Q2 2020 TTEC Holdings Inc Earnings Call

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Welcome to <unk> second quarter earnings conference call I would like to remind all parties that you will be in listen only mode until the question answer session. This call is being recorded at the request.

I would now like to turn the call over to Paul Miller.

Your Vice President Treasurer.

Okay. Thank you Sir you may begin.

Good morning, and thank you for joining us today to check is hosting this call to discuss it second quarter results for the period ended June Thirtyth 2020, participating on today's call or Ken Tuchman, Our chairman and Chief Executive Officer, Regina Paolillo, our chief financial and administrative officer, and Jonathan learner, our president of two Tech digital.

Yesterday to take issued a press release announcing its financial results. While this call will reflect items discussed within those documents lease complete and review our second quarter 2020 quarterly report before we begin I want to remind you that matters discussed on today's call may include forward looking statements.

That leads to our operating performance financial goals and business outlook, which are based on management's current beliefs and assumptions. Please note that these forward looking statements reflect our opinion as at the data this call and we undertake no obligation to revise this information as a result of new developments that may occur forward looking statements are subject to various risks uncertainties.

And other factors that could cause our actual results to differ materially from those expected and describe today.

For a more detailed description of our risk factors. Please review our 2019 annual report on form 10, K. a replay of this conference call will be available on our website under the Investor Relations section I will now turn the call over to Ken Tuchman, Gtech's, Chairman Chief Executive Officer.

Thanks, Paul and good morning to everyone I'm pleased to report that we delivered record second quarter results.

Demonstrating the relevance of our CX as a service platform as we rapidly pivoted to engage from anywhere environment.

Our focus on execution combined with the agility of our team and platform provided seamless continuity to our embedded base and enabled us to win a significant number of new logo.

Our revenue growth rate accelerated 15.4% and our non-GAAP operating income grew 96.2% versus the prior year period.

Our adjusted EBITDA was an impressive $71 million up 58.4% year over year.

Based on our strong first half performance and forward revenue visibility, we are reinstating and increasing our original 2020 guide.

Our record bookings of $214 billion for the quarter predominantly reflected heightened demand for digitization and virtualization solutions across our client base.

Our ability to rapidly enable clients with a frictionless and fully digitized customer experience has never been more critical.

We continue to build momentum with our agile operating model and proprietary Humana fight cloud technology platform.

Our end to end approach to designing building and operating customer experience as a service is succeeding for increasingly complex high end and mission critical client need.

Here are some recent example of the essential work, we're handling on behalf of our clients.

T Tech has helped multiple federal state and local government agencies with city with citizen engagement throughout the endemic.

In the Commonwealth, The Massachusetts, our T. Tech Humana Fi cloud stepped in to support the Bureau of unemployment insurance, who experienced a sudden spike daily unemployment claims moving from a couple hundred to tens of thousands of claims per day.

We rapidly deployed our fully Virtualized Humana fly cloud solution to provide an on demand highly scalable and secure at home technology, along with a virtualized customer experience team to deliver end to end citizen engagement solution.

We also partnering with the bureau, and identifying new opportunities to improve citizen satisfaction and reduce cost through the expansion of digital channel.

We rapidly implemented a new digital conversational messaging platform. So citizens could conveniently access vital info about their unemployment claims process.

Our technology allowed the Commonwealth to migrate 35% of their voice calls to digital interaction and delivered a 50% cost savings benefit.

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Apologies everybody for the for the for the break for a Premier Fortune 500, healthcare client T. Tech engage want to new mandate linked to the mission critical tasks of hiring hundreds of registered nurses and other medical professionals to bolster frontline staff battling the pandemic the scope of the work.

Quickly expanded to take advantage of T. Tech digital capabilities enabled through a nurse line. So patients can engage around the clock 24 by seven.

Hi Tech registered nurses interact virtually with patients and utilized.

Case case and utilize case by case, evidenced based assessments to ensure appropriate care.

Highlighting the complexity of the work the nurses not only engage with patients, but also worked with pharmacist and attending physicians to ensure a clinically safe cost effective prescription.

This is a great example of highly skilled work that has been virtualized as a result at the Covance surge and will remain with T. tech well beyond the pandemic.

For Volkswagen Group UK GTECH has kicked off a five year digital transformation project to reinvent the customer experience.

Moving from current voice centric systems to a fully contextual an integrated omni channel experience.

With digital with T. Tech digital Volkswagen will leverage our AI, our machine learning solution the power intelligent virtual assistant and other cognitive engines to enhance vws customer experience. The fully virtualized end to end CX ecosystem will be delivered with T chek engage.

Look at home customer experience team the outcome will be a solution with a significantly higher customer satisfaction and deliver an overall lower all lower lower overall cost to serve.

The VW solution.

Reflects a mega trend, where consumer products are turning into experiences.

According to ITC.

Experience has overtaken price and brand as the number one differentiator for consumers.

It's just no longer just about the type of car you drive, but rather the entire experience you receive from the car manufacturers brand.

From an interest from an integrated infotainment systems to telematic enabled servicing.

Consumers have significantly higher expectations of their auto provider.

This trend holds true and every industry consumers expect brands to offer continuous personalized effortless engagement in their channel of choice.

Expertise in transforming the customer experience in ways considered futuristic only a few months ago.

Leading brands are recognizing they need to detect humana Fi cloud technology more than ever.

Our continued strong bookings due July are the best evidenced that this market demand from the iconic brands that we target insert.

But to be clear T. tech is well positioned to win both in and out of the current crisis with our proprietary customer experience as a service platform.

Consisting of our digital engage businesses.

They work together to virtually support the entire spectrum of the human and digital workforce at global scale.

T Techs digital operating model is highly differentiated and I'd like to spend some time unpacking the software offering for the benefit of everyone seeking a better understanding of our overall value proposition.

Picks digital technology and services are delivered through our integrated technology platform, we call the humana by cloud.

Our Humana Fi cloud is a turnkey CX technology solution, enabling the largest most complex organizations in the world to obtain all the cloud technologies will ever need to interface seamlessly with their customers.

It is important to stress that our Humana Fi cloud is unique in the ability to routinely serve clients with hundreds of millions of end customers are humana by cloud has three main components.

The first component is our humana by cloud is our CX ecosystem, consisting of dozens of best in class pre integrated CX technology solutions spanning omni channel.

Hi machine learning.

Robotic process automation.

Enterprise CRM and your peas, and marketing automation to a highly proven suite of ready deployed CX application.

Such as advanced analytics, and cyber security solutions among many others.

The second component is our Humana Fi integration and Apiay platform.

Leveraging t. techs, prebuilt connectors and enterprise grade deployment platform, including Humana buys intelligent administration orchestration analytics and automation solutions.

This deployment platform brings together entrenched legacy systems and advanced SaaS applications.

Empowering customer experience teams to enable contextual and personalized customer engagements, providing increased customer satisfaction and deployment speeds that are typically three times faster than point to point integration alternatives.

And the final component of our Humana by cloud is the intelligent automation platform.

Which delivers GTECH proprietary AI ml and RPH solutions to drive our clients.

Customer experience technology to new Heights.

We leverage our proprietary digital worker factory to infuse and orchestrate advanced AI and big data and a mix of other hyper automation solutions to deliver the customer experience centers of of the future today.

Our Humana Fi cloud business inclusive of proceedings solution grew 57.4% in the second quarter over the prior year period, one of the fastest areas of organic growth inside our company.

So humana by cloud is enabled by our technology services team within this team we have distinct practices.

To each of the three main areas.

Areas of the cloud, we help clients design, the ideal experience and corresponding technology stacks or formulating CX transformation roadmap.

We provide integration and orchestration services between CX applications and common business systems to deliver on our clients Roadmaps.

And we determine our clients optimal mix of AI and automation delivering the full range of those capabilities needed in today's digital world.

To sum it up the T. Tech digital value proposition is delivered to clients through our humana by cloud.

With our Humana by cloud, we're architecting full customer experience technology ecosystem and managing them for our clients at enterprise scale through integrated multi cloud environment.

You made a buyer cloud solution, our structure as multi year take or pay contract in which our clients pay us in a fully SaaS format on a per user per month basis.

From conversations with clients, we anticipated the world attempts to emerge from the continued impacts of the pandemic client focus will be will be even more concentrated on adding next generation CX technology enabled by our humana by cloud.

The digital imperative forced onto the CX landscape by Cobot 19 has become a permanent state of business, creating an even more favorable long term demand environment for T. Tech digital.

Although our clients have lost although our clients have not lost sight of the strategic importance for transformative CX capabilities designed to fuel there longer term growth at this moment in time, they're acting with greater urgency to stabilize their operation and financial performance.

Our significant client success during the pandemic is a function of our digital and engage business enhancing one another in unique ways.

Unlike engaged competitors T. Tech was on what was able to leverage digital solution to seamlessly move 40000, plus of our engage workforce to a fully virtualized environment with zero downtime and without interruption to our clients and their customers.

This agile shift to at home allowed engaged to execute on a significant amount of new revenue opportunities.

During this process, we leveraged our Humana Fi cloud engineers to rapidly build and release, our new dramatically improved remote worker platform.

This solution now operational and with general availability to both our engagement digital client equips over 40000, plus remote CX team members with a full range of intelligent automation analytics and Omnichannel collaboration technology among others.

The platform meets the highest standards of enterprise grade security requirements, including multi factor authentication biometric security and environmental monitoring.

The remote worker platform can be seamlessly deployed from augmented by cloud to thousands of associates in a matter of ours.

The impact of this new platform can be exponentially amplified when combined with our new digitally enabled approach to the remote hiring training managing and coaching of our human and digital workforce. We're currently testing the full scope of the new ecosystems and initial client results indicate greater team productivity and.

Customer satisfaction in the virtual environment, then when we were achieved the than what we were achieving in our physical contact centers.

We will be launching this new operating model in the coming months.

Its initial results or any indication we expect this new approach will not only improve our client outcomes, but will also fundamentally shape the future of customer engagement.

Digital and engage further enhance one another by providing multiple go to market avenues for building our pipeline the client offer opportunities.

Exemplified by the Volkswagen example, shared earlier, we see greater demand than ever for the full complement that both digital and engaged as one T chek.

Which delivers on the promise of true end to end, TX as a service while preserving the highest quality experience at the lowest cost to serve this is our preferred go to market approach.

Our growing strategic partner ecosystem is also right with new opportunities to serve large enterprises right now.

We have been purposeful in executing our partner roadmap, creating an ecosystem to enable a framework for enterprise grade public and hybrid cloud TX application deployment.

The extension of the channel partners continues to be a key component of our growth story into the future.

Today marks another big step forward in the future proofing of these capabilities as we welcome Amazon as our newest key strategic partner.

Through the acquisition of voice foundry.

This acquisition extend.

Extend citytech digital's Humana by cloud to now include Amazon connect as well as access to the full suite of services offered by eight up you asked.

This acquisition also diversified our humana by cloud solution with voice foundries, AI and machine learning capabilities, while also adding another industry, leading omnichannel platform alongside our longstanding and highly successful Cisco partnership.

Detect global scale and large enterprise client footprint will result in compelling synergies.

On top of mind for us is extending our reach into ADW EPS is embedded client base.

Through ADW as a strategic partnership with Salesforce, an opportunity to tap into yet another massive channel of customer acquisition.

We can now offer both HW essence, salesforce customers the opportunity to rapidly set up a fully integrated customer engagement ecosystem with their enterprise grade security and best in class suite of CX application that scale to support millions of customers.

Finally, we would also like to warmly welcome the entire voice foundry team into the text family.

In order to protect the unique value we've built in over a decade of delivering best in class client outcomes with Cisco.

We will be maintaining separate and dedicated Cisco and Amazon sales team focused on driving client value through their respective partner ecosystem.

Leveraging strategic partnerships like we have with Cisco Liveperson Pega systems, and now Amazon is central to building our world class approach to delivering CX as a service enabled by our Humana by cloud. This strengthens the T. tech ecosystem and opens up additional points of access into the 600.

40 billion dollar CX marketplace.

There is a fundamental shift happening across the industry, rather than relying directly on individual customer experience SaaS providers.

Clients are turning to T Tech, that's the CX orchestrator and during partner of choice to build end to end customer centric solutions.

And into the cloud, we're just scratching the surface here you can expect many more announcements to come about this in our go to market and that initiatives in future quarters.

We're very excited about the path we're on.

Our expertise and future proofing, our clients CX ensures that thing navigate an increasingly complex and remote workplace, while keeping customer experience intuitive personalized and authentic for these reasons GTECH will be there to convert a long tail of healthy demand related to the adoption of cloud omnichannel.

Hyper automation and digital technology.

Our longer term strategic initiatives have not changed we're relentless in our pursuit to increase our market share by adding differentiated customer experience a service offerings.

Expanding our channel partnerships and executing strategic and accretive acquisition. This gives us that this gives us several avenues to leverage profitable growth as at growth and a well capitalized balance sheet to increase shareholder value.

In closing.

Our strong execution and capitalizing on a wealth of new opportunity brought to the forefront by Cobot 19 is this testament to the manatee and resiliency of our people on behalf of our executive team and our board of directors I want to personally thank each and every one of our over 50000 team members across the globe.

Over 80% of whom continue to work from home for your hard work you are unwavering positivity and your relentless passion for client service. During these historically trying time.

We thank all of our shareholders for your continued support and we look forward to updating you on our progress in the month ahead, and Regina will now cover the key financial highlights to the quarter as well as share a stronger growth guidance to the full year. Thank you.

Thanks, Ken.

Good morning, everyone, hopefully well and remaining safe and healthy.

Some highlights on our record second quarter performance goes to our financial results and then provide some context regarding our 2020 guidance.

We had an exceptional quarter.

Our strong financial performance is attributable to a handful of factors, including our deep hands on experience and tech rich assets.

The strength of our client relationships, enabling us to be a partner of choice in times of crisis and transformation.

The speed at which we securely and efficiently shifted to our work from home platform.

The rapid designing deployment of cobot 19 offerings.

The early actions, we took to safeguard our profits cash flow and liquidity.

Turning to our second quarter results, we closed 214 million of new business compared to 122 million in the prior year.

75.4% increase.

We had a healthy balance between business as usual and cobot 19 volumes.

Engage grill, 118%.

Digital included a three month extension on the large government contract.

67.5% of the booking dollars or any multi capability deals.

We had noteworthy bookings in our financial services governing automotive insurance and hyper growth sectors.

We added 17, new logos.

We signed nine deals, which included our messaging and automation platform.

Our robust pipeline for the remainder of the year is approximately 1.1 billion, providing four times coverage on our forecasted second half bookings.

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On a GAAP basis, we recorded a 15.4% year over year increase in revenue to 453.1 million of which 9.3% less organic.

GAAP operating income was 49 million or 10.8% of revenue compared to 5.8%.

In the prior year period.

GAAP earnings per share was 67 cents in the second quarter up from 25 cents in the prior year.

The remainder of my comments on a non-GAAP basis, which excludes restructuring and impairment expenses.

Full reconciliation of our GAAP to non-GAAP numbers. It's included in the tables attached to our press release.

On a consolidated basis and excluding the impact of FX revenue increased 16.3%.

Operating income increased 96.2% to 49.8 million and 11% margin compared to 6.5% in a year ago quarter.

Adjusted EBITDA increased 58.4% to 71 million or 16.7% of revenue compared to 11.4% in the prior year.

Earnings per share increased 120.6% to 75 cents in the second quarter compared to 34 cents in the prior year.

Our double digit top line growth is attributable to essential and search work tied to covert 19, the acquisition of Fcr and Saran device and increases in our high growth high margin offerings.

On an LTM basis at June Thirtyth. These high growth high margin offerings, consisting of our cloud.

Systems integration at home fraud detection customer growth in automotive and hyper sector. So they should hypergrowth sex Escalations collectively grew 44.2%.

The increase in our profit and related margin expansion is a combination of topline scale.

Critical mix, SGN, a and depreciation efficiency and an increasingly greater percentage of our revenue in a high growth high margin offerings previously noted.

At the end of the second quarter total cash was 482.3 million with 700 million borrowed under our 900 million revolving credit facility.

Net debt was 231.7 million compared to 172.8 million in the prior year quarter and 195.2 million sequentially.

The sequential increase in net debt is due to the by out of the remaining 30% minority interest in motive.

Our fraud detection and prevention business. In addition to paying our semiannual dividend offset impart by positive cash flow.

Cash flow from operations in the second quarter was 43.1 million versus 41.3 million in the prior year DSL was 71 days in the second quarter, a 2020 compared to 75 days in the prior year quarter and 66 days sequentially.

Capital expenditures were 15.1 million or 3.3% of revenue in the second quarter compared to 15.2 million or 3.9% of revenue in the prior year.

Our reported tax rate in the second quarter, 2020 was 24.8% compared to 35% in the prior year. The decrease is due to a combination of jurisdictional mix the taxing time impact of accounting related to acquisitions and distribution dispositions.

And changes in tax rates in credits in these in select areas.

Our normalized tax rate was 24.2% relatively unchanged from 24.7% in the prior year.

Capacity utilization was 68% in the second quarter 2020, compared to 72% in the prior year period and 73% sequentially.

The reduction in capacity utilization is result of new business signings predominantly leveraging our work from home versus brick and mortar platform.

We are in the process of reshaping our facilities footprint to align with our clients and prospects changing views on geographic diversity and work from home versus brick and mortar mix.

Turning to our second quarter 2020 segment results, which are presented on a non-GAAP basis digital revenue was 77.1 million in the second quarter 2020 versus 78.5 million in the prior year, adjusted EBITDA increased 34.6% to 18.7 million or 24.2%.

Of revenue versus 17.7% in the prior year.

Operating income increased 49.2% to 14, and a half million or 18.8% of revenue increased from 12.4% in the prior year.

Excluding the non core consulting practices now fully exited.

Plan declines in our product and managed services offerings as clients convert to cloud based services and removing a larger.

Shorter term government contract digital revenue grew 15.9% our cloud offering net of the large government contract grew 40.5%.

We realize significant improvement in digital's profit an increase in our high margin.

Cloud based revenue mix from 35% to 56% the elimination of subpar profit margins related to the exited noncore consulting practices and a more efficient SGN a are the key contributors to our 24.2% adjusted EBITDA margin.

You know engage segment revenue was 370.9 million in the second quarter 2020, and impressive increased 19.7% over the prior year period organic revenue grew 12.4% on a constant currency basis engage revenue grew 20.8%.

Adjusted EBITDA increased 69.2% to 52.3 million or 13.9% of revenue versus 9.8% in the prior year.

Operating income increased 125.3% to 35.3 million or 9.4% of revenue an increase from 5% in the prior year.

The accelerated improvement in our engage profit and margin expansion is attributable to topline scale and an increasing percentage of revenue derived from engages high growth high margin offerings. In the 12 months ended June 32020. These offerings comprised 46.3% of engages revenue versus 36 point.

7% in the prior year period.

Our over performance to date strong 2020 revenue blank backlog and growing pipeline have enabled us to visibility and confidence to reinstate and raise our guidance.

Before I jump into the numbers I'd like to provide some context.

While our pipeline provides ample coverage to our bookings estimates financial uncertainty related to covert 19% in many of the industries. We serve as a result, the timing of closing deals is more difficult to predict what's reliability.

Our second half bookings, primarily impact 2021 topline volumes.

Our full year 2020 revenue backlog is 99% of the midpoint of our guidance as of June 32020.

Our fourth quarter 2020 guidance is intentionally conservative pending additional insight on our seasonal volumes.

Finalization of the Heroes Heels Act.

Volumes related to the extension of large government contract.

And the general state of the economy.

We intend to continue a rigorous management of our cost structure and working capital to optimize profitability and cash flow maintaining a strong balance sheet to support continued organic and inorganic investment that will reliably to a sustainable high single digit profitable.

Revenue growth rate.

The midpoint of our reinstated 2020 guidance as laid out in our earnings press release, which includes the voice foundry acquisition and excludes restructuring and impairment charges is as follows.

Revenue of 1 billion 775, a year over year increase of 8% adjusted for the items in our digital business previously called out revenue is estimated to grow 10%, but.

Adjusted EBITDA of 253.3 million a year over year increase of 21.1% and 14.3% of revenue compared to 12.7% in the prior year.

Operating income of 161.9 million a year over year increase of 25.3% and 9.1% of revenue compared to 7.9% in the prior year.

Earnings per share of $2.40 a year over year increase of 51 cents for 27.1%.

Other relevant guidance metrics include capital expenditures.

Between 3.1, and 3.3% of revenue down from 3.7% the prior year of which approximately 70% is growth oriented.

Full year effective tax rate between 23, and 25% and a diluted share count between 46.9, and 47.1 million shares to obtain our third and fourth quarter 2020 mix of revenue operating income adjusted EBITDA and EPS at the consolidated and segment levels.

Please reference our commentary in the business outlook section to the second quarter 2020 earnings press release.

Before I close we know that you are increasingly focused on what will come in 2021 and beyond.

Dilution of the pandemic as well as when and to what extent the economy will improve remain as open ended question.

We will address 2021 in greater detail in future quarters. Once we have greater visibility to our third and fourth quarter bookings, including business as usual and cobot 19 volumes.

In the meantime, and as shared previously it is important to note that our digital business, excluding the large government contract which ends in 2020.

The non core consulting practices exited and the declines in our product in managed services for reasons. Previously discussed will result in revenue base as we exit 2020 of approximately 225 million.

We continue to estimate this base of revenue growing in the range of 15% to 25% in 2021 and beyond.

In closing, it's the strength of our client relationships CX technology prowess.

Operational know how.

And resiliency of our global team that is mattered most in successfully navigating the color on the virus pandemic.

We see the benefits in the advancement of our digital and agenda in the evolution of our work from home platform any improvement of our financial performance and in the retention of our people. Most importantly, we see it in the new logos, who engage us in Atlanta crisis, and the way in which we championed surged.

Values in existing client programs.

In doing so we have created lasting relationships relationships with business leaders for whom we are top of mind. As a result, we are already seeing in crisis wins transitioning to out of crisis business opportunities, we're optimistic about our competitive position our growing address.

A couple CX market and the increase speed at which clients are modernizing.

Their customer experience platforms.

Now turn the call back to Paul.

Thanks for Gina as we open the call I ask that you limit your questions to two at a time operator, you may now open the line.

Thank you so much speakers.

Again the question answer session you would like to ask a question you may or may be number one.

And with your phone at a record your name pure anyone from.

Name is already use your question to answer your question you mean Presque alright.

One moment please.

Thank you.

Speakers Fair question, we have George.

As your line is now open you need.

I assume on the George you're referring to.

George Sutton Congrats on the Great result, the voice foundry deal looks outstanding from our perspective, given its attachment to the Amazon and Salesforce ecosystems, along with all the other partnerships as you mentioned Cisco Liveperson Pega.

Our new you're obviously getting a lot of touches given all of these relationships can you talk about how that's influencing.

That pipeline of opportunities.

Hi, George.

All I'll begin to answer that question and then I really would like Jonathan learner, our president of digital to be able to chime in this will be its first time.

On our on our conference calls.

What I would just simply tell you is the following if you look at the OEM.

Today, and the smaller ones like the Fivenine.

Astra.

They not only have a direct sales force, but they also have.

An agent Salesforce and.

Although their model is very very robust and doing extremely well we have a very different approach our approach as a partner approach and it's a it's an approach of basically becoming the largest and most most valuable and important partner of theirs, where we partner with them and have access to their pipe.

Line of many of their strategic deals.

This is how we went to how we've gone to market with disco, it's been very successful and it's how we plan now we're going to market with Pega. It's been successful is how we're going to market with Liveperson and it's how we will continue to go to market with Amazon and others. So what I would just simply say to you is that these organizations.

Radically larger Salesforce is done we have and therefore, they're out there doing the hard rock mining, while our direct Salesforce is doing hard rock mining and and we're both coming up with deals and because of our expertise and CX.

We think we have a unique ability to help them close these deals.

Because we bring so much more to the table than just.

The actual capabilities of integrating this altogether.

So what I would say to you is that there is a myriad of of touch point that are added a myriad of new channels that are added that bring forth a lot more additional opportunities and I think you'll see over time as we continue to build out our partner ecosystem that it will give us the best opportunities to have access to the large.

Yes.

Deals in the in the marketplace since that's the part of the market that we're focused on Jonathan you want to take it from there.

Sure. Thank you Karen good morning, George.

Thanks.

Hey, there.

Batteries consistently that go to partner for complex high touch Amazon connector engagements I'm sure you've seen that.

They've also been highly engaged.

Cws and planning be aligned sales force.

Service cloud voice middle market effort.

So they are right in the thick.

Educating aligning and enabling.

It's around 3000 sellers.

On the ADW Westside complement that with now tremendous interest in.

And access to the sales force sales team.

Pump so the pipeline tremendously George.

And there there are tremendous synergies around how this diversified Archie magnified cloud solution offerings.

With the industry, leading omnichannel platform along side as Ken mentioned, our longstanding and highly successful Cisco partnership.

But it also does as Ken mentioned is it addresses the reality that consumers are looking for Cxo service end to end system.

So we've gone from point solutions to building systems with CX as the sustainable differentiated strategy.

This combination not only of the voice foundry acquisition in the Pos ecosystem, but layer on pega and the trend towards automating and augmenting both agents and customers and we see tremendous potential.

To to accelerate and scale and reach a broader audience of customers.

And satisfy consumers instead of that's results.

Perfect.

Quick one per Regina just definitionally when you talk about Fourx coverage on your.

With what your pipeline coverage you just give us a sense of what that represents in your line.

Yeah, I mean, we have a as I said, we have a total pipeline for.

Q3 in Q4 over a billion dollars.

And you kind of look towards our view of.

Being able to Predictively do between 101 hundred $50 million, though.

Bookings a quarter.

When you look at the second half right down 300 in the first.

And just again, making sure that we keep the context of Corona virus epidemic in the room.

Equity from different uncertainty than previously.

You know, we believe that that pipeline.

Based on conversion rate.

Should outside of potential delays because of the pandemic.

Give us really good coverage and what I mean my that is.

You know that pipeline is growing.

It is equally strong and.

A little as in engage.

Depending on the quarter digital will be anywhere from 35% to 40% of that within that.

Studied the amount.

Bob pipeline, even beyond kind of Q3 Q4.

It's growing and very strong again web FCC, so hopefully that's a little bit more context, then ill.

You know whether that conversion happens.

Q3, Q4, or Q1 Q2 is there and it is real and there are tailwinds like the acceleration of Digitization, where I think that that's the logos that we work with both.

Existing and prospects really has seen what's possible and a seamless possible because.

In that search of war is not humanly possible to get the number of humans in place in time to cover all these engagements and so we saw.

A pretty rapid.

You know movement from voice.

Two more digitized options like messaging.

Perfect can I just wanted to note the irony of talking about the most fashion, Florida technologies and you get impacted by an old line grinning.

[laughter].

Well.

It's a 100% my fault I should have done some quality assurance last night. It was late and I just assume that the printers fitted out Mr page four so I apologize to everybody.

Great. Thank you.

Thank you so much.

Our next question coming from the line of James Your line is now open.

Hi, Good morning, Hey.

Got it did a fantastic job, obviously, responding and im very dynamic environment, and taking advantage and be opportunities, but probably at least as importantly, helping our customers get to what they need to do for theirs.

Wanted to ask as you're looking at.

Kind of that debt pacing of new business and.

And the like obviously.

Big responses in the June quarter, how are you or what are what are you being told in terms of urgency and and that kind of thing from your customers. There's the pipeline is developing and are there things that you need to do from our hiring perspective or other resources to be able to touch.

Match, what the pipeline is asking.

When it could be for the timing.

Thanks for your question.

That's not the easiest question in the world to answer.

So you did not throwing me a thoughtful only because it's it's all over the board.

We have clients that are trying to stabilize their own business and our rapidly shifting from a person to person business to a virtualized business.

And we're there to help them and ramping them up and getting them. So that they can operate in this new modality. We have clients that have built their business digitally from day, one and their business is growing by leaps and bounds in their capitalizing off of the fact that they were always virtual.

So you can think of you know whether it be streaming companies gaming companies.

In home exercise companies et cetera, those in meal companies. All those companies are growing very rapidly right now and seizing the moment and capitalizing off of it.

And then you have.

More institutional based companies, who are trying to figure out what's around the corner.

And our frankly, having difficulty in expressing what their long term future volumes are going to be.

That said those companies in many cases are also seeing surged volumes because of.

Whether it's you know unemployment issues or insurance issues et cetera. So I would love to give you a Pat answer what I would just simply tell you is that we're seeing a mixture of opportunities.

We're seeing what I would call pandemic opportunities, we're seeing companies repositioning them, so opportunities and we're seeing people thinking about post pandemic opportunities I mean, when you just think about every aspect of society has been impact.

Think of what's going on with universities, and how they're going to bring people back to school and were getting involved with that or how they're going to traits in constant contact tracing when kids get sick and quarantining them to insurance companies that are being overwhelmed by.

Hi coverage question of Cobot.

I could go on and on and on and on but what I would just simply say is is that we're seeing all different forms of demand and as it relates to our ability to higher we are definitely in the hiring mode right now and we believe will be in that mode for a you know for quite some time.

Just based on the pipeline that we have and the opportunities that we have in front of.

The other thing I would just say is on the.

Especially on the digital side.

The one thing that this pandemic is done.

As we all know I don't I don't want to sound like a cliche here, but it is definitely a compressed the time.

For companies to digitize it is definitely compress the time for them to figure out how to operate virtually and so that in itself is creating a whole new opportunity set. It also is I would say getting a lot of.

Companies to realize that if they were not omnichannel. They have no choice, but to be omnichannel now they can't just simply offer a retail in person solution nor can they only offer offer of voice only solution. They have to offer also they have to offer all channels.

SMS texting chat.

So browsing video live video et cetera, and this is what we've been experts that for many many many years and so our ability to help these companies very quickly moved to these new channels and serve these new modalities is clearly benefiting us as well right now so I'm, sorry, I'm not giving you a quick.

Concise answer just because it's it's a it's varied out there, but let me just backing up a little bit with some quantification. So you know I think when all said and done you know or something like maybe what we live set of at first 25% to 30% of our bookings for the year in coated nine.

He related whether that search for the industry that has spiked in volumes or is for essential work.

The reality of it is we believe that you know at least 60% of that.

Definitely moves into next year and a piece of that is just becomes ongoing centimeters I can just talked about but more importantly to your question you know at this point when we look at right are highly probable timeline for the second half.

And in digital.

97% of that is not is non call that 19, right. It's business as usual and you know, it's about 82% and engage.

And so we see a dramatic change from the first half into the second half, which I think is definitely aside from our clients that they are starting to pick up their pencils on what I'd say more generic transformation improvement initiatives in around so yes.

Great well. Thanks, Thanks for the color there, Ken and Regina, we're seeing a quick follow up questions for you first I. It looked like Dsos ticked up a little bit in the quarter is that just the linear already in the quarter being and in business being reflected on Dsos.

It's a function of about 20% increase and engage as you know and companies who have high growth. They also have increased working capital needs and so it's really purely one I analyze time today, we'll analyze right. The kinda. These days sales outstanding are.

Average day sales outstanding it's really a function of the tick up in our revenue and you know it also affected our cash flow, which you would have thought was higher given the growth rate, but in reality, you'll see it spike up in the second half, it's just really a tiny.

Got it got it okay that makes sense I appreciate that and then lastly, hows attrition trending is that benefiting your margins at all and and should we expect some variance on that as the world normalizes.

Yeah, I mean, our attrition is.

That definitely up depending on the month, you know you're talking about seven to 10 percentage points.

Improvement our absent season is very low.

Two metrics that as you know when they spiked can eat at your margins I would say that while.

Everything was equal.

And we come at Us I'm, calling 19, and unemployment goes back to a reasonable level of course that will change, but we're not waiting for that we have multiple stocks in the fire working on that and then I would say a you know we clearly are seeing a very different mix geographic mix and importantly, a.

Brick and mortar versus.

At home mix and we do not leave a you know that we'll be back to probably anything less than 50% on the work at home work and home has a lot of financial advantages. The margins are higher for a variety of reasons TJ is more efficient you can go anywhere in the world If you will.

Ah training is more efficient because you have less churn on so back to your point people who work at home.

We see a less less turnover in general outside the US pandemic and then obviously you have a facilities costs the real estate costs and on that includes not only operating cost us that importantly that capital deployment that comes back in <unk> depreciation and interest costs.

We feel that.

We.

What we're doing the things.

To keep that improvement.

You know through a variety of channels.

That's great. Thanks, guys.

Thank you.

Thank you so much for next question, we have Mike Latimore of Northland Capital markets. Your line is now open.

Thanks, Yeah, congratulations impresses across the board there.

In terms of voice foundry can you give a little more color on just how much activity the pad with Amazon connect you know maybe number of customers are seats are they deployed and then like typical deal sizes new up another.

Yeah I'll up.

No go ahead I was going to just say hi, Mike you know some of that we can answer some of that I think we feel is proprietary so I'll, let Regina Jonathan.

Clicking on that.

Yeah, I was actually just going to pivot to Jonathan to do high level on a on that sorry.

Yes.

Thank you guys.

So complimentary to what we do we see there a as Peter average selling price is very similar to ours. They have.

They traditionally about 90% are there a implementations involved integrations to for instance, CRM and and sales force. So from a fit to they're very similar they are the leading independent partner to Amazon connected as I've said in my earlier question response.

They are looking to as the roll up to sleeves partner and they provide that white glove escort much like we do.

And have built a significant brand inside of the Amazon ecosystem to deliver on time and on budget deployments of connect and beyond into the full suite of ADW S.

So.

It's it's an excellent accretive acquisition.

It's a great complement to what we do and what our customer driven.

Inorganic activity has been and we'll be in the future and it really complements what the market's demanding right and that's not only choice, but cloud first choice.

Right and I noticed.

Ill horse.

Service cloud now as Amazon has basically the preferred out on the box.

Contact Center I guess I think I just came out last month as that is that something that you think sort of get sellers opportunity there, 100%. It's what we've been working on this deal for almost a year and.

This is something that we've been very well aware of and very focused on and we think that again for the large enterprise class customers. We think that this will open up a whole new pipeline again when you.

Where we already have people from voice foundry that are literally training.

A large portions of the sales force training Salesforce.

Yep.

Salespeople excuse me.

And so we do absolutely believe that this will be you know up a good opportunity for adding to our pipeline.

Yeah.

Hey, they do brining, our rich set of clients.

You know with Oh, let's say 15 to 20, what I would say extra large enterprise clients in particular in.

Insurance financial services E Commerce, a and a couple of other so we do see a huge opportunity through you know their relationships to cross sell into their client base and then importantly, we find this is very important assets for us to provide.

Banality to our engaged in that space as well as our digital infinity.

Piling on here, you guys, but not to mention their presence in EMEA and xeon and their strength globally. So this again extending our reach not only in the Americas.

Their reputation for that.

Mike loans delivery.

Extends into EMEA.

Especially in Australia, and New Zealand.

Thanks, Greg.

Thanks, and then on engage business.

How much of the sort of incremental demand you're seeing comes from companies with sort of internal call centers. You know everybody has to go home. They're just you know these companies are just not technologically savvy enough to handle kind of remote agents and so there may be you know outsourcing more do you guys I mean.

How much of that dynamic sort of occurring.

Well first of all you should know that on the digital side, we're helping those clients with their at home solutions. So clients of ours, who are struggling the first thing we're saying to them is if you like we can put you on a platform and will help you do this yourself. So we think that.

That is an important aspect of future of opportunities as well as future opportunities.

As far as how much of it is is a client and clients with captives I think there is I think there's just when you look at the overall outsourcing marketplace not according to T Tech, but according to third party analysts they claim that only 25% to 30% of the marketplace.

Is actually outsourced.

Even if you think that that number to me feels a little on the low side I think it's maybe more like 35%, but regardless there is a tremendous amount of work that has yet to be outsourced and I think that this in itself has been a huge wakeup call because so many of these clients to fall.

Really what would they were caught flat footed and even though they had all kinds of disaster preparedness plans. They never they weren't prepared for this and so I think you're gonna see over time that the mixture of internal versus external is going to change and I believe you're going to see it in.

Crease pretty significantly that more and more clients are going to realize this isn't there core competency. They don't have all the agility and they don't have the fault tolerant capabilities that we've built in globally to our systems and technology and so I think you're going to see just overall not only us.

This business some of which is temporary ships I think that more and more are rethinking how much of this business. They want to permanently place in an outsourced a situation and we are definitely having those conversations as we speak right now with many clients about their interest in.

Increasing the amount of business and decreasing the amount of captive let alone were more cost effective and I don't want to sound you know a.

You know like on bragging, but in most cases, we significantly outperform our clients captives and so at some point I think many of our clients are going to realize that if we're operating at a lower overall cost to serve we're delivering a higher quality. It makes more sense for them to continue.

To distribute more business to us as a partner as well as others.

Yeah, Great just last one Ken did you say that the bookings strength has continued in July that Lisa.

Oh, yes, our booking strength across both but excuse me I'm, sorry bookings are pipeline I apologize I [noise].

Whatever you're spot on wasn't thank you for something about July.

Yeah, we had a comment and I can script that indicated strength in a in July and.

It was.

Strong.

Well I.

Lastly on ways to go a strong month, but right.

Thanks.

Thank you.

Thank you for next question, we have designs Woody of William Blair you may begin.

Hey, everyone in.

Great quarter guys.

Given who's on the phone I'd love to get touched on the digital segment second you know better margin.

And we'll revenue.

And then do you think about what are we going to can 20 bucks on them and cloud business growing really fast I.

I guess the question I, obviously, you know I'm Lucky sentry locals embedded in your long and partnerships why not sort of say, okay, we might in Baltimore and sales kind of on the customer relationship as local partners owning them on drive growth always like maybe being one of summer. So people drive that grocers problems down the philosophy that you guys have on that side given.

The traction we're saying.

Yeah, Let me let me just added up from a data endpoint and then maybe hand, it to counter Jonathan but I think you will see if you.

Got the SGN a second half the first half is up about 2 million.

So and Thats specifically in digital so you know to your point.

You know we do we are very much stepping up.

The investment in the go to market.

Counter Jonathan.

Okay. So yes, we're stepping up the investment in the in go to market you know one of the things that is probably we due to a fault is we're conservative company. So unlike some of the other tech companies that its growth at any cost. We we appreciate the fact that were public company.

And that we need to deliver consistently on the promise of of being a profitable company et cetera, and we don't have the luxury of pivoting like other tech companies, where you are expecting us to to basically lose money or breakeven.

Just so that we can show put up very high growth numbers. What we're doing is kind of writing that that tight rope so to speak of balancing the investment and the return on investment and then also being able to deliver the profitability to EPS, the cash flow et cetera, what I would.

Say to you is that.

First I understand that Jonathan has a direct salesforce and he also gets to capitalize off of the T. Tech engage salesforce as well that's in the market every single day.

And as it relates to partners.

Yes in some cases, you know there they are bringing us business and in some cases, there is margin that they are benefiting off of et cetera, but what I would say to you is is that at the ended the day, we still think that it keeps it helps us reduce our overall SDMA and.

I'm actually going to take a step further and tell you that not only do we want to be the prime and we want to also worked with prime but we also want to be the sub partner and what did you, but the marketplace doesn't really no and I can't really say, who all who they all are but let me just say this.

To.

Some of the largest systems integrators in the world and you could imagine who they might be.

Use us as their sub partner to implement CX because were viewed as the experts in doing so so they might win a massive contracted includes a 100000 unified communication seats, and 30000 or 20000, excuse me omni channel seats and what they'll do.

Who is they'll say look every time, we try to implement the contact center. The technology is way too complex. Therefore, we've had failures in the past you take command and control about aspect of the business and we'll do the you see portion and so whether its major tokyo's across the country that do that.

With us today or major systems integrators, we're happy to be there for them and we still think we can drive a very acceptable profit margin, but that said I'll just close by saying that we are encouraging Jonathan to prudently invest in sales and marketing and to prudently add.

A more more salespeople and I think over time, you're gonna see a continued increase in investment on the S. DNA side of the digital side of the business, Jonathan you want to add anything sorry for watching on coal.

Oh that go predictable and profitable revenue sales growth is what our commitment is to shareholders in to you can't and Regina a in the digital business, but.

Additionally, if you Peel back to our recent Oh acquisition of voice foundry for instance.

We're expanding our reach both directly and indirectly right.

So comment that in Q2, we also signed up a global.

As high as a means to.

Distribute and work together and addressing citizens requirements for contact and contact tracking and Tracy.

So our reach as we've been given.

The the rope is to both manage the business profitably, but look for the opportunity as you described.

And do so by expanding our reach through partnerships through direct adds to our salesforce and through.

Our or or aggressive growth with voice foundry expanding another dozen people to represent our brands both indirectly and directly. So I think we're I think we're very much accomplishing that and taking advantage of scaling the volume and the.

The hot market in CX right now.

Okay got you know that's very helpful. Just one quick one of the bench season at the end here, maybe or do you know here, how do you guys monetizing customer rep called the digital interaction.

Looking at mass just moved to 35% digital interaction I guess, how them up and there's work and that's the why gross.

I'm just trying to understand there's two components. Thank you, yeah, I wouldn't say that up.

The improvement in margin, we get by virtue of.

Putting a our crop our our revenue at risk on an outcome basis is.

Hi, digital revenues up you know it we are more and more pricing.

Two outcomes on making commitments on the inflection writes a you know as well as conversion rates. So you know much of our <unk> messaging and automation in general engagements now our including now what you're seeing in this quarter I have doesn't have enough that to be the call.

Plus two to.

It to profit.

That said.

Got you know at a 24.2% EBITDA probably sooner than we had anticipated. We believe that you know we've got again multiple stocks in the fire on the things that we're going to do not necessarily cost cutting our restructuring cost, but importantly, a extracting the value.

Ah that we're bringing to our clients in terms of our topline, albeit some of it may do you think season in some of it you know tied to the outcomes that we got product line.

Got it got its helpful. Thank you guys appreciate it.

Nice job there. Thank you very much.

Thank you for next question, we have Bryan Bergin of Colleen you May proceed.

Yes, it's actually jure living on for Brian Congrats on the strong results in terms of booking see kind of help us parse the mix so between digital and engaged within bookings and then where there any notable large deals within the bookings this quarter.

Yeah, I you know the.

From a quarter point of view about.

Is that of our 200.

14 million just on their you know just on a 45 that is digital and I'm the balances engage it's not a.

It's a typical mix and you know in both of these businesses, yes, we had some very significant of booking.

Jonathan I'll do you want to talk to cover a couple of noteworthy bookings on the digital side.

Sure.

All let me begin Jerry with just.

The strength of our humidifier platform solutions for the public sector, mainly and in the federal space We've got.

Really the Cisco ecosystem markets, only fed ramp and idle for pending certified solution on the market today.

So we had we had great growth and strength expanding in the public sector in all three of federal state and DMD.

So that was it that was a highlight we also as average unit commented we expanded our global footprint.

With a a top insurance company in the quarter.

And what I'd say is that that success continues into the third quarter as well.

Contributing to not only a nice start but a linear start to month one and.

We see that continuing around our our unique solutions and how we've actually.

Orchestrated a lot of those solutions for an increasing mix of the global brands that rely on us.

To power better experiences at the lower overall total cost of ownership yeah. I mean, I think the other thing about bookings is you know it's.

We haven't we Oh, we had a new logo in auto I'm, a big deal. There we had two new insurance companies come into the fold.

We had.

Three no public sector.

Now getting into a state a five new Hypergrowth you know, we we did as Jonathan said, we closed 10 government deals.

In the quarter and you know very interesting if you look at auto write auto year to date, we've grown our auto bookings, 4.2% when we've grown our retail 2.9%. So even the particles, where we felt we you are maybe going to be negative this year are positive.

Yeah. The sudden my script I think one of the things that were most proud of is the nine deals that we did a in digital relative to automation.

Solutions and just the percentage of our bookings a you know 67.5% our bookings had multisegment capability in them. So I would say those are some of the most noteworthy.

Things are from a bookings point of view in addition to the volumes.

Okay, Great and then in terms of engage looking at the guide for Fourq I believe it's implied took contract a low single digit rate is that a bit of an element of conservatism or maybe an expectation of kind of a drop in kind of surge related activity kind of whats.

Yeah provide some color there and you know people back my script and I gave some context before I jump into the guidance, there's a paragraph there in and around that that we are admittedly conservative in the fourth quarter, you know pending some insights on.

Q3.

Bookings pending what happens to euros and or appeal that and I'm just pending basic.

Macroeconomic relative to a you know our seasonal volumes. So you know we feel that we did take for the fourth quarter, we obviously have great visibility to third quarter.

And then for the fourth quarter, we wanted to lead in and give guidance because we're very confident in the numbers that we put out but just caution that that fourth quarter does look to come down primarily because of our conservatism you know our management plan will be different than that.

But we want to be cautionary.

And I think it's really prudent for us to do that because even though we're watching our pipeline grow et cetera, I just think that when you we listen to all the other a public companies that are reporting and I'm not speaking about even in our space and we listen to the uncertainty of all the different Ceos of the Fortune 500.

Her companies, we just think it's the right thing to do.

At this point instead of acting reckless and just simply saying I'm you know it doesn't matter what happens is sector. There is as we all know a lot of variables a pandemic that ER is Ah Ah you know unknown as to when we'll have a vaccine and when enough people.

Actually be vaccinated that it will make a difference in how effective the vaccine will be let alone a major election.

Coming up et cetera, and so we just feel that there is theres tremendous amount of uncertainty that said, we're going to do the very best we can to capitalize off of the environment that we're in and we're very confident that we will deliver on the numbers that we're putting a forward. We just don't want to get ahead of our skis.

And we think it's time to be prudent and conservative.

Okay, great. Congrats on the results again, thank you so much.

Thank you for next question, we have Jason Kupferberg of Bank of America, you may begin.

Hey, guys. Good morning, Kathy on for Jason I, just thought the quick like two part question. So first I wanted to know overall economy.

Well utilization ticked down a little bit you know just how are you guys thinking about balancing the growing margins what kind of a lower utilization maybe continuing in the back half of the year and continued investment in the workforce, especially on the digital side and then the second part of my question is just.

An update on how you're seeing hiring, especially in some of the key geography that you're looking to.

Maybe maintain or develop the more they got a pleasant thing. Thank you.

So how about if I answer the last part of your question and then Regina Jonathan can answer the first part of your question. So as it relates to hiring we couldn't feel better about our higher.

Not just because you know the environment as such with Oh, you know a lot of highly unemployed people, but we're really excited about the culture that we created and just the momentum that are that we have off of the culture that we've created I can tell you didnt doing this.

For 38 years, we have never ever had more talent seeking us.

That are gainfully employed in the highest level of executive positions looking to come to work for us.

The realization that customer experience is the go forward differentiator of all brands is now here, we no longer have to proselytize it and consequently, the amount of of Middle management, all the way up two senior executive leadership that is.

Seeking us out and looking to work for us is unprecedented and we couldn't be happier and on the front line a it goes without saying we have ample access to labor across the globe in all markets, a and then I just want to second something that Regina said, which is we believe that Ohio.

Percentage of our business will stay at home and so consequently, we have always been successful because we've been in the at home business for well over a decade, we've always been successful in attracting a we feel are the best in the brightest to our at home environment, So regardless of how much the economy.

How tight the economy gets how successful it gets as it relates to a recovery et cetera, we're not in any way shape or form concerns about our ability to higher front line as it relates to at home and then just real quickly on the engage a outside of capacity, which is not what do you.

Actually I don't believe is where you were focused on but I just want to say we have been very proactive as Regina sad and are looking at all aspects of the efficiency at our cost et cetera, and what I would just simply say to you is that we started on a program is.

Soon as we saw this pandemic coming which believe it or not was around January 13th when we started acting on this which is why we had no interruption in their service and we recognize the fact that we were going to be a bit top heavy on bricks and mortar capacity and so our real estate department has been working around the clock.

Okay rationalizing a real estate so that when we come out on the other side, we will not be sitting on a too much excess real estate. So we're proactively shutting a real estate as we speak and we will can be continuing to do so all the way through next year to rightsize, our bricks and mortar.

Due to the increase in Ah at home.

Regina or Johnson why don't you take it from there on yeah. I mean, I think this isn't a gauge question not a digital question. So just a couple of things you know first a clarification I see you know our utilization of our capacity is relevant to our seats and this is about our associates. He engage and it is it is down.

On a interest further clarification that digital certainly has space what is a life footprint and we'll get even lighter as most other companies with more professional services is doing on each side. It is down as I said is down because as we as we kind of build our capacity the only thing we felt it.

She our two sites that are dedicated sites for a major financial services.

Company, we have in a new auto company that we got a at the end of next year that is now ranson very successfully man. So you know the Seasonalization really right now is all about no net new business from no those or existing clients that are predominantly taking a work from home.

Option, please understand that well.

Oh, good 85% of our global workforce, including the associates are at home that those C.

Our paid for by our clients and are being reserve for them as they request. So can you talk about the fact that jumped into action. In fact, we have probably 10 sites that were now effecting improved for dot dot reduction of all our some but the reality of it is our clients are still in the process of making their decision on.

On their mix between brick and mortar and at home and while they're doing it make no mistake. Their pricing has continued to include a the reservation of those seats and then I think Ken talked about the most important which is we are very very active with our clients and internally and in fact as usual.

Well weve develops and thought leadership and I thought leading a workshop.

Actually works through with our clients detects point of view on not you know where they should be so very collaborative sessions going on now you know to form that a in a positive way set of clients Ana.

Got it thanks for the color guys.

Thank you.

Thank you so much for next question, we have Josh Vogel of Sidoti and company. Your line is now open.

Hey, good morning.

Thank you for taking my questions are pretty impressive results all things considered I apologize as bouncing back and forth between calls so I apologize if any of this is redundant but.

Can you quantify the amount of surge or temporary work you picked up in Q2 as well as what's baked into second half guidance in and maybe just some commentary around with the margin was on that business. Thank you.

Yeah. So I I think I'll go back to a comment that I made earlier and you know the way we would articulate that as we believe that when all said and done about 25% to 30% of the bookings that.

We have that were inspired if you will like home at 19.

Roughly your bookings and we also believe that will keep that on a go forward basis importantly through next year at about 60% range. When you look at our kinda back home and inspired bookings a good amount of that is search work and.

You know our view is its search work for human you know that's related to human behavior eating more at home doing more things at all consuming in home types of things so.

Hey, you know we don't we don't believe that those behaviors are going to change on a dying and that you know we get the benefit of new logos in states that we're working with where we laid in messaging and there's just no way that they're going to do on employment with that that into the future.

And so you know the way we would call. It now we can update this is when all said and done I could also talked about the fact that when you look at the first half or second half. The second half pipeline you know as maybe you know 82% 82% of it is non coal that on engage in 97% is.

Non coal bid on a on digital so when all said and done at best and like I said, 25% to 30%, but I think it's important when you think about that that it's just not a Q2 it well. It is in Q3. It is and you know in Q4 and it's we're seeing clients.

No.

Let me ask the question earlier, we're seeing clients that we helped intact actually moving now say as part of my strategy I need to start outsourcing on the service side.

Yeah, I'd like to just have one other thing and that is it that you know we have historically on the digital side been a big deal company.

And as you can imagine a lot of the deal that Jonathan's group are shaping informing our deals that in many cases take you know nine months 12 months et cetera to shape and form et cetra, because they're very large their multi country. There in some cases, you know 510000 play.

Seats et cetera, those types of deals which are really not included in this quarter.

Our very active still and they've only been temporarily put on hold as we help those clients with what they need for their emergency work of creating at home capabilities et cetera. So there is a very significant pipeline of what I would call transformative.

Digital deals that are going to take place and depending upon the company there, they're either already making plans on when they're gonna start that transformation and a in the is whether it be in the fourth quarter or first quarter or there are companies that are saying we are absolutely going ahead with this.

However, we want to wait until there was a vaccine out a and even if people have them and fully vaccinated at least we know we're on our way to recover it. So as you can imagine you know in the travel industry any massive projects been put on hold for obvious reasons, along with other industries that are there.

So not only are we short term capitalizing off of the work that needs to be done to help each company's stabilize their business from a from a virtual standpoint, but there's still the deals that are in the pipeline that we've been working for in some cases, the last year last year and a half et cetera.

That simply are being delayed that we're very excited about because we're confident they will still go through it's just simply a matter of will they go through in fourth quarter will they go through in first quarter etcetera. So I just want to put that out there.

No. That's helpful. Thank you and you know as a whole understanding that a lot of these deals are all the deals are put on hold but when you think about.

Clients, making that decision in April or May are you seeing any pockets where.

Some of those programs are starting to move ahead, where they feel comfortable to move ahead or there is just not happening.

Jonathan you want to go ahead with yeah. Thanks, Ken Yeah that that the abundance of caution and the rise of.

Multi looks and iterations of business cases.

Benefits us we have a very disciplined approach in working with customers and what we are seeing is back burnered initiatives definitely moving to front burner.

And it's it's a transformation from buying point solutions to talking with T Chek to help orchestrate outcome.

So we're feeling that benefit there are several mid and lower level pipeline opportunities in those eight figure transformative we call them XXL deals.

That are that are maturing nicely through the pipeline and as Ken said still TBD on releasing the capital on the Opex in the in the environment, but whether that's Q4 Q1.

We're working very collaboratively with larger buying suites of people write larger influencers.

Casual influencers around CX multi disciplined often led by CFO now and our discipline in and guiding to outcomes with very disciplined business cases behind them is really propelling and helping us lead those discussions.

Thank you for that and lastly.

When we think about the successful in rapid hibbett too and that home of virtual model and this new world that that will materialize in coming months in quarters do you think theres an opportunity with regard to the real estate footprint to pair that down.

Well I'm sorry can you can you just repeat that.

Okay. Another question asked you know, which which was asked a little bit earlier as well right. It. Some you know what our plans gift, giving the pivot to at home given we think that there will be much more at home in the future what our plans relative to reshaping the real estate portfolio.

Yes, so we're well underway on that we started in early January as I said previously.

And we are we're taking down real estate.

As prudently and as fast as we can and I feel very very comfortable that we our rationalizing at a at a rapid rate and.

That you know that were we feel very comfortable that we're well prepared for the shift a two more at home business. So.

What I would just simply say too as we started that process in early January we've already exited a multiple of leases and we will continue to do so in certain affair geographies, where we feel like we might be a bit pop heavy et cetera.

Our goal right now during this pandemic, while we've been handling all the work and growing and expanding we have simultaneously of a team that is optimizing our cost structure is all across the globe on multiple fronts.

Not just real estate, but tremendous amounts being invested in automation.

And other areas to make us dramatically more efficient as well as to be able to drive a better quality of set up outcomes.

Alright, Thank you for taking my questions.

Thanks, a bunch, thanks, Josh I like.

Thank you for your questions that all the time, we have today I'll turn the call over Q Paul Miller.

Yes that concludes our call today, thanks, everyone for joining.

Thank you.

Thank you do you think it's Steve that second quarter tiny tiny earnings conference call. You may disconnect at this time.

[noise] [noise].

[music].

[music].

Well thank you.

Any by.

Welcome to feedback second quarter earnings conference call.

Likes to remind all parties that you will be on listen only mode. So the question answer session.

Is being recorded at the reclassification.

I would now like to turn the call over to all Miller feedback senior Vice President Treasurer, and Investor Relations Officer. Thank you Sir you may begin.

Good morning, and thank you for joining us today. She check is hosting this call to discuss it second quarter results for the period ended June Thirtyth 2020, participating on today's call or Ken Tuchman, Our chairman and Chief Executive Officer, Regina Paolillo, our chief financial and administrative officer, and Jonathan learner, our president of T Chek digital.

Yesterday Teletech issued a press release announcing its financial results well. This call will reflect items discussed within those documents lease complete and review our second quarter 2020 quarterly report before we begin I want to remind you that matters discussed on today's call may include forward looking statements.

At least or operating performance financial goals and business outlook, which are based on management's current beliefs and assumptions. Please note that these forward looking statements reflect our opinion as if the data this call and we undertake no obligation to revise this information as a result of new developments that may occur forward looking statements are subject to various risks uncertainties.

In other factors that could cause actual results to differ materially from those expected and describe today, where more detailed description of our risk factors. Please review our 2019 annual report on form 10, K. a replay of this conference call will be available on our website under the Investor Relations section I will now turn the call.

All over to Ken Tuchman, Gtech's, Chairman Chief Executive Officer.

Thanks, Paul and good morning to everyone I'm pleased to report that we delivered record second quarter results.

Demonstrating the relevance of our see exit the service platform as we rapidly pivoted to engage from anywhere environment.

Our focus on execution combined with the agility of our team and platform provided seamless continuity to our embedded base and enabled us to win a significant number of new logo.

Our revenue growth rate accelerated 15.4% and our non-GAAP operating income grew 96.2% versus the prior year period.

Our adjusted EBITDA was an impressive $71 million up 58.4% year over year.

Based on our strong first half performance and forward revenue visibility, we are reinstating and increasing our original 2020 guide.

Our record bookings of 214 million for the quarter predominantly reflected heightened demand for digitization and virtualization solutions across our client base.

Our ability to rapidly enable clients with a frictionless and fully digitized customer experience has never been more critical.

We continue to build momentum with our agile operating model and proprietary humana by cloud technology platform.

Our end to end approach to designing building and operating customer experience as a service is succeeding for increasingly complex high end and mission critical client needs.

Here are some recent example of the essential work, we're handling on behalf of our client.

Can you talk has helped multiple federal state and local government agencies with Citi.

Citizen engagement throughout the pandemic.

In the Commonwealth the Massachusetts.

Our key Tech Humana Fi clout stepped in to support the Bureau of unemployment insurance, who experienced a sudden spike daily unemployment claims moving from a couple hundred to tens of thousands of claims per day.

We rapidly deployed our fully virtualized humana by cloud solution to provide an on demand highly scalable and secure at home technology, along with a virtualized customer experience team to deliver end to end citizen engagement solution.

We also partnered with the bureau in identifying new opportunities to improve citizen satisfaction and reduce cost to the expansion of digital channel.

We rapidly implemented a new digital conversational messaging platform. So citizens could conveniently access vital info about their unemployment claims process.

Our technology allowed the Commonwealth to migrate 35% of their voice calls to digital interaction and delivered a 50% cost savings benefit.

Thanks.

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Hi.

Operator I apologize.

I have to take.

A brief break.

And.

Pull up.

By scrip.

Thanks.

I'm very sorry.

Ken Emailing into right now no I haven't I apologize apparently my printer chose not to print one page one of the benefits of doing this from home and last night I did not.

Check so I have to find my my second page.

Right.

Thanks.

Okay the plan crudes.

Okay.

Apologies everybody for the for the for the break for Premier Fortune 500, healthcare client GTECH engage won a new mandate linked to the mission critical task of hiring hundreds of registered nurses and other medical professionals to bolster frontline staff battling the pandemic the scope of the work.

Quickly expanded to take advantage of TCEQ digital capabilities enabled through a nurse line. So patients can engage a round the clock 24 by seven.

Nick registered nurses indirect virtually with patients and utilized.

Case case and utilized case by case, evidenced based assessments to ensure appropriate care.

Highlighting the complexity of the work the nurses not only engage with patients, but also work with pharmacist and attending physicians to ensure clinically say cost effective prescription.

This is a great example, highly skilled work that has been virtualized as a result, the cobot surge and will remain with T. tech well beyond the pandemic.

For Volkswagen Group UK T. Chek has kicked off a five year digital transformation project to reinvent the customer experience.

Moving from current voice centric system to a fully contextual and integrated omni channel experience.

With digital with GTECH digital Volkswagen will leverage our.

Our machine learning solution to power intelligent virtual assistant and other cognitive engines to enhance vws customer experience the fully virtualized end to end.

Yes ecosystem will be delivered with T. tech engage work at home customer experience team the outcome will be a solution with a significantly higher customer satisfaction and deliver an overall lower all lower lower overall cost to serve.

The VW solution.

Reflects a mega trend, where consumer products are turning into experiences.

According to ITC.

Experience has overtaken price and brand as the number one differentiator for consumers.

It's just no longer just about the type of car you drive, but rather the entire experience you received from the car manufacturers brands.

From an interest from an integrated infotainment systems to telematic enabled servicing.

Consumers have significantly higher expectations of their auto provider.

This trend holds true and every industry consumers expect brands to offer continuous personalized effort lets engagement in their channel of choice.

Expertise in transforming the customer experience in ways considered futuristic only a few months ago.

Leading brands are recognizing they need to detect humana Fi cloud technology more than ever.

Our continued strong bookings due July are the best evidence of this market demand from the iconic brands that we target insert.

But to be clear T. tech is well positioned to win both in and out of the current crisis with our proprietary customer experience as a service platform.

Consisting of our digital engage businesses.

Good work together to virtually support the entire spectrum of the human and digital workforce at global scale.

Hi, Techs digital operating model is highly differentiated and I'd like to spend some time unpacking the software offering for the benefit of everyone seeking a better understanding of our overall value proposition.

Digital technology and services are delivered through our integrated technology platform, we call the humana by cloud.

Our humana by cloud is a turnkey CX technology solution, enabling the largest most complex organizations in the world to obtain all the cloud technologies will ever need to interface seamlessly with their customers.

It is important to stress that our Humana Fi cloud is unique in the ability to routinely serve clients with hundreds of millions of end customers are humana fly cloud has three main components.

The first component is our humana by cloud is our CX ecosystem, consisting of dozens of best in class pre integrated CX technology solutions spanning omnichannel.

Hi machine learning.

Robotic process automation.

Enterprise, CRM, and ERP and marketing automation to all highly proven suite of ready deploy gx application.

Such as advanced analytics, and cyber security solutions among many others.

The second component is our Humana Fi integration and Apiay platform.

Leveraging t. techs, prebuilt connectors and enterprise grade deployment platform, including Humana buys intelligent administration orchestration analytics and automation solutions.

This deployment platform brings together entrenched legacy system and advanced SaaS applications.

Empowering customer experience teams to enable contextual and personalized customer engagements, providing increased customer satisfaction and deployment speeds that are typically three times faster than point to point integration alternatives.

And the final component of our Humana by cloud is the intelligent automation platform.

Which delivers.

Hi, techs proprietary AI ml and RPH solutions to drive our clients.

Customer experience technology to new Heights.

We leverage our proprietary digital worker factory to infuse and orchestrate advanced AI and big data and a mix of other hyper automation solutions to deliver the customer experience centers of of the future today.

Our Humana Fi cloud business inclusive of proceedings solution grew 57.4% in the second quarter over the prior year period, one of the fastest areas of organic growth inside our company.

The Humana by cloud is enabled by our technology services team within this team we have distinct practices.

To each of the three main areas.

Areas of the cloud, we help clients design, the ideal experience and corresponding technology stack for formulating CX transformation roadmap.

We provide integration and orchestration services between CX applications and common business system to deliver on our clients Roadmaps.

And we determine our clients optimal mix of AI and automation delivering the full range of those capabilities needed in today's digital world.

To sum it up the T. tech digital value proposition.

Is delivered to clients through our Humana Fi cloud with our Humana by cloud, we're architecting full customer experience technology ecosystem.

And managing them for our clients at enterprise scale through integrated multi cloud environment.

Humana Black cloud solutions are structured as multi year take or pay contract in which our clients pay us in a fully staffed format on a per user per month basis.

From conversations with clients, we anticipated the world attempts to emerge from the continued impacts of the pandemic.

Our focus will will be even more concentrated on adding next generation CX technology enabled by our humana by cloud.

The digital imperative forced onto the CX landscape by Cobot 19 has become a permanent state of business, creating an even more favorable long term demand environment for GTECH digital.

Although our clients have lot, although our clients have not lost sight of the strategic importance for transformative capabilities designed to fueled our longer term growth at this moment in time, they're acting with greater urgency to stabilize their operation and financial performance.

Our significant client success during the pandemic is a function of our digital and engage business enhancing one another in unique ways.

Unlike engage competitors T. Tech was on what was able to leverage digital solution to seamlessly move 40000, plus of our engage workforce to a fully virtualized environment with zero downtime and without interruption to our clients and their customers.

This agile shift to at home allowed engaged to execute on a significant amount of new revenue opportunities.

During this process, we leveraged our Humana Fi cloud engineers to rapidly build and release, our new dramatically improved remote worker platform.

This dilution now operational and with general availability to both our engage in digital clients.

Quicksilver 40000, plus remote CX team members with a full range of intelligent automation analytics and Omnichannel collaboration technology among others.

The platform meets the highest standards of enterprise grade security requirements, including multi factor authentication biometric security and environmental monitoring.

The remote worker platform can be seamlessly deployed from augmented by cloud to thousands of associates in a matter of ours.

The impact of this new platform can be exponentially amplified when combined with our new digitally enabled approach to the remote hiring training managing and coaching of our human and digital workforce. We are currently testing the full scope of the new ecosystems and initial client results indicate greater team productivity and cost.

Customer satisfaction in the virtual environment, then when we were achieved that then what we were achieving in our physical contact centers.

We will be launching this new operating model in the coming months.

Its initial results or any indication we expect this new approach will not only improve our client outcomes, but will also fundamentally shape the future of customer engagement.

Digital engage further enhance one another by providing multiple go to market avenues for building our pipeline of client offer opportunities.

Exemplified by the Volkswagen example, shared earlier, we see greater demand than ever for the full complement of both digital and engaged as one T chek.

Which delivered on the promise of true end to end, TX as a service while preserving the highest quality experience at the lowest cost to serve this is our preferred go to market approach.

Our growing strategic partner ecosystem is also right with new opportunities to serve large enterprises right now.

We have been purposeful in executing our partner roadmap, creating an ecosystem to enable a framework for enterprise grade public and hybrid cloud Gx application deployment.

The extension of the channel partners continues to be a key component of our growth story into the future.

Today marks another big step forward in the future proofing these capabilities as we welcome Amazon as our newest key strategic partner.

Through the acquisition of voice foundry.

This acquisition extend.

Extend citytech digital's Humana by cloud to now include Amazon connect as well as access to the full suite of services offered by ADW.

This acquisition also diversified our humana by cloud solution with voice foundries, AI and machine learning capabilities, while also adding another industry, leading omnichannel platform alongside our longstanding and highly successful Cisco partnership.

Detect global scale and large enterprise client footprint will result in compelling synergies.

Top of mind for us is extending our reach into ADW EPS is embedded client base.

Through ADW as a strategic partnership with Salesforce.

Opportunity to tap into yet another massive channel customer acquisition.

We can now offer both ADW essence, salesforce customers the opportunity to rapidly set up a fully integrated customer engagement ecosystem with their enterprise grade security and best in class suite of CX application that scale to support millions of customers.

Finally, we would also like to warmly welcome the entire voids foundry team into the detect family.

In order to protect the unique value we've built in over a decade of delivering best in class client outcomes with Cisco.

We will be maintaining separate and dedicated Cisco and Amazon sales team focused on driving client value through their respective partner ecosystem.

Leveraging strategic partnerships like we have with Cisco Liveperson Pega system and now Amazon is central to building our world class approach to delivering GXS a service enabled by our Humana by cloud. This strengthens the T. tech ecosystem and opens up additional points of access into the 600.

40 billion dollar.

Next marketplace.

There is a fundamental shift happening across the industry, rather than relying directly on individual customer experience SaaS providers.

Clients are turning to T tech as the CX Orchestrator during partner of choice to build end to end customer centric solutions.

And to the cloud we're just scratching the surface here you can expect many more announcements to come about this in our go to market and that initiatives in future quarters.

We're very excited about the path we're on.

Our expertise in future proofing, our clients CX insurers that they navigate and increasingly complex and remote workplace, while keeping customer experience intuitive personalized and authentic.

For these reasons T. tech will be there to convert a long tail of healthy demand related to the adoption of cloud Omnichannel hyper automation and digital technology.

Our longer term strategic initiatives have not changed we're relentless in our pursuit to increase our market share by adding differentiated customer experience a service offerings.

Expanding our channel partnerships and executing strategic and accretive acquisition. This gives us that this gives us several avenues to leverage profitable growth.

At growth and a well capitalized balance sheet to increase shareholder value in closing our strong execution in capitalizing on a wealth of new opportunity brought to the forefront by Cobot 19 is this testament to the humanity and resiliency of our people.

Behalf of our executive team and our board of directors I want to personally thank each and every one of our over 50000 team members across the globe over 80% of whom continue to work from home for your hard work you are unwavering positivity and your relentless passion for client service. During these historically trying.

Hi.

We thank all of our shareholders for your continued support and we look forward to updating you on our progress in the month ahead, and Regina will now cover the key financial highlights to the quarter as well as share a stronger growth guidance to the full year. Thank you.

Thanks, Ken.

Good morning, everyone, hopefully well and remaining safe and healthy.

Some highlights on our record second quarter performance goes to our financial results and then provide some context regarding our 2020 guidance.

We had an exceptional quarter.

Our strong financial performance is attributable to a handful of factors, including our deep hands on experience and tech rich assets.

The strength of our client relationships, enabling us to be a partner of choice.

Signs of crisis and transformation.

Speed at which we securely and efficiently shifted to our work from home platform.

The rapid designing deployment of cobot 19 offerings.

The early actions, we took to safeguard our profits cash flow and liquidity.

Turning to our second quarter results, we closed 214 million of new business compared to 122 million in the prior year.

75.4% increase.

We had a healthy balance between business as usual and cobot 19 volumes.

Engage grill, 118%.

Digital included a three month extension on the large government contract.

67.5% of the booking dollars or in multi capability deal.

We had noteworthy bookings in our financial services governing automotive insurance and hyper growth sectors.

We added 17, new logos.

Hi, nine deals, which included our messaging and automation platform.

Our robust pipeline for the remainder of the year is approximately 1.1 billion.

I'd four times coverage on our forecasted second half bookings.

On a GAAP basis, we recorded a 15.4% year over year increase in revenue to 453.1 million.

All of which 9.3% was organic.

GAAP operating income was 49 million or 10.8% of revenue.

Care to 5.8%.

In the prior year period.

GAAP earnings per share was 67 cents in the second quarter up from 25 cents in the prior year.

The remainder of my comments on a non-GAAP basis, which excludes restructuring and impairment expenses.

Full reconciliation of our GAAP to non-GAAP numbers.

Included in the tables attached to our press release.

On a consolidated basis and excluding the impact of FX revenue increased 16.3%.

Operating income increased 96.2% to 49.8 million and 11% margin compared to 6.5% in a year ago quarter.

Adjusted EBITDA increased 58.4% to 71 million.

Were 15.7% of revenue compared to 11.4% in the prior year.

Earnings per share increased 120.6%.

75 cents in the second quarter compared to 34 cents in the prior year.

Our double digit top line growth is attributable to essential and search were tied to covert 19, the acquisition of Fcr and Saran device and increases in our high growth high margin offering.

On an LTM basis at June Thirtyth. These high growth high margin offerings, consisting of our cloud systems integration add how fraud detection customer growth in automotive and hyper sector solution hyper growth sector solutions collectively grew 44.2.

<unk> percent.

The increase in our profit and related margin expansion is a combination of topline scale vertical mix SGN, a and depreciation efficiency and an increasingly greater percentage of our revenue in a high growth high margin offerings previously noted.

At the end of the second quarter total cash was 482.3 million with 700 million borrowed under our 900 million revolving credit facility net debt was 231.7 million compared to 172.8 million in the prior year quarter and 195.2 million.

Sequentially.

The sequential increase in net debt is due to the buyout of the remaining 30% minority interest in motives.

Our fraud detection and prevention business. In addition to paying our semi annual dividend offset in part by positive cash flow.

Cash flow from operations in the second quarter was 43.1 million versus 41.3 million in the prior year DSO was 71 days in the second quarter 2020, compared to 75 days in the prior year quarter and 66 days sequentially.

Capital expenditures were 15.1 million or 3.3% of revenue in the second quarter compared to 15.2 million or 3.9% of revenue in the prior year.

Reported tax rate in the second quarter, 2020 was 24.8% compared to 35% in the prior year. The decrease is due to a combination of jurisdictional mix, the taxing comp impact of accounting related to acquisitions and distribution dispositions.

And changes in tax rates and credits in these in select areas.

Our normalized tax rate was 24.2% relatively unchanged from 24.7% in the prior year.

Capacity utilization was 68% in the second quarter 2020, compared to 72% in the prior year period and 73% sequentially.

The reduction in capacity utilization is result of new business signings predominantly leveraging our work from home versus brick and mortar platform. We are in the process of reshaping our facilities footprint to align with our clients and prospects changing views on geographic diversity and work from home versus brick and mortar mix.

Turning to our second quarter 2020 segment results, which are presented on a non-GAAP basis digital revenue was 77.1 million in the second quarter 2020 versus 78.5 million in the prior year.

Adjusted EBITDA increased 34.6% to 18.7 million or 24.2% of revenue versus 17.7% in the prior year.

Operating income increased 49.2% to 14, and a half million or 18.8% of revenue an increase from 12.4% in the prior year.

Excluding the non core consulting practices now fully exited.

Plan declines in our product and managed services offerings as clients convert to cloud based services.

Removing a larger.

Shorter term government contract digital revenue grew 15.9% our cloud offering net of the large government contracts grew 40.5%.

We realize significant improvement in digital profit an increase in our high margin.

Cloud based revenue mix from 35% to 56% the elimination of subpar profit margins related to the exited noncore consulting practices and a more efficient SGN a are the key contributors to our 24.2% adjusted EBITDA margin.

And our engage segment revenue was 370.9 million in the second quarter 2020, and impressive increased 19.7% over the prior year period organic revenue grew 12.4% on a constant currency basis engage revenue grew 20.8%.

Adjusted EBITDA increased 69.2% to 52.3 million or 13.9% of revenue versus 9.8% in the prior year.

Operating income increased 125.3% to 35.3 million or 9.4% of revenue an increase from 5% in the prior year.

The accelerated improvement in our engage profit and margin expansion is attributable to topline scale and an increasing percentage of revenue derived from engages high growth high margin offerings. In the 12 months ended June 32020. These offerings comprised 46.3% of engages revenue versus 36 point.

7% in the prior year period.

Our over performance to date strong 2020 revenue blank backlog and growing pipeline have enabled us to visibility and confidence to reinstate and raise our guidance.

Before I jump into the numbers I'd like to provide some context.

While our pipeline provides ample coverage to our bookings estimates financial uncertainty related to covert 19% in many of the industries. We serve as a result, the timing of closing deals is more difficult to predict with reliability.

Our second half bookings, primarily impact 2021 topline volumes.

Our full year 2020 revenue backlog is 99% of the midpoint of our guidance as of June 32020.

Our fourth quarter 2020 guidance is intentionally conservative pending additional insights on our seasonal volumes finalization of the heroes Heels Act.

Volumes related to the extension of large government contract.

And the general state of the economy.

We intend to continue a rigorous management of our cost structure and working capital to optimize profitability and cash flow maintaining a strong balance sheet to support continued organic and inorganic investments that will reliably to a sustainable high single digits profitable.

Revenue growth rate.

The midpoint of our reinstated 2020 guidance as laid out in our earnings press release, which includes the voice foundry acquisition and excludes restructuring and impairment charges is as follows.

Revenue of 1 billion 775, a year over year increase of 8% adjusted for the items in our digital business previously called out revenue is estimated to grow 10%, but.

Adjusted EBITDA of 253.3 million a year over year increase of 21.1% and 14.3% of revenue compared to 12.7% in the prior year.

Operating income of 161.9 million a year over year increase of 25.3% and 9.1% of revenue compared to 7.9% in the prior year.

Earnings per share of $2.40 a year over year increase of 51 cents for 27.1%.

Other relevant guidance metrics include capital expenditures.

Between 3.1, and 3.3% of revenue down from 3.7% the prior year of which approximately 70% just growth oriented.

Full year effective tax rate between 23, and 25% and a diluted share count between 46.9, and 47.1 million shares to obtain our third and fourth quarter 2020 mix of revenue operating income adjusted EBITDA and EPS at the consolidated and segment level.

Please reference our commentary in the business outlook section to the second quarter 2020 earnings press release.

Before I close we know that you are increasingly focused on what will come in 2021 and beyond.

Dilution of the pandemic as well as when and to what extent the economy will improve remain as open ended question.

We will address 2021 in greater detail in future quarters. Once we have greater visibility to our third and fourth quarter bookings, including business as usual and cobot 19 volumes.

In the meantime, and I shared previously it is important to note that our digital business, excluding the large government contract, which ends in 2020 noncore consulting practices exited and the declines in our product in managed services for reasons previously discussed.

Will result in revenue base as we exit 2020 of approximately 225 million.

We continue to estimate this base of revenue growing in the range of 15% to 25% in 2021 and beyond.

In closing, it's the strength of our client relationships.

CX technology prowess.

Operational know how.

And resiliency of our global team that is mattered most in successfully navigating the color on a virus pandemic.

We see the benefits in the advancement of our digital and agenda in the evolution of our work from home platform in the improvement of our financial performance and in the retention of our people. Most importantly, we see it in the new logos, who engage us in Atlanta crisis, and the way in which we championed surge barrel.

I'll use in existing client programs.

In doing so we have created lasting relationships relationships with business leaders for whom we are top of mind. As a result, we are already seeing in crisis wins transitioning to out of crisis business opportunity.

Optimistic about our competitive position, our growing addressable CX market and the increase speed at which clients are modernizing.

Their customer experience platforms.

I'll now turn the call back to Paul.

Thanks for Gina as we open the call I ask that you limit your questions to two at a time operator, you may now open the line.

Thank you so much speaker.

Begin the question and answer the question you would like to ask a question you Miss our followed by the number one.

And had record your name pure anyone from.

Name is already use your question to answer your question you May ask Mark.

One moment please.

Thank you up.

Speakers for question, we have George.

Sir Your line is now open you May proceed.

I assume on the Georgia, referring too.

George Sutton Congrats on the Great result, the voice foundry deal looks outstanding from our perspective, given its attachment to the Amazon and Salesforce ecosystems, along with all the other partnerships as you mentioned Cisco Liveperson Pega.

Our new you're obviously getting a lot of touches given all of these relationships can you talk about how that's influencing that pipeline of opportunities.

Hi, George.

All right I'll begin to answer that question and then I really would like Jonathan learner are present in the digital to be able to chime in this will be its first time.

On our on our conference call.

What I would just simply tell you is the following if you look at the OEM.

Today.

And the smaller ones like the Fivenine et cetera.

They not only have a direct salesforce, but they also have.

An agent.

Salesforce and well, although their model is very very robust and doing extremely well we have a very different approach our approach as a partner approach and it's a it's an approach of basically becoming the largest and most most valuable and important partner of theirs, where we.

Partner with them and have access to their pipeline of many of their strategic deals.

This is how we want to how we've gone to market with disco, it's been very successful and it's how we plan now we're going to market with Pega. It's been successful is how we're going to market with Liveperson and it's how we will continue to go to market with Amazon and others. So what I would just simply say to you is that these organizations have dramatic.

The larger Salesforce has done we have and therefore they are out there doing the hard rock mining, while our direct Salesforce is doing hard rock mining and and we're both coming up with deals and because of our expertise and CX.

We think we have a unique ability to help them close these field.

Because we bring so much more to the table than just.

The actual capabilities of integrating this altogether.

So what I would say to you is that there is a myriad of of touch point that are added a myriad of new channels that are added that bring forth a lot more additional opportunities and I think you'll see over time as we continue to build out our partner ecosystem that it will give us the best opportunities have access to the large.

Yes.

Deals in the in the marketplace since that's the part of the market that we're focused on Jonathan you want to take it from there.

Sure. Thank you Karen good morning, George.

No.

Hey, there.

Foundries consistently that go to partner for complex high touch Amazon connector engagements I'm sure you've seen that.

They've also been highly engaged Parker with Cws and planning be aligned sales force service cloud voice go to market effort.

So they are right in the thick.

Educating aligning and enabling.

It's parral over 3000 sellers.

On the ADW west side and complement that with now tremendous interest in.

And access to the sales force sales team.

Pumps up pipeline tremendously George.

And there there are tremendous synergies around how this diversifies Archie ratified cloud solution offerings.

With the industry, leading omnichannel platform along side as Ken mentioned, our longstanding and highly successful Cisco partnership.

When it also does as Ken mentioned is that addresses the reality that consumers are looking for CX as a service end to end system.

So we've gone from point solutions to building systems with CX as the sustainable differentiated strategy.

This combination not only have.

Foundry acquisition in the Pos ecosystem with layer on pega and the trend towards automating and augmenting both agents and customers.

And we see tremendous potential.

To to accelerate and scale and reach a broader audience with customers.

And satisfy consumers instead of Thats results.

Perfect.

Quick one per Regina edges, Definitionally, when you talk about Fourx beverage on your.

With what your pipeline coverage you just give us a sense of what that represents in your line.

Yes, I mean, we have a as I said, we have a follow on pipeline for.

Q3 in Q4 over a billion dollars.

And if you kind of look towards our view of.

Being able to predictably do between 101 hundred $50 million, though.

Bookings a quarter.

When you look at second half right down 300 in the first.

And just began making sure that we keep the context of Corona virus epidemic in the room.

Equity from different uncertainty than previously.

You know, we believe that that pipeline.

Based on conversion rate.

Should outside of potential delays because of the pandemic.