Q4 2020 TTEC Holdings Inc Earnings Call

March 2, 2021

Yes.

[music].

Paul.

[music].

Yeah.

[music].

Welcome to <unk> fourth quarter, and full year 2020 earnings conference call.

I would like to remind all parties.

Okay.

The question and answer session.

Is being recorded.

I would now like to turn over to Paul Miller.

And your Vicepresident for us.

<unk> and Investor Relations officer. Thank you Sir you may now begin.

Good morning, and thank you for joining US today <unk> is hosting this call to discuss its fourth quarter and full year financial results for the period ending December 31, 2020 participating on today's call are Ken Tuchman, Our chairman and Chief Executive Officer, and Regina Paolillo, our chief financial and administrative officer.

Yesterday <unk> issued a press release announcing its financial results. While this call will reflect items discussed within the press release for additional information about our financial performance. We also encourage you to read our 2020 annual report on form 10-K, before we begin I want to remind you that matters discussed on today's call may include forward looking statements.

Related 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 of the date of 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 described today for more detailed description of our risk factors. Please review our 2020 annual report on form 10-K. Our comments today will also include certain statements related to our financials, which are on a non.

GAAP basis, 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, <unk>, Chairman and Chief Executive Officer, Ken.

Thanks, Paul and good morning to everyone.

2020 was a breakthrough year for T. Chek, we set aggressive operational and financial objectives and dramatically exceeded them all.

Like every business across the globe, we faced a once in a century challenge as the world lost mobility consumers shifted to virtual interactions and workers shifted to virtual productivity.

Across the globe people quickly accepted virtual as their new reality and embraced the new way of life, most of which is here to stay.

In the midst of this massive digital migration.

Our clients dependent on us for the technology and digitally enabled services they need to meet their rising customer demand.

We digested what we felt like 10 years of digital transformation in 10 months, our systems and operations were tested and succeeded our teams worked around the clock and went above and beyond we responded from a solid foundation, whether the 100 year storm and emerge stronger than ever.

We're at the Dawn of a second wave of digital transformation and virtualization that is sweeping the world and we perform a mission critical role in pioneering it for our clients.

This new digital layer will demand increased virtual capabilities for years to come and we are ready.

We have rich we have achieved the highest annual revenue growth rate in well over a decade and expect our momentum to drive a higher normalized rate of revenue growth in the years to come.

Yes.

Recapping the last year bookings increased 35% to a record $659 million revenue.

<unk> increased 19% to a record $1 $95 billion adjusted EBITDA increased 45% to a record $304 million non-GAAP EPS increased 70% to a record $3 82 per share cash.

Cash flow from operations increased 14% to a record $272 million.

We closed two key acquisitions and established several new high profile go to market partnerships.

We moved 80% of our digitally enabled frontline teams to a virtual environment and launched several new digital offerings to expand our at home platform.

And we remain committed to returning a portion of our robust cash flow to shareholders via our regular semiannual dividends, which the board is has consistently raised and we also issued a onetime special dividend in 2020.

Our 2020 successes are accelerating the virtual explosion that has taken place over the past year has increased the volume of digital interactions exponentially.

This digital deluge in concert with a growing shift towards more value oriented human interactions is here to stay and is creating an unprecedented opportunity for T. Chek.

Over the past several years consumers have become accustomed to using digital tours tools to acquire anything they want online they shop for shoes clothes foods cars back vacations and so much more.

Everything is available at their fingertips without compromise the past 12 months have added a new head have added new conveniences to that list work from home learn from home eat from home Bank from home exercise from home stream Entertainment from home and see a doctor from home have gone from nice to have to.

Must haves. These digitally enabled experiences have become a new cultural standard many of which many of which will become part will become permanently woven into the fabric of our everyday life.

Consumers expect every one of these virtual mic micro interactions to be simple seamless and personalized if they experienced any friction along their digital journey. The competition is just a click away.

Orchestrating these effortless experiences isn't easy and requires highly complex interconnected network of a network of cloud based technologies, including omni channel or artificial intelligence machine learning robotic process automation and advanced analytics. These proprietary.

<unk> solutions T Chek delivers coupled with our deep industry expertise across all major verticals is fueled by billions of customer interactions T. Tech has delivered for the world's most iconic and disruptive brands.

This ability to seamlessly integrate complex CX technology with flawless last mile execution is what truly distinguishes us from the competition.

Our business is thriving because consumer expectations for the next generation digital experiences are overwhelming client CX technologies processes and their systems. Many of their communication channels are limited and lack the scale and agility to meet the rising demand they need the digital horsepower.

Operational expertise that T Chek provides.

For decades, we've been at the forefront fueling the CX technology and services for our clients, who drive the digital economy, we become the connective tissue between iconic brands and their customer experiences our people and our technology provide the digital glue that any.

<unk> frictionless interactions across every channel.

In 2020, we set bold objectives and exceeded every one of them. We added 57, new client relationships, a new record for us over a calendar year period, we advanced our cloud based CX as a service technology and solutions ecosystem.

And we increased our capabilities and expanded our addressable market with proprietary IP strategic partnerships and accretive acquisitions, our announcement yesterday to acquire <unk>, an important continuation of the strategy that I'll talk more about shortly.

But before we get into that let me share some detail on new client wins.

We've achieved accelerated growth during the past several years by serving two kinds of clients multinational Giants and high growth verticals like technology health care financial services, automotive and the public sector and new economy players and thriving e-commerce and direct to consumer channels.

This distinction all of these client share a common goal grow customer value and citizen engagement by delivering exceptional experiences across every channel.

This year, we've help these clients significantly improve their customer experiences and reduce costs by 20 to 40 per cent by shifting their interaction volumes from pure voice to an optimized blend of voice and digital channels.

Now, let me share some specifics about the growth within our embedded base.

This year, we began to shift to broader longer relationships with our existing clients.

We penetrated additional areas of these businesses not previously outsourced and have established ourselves as the incumbent going forward.

Surge volumes are converting to long term reoccurring revenue contracts, especially for clients, who recognize the challenges of virtualized their operations.

These clients had reached their tipping point and needed to advance their customer experience delivery capabilities.

We supported them as they launched omni channel implemented at home and migrated their infrastructure to our cloud by digitizing their systems. They were able to meet the increasing demand improve their C sat scores and build operating efficiencies as a result, we gained additional volume commitments not just for the new.

Six to 12 months, but for the next three to five years.

One T tech offering, which we call CX as a service is expanding our market share and differentiation Gartner recently named T. Chek, a leader and a C ex magic quadrant in part because of our differentiated platform.

The report called our platform, an innovative virtual ecosystem to integrate orchestrate and automate key ex that shifts CX to a digital first approach.

Gardeners description of our CX as a service platform.

Is a great setup.

For a case study that I'll now describe.

The client was a preexisting engage customer who tapped into our digital services to move their business forward. We all know that the travel industry has suffered through a very difficult stretch our client a leading global airline took on the challenge with a complete overhaul of their customer experience strategy and operations working in tandem with our <unk>.

<unk> and technology teams, we helped our clients re imagine their entire digital customer journeys.

Then to enable the new approach, we move their technology infrastructure to our agile cloud based omnichannel platform.

The new platform goes live next month and will help ensure that as an airline as the airline rebuilds its business volume over the coming year. It will provide best in class customer experience that is omni channel fully digitized future proof and delivered at the lowest total overall cost to serve.

Our value proposition is unique we are focused exclusively on.

On the design implementation and optimization of seamless customer experiences across every interaction channel available.

This singular obsession with customer excellence drives every decision, we make and puts us in a class of our own.

With an all time record client net promoter score of plus 75. The results speaks for themselves. The most well respected brands, who want to compete and win on customer Centricity are trusting T tech to deliver premium quality digital experiences for their most valuable asset.

Their customers.

But we have more to do.

The right technology is foundational to delivering on this promise.

Through the development of our proprietary IP strategic partnerships and complementary acquisitions. Our goal is to offer our clients all of the best of breed CX technologies for.

Fully integrated under one roof on.

Any channel.

Hi machine learning or P. A automation CRM analytics and whatever comes next.

Yesterday's announcement that we will acquire avtex.

Is the next strategic step towards that goal.

This acquisition is transformational for T Chek and enhances our position as the global go to partner for cloud based customer experience solutions.

This high growth platform more than doubles, our coverage of the CX addressable market by extending our solutions into thriving mid market.

<unk> partners.

Excuse me App Tech Springs partner of the year status and top certifications from tier one technology partners, including Genesis and Microsoft They have more than 500 experience CX engineers data scientists and solution architects and serve over 1000 clients in high growth industries.

The Union of our two companies will accelerate digital innovation with industry, leading IP, including API integrations data analytics vertical specific solutions for fraud, cyber security and automation. We are extremely excited about this bold move to accelerate our digital strength and expand our market reach.

And we look forward to sharing our progress with you in the months ahead.

Today industry analysts estimates that companies are spending over $640 billion in CX Tech and services. It's a split with 525 billion CX services and 115 billion in CX technology, we are focused exclusively on the market segment.

That are experiencing double digit growth on.

On the technology front, we estimate that only 15% of the contact center market has migrated to the cloud the midsized and Mega institutions that we target our target are recognizing the need to modernize and automate their systems.

Our set of capabilities is perfectly positioned to capitalize on the mass migration in motion and create significant opportunity for our growth.

We see several compelling trends.

To.

On the operational side as well as see ex delivery becomes more complex companies are shifting their in house operations to outsourced partners.

They are also consolidated its consolidating their CX spend with fewer trusted leaders, who have a solid balance sheet innovative capabilities stellar credentials and deep experience to meet their needs today and position them for ongoing success tomorrow.

With a client base of highly respected customer centric global brands. They are increasingly choosing T tech are unique and compelling CX as a service platform is resulting in increased win rate as we look to 'twenty 'twenty, one and beyond we expect our strong financial performance to continue supported by a record pipe.

<unk> bookings and backlog.

In 2020, we were tested and we thrived for our clients in their time of need we became an engine of the virtual economy. We broke records for bookings revenue and profits today, we're better positioned than ever to continue capitalizing on our strong position and market demand.

We could not have done it without our incredible employees, we've invested heavily in creating an environment, where our people feeling good.

Powered and inspired by their work our philosophy is simple.

Happy employees make happy customers and happy customers translate into increased shareholder value.

Just this past month, we were thrilled and honored to learn at Forbes magazine named <unk> as one of the best 500 large employers in America for 2020.

Meeting the needs of the present without compromising the future continues to be a core value at T. Tech, we believe that proactively managing environmental social and governance issues as part of our business strategy is critical to our sustainable growth.

Our ESG program is built on four pillars, including sustainable operations diversity and inclusion.

Our plan for P M and responsible data management.

These programs are well resource active and vital to our future we live and breathe. These values every day and as a result, it was a privilege to be named one of the best companies for diversity in 2020 by comparably.

I, along with our incredible management team and I'm excited about the path ahead, we have a powerful market for market forces that are back our long standing reputation for flawless delivery.

History of innovation, and an unrivaled customer experience SaaS technology and services platform that is further fortified with the addition of <unk> today, we have all the necessary ingredients to continue to accelerate our growth and margin potential beyond 'twenty 'twenty, one on behalf of our executive team.

<unk> directors and our global employee base. Thank you for your continued support we look forward to updating you on our progress on the months ahead and Regina will now walk you through the key financial highlights for the quarter and here and share our growth and margin outlook for 'twenty 'twenty, one Regina over to you.

Yes.

Thanks, Ken and good morning, everyone I'll start with a review of our fourth quarter and full year 'twenty 'twenty results and then provide some context for 'twenty and 'twenty one guidance for <unk>.

Sales marketing and client executive teams delivered record new business signings in 2020 on.

Fourth quarter bookings were $188 million and full year bookings were 659 million up 57 per cent and 35% respectively.

The prior year period.

In the fourth quarter, we signed a meaningful volume of new business within our existing client base and added 13, new client relationships bookings.

Bookings were most noteworthy in our financial services technology health care and public sector verticals.

Offering highlights included our customer acquisition services hyper growth born digital platform, Amazon connect messaging and automation collectively contributing $53 million in bookings.

Further we closed nine multi segment engagements totaling $96 million and trying 25 multimillion dollar deals.

We entered 2021 with pipeline of approximately 1.8 billion, including haptics up 50% over the same period last year.

With engage up 52% and digital up 44%. Additionally, our revenue backlog coming into 2021 is approximately 1.9 billion, including haptics up 20% over the prior year ex.

Excluding the large government contract and exited consulting practices.

In my discussion on our fourth quarter and full year 2020 results referenced to revenue is on a GAAP basis, while EBITDA operating income and earnings per share are on a non-GAAP basis.

Please note that our non-GAAP operating income and EPS are now adjusted for stock based compensation and acquisition related amortization expense consistent with the definition of adjusted EBITDA and aligned with industry practice.

A full reconciliation of our GAAP to non-GAAP results is included in the tables attached to our earnings press release.

On a consolidated basis in the fourth quarter of 2020 revenue increased 23, 8% to five.

$571 million of which 23% was organic.

Adjusted EBITDA increased 46% to $92 3 million or 16, 2% of revenue.

Share to 13, 7% in the prior year.

Operating income increased 48% to $73 9 million for $12, 9% of revenue a 210 basis point improvement over the prior year.

P. S increased eight 5% to $1 22, compared to 76 cents last year for.

Foreign exchange contributed $3 1 million to revenue primarily impacting our engage segment.

Ex was negligible on operating income.

Our topline growth is primarily attributable to increased volumes from existing clients new clients.

And COVID-19 related amounts, which comprised approximately 15% of our fourth quarter revenue.

Other highlights include at 75% increase in revenue for linear.

6% growth rate in a hyper growth born digital sector, 22% increase in our auto sector and over $10 million of revenue from digital's newly launched offerings, including Amazon connect messaging and automation.

Our improved profitability is primarily due to top line scale and increased mix of higher margin verticals and offerings as well as lower SG&A and depreciation expense as a percentage of revenue.

This was partially offset by increased investments in executive talent sales and marketing to enable our continued expansion on our topline growth rate.

For the full year 2020 on a consolidated basis revenue increased 18, 6% to $1 billion 95.

Of which 12, 8% was organic growth.

Adjusted EBITDA increased 45, 4% to a record $304 million or 15, 6% of revenue compared to 12, 7% in the prior year period.

Operating increase income increased 57, 9% to $242 4 million or 12, 4% of revenue of 310 basis point improvement over the prior year.

P. S increased 69, 9% to $3.82 compared to $2 25 flat for.

Foreign exchange had a positive <unk> 3 million.

On 1.2 million impact on revenue on operating income, respectively, primarily affecting our engage segments.

The enablers of our full year top line growth and bottom line margin expansion are consistent with the themes I outlined for the fourth quarter.

Turning now to our fourth quarter and full year 2020 segment results are.

Our digital segment revenue was $75 $7 million on our fourth quarter compared to $82 4 million in the prior year on.

Operating income was $9 9 million or $13, one per cent of revenue compared to $13 3 million and 16, 2% in the prior period.

The decline is attributable to the wind down of the large government contract and the exit of non strategic consulting practices digital revenue growth, excluding the large government contract and exited consulting practices was applied to approximately 10% higher in the fourth quarter with cloud growing approximately 8% and systems integration growing.

24%.

2020 full year revenue for digital was $207 million compared to $305 3 million in the prior year operating income was $53 9 million or 17, 5% of revenue compared to $47 4 million or 15, 5%, excluding the large government contract and exited consulting practices.

Which comprised $91 million.

Of 2000, Twenty's revenue, our cloud revenue grew approximately 27% and systems integration grew approximately 6%.

We continue to estimate digital's core recurring cloud systems integration and consulting revenue to grow on the 15% to 25% range enabled by a growing market for our six for CX technology <unk> growing suite of offerings availing us on it.

Expanded addressable market differ.

Our differentiated turnkey approach to delivering highly scalable best in breed CX ecosystem, leveraging on noteworthy channel partnerships with Amazon connect Cisco Purger systems like person amongst others.

Our sales pipeline, including amtech set as 44% higher than the prior year and our revenue backlog of $240 million, including after tax up 53% over the prior year, excluding the large government and exited for consulting practices.

Our engage segment was outstanding in the fourth quarter revenue grew 37% to $495 3 million of which 28, 8% was organic compared to $379 million in the prior year operating income grew 74, 9% to $64 million versus $36 6 million in the per.

For year engages operating income margin expanded 320 basis points from nine 7% to 12, 9%.

On a full year basis revenue increased 22, 7%.

For $1 billion 64.

Of which 16, 8% was organic growth operating income increased 77, 5% to $188 6 million or 11, 5% of revenue compared to seven 9% in the prior year.

While the shorter term pandemic related volumes contributed to our revenue growth in 2020 for majority of growth now includes longer term embedded base and new client contracts, including a 10 percentage point improvement in client revenue retention significant volume increases on our financial services public sector automotive technology and Rita.

Clients, a growing demand for our virtual and digital delivery capabilities inclusive of our Humana fly cloud.

At home platform existing client program expansions and new lines of business, both within and across our engage customer care growth in hyper growth born digital sector, a growing contribution from our EMEA client acquisition platform and less new client relationships that want a transformational partner to advance their CX strategy.

With outcome based integrated technology and operational solutions.

Our strong engage profit margin expansion is due to top line scale and increased percentage of revenue on our higher margin verticals and offerings and continued efficiency of our SG&A and asset utilization, leading to lower depreciation expense as a percentage of revenue.

We are optimistic about the tailwind impacting our engage business substantiated by a 14% increase in 2020 revenue backlog 15, 52% increase in 2021 sales pipeline and a growing footprint for client acquisition beyond North America, including EMEA and Asia Pac.

I'll now share a few other twenty-twenty measures before discussing our outlook.

At year end cash was $132 9 million with $396 3 million of debt of which 385 million represented borrowings under our revolving credit facility net debt increased by $38 3 million to $263 4 million year over year, primarily related to acquisition related investments.

And capital distributions, partially offset by strong cash flow generation cash flow from operations improved to $271 9 million from $238 million of 14, 3% increase over the prior year. The increase was attributable to improvement in our profitability and working capital management.

DSO reached a record low of 61 days in the fourth quarter of 2020 down from 66 days in the prior year period, and 63 days sequentially cash.

Capital expenditures for $59 8 million or three 1% of revenue for the full year 2020, compared to $60 8 million or three 7% in the prior year. The notable decrease as a percentage of revenue was primarily due to our focus on the improvement in our fixed asset utilization in particular, our facility and technology assets.

Our normalized tax rate was 22, 5% in 'twenty versus 24, 4% in the prior year. The reduction is due primarily to research and development credits a reduction in our state tax rate as well as reduction in the tax rate in certain international jurisdictions, we now anticipate our forward tax rate in the range of 21%.

24%.

In addition to our regular semiannual dividend paid in October and April of last year totaling $34 5 million. We paid a one time special dividend of $100 million in December these capital distributions to shareholders align with our long term capital management plan of continuing to execute our strategic priorities related to market.

Leadership and investment in organic and inorganic growth, while providing early returns to our shareholders.

Yesterday, we also announced the board's approval for the next semiannual dividend in the amount of 43 cents on approximately $20 million payable on April 21, 2021 to shareholders of record on April five 2021.

Turning to our 2021 outlook I'll first provide some context supporting our updated guidance.

And then move into our financial estimates the.

The transformation of digital and virtual has been accelerated with a market need for speed our addressable market has expanded to cover the mid market. In addition to our large enterprise government and hyper growth born digital sector.

Client acquisition footprint has expanded with EMEA and Asia Pac our offering portfolio has expanded to include Amazon connect Genesys, Microsoft automation and messaging we.

We enter 2021 with a revenue backlog of total revenue backlog, including <unk> of $1 9 billion, 20% higher than 2020, excluding the large government contract and exited consulting practices. Our 2021 sales pipeline at the start of the year, including at Texas, $1 8 billion up 50% over the.

Our prior year, we've been we have increased our investment in sales and marketing by approximately $25 million in 'twenty 'twenty, one, including App texture for it it continued reliable and predictable double digit organic revenue growth.

Turning to the mid point of our 'twenty 'twenty, one guidance, including <unk> as outlined in greater detail in our fourth quarter and full year 2020 earnings press release GAAP revenue of 2.1 65 billion an increase over the prior year of 11%, excluding the large government contract and consulting practices.

Exited the growth rate of 16, 5% of which 650 basis points is optics.

Non-GAAP adjusted EBITDA of $325 million, an increase of six 8% over the prior year and 15% of revenue compared to 15, 6% in the prior year, excluding the large government contract and consulting practices. The growth rate is 22, 8% of which 700.

80 basis points is optics.

Okay.

Non-GAAP operating.

Now on a non-GAAP operating income of $261 million, an increase of seven 8% over the prior year and 12, 1% of revenue compared to 12, 4% in the prior year, excluding the large government contracting consulting practices the growth rate of 28, 1% of which 850 basis points.

Is that tax.

Non-GAAP earnings per share for dollars 16 cents, an increase of 34 cents or eight 9% over the prior year, excluding the large government contract and consulting practices. The growth rate is approximately 30% of which 940 basis points is optics at the mid point of our 2020 guidance, we estimate app text.

Contribute $120 million of revenue $20 million of adjusted EBITDA $17 million of non-GAAP operating income and 30 cents of EPS other.

The relevant guidance metrics include capital expenditures between three one and three three per cent of revenue of which approximately 60% is growth oriented a full year effective tax rate between 21, and 24% and a diluted share count between 47 to $47 6 million.

Please reference our commentary on the business outlook section to our fourth quarter and full year 2020 earnings press release to obtain our expectations for first and second half 2021 performance at the consolidated and segment level.

In closing I could not be more proud or grateful for the resiliency commitment innovation and ingenuity of our diverse employee base around the world. Their contributions are the wind beneath our 2020 performance in 'twenty and 'twenty one guidance I'll now turn the call back to Paul.

Thanks, Regina as we open the call we ask that you limit your questions to one at a time operator, you may open the lines.

Yeah.

Thank you so much we will now begin the question and answer session. If you'd like to ask the question you May Press Star followed by the number one reason.

Mute your phone and just for your name clearly when prompted.

M. A C Corp to deduce your question John.

Gross you May press star two.

Speakers.

Yeah.

First question here.

First question comes from the line of George Sutton of Craig Hallum.

Your line is now.

One moment Sir.

Your line is now open you May proceed.

Great.

For our results.

Kind of eye opening results frankly so.

Ken I'm curious in the press release, there was a discussion about and you mentioned on the call a doubling of your Tam with this acquisition I wondered if you can go into a little more detail on that.

And then relative to that add tax being in Minneapolis.

Where I live.

It is known as very high quality organization on I'm, just curious how competitive was this deal.

Great.

Good morning, George.

Thank you for the kind words.

<unk>.

What this does for us Tam wise is pretty incredible as you know for the last call. It 10 to 11 years in the digital space T. Tech is really only focused on what we call. The Mega enterprise, So a very large governments.

Governments as well as corporations and multinationals.

Our sweet spot has historically been 5000 seats, all the way up to 25000.

Workstations on our cloud platform.

What <unk> does for US is it opens up.

Large enterprise, but more importantly opens up for mid market.

And we pick up a thousand net new accounts.

Which for US is huge when you look at the fact that we have about 360 active accounts for so today across both business units. So it dramatically increases our Tam because the mid market has more than doubled the size of the mega.

Mega to large enterprise size.

Additionally, because they're focused on a couple of different platforms. It basically.

Insurers that we're at the table on any major deal that comes across the globe as it relates to CX transformation, because if you look at the market share that.

AWS connect has which is growing very rapidly that Cisco already has as an embedded base and that Genesis has which is growing very rapidly right now.

It's suffice to say that that's where the majority of all of our large enterprise business is going it is also oh, they're also now benefiting from the higher end of the mid market. So this really opens up the aperture for us.

We're not only excited about that aspect of it but we've always wanted to be on Microsoft partner.

We think that the dynamics platform.

Is one of the most popular platforms out there.

<unk> sales force and these guys have built some incredible applications.

Not only on the dynamics platform, but on Microsoft's.

Analytics platform using machine learning and AI and where we're building a very significant machine learning AI practice across everything we do whether it be conversational messaging, whether it be chat bots, whether it be data analytics, whether it be agent assist.

So it's a welcome.

Opportunity for us to pick up all these very talented engineers.

That <unk>.

Span across these incredibly successful partners.

I know Ken.

Limited to one question, but my most important question is actually for you I'm curious what kind of wind you drink to celebrate those kinds of results.

[laughter].

So for the last Oh right now what I drink is whatever it helps me go to sleep, because we have all been up around the clock. So lately, it's been more a little bit into Q live and then wine.

But certainly we will be we will be celebrating we need to take a bit about a 32nd breath.

Before we move on you asked the question about whether the process was competitive the answer is it was very competitive.

And truthfully Youll.

You'll have access to the management of at <unk> I think what won the deal.

<unk> was not only that we were competitive in our in our price, but more importantly, they loved our culture and they did their homework and they check this out and they loved the management and just kind of how we treat people et cetera, and I think they felt more comfortable with our culture than any of the other.

Opportunities.

Super Thanks, guys.

Yeah.

Okay.

Thank you for that the next question comes from Mike Latimore of Northland capital markets.

Great Yeah. Thanks for thanks, a lot spectacular year, great execution there.

I guess just on average just to be clear how many months of revenue are you, including in the 10 months here and then second.

This company historically has been a lot more.

Technology oriented than you are.

Typical consulting firm on that side, so I guess, yes.

On a month's revenue into what is their revenue model look like you know how much is recurring versus professional services that sort of thing.

Yes, so we.

We've assumed that we clear antitrust and we operate together.

As of the beginning of May.

And then they have about 60% recurring revenue.

And that well should grow as they too.

Or are you know focused on cloud based.

Predominantly cloud based subscription.

Oriented services.

Great and then Regina and you mentioned that you said, 15% of revenue I believe in the fourth quarter was COVID-19 related I guess, you've done a great job on converting prior deals like that to long term I guess, how should we think about.

For those customers and low.

Longer term visibility there.

Yes, So you know I've kind of as we had indicated off of our Q3 earnings call most of that business.

Has been converted to <unk>.

Longer term business and so what we would probably see them.

Yeah, I think you've figured this out when you look at the press release and look at you know what revenue is on our first half second half is we probably have a dip towards Q4, while we have a depth towards Q4 in our estimates right now, but we continue to see whether it's the state or the banks.

We continue to see a.

A re up of those contracts that.

I I personally don't have any concern that.

Covid volumes are challenged.

In in 'twenty one.

And given our pipeline and you know the lion's share of that pipeline that I've been talking about is is non COVID-19.

On.

We are we feel that the momentum we have in 'twenty. One allows us then.

To move through earned through if you will any COVID-19 business that's in 'twenty one.

Okay.

Good luck with your.

Thank you.

Yeah.

Thank you so much. The next question comes from Maggie Nolan of William Blair.

Your line is now open you May proceed.

Thank you if I could just build up on that passed last question there and.

It seems like Youre getting great traction.

The more permanent volumes are coming so what is the normalized long term growth rate for the engage segment and is it structurally higher than it was in the past.

Yes, one in Q3, we talked about moving it from we moved it from three from 3% to 5% to five to seven you know argue now is 7% to 9%.

And our our hope as we leverage both organic and inorganic investment is that you know.

Engages on its way to a double digit organic growth rate.

That's really helpful. Thanks.

Then you know you've talked about various partnerships I'm excited to bring Microsoft on can you give us a little bit of an update on your progress with some of these other partnerships on Cisco how some of the transition of those customers to our cloud solution is tracking versus your expectations.

Anything on live person or any other partnerships have notes.

Yeah, we're very happy with the partnerships and how they are moving forward and we're really kind of double down on the double doubling down and putting a lot of energy into all of them. What I would what I would say is is that depending upon the partnership and what.

Where we're actually focusing whether it was a massive transformation, which some of which got a bit delayed by COVID-19 and people just said, let's deal with new helping us get our agents at home.

Or helping us with all this on slot of volume by <unk>.

<unk> some other volume with conversational messaging et cetera. So it's what I would say is is that we feel very good about all the partners that we've selected and we feel really good about the.

The momentum and the leads that are coming from.

From those partners, but.

I would also say that we are adding so many partners and there'll be more announcements to come of additional partners that we really have just kind of made the decision that we're not going to get into the specifics because the dilemma that we're facing is it some of these companies. So many of these companies are now public or about to go public and we have every.

Analysts, calling us up trying to do channel checks on them and we basically.

Agreed with the Ceos of these companies that we're going to.

Not go there.

Just to make it easier for them as well so I apologize.

If I'm not giving you all the information that you would like but I'm sure you can respect the situation that we're in with so many of these companies being public right now.

We're excited about.

A lot of the energy that's being invested by our partners.

Into adding new technology, they're taking a lot of direction from us of where we see the market going and capabilities and features that they need to add.

I can tell you that there's not a single company that we're partnering with right now that is not viewing <unk> as one of their very most important areas to invest into share not just the standalone CX focused company and so consequently, they are dramatically stepping up their investment in this space because they really want to own.

A market.

So that's good for us it's good that theyre spending more money on sales more money on marketing.

And we think that we become the beneficiary as long as we continue to deliver for them and satisfy their customers again, I just want to stress Maggie debt.

Each one of these partners are really just the piece part in the overall solution that we're offering.

We're providing a very broad set of front middle back office capabilities that are totally orchestrated and so whether it's a omni channel routing solution. That's been tied to our case management solution with peg that.

And then tied to a robotic process automation solution with an automation anywhere et cetera. These are becoming very complex deals, which is exactly what we want and that's what keeps them reoccurring in nature.

Got it thanks, Ken Thanks for Gena congrats on the quarter. Thank you Brian. Thank you.

Thank you so much. The next question comes from Bryan Bergin of Cowen.

Your line is now open you May proceed.

Hi, Good morning, Paul Perrault, then well one on.

To start on the margin looked like engage exited much stronger here on the <unk>. The digital did tick down versus the run rate you add over the first three quarters. So can you first talk about the drivers in each other segments. There and then for 2021 is the absence of the large federal contract a reason for the step down on digital EBITDA margin of orders at <unk>.

Just any color you could provide there.

Yeah, great. So just from a Q4 point of view.

You know really for engage it relates directly to volumes.

We continue to say you know on another $75 million to $100 million of revenue, we're going to get another 75 to 100 basis points of margin expansion.

And so it's just a function of the leverage that we have in volumes on.

On digital what you're seeing is on the large government contract step down in the fourth quarter.

And ended by the end of the year and so it's really those volumes.

You know I'm out.

Out of our top line that affected the bottom line however, and this is.

Segue into 2020.

We did not hesitate in the fourth quarter to begin.

To execute incremental marketing.

Activity as well as to start to build.

Greater number of salespeople.

In particular in areas like global accounts health care.

Public sector.

You know financial services and tech.

As well as we continue to invest in EMEA and see that.

As an important contributor to our top line growth.

In in 'twenty one.

And on.

So the what you're seeing in digital in terms of the step down.

Is a couple of things one we do have a significant acquisition we have significant external fees that are in our numbers. We have cost of integration. We lineup. Good good pace and speed of that integration and then last but not least as I mentioned in my comments we've invested.

On the core side.

I'm, sorry, a little bit of it is is that tax, but we've invested in other $25 million in sales and marketing with.

With the intent of ensuring that.

To Maggie's question earlier, we are getting.

Not only in digital but engage as as well that organic.

Growth rate reliably to the high high single digits low double digits.

Okay. Thank you that's helpful. And then just on <unk> can you can you give us a sense on what the average client size in seats that they're serving or just curious where that cut off is on the mid market level and as you expand further into the mid market how does that impact your strategy around the other see cash technology platforms that are generally <unk>.

<unk> net SMB segment.

I'm not sure I'm fully understanding your question are you asking what the cutoff how do we define.

Mid market and Where's our target focus is going to be.

So that mid market so versus the high enterprise that you've traditionally served the where is the average size for Opex and then does it also open you up for other technologies to that that's a great question I'm actually really glad that you're asking it because I think there's so much confusion with the smaller Oems that they call enterprise.

Small medium business, what we classify as small medium business. So I would say that the sweet spot here.

Of where app taxes done just tons and tons and tons of deals.

Isn't that $2 50 to 750 workstation range of cloud SaaS based a range that said they've also done many installations that are well above that but they're really hunting in that very kind of.

Significant space, that's $2 50 to 750, there they're not interested in really going below that theyre going to leave that for the others that want to do kind of a debt.

Don't really require all the complexities that go into a company that has $250 to 750 workstations. So does that help you as far as their sweet spot and then if you're if you then look at traditionally where core are key tech core digital has been it really has been focusing.

On a minimum of 750 and going up and so we see this is just really a perfect fit they've got a brilliant sales organization, they've got fantastic organic growth.

So we take their organic growth in there their sales organization, coupled with our large enterprise organization.

And we really think that we've got far far better coverage on the marketplace than we historically had.

Okay. Thank you just a quick clarification I don't know for you had on the script did you say the size of <unk> the cost and the funding plan.

We did not.

But it will be an all cash transaction.

Thank you.

Yes.

Thank you so much. The next question comes from the line of Joseph Duffy.

Ken.

Your line is now open.

Hey, guys. Good morning terrific results just I was wondering if you could maybe for the park.

The growth in Q4, maybe any callouts there if that's.

By vertical by Geo anything there would be pretty interesting.

Paul.

Okay.

Yeah, so from a vertical perspective.

Ken kind of for the quarter and the year and some.

Financial services healthcare public sector.

And E tail for retail.

Part of that primarily.

We continue to see significant growth in our hyper growth kind of born digital sector.

EMEA is.

I think just debt making are important.

Contribution.

And I would say you know these are so for example.

Simple in our.

In Q4, we had nine multi segment.

Deals that we close representing 105.

Uh huh.

Million.

Of the $180 million that we closed in Q4. So the other theme right that is not just in the bookings for Q4, but.

It is within <unk> is a larger number of.

On a combined GTECH digital and engage.

Our engagements with our clients.

Okay. That's helpful. And then I know you've made some good traction in EMEA in.

In 2020.

You've mentioned a few times here on the call are there any.

Specific callouts in terms of wins.

In Q4 or is it just more of a building pipeline in EMEA right now so yeah, I mean, it's on a building pipeline kind of across across verticals.

Unfortunately.

Over the last couple of years.

Made an investment there and we got to build.

EMEA with a digital first strategy, so given our size and the kind of recency and which were in the market for customer client acquisition.

We ought to form that business in <unk> and so I would say the thing. That's noteworthy is our advantage there is to lead with digital and now that we have Genesis, which has got huge market share in Europe, we see that further propelling.

Not only digital but.

Our ability to win.

Improve our win rate on the engage side.

Okay, and then just a couple on <unk> I'm not sure. If you mentioned their margin structure versus the <unk>.

Rest of your digital business and.

How is their footprint ex U S and.

How does that look as an opportunity for you kind of maybe more on those.

Mid market so.

We are I would say that digital.

On both sides for the core.

Digital.

And then <unk> share you know what I call it 18% to 22%.

On EBITDA.

Margin adjusted EBITDA margin.

Obviously on the <unk> side.

A little bit of a shift down.

Given that large government contract and the exiting <unk>.

Practices, Chuck as I named index in the in our script about $91 million of revenue in 2020 that is not there in 2021, and so again anytime.

Volume drop at that level.

We are.

The margin John drops, but in particular, because we didn't we.

We didn't reduce the S sales and marketing of our SG&A, we actually are invested more.

So while we have a debt.

This year.

We expect that by the fourth quarter to be back in that 18% to 22% range, depending on the component of digital.

Great.

How about you.

Footprint also on our footprint.

Today, they have a north America footprint U S and Canada and as I said, we have early plans to ensure that we leverage that.

In other regions that we're in already.

EMEA and Asia Pac.

It would be able to light up.

That debt offering there as well in short term.

Alright, and then maybe just one final high level question on.

On engage in you know we're sitting here in early March and.

And on a large enterprises are getting their plans together for 2021.

Change in and their views.

In source versus outsource clearly 2020 was transformational.

Moving a lot more tam.

For the outsource bucket is there.

Any shift versus 2020 that youre seeing either a positive or negative there. Thanks, a lot I think.

Think if you refer back to some of my comments I kind of inferred that that what we're seeing is you know there's there's close to.

According to third party analysts not us.

<unk> $300 billion worth of captive in sourced engage and then there's still a significant amount of in sourced a technology. We are definitely seeing more and more of the large companies for lack of a better term wave the white flag.

And shift.

Start shifting.

Volumes very large volumes of their captives.

For multiple reasons.

One the day.

They didn't know how to do at home to they didn't have they don't really have the right technology platform.

And three.

I don't want this to sound like we're bragging, but we typically well outperform our clients' internal sites.

On all metrics on CS that on net promoter score.

And and on cost to serve and so.

They can only do it so long and have this variance.

Until if they're not willing to move with their senior leadership is saying why are we doing this so we are definitely feeling like the trend going forward is going to be more and more of these captives that are going to be outsourcing far more business. So if you look at the overall.

On a business that's been outsourced if you look at the pie, it's really only about 30%.

That's been outsourced I think youre going to very comfortably see that moved to 50% over the next few years not five years, but few years and I think that's going to be great.

For us and I think it will also be great for for others, who benefit.

<unk> from it.

And you know the other thing that I, just want to stress that I think.

Hmm.

On the Wall Street, maybe isn't fully paying attention is.

As all these companies become more customer centric they become more accessible.

Historically it was common to go to a client's website and you could even find an 800 number or a way to communicate with them because they really didn't want to communicate with you now they are realizing that that's the bane of their existence and the way that they actually sell more services for more products et cetera. So the interaction volume is exploding.

Across all of these companies as they provide more routes more channels for their customers to interact directly with them.

So I think that there is multiple.

Areas that are going to drive wind to our back a what you just asked the question about of captive starting to transfer more business to our partners such as ours and B just the mere explosion of of all the new channels and how people want to communicate C. The fact that people want.

To.

Have they want to be able to communicate in the moment, whether it be text, whether it be chat.

It would be conversational messaging, while they're in the store asking a technical question about our product et cetera, I can't tell you how many interactions. We're now receiving while people are actually in bricks and mortar and on their phone, they're asking a question about T V or about.

You know some policy that they want to purchase et cetera in many cases, because they don't feel confident that the retail sales person has the information. So they go directly to the manufacturer of the service provider, who were representing and we're giving them. The real time information to give them the confidence to actually purchase that product or service.

Yeah.

I hope that helps.

Thank you so much.

The next question comes from the line of James Fawcett of Morgan Stanley. Your line is now open.

Hey, this is Jonathan on for James Congrats on the quarter and the acquisition debt.

Regina.

What's your appetite for existing acquisitions over the course of the year and what would those acquisitions would be focused on.

Two questions for you Regina.

Happy to answer but go ahead.

The acquisition, yes. She said what is it what's our appetite I mean, we clearly have an appetite for a day out yeah.

It continues to be a part of our strategy.

To grow the business then.

It's a.

Balance between digital and engage and from a digital perspective, it's continuing to may.

Make sure that we have the best and most relevant.

<unk> technologies.

On the CX point of view and.

As well as scale.

On the practice areas that we have to do we have today and extend them.

At scale not just in the U S, but outside of the U S. So acquisitions that kind of hit.

Those three points are topical thing on top of our list from earnings.

Any gauge point of view we continue.

To look primarily I would say at offering based on <unk>.

Client based and regional based acquisitions.

To continue to fill out on.

Our offering.

As well as build.

Locations like Europe too to significant scale.

Helpful. Thank you.

Thank you so much. The next question comes from the line of.

Josh Vogel of Sidoti.

Your line is now open you May proceed.

Thank you good morning, Ken and Regina certainly impressive results in light of everything going on out there.

I had a question around the new Humana.

<unk> cloud at home offering.

What is the target number of users that you have for this year and longer term and understanding it's an ongoing and fluid situation, but just thinking about the cost structure of the business. How are you thinking about the real estate strategy today and as the year progresses.

So I.

I apologize Josh on the little confused when you you mentioned real estate, but then I thought you said number of users. So can you help me with that a little bit.

Sure first with.

With the Humana at home offering.

You had.

An announcement that you had used enabled 100000 users that was back in November I'm, just curious what your targets are for this year on longer term.

And then I was just thinking about the virtual versus brick and mortar footprint.

Alright, So why don't we start with that first of all we are constantly sampling our customers.

And asking them, where they would like to be.

And whatever is going to be this post pandemic era, which frankly I think it's difficult to predict right now.

But what I would say is.

We we believe that somewhere in the 35% to 40%.

Of our engaged workforce.

Will more likely than not be asked to continue to work from home.

We also believe that on a go forward basis, those who potentially work on our bricks and mortar.

We will be working in more of a more of a hybrid environment.

Additionally, we have from a real estate standpoint, <unk> been very proactive.

We frankly.

For this pandemic coming in January we didn't wait until March which is why we were able to so quickly transition our employees and our management was readying for for for it.

And we have already shattered.

Of workstations, a bricks and mortar workstations. So that we can ensure that we're not carrying too much excess real estate since theres, so much demand for our at home.

Capability.

Does that help you answer your question.

Yes definitely thank you.

And just going back to a comment that Regina had or the prior question around M&A activity and the appetite there.

Understanding that with digital you you still want to look for the best and most relevant technologies from <unk> point of view.

But Ken in your comments you mentioned that you had all the ingredients in place so as things stand today do you feel that your digital portfolios Gx platform is where you want it to be or are there any.

Small gaps that you still are looking to fill.

Well I'm kind of known to be constructively discontent so it will never.

Where I want it to be no matter how good. It is so what I would say to you is the following.

We're going to we will.

So I'm a big believer that when we tell the street, we're going to do something that we actually execute on it instead of just simply saying it.

And whether it be that we said we were going to purchase our stock back and we purchased almost half the float whether it be that we said we were going to pay a dividend and we've consistently increase the dividend or whether it would be that we said that we were going to do acquisitions and we've done many acquisitions and our goal is to maximize shareholder value.

So what we see as the opportunity we made a commitment to the street over the last 12 months. We said our goal was to get to a half a billion dollars in digital in a three year period of time.

I think the street as of today now knows that we're beyond dead serious and that we're well on our way to the half a billion dollars because we're really almost already there for.

For digital so at some point, we will be updating that guidance of what our future goals are of where we'll be taking digital but suffice to say, we think digital over time can become a billion dollar business.

M. A based on the organic growth rate and potential acquisitions as to where we do acquisitions.

You know I think that we.

We want to get stronger in other geographies.

With what it is that we do and we want to continue to keep building out our our AI machine learning and.

R P a practice.

And we Wanna be recognized across the globe is the experienced company and that you come to us.

When your goal is to have the best customer experiences.

And so now it's not the time to get into all the projects that we're involved with but what I can tell you is that.

Companies are coming to us and asking us to help them truly reinvent their experience and.

And so it starts with strategic consulting.

And then it turns into journey mapping and then it turns into a converting that to the technology.

And then getting the technology on to our SaaS cloud and then and then if they're interested of course us providing them with the operating execute capabilities. We truly believe that we realize others claim they have technology that are that have outsourcing capabilities, but the data speaks for itself our client references.

Does speak for itself, we don't consider tuning someone's IV or is having technology.

And we really don't see anyone that has our level of technology capabilities.

In the CX space as.

As it relates to providing a best of breed cloud solution and we also don't see anybody that has.

Our quality of execute our capabilities on the engage side and we think when you combine those two as a one T tech offering we think it's very powerful and more and more people are realizing that they cannot win market share on these large companies.

If they don't have the best customer experiences so more and more of our conversations are no longer just with cio's, but they're dramatically shifting to the Ceos and the chief customer officers and chief digital officers and the Chief marketing officers, who are who are are being instructed by their board debt.

They've got to get their net promoter score up and they have to focus solely on the customer experience the ownership experience.

Et cetera. The other thing is that we take a very different approach in how we justify our services. Many of the competitors out there are focused on you know who's got the cheapest price per minute or per hour or whatever that just doesn't resonate with our audience our audience cares.

About what does it cost to actually acquire a customer what does it cost too.

To serve a customer what does it cost to grow our customer and so everything we do is all about customer <unk>. So that as CFO of a sophisticated sophisticated corporation can understand how to variable is their cost.

Versus just treating it as a time and materials type expense center and so I think that the Epiphany, that's taking place on the marketplaces. This is a must have it's no longer a convenient.

And B, it's the only way, they're going to make it across the river if they digitally transform and we believe that it's much more efficacious if they work with one organization.

Understands what the customer needs because we have deep domain expertise of the vertical but also understands what the brand ambassador needs on the tools that they need on their desktops that they can do their job. We think when you couple those two things together you get a terrific experience.

Thank you for your questions that is all the time, we have day I'll now turn the call back to Paul Miller, Sir you May proceed.

Yes. Thank you everyone for your participation. This concludes our call per day. Thank you.

This concludes deep ex fourth quarter and full year 'twenty 'twenty earnings conference call.

You may disconnect at this time.

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Ken.

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Welcome to the defect for.

<unk> quarter and full year 2020 earnings conference call.

I would like to remind all parties that you will be in a listen only mode on through the question and answer session.

This call is being recorded.

Okay.

I would now like to turn.

Over to Paul Miller feedback and your Vice President Treasurer, and Investor Relations Officer. Thank you. Sir you may now begin.

Your day <unk> issued a press release announcing its financial results. While this call will reflect items discussed within the press release for additional information about our financial performance. We also encourage you to read on 2020 annual report on form 10-K.

Before we begin I want to remind you that matters discussed on today's call may include forward looking statements related 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 on our opinion as of the date of this call and we undertake no obligation to revise this information as of.

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 described today for more detailed description of our risk factors. Please review our 2020 annual report on form 10-K on a com.

Rents today will also include certain statements related to our financials, which are on a non-GAAP basis. 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, <unk>, Chairman and Chief Executive Officer, Ken.

Thanks, Paul and good morning to everyone.

2020 was a breakthrough year for T Tech, we set aggressive operational and financial objectives and dramatically exceeded them all.

Like every business across the globe, we faced a once in a century challenge as the world lost mobility consumers shifted to virtual interactions and workers shifted to virtual productivity.

Across the globe people quickly accepted virtual as their new reality and embraced the new way of life, most of which is here to stay.

In the midst of this massive digital migration.

Our clients dependent on us for the technology and digitally enabled services they need to meet their rising customer demand.

We're at the Dawn of a second wave of digital transformation and virtualization that is sweeping the world and we perform a mission critical role in pioneering it for our clients.

This new digital layer will demand increased virtual capabilities for years to come and we are ready.

We have rich we have achieved the highest annual revenue growth rate in well over a decade and expect our momentum to drive a higher normalized rate of revenue growth in the years to come.

Yes.

Recapping the last year bookings increased 35% to a record $659 million revenue increased 19% to a record $1 $95 billion.

Adjusted EBITDA increased 45% to a record $304 million non-GAAP EPS increased 70% to a record $3 82 per share.

Cash flow from operations increased 14% to a record $272 million.

We closed two key acquisitions and established several new high profile go to market partnerships.

We moved 80% of our digitally enabled frontline teams to a virtual environment and launched several new digital offerings to expand our at home platform.

And we remain committed to returning a portion of our robust cash flow to shareholders via our regular semiannual dividend, which the board as Ken has consistently raised and we also issued a one time special dividend in 2020.

Our 2020 successes are accelerating the virtual explosion that has taken place over the past year has increased the volume of digital interactions exponentially.

This digital deluge in concert with a growing shift towards more value oriented human interactions is here to stay and is creating an unprecedented opportunity for T. Chek.

Over the past several years consumers have become accustomed to using digital tours tools to acquire anything they want online based on.

For shoes clothes foods cars back vacations, and so much more.

Everything is available at their fingertips without compromise the past 12 months have added a new Uh huh.

Added new conveniences to that list work from home learn from home eat from home Bank from home exercise from home stream Entertainment from home and see a doctor from home have gone from nice to have to must haves. These digitally enabled experiences have become a new cultural standard many of which more.

Many of which will become will become permanently woven into the fabric of our everyday life.

Orchestrating these effortless experiences isn't easy and requires highly complex interconnected network of network of cloud based technologies, including Omni channel art artificial intelligence machine learning robotic process automation and advanced analytics. These proprietary.

<unk> solutions T Tech delivers coupled with our deep industry expertise across all major verticals is fueled by billions of customer interactions T. Tech has delivered for the world's most iconic and disruptive brands.

This ability to seamlessly integrate complex CX technology with flawless last mile execution is what truly distinguishes us from the competition.

On operational expertise the T Chek provides.

Yeah.

For decades, we've been at the forefront fueling the CX technology and services for our clients who drive the digital economy.

We become the connective tissue between iconic brands and their customer experiences.

Our people and our technology provide the digital glue that enables frictionless interactions across every channel.

Standard our addressable market with proprietary IP strategic partnerships and accretive acquisitions, our announcement yesterday to acquire <unk> as an important continuation of the strategy that I'll talk more about shortly.

But before we get into that let me share some detail on new client wins.

We've achieved accelerated growth during the past several years by serving two kinds of clients multinational Giants and high growth verticals like technology health care financial services, automotive and the public sector, and new economy players and thriving ecommerce and direct to consumer channels.

Despite this distinction all these clients here a common goal.

Grow customer value and citizen engagement by delivering exceptional experiences across every channel.

This year, we have helped these clients significantly improve their customer experiences and reduce costs by 20% to 40% by shifting their interaction volumes from pure voice to an optimized blend of voice and digital channels now.

Now, let me share some specifics about the growth within our embedded base.

This year, we began to shift to broader longer relationships with our existing clients. We penetrated additional areas of these businesses not previously outsourced and have established ourselves as the incumbent going forward.

Surge volumes are converting to long term reoccurring revenue contracts, especially for clients, who recognize the challenges of virtualized in their operations.

These clients had reached their tipping point and needed to advance their customer experience delivery capabilities.

We supported them as they launched omni channel implemented at home and migrated their infrastructure to our cloud by digitizing their systems. They were able to meet the increase in demand improve their C sat scores and build operating efficiencies as a result, we gained additional volume commitments not just for the new.

Six to 12 months, but for the next three to five years.

One key tech offering, which we call CX as a service is expanding our market share and differentiation Gartner recently named T. Chek, a leader and a CX magic quadrant in part because of our differentiated platform.

The report called our platform, an innovative virtual ecosystem to integrate orchestrate and automate CX that shifts CX to a digital first approach.

Gardeners description of our CX as a service platform.

Is a great set up.

For a case study that I'll now describe.

Zine and technology teams, we helped our client re imagine their entire digital customer journeys.

And then to enable the new approach, we move their technology infrastructure to our agile cloud based omnichannel platform.

Our value proposition is unique we are focused exclusively on.

On the design implementation and optimization of seamless customer experiences across every interaction channel available.

This singular obsession with customer excellence drives every decision, we make and puts us on a class of our own.

Their customers.

But we have more to do.

The right technology is foundational to delivering on this promise.

Through the development of our proprietary IP strategic partnerships and complementary acquisitions. Our goal is to offer our clients all of the best of breed CX technologies for.

Fully integrated under one roof on.

Any channel.

Hi machine learning.

Automation.

Our M analytics and whatever comes next.

Yesterday's announcement that we will acquire <unk>.

Is the next strategic step towards that goal.

This acquisition is transformational for T Chek and enhances our position as the global go to partner for cloud based customer experience solutions.

This high growth platform more than doubles, our coverage of the CX addressable market by extending our solutions into thriving mid market.

<unk> partners.

We are extremely excited about this bold move to accelerate our digital strength and expand our market reach.

And we look forward to sharing our progress with you in the months ahead.

Today industry Analysts' estimates the companies are spending over $640 billion in CX Tech and services. It's a split with 525 billion CX services and 115 billion in CX technology.

We are focused exclusively on the market segments that are experiencing double digit growth on.

On the technology front, we estimate that only 15% of the contact center market has migrated to the cloud the mid sized and mega institutions that we target our target are recognizing the need to modernize and automate their systems.

For a set of capabilities is perfectly positioned to capitalize on the mass migration in motion and create significant opportunity for our growth.

We see several compelling trends.

Two.

On the operational side as well as CX delivery becomes more complex companies are shifting their in house operations to outsourced partners.

There are also consolidated its consolidating their CX spend with fewer trusted leaders, who have a solid balance sheet innovative capabilities stellar credentials and deep experience to meet their needs today and position them for ongoing success tomorrow.

With a client base of highly respected customer centric global brands. They are increasingly choosing T tech are unique and compelling CX as a service platform is resulting in increased win rate as we look to 2021 and beyond we expect our strong financial performance to continue supported by a record.

<unk> bookings and backlog.

We could not have done it without our incredible employees, we've invested heavily in creating an environment, where our people feel engaged empowered and inspired by their work our philosophy is simple.

Happy employees make happy customers and happy customers translate into increased shareholder value.

Just this past month, we were thrilled and honored to learn at Forbes magazine named <unk> as one of the best 500 large employers in America for 2020.

Our ESG program is built on four pillars, including sustainable operations diversity and inclusion.

Our plan for P and and responsible data management.

I, along with our incredible management team and I'm excited about the path ahead.

We have a powerful market for market forces that are back our long standing reputation for flawless delivery.

Good of directors and our global employee base. Thank you for your continued support we look forward to updating you on our progress on the months ahead and Regina will now walk you through the key financial highlights for the quarter and here and share our growth and margin outlook for 2021 Regina over to you.

Yes.

Thanks, Ken and good morning, everyone I'll start with a review of our fourth quarter and full year 2020 results and then provide some context on our 2021 guidance for.

For sales marketing and client executive teams delivered record new business signings in 2020 our.

Fourth quarter bookings were $188 million and full year bookings were 659 million up 57% and 35% respectively.

The prior year period.

In the fourth quarter, we signed a meaningful volume of new business within our existing client base and added 13, new client relationships bookings.

Bookings were most noteworthy in our financial services technology health care and public sector verticals.

Offering highlights included our customer acquisition services hyper growth born digital platform, Amazon connect messaging and automation collectively contributing $53 million in bookings.

Further we closed nine multi segment engagements totaling $96 million and find 25 multimillion dollar deals.

We entered 2021 with pipeline of approximately $1 8 billion, including <unk> up 50% over the same period last year.

With engage up 52% and digital up 44%. Additionally, our revenue backlog coming into 2021 is approximately $1 9 billion, including haptics up 20% over the prior year ex.

Excluding the large government contract and exited consulting practices.

In my discussion on our fourth quarter and full year 2020 results referenced to revenue is on a GAAP basis, while EBITDA operating income and earnings per share are on a non-GAAP basis.

A full reconciliation of our GAAP to non-GAAP results is included in the tables attached to our earnings press release.

On a consolidated basis in the fourth quarter of 2020 revenue increased 23, 8% to $571 million of which 23% was organic.

Adjusted EBITDA increased 46% to $92 3 million or 16, 2% of revenue compared to 13, 7% in the prior year.

Operating income increased 48% to $73 9 million or 12, 9% of revenue a 210 basis point improvement over the prior year.

<unk> increased 65% to $1 22, compared to 76 cents last year for.

On exchange contributed $3 1 million to revenue primarily impacting our engage segment FX was negligible on operating income.

Our topline growth is primarily attributable to increased volumes from existing clients new clients.

And COVID-19 related amounts, which comprised approximately 15% of our fourth quarter revenue.

Other highlights include at 75% increase in revenue from EMEA, 26% growth rate in a hyper growth born digital sector, 22% increase in our auto sector and over $10 million of revenue from digital's newly launched offerings, including Amazon connect messaging and automation our.

Improved profitability is primarily due to top line scale and increased mix of higher margin verticals and offerings as well as lower SG&A and depreciation expense as a percentage of revenue.

This was partially offset by increased investments in executive talent sales and marketing to enable our continued expansion on our topline growth rate.

For the full year 2020 on a consolidated basis revenue increased 18, 6% to $1 95.

Of which 12, 8% was organic growth.

Adjusted EBITDA increased 45, 4% to a record $304 million or 15, 6% of revenue compared to 12, 7% in the prior year period.

Operating income income increased 57, 9% to $242 4 million or 12, 4% of revenue of 310 basis point improvement over the prior year.

<unk> increased 69, 9% to $3 82, compared to $2.25 last year Foreign exchange has had a positive <unk> 3 million.

And 1.2 million impact on revenue on operating income, respectively, primarily affecting our engage segments.

For the enablers of our full year top line growth and bottom line margin expansion are consistent with the themes I outlined for the fourth quarter.

Turning now to our fourth quarter and full year 2020 segment results are.

Our digital segment revenue was $75 $7 million on our fourth quarter compared to $82 4 million in the prior year on.

Operating income was $9 9 million or 13, 1% of revenue compared to $13 3 million and 16, 2% in the prior period.

The decline is attributable to the wind down at the large government contract and the exit of non strategic consulting practices digital revenue growth, excluding the large government contract and exited consulting practices with the price approximately 10% higher in the fourth quarter with cloud growing approximately 8% and systems integration growing.

<unk>, 24%.

2020 full year revenue for digital was $307 million compared to $305 3 million in the prior year operating income was $53 9 million or 17, 5% of revenue compared to $47 4 million or 15, 5%, excluding the large government contract and exited consulting practices.

Which comprised $91 million.

Of 2000, Twenty's revenue, our cloud revenue grew approximately 27% and systems integration grew approximately 6%.

We continue to estimate digital's core recurring cloud systems integration and consulting revenue to grow on the 15% to 25% range enabled by a growing market for our six for CX technology T takes a growing suite of offerings availing us on it.

Expanded addressable market differ.

Our sales pipeline, including amtech set as 44% higher than the prior year, and our revenue backlog of $240 million, including <unk> up 53% over the prior year, excluding the large government and exited for consulting practices.

Our engage segment was outstanding in the fourth quarter revenue grew 37% for $495 3 million of which 28, 8% was organic compared to $379 million in the prior year operating income grew 74, 9% to $64 million versus $36 6 million in the per.

For year engages operating income margin expanded 320 basis points from nine 7% to 12, 9%.

On a full year basis revenue increased 22, 7%.

For $1 billion 64.

Of which 16, 8% was organic growth operating income increased 77, 5% to $188 6 million or 11, 5% of revenue compared to seven 9% in the prior year.

While the shorter term pandemic related volumes contributed to our revenue growth in 2020 for the majority of growth now includes longer term embedded base and new client contracts, including a 10 percentage point improvement in client revenue retention significant volume increases on our financial services public sector automotive technology and Rita.

Clients, a growing demand for our virtual and digital delivery capabilities inclusive of our Humana fly cloud.

At home platform existing client program expansions and new lines of business, both within and across our engage customer care growth in hyper growth point and digital sector, a growing contribution from our EMEA client acquisition platform and less new client relationships that want a transformational partner to advance their CX strategy.

With outcome based integrated technology and operational solutions.

Our strong engage profit margin expansion is new to topline scale and increased percentage of revenue on our higher margin verticals and offerings and continued efficiency of our SG&A and asset utilization, leading to lower depreciation expense as a percentage of revenue.

I'll now share a few other 2020 measures before discussing our outlook.

At year end cash was $132 9 million with $396 $3 million of debt of which $385 million represented borrowings under our revolving credit facility net debt increased by $38 3 million to $263 4 million year over year, primarily related to acquisition related investments.

And capital distributions, partially offset by strong cash flow generation cash flow from operations improved to $271 9 million from $238 million of 14, 3% increase over the prior year. The increase is attributable to improvement in our profitability and working capital management.

DSO reached a record low of 61 days in the fourth quarter of 2020 down from 66 days in the prior year period, and 63 days sequentially cash.

Our normalized tax rate was 22, 5% in 'twenty versus 24, 4% in the prior year. The reduction is due primarily to research and development credits a reduction in our state tax rate as well as reductions in the tax rate in certain international jurisdictions, we now anticipate our forward tax rate in the range of 21%.

24%.

Leadership and investment in organic and inorganic growth, while providing early returns to our shareholders.

Yesterday, we also announced the board's approval for the next semiannual dividend in the amount of <unk> 43.

<unk> 20 million payable on April 21, 2021 to shareholders of record on April five 2021.

Turning to our 2021 outlook I'll first provide some context supporting our updated guidance.

And then move into our financial estimates the.

Our client acquisition footprint has expanded with EMEA and Asia Pac our offering portfolio has expanded to include Amazon connect Genesys, Microsoft automation and messaging.

The prior year.

We have increased our investment in sales and marketing by approximately $25 million in 2021, including App texture for it it continued reliable and predictable double digit organic revenue growth.

Turning to the midpoint of our 2021 guidance, including <unk> as outlined in greater detail in our fourth quarter and full year 2020 earnings press release, GAAP revenue up to 165 billion an increase over the prior year of 11%, excluding the large government contract and consulting practices.

Exited the growth rate of 16, 5% of which 650 basis points is optics.

80 basis points is optics.

Okay.

Non-GAAP operating.

Is that tax.

Non-GAAP earnings per share for dollars 16 cents, an increase of 34 or eight 9% over the prior year, excluding the large government contract and consulting practices for growth rate is approximately 30% of which 940 basis points is <unk> at the midpoint of our 2020 guidance, we estimate app text.

Contribute $120 million of revenue $20 million of adjusted EBITDA $17 million of non-GAAP operating income and 30.

Of EPS other.

Other relevant guidance metrics include capital expenditures between three one and three 3% of revenue of which approximately 60% is growth oriented are for.

Full year effective tax rate between 21, and 24% and a day.

Diluted share count between 47 to $47 6 million.

Thanks, Regina as we open the call we ask that you limit your questions to one at a time operator, you may open the lines.

Thank you so much.

I'll begin the question and answer session, if you'd like to ask a question you May press star followed by the number one.

You didn't meet your phone and just for your name clearly went from your name is he going to Denise your question.

John Suter gross you May press star two.

Speakers.

We have our first question or.

First question comes from the line of George.

Pattern of Craig Hallum.

Your line is now.

One moment Sir.

Your line is now open you May proceed.

Great.

For our results.

Kind of eye opening results frankly so.

Ken I'm curious in the press release, there was a discussion about the and you mentioned this on the call a doubling of your Tam with this acquisition I wondered if you can go into a little more detail on that and then relative to that add tax being in Minneapolis, where we are.

I live.

It is known as very high quality organization on I'm, just curious how competitive was this deal.

Great well good morning, George.

Thank you for the kind words.

What this does for us Tam wise is pretty incredible.

You know for the last call. It 10 to 11 years in the digital space T. Tech is really only focused on.

What we call the Mega enterprise, so a very large.

Governments as well as corporations and multinationals.

Our sweet spot has historically been 5000 seats, all the way up to 25000.

Workstations on our cloud platform.

What <unk> does for US is it opens up.

On large enterprise, but more importantly opens up the mid market.

And we pick up a thousand net new accounts.

Mega to large enterprise size.

Additionally, because they're focused on a couple of different platforms. It basically.

Insurers that we're at the table on any major deal that comes across the globe as it relates to see ex transformation because if you look at the market share that.

AWS connect has which is growing very rapidly that Cisco already has as an embedded base and that Genesis has which is growing very rapidly right now.

We're not only excited about that aspect of it but we've always wanted to be on Microsoft partner.

We think that the dynamics platform is one of the most popular platforms out there.

<unk> sales force and these guys have built some incredible applications.

Not only on the dynamics platform, but on Microsoft's.

So it's a welcome.

Opportunity for us to pick up all these very talented engineers.

At <unk>.

Span across these incredibly successful partners.

I know Ken.

Limited to one question, but my most important question is actually for you I'm curious what kind of wind you drink to celebrate those kinds of results.

[laughter].

So for the last Oh right now what I drink is whatever it helps me go to sleep, because we have all been up around the clock. So lately, it's been more a little bit at the key live and then wine.

But certainly we will be we will be celebrating we need to take a bit about a 32nd breath.

Before we move on you asked the question about whether the process was competitive the answer is it was very competitive.

And truthfully Youll.

You'll have access to the management of at <unk> I think what won the deal.

Opportunities.

Super Thanks, guys.

Okay.

For that the next question comes from Mike Latimore of Northland capital markets.

Great Yeah. Thanks for thanks, a lot spectacular year, great execution there.

I guess just on average just to be clear how many months of revenue are you good hands upon months here and then second.

On this company historically has been a lot more.

Technology oriented than you are.

Typical consulting firm on that side, so I guess, yes.

On a month's revenue into what is their revenue model look like you know how much is recurring versus professional services that sort of thing.

Yes, so we.

We've assumed that we clear antitrust and we operate together.

For the beginning of May.

And then they have about 60% recurring revenue.

And that well should grow as they too.

Our.

Focused on cloud based.

Predominantly cloud based subscription.

Oriented services.

Great and then.

You mentioned that you said, 15% of revenue I believe in the fourth quarter was COVID-19 related I guess, you've done a great job of converting prior deals like that to long term I guess, how should we think about those customers and longer term visibility there.

Yes, so kind of as we had indicated off of our Q3 earnings call most of that business.

Has been converted to.

Longer term business and so what we would probably see.

Yeah, I think you've figured this out when you look at the press release and look at what revenue is in our first half second half is we probably have a dip.

<unk> Q4, while we have a depth towards Q4 in our estimates right now.

But we continue to see whether it's the state or the banks.

We continue to see a.

A re up of those contracts that.

I personally don't have any concern that.

Covid volumes are a challenge.

In 'twenty one.

And given our pipeline and you know the lion's share of that pipeline that I've been talking about is is non COVID-19.

We are we feel that the momentum we have in 'twenty. One allows us then.

To move through earned through if you will any COVID-19 business that's in 'twenty one.

Okay excellent.

Good luck with your.

Thank you.

Thank you so much. The next question comes from Maggie Nolan.

Blair.

Your line is now open you May proceed.

Thank you if I could just build up on that passed last question there.

It seems like Youre getting great traction and then more permanent volumes are coming so what is the normalized long term growth rate pretty engaged segment and is it structurally higher than it was in the past.

Yes, one in Q3, we talked about moving it from we moved it from three from 3% to 5% to five to seven.

Our view now is 7% to 9%.

And our our hope as we leverage both organic and inorganic investment is that.

Engage is on its way to a double digit organic growth rate.

That's really helpful. Thanks.

And then you know you've talked about various partnerships and exciting to bring Microsoft on can you guess a little bit of an update on your progress with some of these other partnerships.

How some of the transition at those customers to our cloud solution is tracking versus your expectations.

Anything on live person or any other partnerships have notes.

Yeah.

Happy with the partnerships and how they're moving forward and we're really kind of double down on the double doubling down and putting a lot of energy into all of them. What I would what I would say is is that depending upon the partnership and what where we're actually focusing whether it was a man.

A transformation, which some of which got a bit delayed by Covid and people just said, let's deal with you, helping us get our agents at home.

Or helping us with all this on slot of volume by automating some of the volume with conversational messaging et cetera. So it's what I would say is is that we feel very good about all the partners that we've selected and we feel really good about.

The momentum and the leads that are coming from.

From those partners, but I would.

So say that we are adding so many partners and there'll be more announcements to come of additional partners that we really have just kind of made the decision that we're not going to get into the specifics because the dilemma that we're facing is is it some of these company. So many of these companies are now public or about to go public and we have every analyst.

Calling us up trying to do channel checks on them and we basically.

Agreed with the Ceos of these companies that we're gonna.

Not go there.

Just to make it easier for them as well so I apologize.

If I'm not giving you all the information that you would like but I'm sure you can respect the situation that we're in with so many of these companies being public right now.

We're excited about.

A lot of the energy that's being invested by our partners into adding new technology. They are taking a lot of direction from us of where we see the market going and capabilities and features that they need to add.

I can tell you that there's not a single company that we're partnering with right now that is not viewing CX as one of their very most important areas to invest and if theyre not just the standalone CX focused company.

So consequently, they are dramatically stepping up their investment in this space because they really want to own the market.

And so that's good for us it's good that theyre spending more money on sales more money on marketing.

And we think that we become the beneficiary as long as we continue to deliver for them and satisfy their customers again.

On a stressed Maggie debt.

Each one of these partners are really just the piece part in the overall solution that we're offering.

We're providing a very broad set of front middle back office capabilities that are totally orchestrated M.

And so whether it's a omni channel routing solution that's been tied to.

On a case management solution with Purger, that's been tied to a robotic process automation solution with an automation anywhere et cetera. These are becoming very complex deals, which is exactly what we want and that's what keeps them reoccurring in nature.

Got it thanks, Ken Thanks for Gena congrats on the quarter. Thank you Brian. Thank you.

Thank you so much. The next question comes from Bryan Bergin of Cowen Your.

Your line is now open you May proceed.

Hi, Good morning, Paul Perrault, then well what I wanted to start on the margin looked like engage exited much stronger here on the <unk>. The digital did tick down versus the run rate you add over the first three quarters. So can you first talk about the drivers in each other segments. There and then for 2021 is the absence of a large debt.

Contract a reason for the step down on digital EBITDA margin of orders at Opex, just any color you could provide there.

Yeah, great. So just from a Q4 point of view.

You know really for engage it relates directly to volumes.

We continue to say you know on another $75 million to $100 million of revenue, we're going to get another 75 to 100 basis points of margin expansion.

And so it's just a function of the leverage that we have in volumes on digital what you're seeing is the large government contract step down in the fourth quarter.

And ended by the end of the year and so it's really those volumes.

Our topline that affected the bottom line.

And this is <unk>.

<unk> way into 2020.

We did not hesitate in the fourth quarter to begin.

To execute incremental marketing.

Activity as well as to start to build.

On greater number of salespeople.

In particular in areas like global accounts health care.

Public sector.

Financial services and Tech.

As well as on.

We continue to invest in EMEA and see that as an important contributor to our top line growth.

In in 'twenty one.

And on.

So the what you're seeing in digital in terms of the step down.

Yes, a couple of things one we do have a significant acquisition we have significant external fees that are in our numbers. We have cost of integration. We lineup. Good good pace and speed of that integration and then last but not least as I mentioned in my comments we've invested.

On the core side.

I'm, sorry, a little bit of it is <unk>, but we've.

We've invested in other $25 million in sales and marketing with.

With the intent of ensuring that.

Maggie's question earlier, we are getting.

Not only in digital but engage as as well that organic.

Growth rate reliably to the high high single digits low double digits.

Okay. Thank you that's helpful. And then just on <unk> can you can you give us a sense on what the average client size in seats that they are serving but just curious where that cutoff is on the mid market level and as you expand further into the mid market how does that impact your strategy around the other see cash technology platforms that are generally <unk>.

Moving that SMB segment.

I'm not sure I'm fully understanding your question are you asking what the cutoff, where how do we define <unk>.

Mid market and whereas our target focus is going to be.

So that mid market versus the high enterprise that you've traditionally served on where where is the average size for Opex and then does it also open you up for other technologies to that that's a great question I'm actually really glad that you're you're asking it because I think there's so much confusion with the smaller Oems that they call enterprise.

Small medium business, what we classify as small medium business. So I would say that the sweet spot here.

Of where app taxes done just tons and tons and tons of deals.

Isn't that $2 50 to 750 workstation range of cloud SaaS based a range that said they've also done many installations that are well above that but they're really hunting in that very kind of.

Significant space, that's $2 50 to 750, there they're not interested in really going below that theyre going to leave that for the others that want to do kind of a.

On a minimum of 750 and going up and so we see this is Justin.

Really a perfect fit they've got a brilliant sales organization, they've got fantastic organic growth.

And so we take their organic growth in there their sales organization, coupled with our large enterprise organization.

And we really think that we've got far far better coverage in the marketplace than we historically had.

Okay. Thank you just a quick.

Clarification on and off that you had on the script did you say the size of <unk>, the cost and our funding plan.

We did not.

But it will be an all cash transaction.

Thank you.

Yes.

Thank you so much. The next question comes from the line of Joseph Duffy.

Ken Ken.

Your line is now open you May proceed.

Hey, guys. Good morning terrific results just on I was wondering if you could maybe for park.

The growth in Q4, maybe any callouts there.

By vertical by Geo.

Anything there would be pretty interesting and then a follow up.

Yeah.

Yeah, so from a vertical perspective, Ken.

Ken kind of for the quarter and the year and some financial services healthcare public sector Tech and E tail retail, but the key part of that primarily.

We continue to see significant growth in our hyper growth kind of born digital sector.

EMEA is.

As I, just said making important.

Contribution.

And I would say you know these are so for example.

Simple in our.

In Q4, we had nine multi segment.

Deals that we close representing 105.

Uh huh.

Million.

Of the $180 million that we closed in Q4. So the other theme right that is not just in the bookings for Q4, but.

It is within <unk> Tec is a larger number.

Number of.

On a combined GTECH digital and engage.

Our engagements with our clients.

Okay. That's helpful. And then I know you've made some good traction in EMEA in 2020.

You've mentioned a few times here on the call are there any.

Specific callouts in terms of wins and.

In Q4 or is it just more of a building pipeline in immuno right now so yeah I mean, it's on a building.

Pipeline kind of across across verticals.

Fortunately.

Over the last couple of years, we've made an investment there and we got to build.

EMEA with a digital first strategy, so given our size and the kind of recency and which were in the market for customer client acquisition.

You know, we got to perform that business in <unk> and so I would say the thing. That's noteworthy is our advantage there is to lead with digital and now that we have Genesis, which has got huge market share in Europe, we see that further propelling.

Not only digital but.

Our ability to win.

Improve our win rate on the engaged on.

Okay, and then just a couple on App Tech I'm not sure. If you mentioned their margin structure vs.

The rest of your digital business and.

How is their footprint ex U S and.

How does that look as an opportunity for you kind of maybe more on <unk>.

Mid market so.

We are I would say that digital.

On both sides for the core.

Digital.

And then <unk> share you know what I call it 18% to 22%.

EBITDA.

Margin adjusted EBITDA margin.

Obviously on the <unk> side.

A little bit of a shift down.

Given that large government contract and the exiting of Pratt.

Practices, Chuck as I know.

Aimed in in the in the script about $91 million of revenue in 2020 that is not there in 2021, and so again anytime.

Volume drop at that level.

We are.

The margin John drops, but in particular, because we didn't we.

We didn't reduce the S sales and marketing of our SG&A, we actually are invested more.

So while we have a depth a bit this year.

We expect that by the fourth quarter to be back in that 18 to 22 per cent range, depending on the component.

Of of digital.

Great.

How about you.

Footprint also on our footprint.

Today, they have a north America footprint, our U S and Canada and as I said, we have early plans to ensure that we leverage that.

In other regions that we're in already.

EMEA and Asia Pac.

It would be able to light up.

That debt offering there as well in short term.

Alright, and then maybe just one final high level question.

On engage in you know we're sitting here in early March and large.

On the large enterprises are getting their plans together for 2021 any.

Change in and their views.

In source versus outsource clearly 2020 was transformational.

Moving a lot more tam.

Sure the outsource bucket is there.

Any shift versus 2020 that youre seeing either a positive or negative there. Thanks a lot.

I think if you refer back to some of my comments I kind of inferred that that what we're seeing is you know there's there's close to.

According to third party analysts not us.

And shift.

Start shifting.

Volume was very large volumes of their captives.

For multiple reasons.

One the day that they didn't know how to do at home to they didn't have they don't really have the right technology platform.

And three and I don't want this to sound like we're bragging, but we typically well outperform our clients' internal sites.

On all metrics on <unk> sat on net promoter score.

And and on cost to serve and so they can only do it so long and have this variance.

Until if they're not willing to move at their senior leadership is saying why are we doing this so we are definitely feeling like the trend going forward is going to be more and more of these captives that are gonna be outsourcing.

Outsourcing far more business. So if you look at the overall amount of business. That's been outsourced if you look at the pie.

It's really only about 30%.

That's been outsourced I think youre going to very comfortably see that moved to 50% over the next few years not five years, but few years and I think that's going to be great.

For us and I think it will also be great for for others, who benefit.

<unk> from it.

And you know.

Q4 2020 TTEC Holdings Inc Earnings Call

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