AI execution: AI Services is the company’s fastest-growing line, but wider client adoption of generative and agentic AI could also alter demand for outsourced services. TaskUs must continue integrating AI into its offerings while maintaining service quality and cost control.
Summary
TaskUs delivered 5.0% revenue growth and higher GAAP earnings in fiscal Q2 2026, supported by rapid AI Services growth, broader client diversification and lower SG&A expense. However, service costs rose faster than revenue, causing adjusted EBITDA and adjusted net income to decline. Improved cash conversion and higher full-year guidance provide support, while the main issues to monitor are Q3’s slower growth outlook, adjusted-margin execution and the balance-sheet impact of higher debt.
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