TTEC — TTEC Holdings, Inc.

TTEC Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Revenue: $496 million, down 7.1% from $534 million in Q1 2025.
• Adjusted EBITDA: $46 million (9.2% of revenue), compared to $56 million (10.6% of revenue) in the prior year.
• Operating Income: $32 million (6.4% of revenue), down from $41 million (7.8%).
• Earnings Per Share (EPS): $0.15, down from $0.28.
• Free Cash Flow: $21 million, an increase from $16 million year-over-year.
• Debt: $892 million, with a net debt position of $803 million, down $79 million from the previous year.
• Engage Segment Revenue: $394 million, a 7.5% decline year-over-year; operating income was $25 million (6.3%).
• Digital Segment Revenue: $102 million, down 5.7% year-over-year; operating income was $7 million (6.6%).

2. Strategic Updates and Business Highlights

• TTEC is focusing on AI-enabled innovations and has seen a shift in client engagement towards integrating AI with business goals.
• The company is expanding its offshore operations, increasing the offshore revenue mix from 34% to 38% year-over-year, with a target of over 40% by year-end.
• TTEC is rationalizing its client base by exiting lower-margin accounts and prioritizing complex engagements.
• The company has implemented AI across various operational areas, including hiring and performance management, which has shown promising early results.
• TTEC's Engage segment has a backlog of $1.51 billion, representing 94% of the 2026 revenue guidance midpoint.

3. Forward Guidance and Outlook

• TTEC is reiterating its full-year guidance, expecting improved profitability and revenue growth in the second half of 2026, driven by operational and cost management actions.
• The company anticipates a return to top-line growth in the Engage segment by the end of the year, supported by new client acquisitions and expanding existing client relationships.

4. Bad News, Challenges, or Points of Concern

• The decline in revenue and profitability was partly due to a delayed receivable from a public sector project, which impacted Q1 EBITDA.
• The Engage segment's revenue was affected by the rationalization of underperforming clients, leading to a decline in year-over-year revenue.
• The Digital segment is facing challenges due to a shift away from legacy contact center solutions, impacting recurring revenue.
• The normalized tax rate increased significantly to 52.9%, primarily due to jurisdictional income mix, which may affect future profitability.

5. Notable Q&A Insights

• Management expressed confidence in the health of the pipeline, noting larger average deal sizes and a strong demand for AI capabilities, despite market narratives suggesting a slowdown.
• TTEC's AI Gateway is positioned as a solution to bridge existing customer experience systems with AI technologies, reducing implementation timelines.
• The company is focused on maintaining a hybrid approach to customer interactions, balancing AI and human engagement to enhance customer experiences.
• There is a recognition of the complexities involved in modernizing legacy systems, which can significantly extend project timelines, impacting revenue realization.
• Management emphasized that while they are rationalizing clients, they are also seeing strong demand for new business, particularly in offshore markets.

Overall, TTEC is navigating a transitional period with strategic investments in AI and operational efficiencies, while facing challenges in revenue growth and profitability in the short term.