TTEC Holdings, Inc. Q1 FY2025 earnings call

• Q1 revenue was $534 million, in line with forecast; EBITDA was $56 million, up from $55 million y-o-y, with EBITDA margin at 10.6% vs. 9.5% prior year. • Gaining ground with new large enterprise clients, growing share of wallet with embedded base, and broadening market reach with AI-enabled solutions. • Progress in TTEC Engage includes measurable improvements on diversification, digital innovation, and financial performance; added contracts with embedded-based clients worth over 75% of last year's total. • TTEC Digital operating at the core of expanding digital ecosystem, investing in AI-enabled enterprise-wide digital transformation; closed significant deals with financial services brands. • Recognized for progress in bringing real-world AI solutions to market with multiple Stevie Awards.

For the Digital segment, first quarter revenue was $108 million, a decrease of 3.6% over the prior year. Excluding one-time product sales, digital's revenue grew 2.8% y-o-y, and recurring managed service offerings increased 2.7% y-o-y, representing approximately 66% of digital's total first quarter revenue. Digital's first quarter 2025 operating income was $12 million, or 11.2% of revenue. For the Engage segment, first quarter revenue decreased 8.3% to $426 million over the prior year period. The Engage segment's first quarter operating income was $29 million, or 6.9% of revenue, relatively flat compared to the prior year but a 70 basis point improvement as a percentage of revenue. The Engage backlog is $1.59 billion, or 101% of 2025 revenue guidance at the midpoint.

• Reiterated 2025 full-year financial guidance but are cautious about the second half due to current global economic environment. • Both segments well-positioned to navigate the environment, but client investment decisions are hard to predict due to economic uncertainties. • Engage segment focused on improving operational agility, providing digitally enabled solutions, and driving cost optimization; Digital segment aligned with strategic priorities of enterprise-wide digital transformations utilizing multi-platform solutions.

• Uncertainties in trade policy making it challenging for global businesses to accurately predict the future. • Macroeconomic factors impacting client investment decisions, causing caution in their CapEx spend and investment levels.

Q: Client adoption was under pressure given caution, but working with hyperscalers. Where are the client adoption challenges?

A: Factors include uncertainty about AI reliability, clients getting educated on AI types, and backdrop of trade policy uncertainty causing hesitation in CapEx spend.

Q: Comment on TTEC being taken private?

A: No comments, as the company and Mr. Tuchman won't comment on the process.

Q: Differentiation vs peers in partnership with hyperscalers?

A: TTEC has more experience, credentials, and engineers focused on product development for CX; singular focus on digital CX transformation unlike others.

Q: Cost optimization efforts and new faces?

A: There is more to go in cost optimization, part of day-to-day work, with focus on offshore operations, AI integration, and reinvestment in business.

Q: Delays in new deals or expansion?

A: Digital has good flow of business but deal sizes smaller; Engage feels good about pipeline and backlog, Q2 expected to perform similar to Q1.

Q: Macro softness in back half and margin levers?

A: Second half impacted by macro and geopolitics, incremental levers include offshore operations, AI integration; caution in market with contracts starting smaller but expected to grow with execution.

Q: Evolution in like-for-like pricing?

A: Competitive industry with some players winning through price, but marketplace rationalizing; TTEC holds to pricing discipline to improve long-term profitability.