StarTek, Inc. Reports a 17% Increase in Revenue As Two More New Call Centers Go Live

StarTek, Inc. reported second quarter 2006 fully diluted earnings per share from continuing operations of $0.06. Fully diluted earnings per share from continuing operations for the same period in 2005 were $0.18.

Revenue for the second quarter of $59.5 million represented an increase of 17% over the same period in the previous year. New clients added since the second quarter of 2005 drove this increase, contributing $9.4 million to revenue during the quarter. These new clients also lessened StarTek’s revenue concentration as the Company’s two largest clients represented 66% of revenue during the second quarter of 2006, versus 78% during the same period of 2005. The Company also continued to expand its value-added services by launching two new business solutions during the quarter aimed at further diversifying its revenue base.

Gross margin declined from 22% to 14%. The majority of this decline was the result of costs attributable to greater than anticipated employee turnover in certain of our U.S. sites as well as the opening and ramping of two new call centers in Ontario, Canada during the second quarter. The ongoing strengthening of the Canadian dollar versus the U.S. dollar contributed approximately $1.3 million to the decline in margin. Lower volumes from our largest client as well as increased numbers of agents in training in many of our sites also negatively impacted second quarter gross margin.