TTEC - Earnings call 4 2022 | TTEC Holdings, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to TTEC's Fourth Quarter and Full Year 2022 Earnings Conference Call. [Operator Instructions]. This call is being recorded at the request of TTEC. I would now like to turn the call over to Paul Miller, TTEC's Senior Vice President, Treasurer and Investor Relations Officer. Thank you, sir.

begin. may You

Paul Miller

Chief of issued Financial December thank hosting Chief results. and Chairman its and joining today. period of us year TTEC. Yesterday, are Swanback, today's Good TTEC Officer Ken press call you TTEC; to is ended the for this financial quarter Officer Chief XXXX. Participating release discuss TTEC on financial Semach, and XXXX call Tuchman, morning, results for XX, its full Engage and and Dustin Shelly Executive a announcing TTEC President Executive Officer of TTEC; of fourth

will reflect While annual filed this XXXX encourage today. close call document, discussed at will we to our you items report about on complete market financial also be performance, for anticipate information Form our that XX-K, read within we which

these I that information current as our Before and developments obligation to statements this revise note forward-looking remind business outlook, based to of opinion to may we matters result which undertake assumptions. Please financial of and you related call, occur. date the call today's discussed goals beliefs forward-looking that want are a we management's new this begin, on and include our of no as performance, operating reflect that on may statements

uncertainties are subject to today. to expected other Forward-looking results statements could various and our those that described and actual risks, cause factors differ from materially

Ken. A this our section. I call of of website description to report please XX-K. Relations the our review Form factors, available Investor turn detailed will risk more a For the call replay under will on over annual on now conference be our

Kenneth Tuchman

global execution uncertainties financial ended our our you global of expertise strategic capabilities. reflects and full for environment, surrounding XXXX service our broad range base results and despite across Paul. you, with AI us joining thank and of increased diverse Thank today. and morning, CX the our performance clients, digital macroeconomic verticals the technology, everyone, We and solid Good

increased of Revenue was billion a $XXX of XX.X% bookings on Adjusted year XXXX, full X.X% the constant revenue. to currency were million. or For EBITDA million basis. $X.XX $XXX.X

we investments were and client by year, the several offerings we strategic with strategic by last with with including in partnership and all offshore client footprint acquisition. new AI new recognized each technology analyst CX expanded our vertical new CX delivery first-mover partners, a hyperscalers, with addition, our strengthened our our new as XX leader strategic our Google, we launched with We core deepened largest firms. And wins. We X enhanced of sector X partnership public our advantage meaningful we In in logos grew geographies. a our winning base major publicly

best that In an our Forbes with as employers addition, of headwinds and pleased fact macroeconomic the America's And experience. I'm in customer pioneer, we third we a in in marked financial a named innovator XXXX. global by emerged of that consecutive leader half performance our by the year. accomplishments our XXth was large one year. as last anniversary tempered were second for Despite lastly, increased the the

customers I'm short- their verticals some They in we at growth strength are and exit to could differentiated our revenue any we loyal. macroeconomic to market. In time, at with on are of become guidance let's higher our is our our businesses apart. spend more more about money be sets significantly leadership confident active deliver that, and Happy team in conservatively. Having admired global challenged the to and do not said customers excited favorite ability platform. margins I now in In reduced time, Yet the point the into this these customer an And brands. an exceptional to their environment, prudent in move ahead, uncertain look keeping it's and we select less. loyal promoters approach more economy, midterm same paramount. to most have brands current views As as this economy, experience visibility clients to outlook. XXXX continue therefore, believe

more Our this critical in outcomes-based solutions than environment. ever are

Over giants to the across we're native of the we've past to will digitally altering globe. inflection these capitalize startups, the point, to for capitalize game-changing of us. trends face be legacy been decade, From set the company ahead on positioned megatrends. this preparing every opportunity X up industry well We've and our on

large So It's the to CX longer an let option. me imperative. move XX% begin. completed Trend Currently, CX an cloud. about migration their is to number of no one, enterprises cloud have only the the

capabilities create companies pure-play As that these by and largest experiences and world, personalized, to the are the every technology modern enabled cloud CX point effortless across player differentiated. use customer services we're helping the in the touch

create our enterprise opportunities world's Our experiences. we're their the some complex capabilities, CX that the results growth every leading anticipate something digital longer proactive for acquisition, migrations delivering support customer of to out come. Trend platform. customer needs governments Smart These to outreach retention, cloud and capitalize wrong. and strong implemented They're to investments the many TTEC platforms. of for a redefining has years goes and remaining #X, with workers, knowledge We're of a next has financial in on turn frontline across or a truth, these highly future associates, brands using our us on scale clients predictive and emotional new can the of Digital creating large capabilities including XX% and well real-time services they customer best best and with moving still most compassionate business new are a AI provide to #X, human operating outcomes proactive pathways, a in at from waiting on positioned businesses These enable possible to will when TTEC. These the initiatives their by higher major career on-premise the transformation augmenting about confidence. best no with With technology that skills legacy are reach outdated for deliver next trends margin are brands to moment the advanced issue service proficiency, partner customers will automotive. Trend so actions. class putting expect and digital workers opportunities care, find industries, reactive managed analytics business skilled complicated of their is are customers into insights multiple globe complex whether of actions. potential with the out charged companies is knowledge create customer a and X frontline reaching to side. the speed they role super move across agents be on AI accelerate quickly pressure other and health to to for the

new fit into we've by technologies their market XX years, the understand ecosystem. helping CX the past For led how our clients digital

today's has for separate developments steady our we've the fundamental the solutions our While earliest been always provided always to the from has technology focus a been AI, clients IVRs customers to helpful clients, from with grow. and delighting our hand latest hype, helping to

this connected segments the AI-driven Digital results deliver services to CX player technology phase largest in new but business innovation. distinct us CX world. Today, TTEC in and differentiated enable two Our of is the pure-play

We CX consultants, CX data technology have scientists, platforms. the expertise the the leading across all

deep CCaaS millions with of and behalf our which on Our our Engage clients is experience look brands. TTEC of our premier players. Complementing world's the handles to strategic us partnerships with business, TTEC complex Digital the leading the customer hyperscalers and last-mile implementations interactions given

consistently workers, when two capabilities their clients proprietary we relative uniquely effectively customers. knowledge data of Microsoft more build only delight to support these CX and and our helps AI with deliver designers, of the business brands but of also the And analytic experiences we're Google's curators teams Our to top the combine that our Lambda. We learning, us on conversational wow deliver positioned believe and of OpenAI's and solutions segments, world's and serves it competitors. leading a CCAI rest Amazon's moat ChatGPT, this as not machine experts

we're this Cisco for technology for like new and integrated augment are customer they with before, and role AI applications and market digital AWS are our building our Microsoft, knowledge delivery as go-to-market develop expertise. generation technologies for these strategies compassion generative these domain us play investing solutions. experience. Human frontline Like new in new CX Genesys, development, new key functions Google, models AI, solution our frontline CX innovations workers. collaborating trust Together, into will discernment capabilities in a knowledge will and of many As

thoughts mindset, -- are events have like we cyclical through the and the pandemics and to as these on our agile know strong cycles, resilient With and persevered team. a Now have and a foundation global economic natural that XXXX. We an share working I'd disasters.

single the side. to the tenacity ever technology, I'm actively as to on the Dave demonstrated year. From very more truly have with the determination, other environment we the we premium than We Shelly. time that stronger I'll aspired Shelly and over resource as that end-to-end as Together, side. have build and we CX down planet. for And are the hand in and we power to customer-centric priorities the and confident we momentum long-term record ever. path and navigating call progress the a something service the will and by on with current Swanback Seybold, unique excited my are come forward the to build on And through our about today, out beginning, our brands have that, industry, most doubling again track AI vision

Shelly Swanback

morning, good everyone. and Ken, you, Thank

fourth As Ken delivered mentioned statement, in quarter. opening a strong his we

Engage Ken, and weakening solutions amazing creating Our responding challenges. the the macroeconomic of our positioned needs most and clients, in subsequently specific XX,XXX for their partnerships affecting short-term the I'm and AI our passion, possible our and our trusted agile. with The was our technology hard few short- some solid across economic work well performance clients to the and due impacting environment globe. Like is to long-standing contributions remaining market visibility. apply the industries for the experience. environment help importance relevant The very our outcomes outlooks a of midterm across demand now customer We're Clients great of We're this to business. is we CX and for their by business. Shifting uncertainty of the focused solutions to continue enthusiastic them relevance a the be to deliver. on the about our talent, teammates

public of resilient momentum clients M&A putting these term, continued we and continue our care, make us decline the to we several technology, While investments sector been pressure are we the XXXX have short services post-pandemic as and head This the impacted renormalization. In exit our pressures global health will have footprint navigate margins. We're experiencing successfully that by into hypergrowth verticals we in hypergrowth while our financial weakness infrastructure, this give sector. XXXX. we'll our Unfortunately, is on and sector, like integration. of confident strength in in

share and our capabilities and operational In added now the language three to of up in engine, XXXX, geographies current increasing and footprint. to plan new me Africa, XX profile and We're our we're velocity add company our clients initiatives set add new that and language associates margin efforts our thousands let Asia to expand that countries. for improve we Now EMEA, prospects. delivery XXXX, accelerating footprint our will Engage our where success. both more In long-term than new America, we from to Latin seeing demand spans growth

a same time that over we're have quickly for Additionally, qualified last year. moving offshore this the has and increased -- delivery same pipeline

We talent expect build. We're interactions, to place this momentum skilled to knowledge continue uniquely highly a base with more complex our where workers we're to support building qualified.

demand. We're the interactions we are sector with of demand knowledge speed. in advantage. clients with solutions, and and with verticals provide to growing. more supply schedule are workers enabling FlexEX the the non-voice As simple financial these and with highly match allowing tools their is nature us for AI-based work ebbs of and Initiatives knowledge flexibility trained workers onboard differentiated into more specialized platform where find, we services to knowledge us health competitive a migrate flows offering our train experienced while requirements licensing and our the us care, help workers offer leaning public channels, like better resilient to

to as best in base. In in XX companies enrollment performer. are expertise as embedded our we well top XXXX, were us programs domain consistently verticals Our expand and these the open and implemented we practices health for enabling XX care, proven new attract clients,

We're services, business personalized to now at highly offers. In a insurers as In X continue complete of we logos the just-in-time estimates we with our industry of sell and marketplace, in we hyper this earned partnering support with asynchronous on the integration with assets the competitive year. the acquired category. margin. In offshore with in claims, a property successful these X continue growing and financial services casualty and fraud out leaders new as trust public As services. last grow expand collections, we're scale analytics additional sector differentiator sector, to we our higher build this delivered new we to use programs, client and from of embedded back-office also we base will public and

support scaling work in This help by authorities AI and comprehensive skilled an operation with opportunities reduce focusing companies Metro taking go-live York go-to-market CX our annotation back-office date curation and customer contract supported the For technology, transportation services. New costs anticipated and our about well data our is includes tolling we're particularly with broadly, more on of account and power with clients solutions. I'm and our of by underway expanded advantage example, XXXX. excited management, AI And footprint trust expanding safety harness in our global and services helping knowledge workers. to our

on Now TTEC our move to segment. I'll Digital

in and build, with right and managed for pace operate are also sweet rapid companies CX the transformation. technology contracts to digital consulting Given service design, breadth a partner looking our fall their of depth technology manage spot. innovation, long-term the and These

record technology pure value great insight manages and relationships priorities. pivotal CX the else deep accelerating play CX and that making He's at our are day, it's people, one and customer to cloud millions an on we As expertise progress businesses digital that deliver Seybold customer business his with of Dave can. and of so and and team time. clients team our a client to Dave our growing already also every on impact track have partner his at partner only our strong partners. Dave with brings our And no extensive scale, global the interactions

by digital partnerships cloud growth Genesys, our with initiatives, with and Google. capturing CX AWS, large Microsoft, to and First, Cisco strategic clients AI enabled the transformation opportunity help their migration,

partners We AI. for CX including these and continue by be generative complex to engagements, chosen first-of-a-kind

capture to conclusion, equation because of uniquely We're is in of strengthen only towards experience languages the we're technology one across and our that delivering mix deep Next, margin continuing CX scale disciplined managing grew And in to of embed further and expertise, year business XXXX. and the underway XX%, profile. a focused directly different clear our the on optimize geographies, now innovation frontline with by while build to with continue delivering also as agile future, for worked services continuing few that opportunity made to that across strengthen we advantage cycles of combination a AI CX part finally, domain discussion hyperscalers platform What's before, we and today tangible to Having within it's have in technology clients sell terms happening we footprint profile. our business results. about diversification reach. software IP-based some the revenue scale the we segment customer execution around foundation our our at previous Discussion our and marketplaces. I'll offshore clients, delivery as our XXXX to continue plans offshore drive benefits to our positioned for of to our AI. being wrap progress engagement. In to technology our scale and margin our for thoughts successfully been and solutions AI up has and in time. solutions Last year, strengthen scale we is reviewing further are take exciting practical

the we will I returns continue XXXX growth our in our to growth outlook for to with and accelerate for TTEC to I team, progress sharing by call we is margins margins over to growth earlier. With clients, turn single-digit investments and Our mentioned our points prudent tempered and solutions segment's employees strategy, XXXX expect I opportunities the forward Dustin. shareholders. And performance strengthened for our our low our look being and in focused impacted beyond. Engage leadership And best-in-class now for as with driven deliver

Dustin Semach

appreciate We review with today. the start Thank you, and guidance. a us our year taking everyone join our I'll to time context and morning. full you on quarter providing of fourth XXXX Shelly, before XXXX good results

our in in to an year to the million for particularly environment, our $XXX XXXX, In solid go-to-market year. multiyear teams the quarter and a driven million CX are year many compared prior Turning resulting segment million full $XXX Despite our in in fourth transformational bookings $XXX from the $XXX Bookings bookings. Amazon period, Cisco, technology CX increase of the prior Microsoft of delivered addition in year. large strong, were bookings our year million, the XX% business period increasing XX% quarter were Connect were to of in Genesys signings solutions, the over Digital XXXX. The predominantly and in demand fourth prior engagements. and which dynamic by

were recognize was there offerings fourth our continue core have modernizing and benefits cycles our extended, travel EMEA relationships the health XX% industries, XX% including clients in our Bookings for which with an XXXX. had and growth full and strength for quarter to care, fourth in added our well XX% XXXX. region, for full segment, Engage XX automotive XX public overall business, long-term sector XXXX. and particular CX to in the our percentage Digital and increased. increase year quarter client our key Engage. in continued services of the our full services, year well solid relative our acquisitions, bookings While enhancing over of represents to We the sales new and fourth bookings This as of digitally geographic nonrecurring hospitality to expanded in revenue a the year revenue as prior financial momentum in their demand footprint, the reflect diversified of ecosystems. In period. Due of as recent across of across quarter the the mix enterprise higher Digital a has Due nature our and

giving result, level. on will individual than overall at rather bookings performance begin we forward, discussing moving each As segment's a color TTEC the

my full we'll of press basis of my full year exchange and on backlog adjusted XXXX offerings. on and in In included the GAAP our quarter in prior Digital's the XXXX describes My as the while on color the a details I share to fourth we've by year will discussion income give growth, earnings treating EBITDA, attached to a results, tables closing each get revenues will the owned term A performance, and to operating references if on reconciliation translation foreign our period. For financial and basis. our color like-for-like reference to GAAP release. earnings in non-GAAP our excluding impact results vertical basis, a Engage's performance, acquisitions share remarks. per we is non-GAAP on revenue for them

dollar million XX.X% year negative prior to the XX.X% Engage or increase a the compared was the mentioned, year. The considering both while period, Ken in on especially fourth basis quarter income highlighted with revenue consolidated or Shelly $XX.X over U.S. that growth million, X.X% of and Organic we the pandemic-related prior of XX.X% basis. Adjusted On an the fourth strengthening when year. EBITDA constant And fourth quarter revenue $XX.X to revenue excluding the on like-for-like our revenue $XX.X of was million primarily the was the income million a our pleased financial of volumes, XX.X% million, of $XXX.X within million in $XX.X headwinds was Operating the in a impact basis, had X% prior in in As positive $X.XX performance, million by a revenue on XXXX, $XX.X benefiting are operating $X.XX compared of or X.X%. grew $X.X earlier. a or quarter prior year. impact EPS currency was segment. compared to lastly,

reflects our the contribution Faneuil technologies. April as of Engage driven in well the primarily CX technology fourth increased the year-over-year as from services cloud increasing line asset segment, top XXXX in adoption quarter by Digital our acquisition CX Our segment performance

talent primarily our pandemic-related leadership margins. strategic is volumes the in the investments, function of our and to engineering in delivery the operating EBITDA prior asset the build-out a growth-oriented Turning with costs to acquisitions, year-over-year integration-related centers and offshore including decrease period. and Faneuil year acquisition, reduction compared associated The higher-margin

report volumes impact. longer no from pandemic-related its remaining will modest we forward, Moving given impact the

or for felt important the it end to was increase year. revenue revenue or was On in of fiscal However, year million an the through of dollar was Engage negative on million income for $X.XX prior share of while $X.XX Operating or basis compared the prior XXXX was XXXX, positively in a the primarily consolidated we year the consistency, billion, excluding revenue, within income the full of lastly, a X.X% $XX.X EBITDA in $XXX.X And basis. Adjusted $XXX.X million like-for-like was of a in by on pandemic-related on a operating and U.S. year. to of currency XX.X% revenue $X.XX growth $XXX.X XX.X% XX.X% was X.X% $XX.X EPS X.X% our constant volumes. compared $XXX.X impact the to or million strengthening million prior basis, XX.X% year. The impact impacting 'XX. million, had compared Organic segment. to

in line of is Faneuil the line The top fourth Our by same and offerings full asset April from April Engage across our full alongside increased growth was driven Avtex core the decline existing and quarter. of in year primarily business year driven new the mentioned XXXX, XXXX acquisition clients. bottom by reasons for Digital's acquisition predominantly

$XXX.X year fourth revenue the over our XX.X% prior segment year $XX.X X.X% to prior XXXX increased revenue fourth income in of million $XX.X million Digital compared revenue and now period. results. was to organic. period, year all XX.X% to million the or of Turning of Operating quarter or quarter in full XXXX the segment

function a partner platforms, move services lower the on-premise increased our across slightly Tier fourth to integration of product sales year-over-year growth is and clients offset more revenue services and as systems cloud CX Our managed tech by quarter X cloud.

fourth quarter XXXX a full over margins CX services marketing XX%, prior compared XX% investment which technology Our to grew prior was revenue reflect developments. over million X.X% XXXX cloud million basis, Digital's in currency operating period, acquisition. organic year income revenue. Decline basis. Operating in revenue XX.X% representing year to XX% XX.X% and Digital's Operating in of Full reasons leadership costs. managed revenue incremental was grew a product on sales were in addition increased by reoccurring fourth constant Avtex margins representing noted integration or year the of the revenue talent, the prior revenue $XX.X total quarter and combined acquisition-related benefited engineering X.X% and and On revenue and the integration systems of year primarily impacted recurring total period, from of the the in our year $XX.X XX.X% million to in period. $XXX.X the and or of

representing revenue Our of XXXX cloud and grew our managed XX% XX% revenue. integration Digital's the of and XX% systems period, revenue revenue, services total over in year representing prior total XX% grew

Moving Engage. to

currency Engage basis, increased quarter Our basis. revenue X.X% $X.XX $XXX.X the Organic of the was an prior of services, full On pandemic-related constant excluding impact on volumes. virtual on growth volumes. reported capabilities, a EMEA volumes acquisition like-for-like in X.X% financial basis, health impact increased select of excluding basis. The on a the billion, fourth year, asset of a X.X% revenue alongside was the and the contribution contributor basis, and million verticals, the our a segment full and growth X.X% currency XXXX year, to was across increase over a year pandemic-related X.X% quarter volumes. Organic and Faneuil primary digital excluding care growth including the delivery pandemic-related on like-for-like to our from X.X% constant region

performance operating a revenue year or million X.X% or to full compared X.X%. was to million of or income XX% basis, On $XXX.X Engage's $XX.X $XXX.X as retention retention compared excluding of strong million In million pandemic-related quarter, by XX-month demonstrated Our was XXX%. of the revenue operating rate embedded volumes, rate income was base revenue XX%, Engage's or revenue remains XX.X%. fourth last $XX.X

moving earlier our before now operating will measures outlook. reflect to XXXX highlighted in comments. I share other the Engage margins Our impacts my

is with As distributions, cash with fourth days compared cash million compared of function was expenditures to the in of debt IT $X.X partially in payments generation. Cash of XXXX, flow to million year revenue year. X.X% flow and credit XXXX days accelerated million in efforts. from infrastructure related security to $XXX a increase $XXX.X the year. December was prior $XX.X and primarily borrowings geographic reduction year $XXX of in million Net period. Capital DSO acquisition-related in to Faneuil higher represented The increased our million XX, prior of flow the asset $XXX.X $XXX.X and $XX operations $XXX.X million investments million or in quarter The by million of XX from investments were billion XX or capital X.X% operations XXXX for which associated our offset full acquisition cash the lower the the a by year-over-year was prior primarily million facility. interest under compared of expansion to profitability, $XXX.X driven debt in and

payable shareholders XX per record Our full zone within XX mix of in XX.X% normalized tax economic of in the as prior a XXXX, PEZA, benefits. In XX the year quarter is $XX.X XXXX, February of related March on of special per XXXX. a tax XXXX of XXXX, Philippines, or the $X.XX XX% declared increase rate income of semiannual regulation fourth April the TTEC paid share, year, to dividend a was select tax on to related international in share million in primarily change Board to versus the jurisdictional next dividend $X.XX of the and of reduction

provide to Turning to our guidance. supporting going XXXX some outlook. our I'm context

of further weakening in macroeconomic discussed the second affecting environment in signaled the outlook our half the due earlier, uncertainty verticals. select and impacts half to expect first we that first XXXX, persist to continued reflects of including XXXX, First, Shelly we

While financial this our in is public we seeing hypergrowth are sector. like in strength and weakness care services, health continued offset by verticals being resilient sector,

] growth execution year expect within continued accelerate that in linked-in continued in Digital's sales go-to-market of verticals year. by fiscal the We Cisco turnaround impacted muted will XXXX, by previously mentioned adoption [ our driven driven practice in ramp half growth recovery of and technology macro-driven a second by increased the 'XX Engage throughout and the cycles. will cloud CX

landscape. and technology make footprint, We team investments the are recent to integration complete and and our our of enhance continuing infrastructure acquisitions, further strengthen language our leadership executive delivery to globalize

on with of Continued at XXXX pressure backlog is in of guidance our year year 'XX. impacts sector full the we revenue our Last, billion, margins putting in fiscal midpoint. investments, XX% coupled hypergrowth $X.XXX our entered with total

by prior in and year anticipated interest is and the our Non-GAAP XXXX relevant share is X.X% increase the between across XX.X% capital prior commentary decrease and variable for detail growth-oriented, our ahead per the prior X.X%, of we full as rate $X.X of we million first the will XXXX year in revenue, the rate and at our will to interest to a year to The the XXXX the over of and that XX% release. X.X% fourth successfully full rate. Other in quarter a of we navigate level. In over X.X% and consolidated of of between the XXXX count effective for a of which the EBITDA guidance section press year turning outlook us, a are environment in billion, performance XX.X segment million, driven in XXXX XX% between the to a of our of of earnings dynamic fourth closing, revenue and our accelerated greater press $XXX $XXX the of XXXX our income decline growth release company include X.X% tax hikes of an XX% earnings million. Please XX.X the over to obtain reference full year. year metrics full guidance compared business year the exit prior expenditures GAAP XX.X% predominantly year year. diluted position prior quarter Now year. XX% impact revenue midpoint and over $X.XX, confident hikes outlined of in and EPS expectations share of revenue quarter decrease compared XX% operating prior earnings million, and interest as decrease adjusted year. Non-GAAP X.X% rate and

future, and Paul. now leadership track call for CX will CX strong back executive our team of platform. I about and outcomes our innovation clients, supported technology XX-year excited turn record delivering unmatched our and the an are services We value-driven by to

Paul Miller

Thanks, Dustin.

As we limit that line. the open your we call, Operator, open may one up the time. ask you a you questions at to

Operator

Our the line Instructions] [Operator Nolan question of Maggie first from is Blair. William of

Margaret Nolan

guidance? past. the than elaborate get the much. And a your to band would what you seen the so there? seems us the end guidance assumptions is you It high end perhaps some we've low the like of wider revenue versus Thank Could on of in

Dustin Semach

Dustin to first take is I'm going and Shelly speaking. let afterwards. and comment this that Maggie, Ken

half of of as emerging even the we of it's the that XXXX, some first seeing now second couple and and, in really reflecting of that beginning first that there headwinds continued we weakness a kind half our Maggie, persist half, discussed degree, we're was in and XXXX, indicated in in the comments, to of So outlook. uncertainty

hypergrowth what So the it's sector get in to us the hypergrowth in we give full right think end about this right a at, when that performs and cetera, in relative range, the will that's some business assumptions in now take of year. And they're the rest now, in business growing health you you business you like that if have the context, the roughly is of versus talk how services, hypergrowth where to -- to et X% now care, decline. decline right financial high verticals you that about the resilient growth

of discussed. And up comes if it's then to time, we need verticals it range. that guide the point kind hypergrowth about that doesn't of the we higher to kind we've see to we'll decline really then of end So at back the degree in the this it and to continue in expect resilient to execute

Kenneth Tuchman

Maggie, clients last across our want conversions have investors That visibility approach. say, let X conservatively through rather conservative will the down. really that were being same that pipeline the just And We the I and would a our take seeing, that is see we period stronger to guide time. same said, it's to to at exceed all would want then recessions a add let's following year. year, now to bit I is this realistic issues same than same of level we it is about Ken year the What potential be quite actually just last Tuchman. the we expressing time globe was

And want confident I pin and macroeconomic so our how people, large of very we And longer these make a clients decision, to the large commitment overall deals, going take like they this change et during from to commit exciting a large in to bit of I but business very there's this frankly, and We're approach the going. pipeline cetera. don't feel, cloudy standpoint, new we're we where some excited like in deals. they're about we unfortunately, taking a current some conservative some time to sometimes sometimes said, see And very have. -- that it's a

was And this so to prudent that take just conservative approach. it felt we

Margaret Nolan

would be demand impact And into know kind any think deals of sense. I you've any that makes an from guidance. couple of incremental kind a those That might that of you your there your when locations. or about revenue be offshore added more of those then there is large And building, incorporated for maybe deals. then component within

Kenneth Tuchman

Absolutely.

Shelly, the you to want don't would is what but I following. just So I for speak tell

goes to other footprint, actually in be XXXX we embedded saying, the are our a of for about languages. all And service the to large committed and absolutely saying need regions, that clients very it's quality are but thing execution. capabilities base nice not it other we same just focus would do, have because because Our without we increasing in offshore same

Asian that so bringing And et the online we're cetera, fast we languages, tracking on are entering. in languages, tracking fast markets bringing more European

your Shelly, answer pipeline a help realize is our amount of offshore there business. So percentages that significant more side what our there's as add us offshore because matter drive business be to Engage on higher that? question, the focus us anything increasing a huge on, offshore that fact, really we want margin. that, on has a a coming that of And to you will to by will

Shelly Swanback

really just demand and more I us. we have sectors new we're as about the for services onshore traditionally services open would the resilient add, even expand on our locations been offshore just in strong I But Maggie, -- would services care, which that locations, those up capitalize for and I our health in and health good focused particularly seeing prospects the talked demand offshore new base, enrollment our just as we're, care that this last client new for but course, had of season we fall, on in performance, seeing with Ken those clients over locations. And we're said, as not interest great open embedded of very some and our from in new in financial well.

Operator

is Capital of question of Northland the Markets. Mike Next line from Latimore

Mike Latimore

of looks I improvement? just kind what division. a bit margins. terms the expecting a question little you revenue like more solid growth you're both Just of year, in and business provide that can the guess, improvement that in detail some would on Digital on drive throughout It

Shelly Swanback

is Yes. that I while in the terms growing one of has that to practices for growth. there back I -- note important to getting through business mean been Dustin and that think Cisco outside thing talking Cisco a of about

that expecting with partners excited pipeline the and partners and percent. clients, the other other we're have execution our go-to-market he joined XX-plus we're throughout I accelerated And as both across those The and the the year. momentum about growing relationship with certainly, are has practices team we think Dave platforms, the brings

Mike Latimore

it. Got

is percent the then revenue category hypergrowth that? of And Engage Okay. what Engage, with

Dustin Semach

In million. fiscal roughly about a looking at you're that's XXXX, business year $XXX

Operator

Next Sutton Craig-Hallum. question is of from the line George of

George Sutton

address if Ken, relative any see helpful. could AI I'm beyond and to it go-to-market you you're opportunity where that involved, you details wondering specifically the AI? And be as would

Kenneth Tuchman

I'll answer, to a I'll start the a following. short George, to give I'm and going out to is -- what you're trying great how but saying I'm asking by -- of think question,

on opportunity On for partners with AI. working the of the us many there our of training to be tremendous side, Engage is

misconception its that with big means web, have on I a a positive customer areas be lot different the consequently, of hype there's -- because have ChatGPT Reddit, all Wikipedia AI of reading in the like when, grabs to marketplace it which think fact, going within little from product, that information impact around there's all very is reading it's misinformation those cetera. a a crawling actually in to horizontal service information. et vessels the real it's impact And going it

with AI. our experiencing. future the chatbot, as that with rather et AI it's working working -- the cetera, where ChatGPT actually really we're for that's the put will as cases with which is the accurate with be not clients it the of many when whether in and experience an it'd that vertical format in well every many a so would be most what been And hyperscalers, single have AI So are as that information as in providers, space in in used cases, people bizarro customer we call something time questions answer a asked, and consequently, playing be vertical you're voicebot, that's getting and category narrowing a

heavy see quite implementation where not with clients are the and but to on we where data of early opportunity It's where the days quite very There's AI AI we're in also we executing all that is, and of into the opportunity, a a CCaaS platforms, actual integrating lift. and annotation to currently opportunity also omnichannel training have et and platforms, everywhere cetera. are. bit technology from we So then the -- the only

partner service and obviously lot and grateful a embedded of there's a so we're on lot pipeline, a on, clients well there of have pipeline our concepts, with significant very and that experimentation us as Engage. And a in that chosen the to going large of as they we're base way hyperscalers really that proof -- have to very

So across this see in area. board, significant we opportunity the

how that today. business set classic believe in we when time of over significantly margins of the opportunities do higher we price introducing to outcomes-based our type move we exciting much way this which we're drive of more some potential see also has We an we pricing actually and versus how technology, can to

helpful. that's the the hopefully, up want on suck oxygen to So I all don't call.

George Sutton

great. That's

one other question. Just

sense dichotomy the that I organic of bringing some -- larger you're building to Can appreciates. I there's give sense us don't out sort that think think how market expand is your going growth plans a some dichotomy just clearly come? of great just to Is a and team give a to guidance expand. in much with that your -- it you're leadership the know relative you to of I company. what predominantly us to

Kenneth Tuchman

being margins. technology in a just right the of conversions increasing while we brought going technology, we we are team. now, and wanted say that on the person. BPO-type well. all intentionally We that board year-over-year in possible come we we the I we get our it understood reason I very is the where months. have that bring say, wanted predominantly how We partner And communicating building to have we of myriad confident senior is implementation. It key somebody understood XX people over leaders with been wanted we organic. digital And right Street. We Shelly Dave business. a look in et and very to ultimately $X feel to would understands other and execution last, business. our also brought no where the has the shortest really somebody that amount capabilities. Shelly significantly be billion in at why going marketplace their digital we who has experience are that side with the look her brought Seybold, did $XX Digital basically of in, with allows as let's is multibillion-dollar to that in very experience, if that brought actually we We on pipeline at the can focus a absolutely double And one Accenture doubt scale. Shelly and understood from not that have large time those it very feel cetera, comfortable of we in, double entire experience period understood somebody to just of her to closely There have the and a Dave and

as And large senior level on more large the well as allowing now on acquisition at clients. really spend of with time a potential partnerships much to me very on of technology players helping my and then so on it's M&A these on consequently, strategy, vision, future

to so And really work our at side as really of with with Dustin brought looking fun well new been way folks whole these who's it's both of a numbers. leadership as at the

that you're can think a going period get excited we're see short be that of time, relatively about. that delivering people I so to And to results very given going

Operator

Colicchio question the of Vincent Research. line from of is Barrington Next

Vincent Colicchio

And consolidation Yes, into Ken. opportunities? they baked what so, to are if outlook? meaningful seeing XXXX you Curious, extent are the

Kenneth Tuchman

a... client you volumes moving Consolidation they mean of where are from

Vincent Colicchio

a client's from -- side. clients Yes

Kenneth Tuchman

talk clients. lot amongst of that There about a is certainly

We certain where are performance outperforming. under clients, measuring where seeing on with focused consistently that especially they're very we're -- key and

and about you've And companies on, real have opportunity. In would captive never outsourced that the be focused that organizations very that we're speak a me, the excuse large heard see -- large so past, have very as internally. which we me opportunities outsourcing

believe outsourced, of spending of not, excess or that $X in billion. Some internally are these have organizations it never

And on so very we're that well. as focused

been what saw is ago. are things quite you the And some we on to want impact think on of very have is self-made, to potentially understand this that important amount as that Street we've focusing really of going least time verticals for down. intentional if that to the it, coming think that economy call really -- one I the we slows the recession

that so all simply have extremely that And just say focusing what I large verticals the would we're on is you captives. to

So we're moving they're that we going But as that to there's that's players, not not think broken only has in do off a we where not side and will record, still we Engage that just but outsourced. trend become sound have billion a that think X-plus like such which again, is seeing lower a that do to we a kind we leaking see also that's adds we not over that the going can TTEC. years. And fewer the to feel -- more leaky can marketplace we that relationship in to peeling partner on the marketplace. thing, a it confident they're with a we is $XXX more the leaky benefit tire, of that, We something bad do it cost good capabilities, And next with internal been we where of we thing. think more technology that the the can business to what offer a it consolidation faster, that is higher addition that, to the can at a will with better, and business And when overall and because think capability even be it speak, the couple then to value turbocharge total proposition. more so and delivered. And value a it to very that's is bottom unique do line our we're demonstrate

Shelly Swanback

offshore clients providing continuing getting of said, particular, that these and XX in of terms those excited, you to some to just growth a that as Well, and see in in provided might top just there, we add, clients. We're of our XXXX, -- the and actually our demand they're I for lot into new our see and consolidating. well we we're services locations add performing were XXXX

I of typically services up health financial services. haven't of sectors focused Ken resilient a those being and before in terms that and also we're kind mix outsourced care offshore clients very those onshore in think particularly helping that mentioned, that ends and of

in we're lot those demand very, more which And is on so them. we're very sectors, seeing focused a why

Vincent Colicchio

you deteriorate? in your Dustin, are to for you, What half the or you is Do assumption hypergrowth? one thinking? guidance can. the expect it for And second further What for if I stabilize

Dustin Semach

of And then of Vince and just will Maggie's down we to the Yes. grow to to going It's clear, The back be question, -- in It's XXXX. then be build in into in first come half. continuation expectation is that impacts in stabilized because momentum it's as a to kind it that really kind half, go continued XXXX. half. ideally, the of stabilize really going second we original had XXXX second hypergrowth

number an including a then is other XX point, it on with has in we a just you significant the XXXX grew for in in If being we're in Vince, customers, sense you excluding idea neighborhood comment. you're give top XX%. and came go our have how play pandemics. -- at we but where a muted I'll still gives And down, talked That pandemic-related for that's consolidation the the least we back consolidating XX%, of downstream the XXXX, impact -- enterprise into put and to only in where scale. follow about decline that grew and just Shelly's to so terms that of of on looking now the created the and at you X%, roughly 'XX. And large it to pin a volumes terms second To particularly half,

Operator

of from Joseph of Vafi is the question Next Canaccord. line

Joseph Vafi

and your a looking question Just between in it of opportunity cross-sell I on mean kind CX drag strategic a more gets wider volumes. business adjacencies inside of X cross-sell more along potential as maybe into to emergence like that at enterprises migration, XXXX. move to divisions has be a of CX potentially maybe cloud differently? outside able with you Are Digital any feels got AI,

Just how dynamic this at overall here are you year? that looking

Shelly Swanback

there's think things. I Well, X

at AWS I thing look platform. that just on that to of like just business, practices of right? practice our helping starting with their digital our be clients would services first within see if part say sort our opportunities AWS Connect, The The surround you to just certainly,

some expand And so to we're do those services starting we're starting that and practice. see to work -- within

Dave an for I And we arena, modernize are those their Dave I and And cross-selling about think This we're have serve to more being that we excited fact, and those the some platforms working Engage broadly they enterprise to technology I'm as CX together in clients the And And really we very on in begin absolutely, reasons perspective. terms of of thoughtful are one opportunities on from us. have opportunities. those Digital Engage. the in speak. as of team. is

be Digital think the inside an do as very obviously Engage I that will on distinct so opportunities opportunity. We're that Digital idea opportunities of And focused well. and -- the this

Operator

is the question of from America. Next Chan Cassie Bank line of of

Jinli Chan

to and some in in wanted for just build X around offshore are for about your your offshore, out your know terms you And ask, delivery onshore metrics know added I well guys offshore to mix your geographies. you I you more. baking of XXXX that. I continuing what as outlook as guys talked attrition

you I this your delivery of a similar XXXX? think onshore in Are in is XXXX. like said expecting some pace And and XX% you guys grew replacing centers?

Shelly Swanback

I'll start.

pace delivery to growing that to those geographies we we we side, demand new increase that those to that of year. as footprint year. throughout So and to the open Digital, will continue this Engage footprint. sell the -- to on scale offshore And geographies, plan XX% Certainly, services expect and will where definitely was the our a add inside reference X X of into those the -- we

our support. verticals we clients will those licensed need the also that terms financial talked of where sell continue in and services care onshore about We in to health that services

Dustin Semach

question. a And the just then follow-on, as Cassie,

relative within U.S. As was about little of which acquisition a impact public the bit in Faneuil, and to was this before, we the in just mix sector. all our year talked the

they year, was And this being or in 'XX beyond. the by year so XXXX this to fiscal we continue year year plan roughly year shift XX-XX, accelerate and and about X last this mix is to roughly obviously, points and

offshore partly point to comment efforts -- And labor footprints. improve metrics, attrition well on I and XXXX your then giving do XXXX as coming both improving not would the specific attrition, back while markets, within to your to we're expect our due attrition domestic out we say across as across

Jinli Chan

Got to on also pointed Okay. wanted And XXXX? you in flow. And ask onetime know expectations DSO, example for quarter free specifically, few it. in I flow nature? are out cash for anything the these about things cash I free a the

Dustin Semach

It's a great question. Yes.

we earlier. cash by impacted free onetime discussed was our items flow So that

as major step-up I forward, going Going a step interest facilities. It's impact affecting these would EPS, it's one the the to payments, in is up. also are say variable continue

million mid-XX expense XXXX. the roughly up interest going in from stepping mid-$XX XXXX, into You're in

to in and prior we're million year, it And roughly cash land you around about so think if next $XX this year, million. it's $XXX double flow expecting

Operator

of Cowen. the line Bergin Next question Bryan is of from

Zachary Ajzenman

Zack Bryan. on for is This Ajzenman

question Dustin. First for

new year. calendar within vertical for disclosures planned for heard I for some other can hypergrowth the you outlook? you color insight give a sense the or the more assumptions We this embedded mentioned think growth 'XX vertical. performance key upcoming on cohorts the us on But the vertical

Dustin Semach

Yes.

verticals now, the behind, for look the in you as within to well care. And then variety say, statement rest would a outcomes of intention $XXX roughly color going services then down and call. would forward was of predominantly in actual the more automotive, $XXX strength specific X%. we'll is of you The at this forward health coming in specific disclose point, And rates public in as and strong services within hypergrowth, say, growth and terms health talking So the at I about there's right specific of going fiscal of and back million I QX financial roughly I beyond each million vertical to at but performance that more remaining care said financial would roughly say, of what sector and earnings on year kind give still are slightly is rates. terms as growing in XXXX $XXX growth and number them. going I we're million,

Zachary Ajzenman

Great. Great. Follow-up on offshoring.

if margin can within the quantitatively Any you see to looking Just to is offset get affecting frame and to the way we pressure. this extent sense can offshoring what revenue outlook helping Like year? any around that numbers.

Dustin Semach

in [ to gross in the of relative it. that's the puts of terms and and kind So up you on we margin, XX-XX again, mix, it year XX, you about think and that differential XX you takes, it. think think expectation fiscal year next ups to the and Cassie's if because you about our this metrics or points margin downs the year for about of and is expansion, 'XX as XX relative you ] think back will, a question, of to the touched when guidance if right, still net and

then have continue to and it'll then forward, but So we it as over continue impact XX move time 'XX. is and it's exiting relatively into minor, outsized to mix an 'XX to

Operator

the Last line Faucette Stanley. question of James is of Morgan from

Unknown Analyst

This confidence half is the on section business? sector you in for that giving stabilization Jonathan your James. back What's hypergrowth or of

Shelly Swanback

offshore Well, I in footprint. mean, we hypergrowth of and -- couple definitely are in have offshore a -- that expanding have clients of first that growing interested our we all, sector

unfortunately, so that unfortunate the clients having And in opportunities portfolio some of we softer demand. normalization, with those this despite growth see -- post-pandemic

hypergrowth expecting in hypergrowth clients with Dustin digits. have clients we So of we're of mid-single the pipeline the the our sector -- in to our outside said, grow as also some sector. And a opportunities

Dustin Semach

of half in Keep the within of in had hypergrowth point. again, churn that to sector that, second follow-on a just Jonathan, the happened So a our we year. the mind lot

it's -- which half bit down little second Those versus in half first happened, half, talked second the So compare it XXXX. compare, half. exes have we a over impacted the XXXX you just the down of a is and of because notable come [ a about ramp they'll obviously if in will, ] first the

again, the around stabilization. that's so And

largely in not too, Just to customer that within moderation. it's services growth this really is around mind, and hypergrowth, keep content and care, related

normalization XXXX, platform the half. in the then and of more economy having it's So grow the that, re-baselining of to post-pandemic weakness alleviate a again, the a expecting macroeconomic second statement in the around will off of,

Unknown Analyst

follow-up, how to And Dustin. thinking Clarity, M&A you environment acquire? a about capacity are the and your

Kenneth Tuchman

I think that right to now where trying we're be. really going focused on to execution and values understand really are

and So think That the a truth M&A. our it's say sheet. pipeline I we're safe to we balance mind responsible that be matter of said, to of have very potential is going solid the that fiscally

something a is absolutely for that that the is continue what so is our to us you prudent the that where part And that in try be little of and future valuations we M&A it's see to strategy, to to come targets would think although going our we're strategy, to looking on wait say just some bit I of at.

on more be I M&A of is be strategic the to business. simply organic think towards that say I our -- and execution side would Digital any that to areas more right growth. benefiting we're be just going But would would that very that in now, on you what geared is doing we the focused would team much of the

Operator

for you turn is time That to today. we back I the will now all call your have Thank the Paul questions. Miller.

Paul Miller

us concludes Yes. for joining Thank you. call. Thank This everyone, our today. you,

Operator

Call. Full and Quarter XXXX Earnings Fourth Year TTEC's concludes This Conference

may You this at disconnect time.

TTEC (TTEC) 28 Feb 232022 Q4 Earnings call transcript