Q1 2021 TTEC Holdings Inc Earnings Call

[music].

Welcome to <unk> first quarter 2021 earnings conference call I would like to remind all parties that you will be in a listen only mode until the question and answer session. This call is being recorded at the request of <unk> I would now like to turn the call over to Paul Miller, <unk> Senior Vice President Treasurer.

And Investor Relations officer. Thank you Sir you may begin.

Good morning, and thank you for joining us today <unk> is hosting this call to discuss its first quarter earnings results of the period ended March 31 2021.

Dissipating in 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 those documents are complete information about our financial performance. We also encourage you to read our first quarter.

2021 quarterly report on form 10-Q, 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 a more detailed description of our risk factors. Please review our <unk>.

2020 annual report on form 10-K, a replay of this conference call will be available on our website under the Investor Relations section I will now turn the call over to Ken Tuchman, <unk>, Chairman and Chief Executive Officer.

Ken are you able to Harris.

Excuse me I was on mute, thanks, Paul and good morning, our focus on digital innovation and operational excellence continues to deliver differentiated outcomes for our clients engaging careers for our employees and increasing value for our shareholders.

I am pleased to report that our broad based financial momentum continues and for the fourth consecutive quarter. We have delivered record results in the first quarter of 2021 over the prior year period bookings increased 95% to $170 million the new businesses.

<unk> diversified across our existing embedded base and net new clients. These new wins are healthy mix of digital and engage capabilities.

We added 25, new client relationships across several industry focus areas with nearly half coming from our rapidly growing healthcare and public sector verticals.

Revenue increased 25% to $539 million.

<unk> EBIT increased 51% to $96 million.

Non-GAAP operating income increased 64% to $80 million non-GAAP, EPS increased 70% to $1 26, and free cash flow increased 28% to $58 million.

Over the last four quarters, we have booked $742 million of new business up 68% over the comparable 12 month period.

Based on our sustained momentum our record first quarter performance solid pipeline and backlog, we are raising our 2021 guidance.

Our financial momentum has not only continued but it is accelerating the convergence of the experienced economy increased virtualization and the thriving direct to consumer marketplace has put customer experience at the epicenter of modern commerce.

Experience has become the new competitive battleground, among all brands and our turnkey customer experience at the service platform delivers all of the mission critical technologies and services companies need to win today.

Across our focused industries and geographies improving the customer experience has never been more urgent.

The experienced economy has created an explosion of interaction volumes across the myriad of channels. The result is of Disney more of challenges for companies and government entities alike.

Their brand equity in their financial success now depends on their ability to rapidly modernize their technology operations and processes to deliver a frictionless personalized experience.

The demand for our end to end approach continues to Mount.

Enterprises that have tried to improve their CX by stitching together.

<unk> of point solutions service providers and technology platforms are falling short disconnected.

<unk> systems are creating disconnected experiences when customers are demanding seamless and intuitive interactions.

Our customer experiences of service platform takes the burden off of our client's shoulders as a single integrated source, we serve as the CX Orchestrator administrator and journey partner with established best practices and priority.

Excuse me.

The best practices and proprietary prebuilt technology connectors, we synchronize strategy analytics technology and operational execution to produce personalized experiences that consistently deliver superior results.

It has been proven.

Time, and again the companies with the highest net promoter scores continually outperformed the laggards companies that invest in customer experience as the strategic differentiator when with customers, who stay longer spend more and are passionate advocates for brands that they love.

Now, let me share our perspective on several megatrends that are gained momentum over the past 12 months the.

These factors will continue to provide strong tailwind for <unk>.

Virtualization.

Is changing everything consumer habits have changed for good the convenience of everything from home has forced traditional brick and mortar operations in industries like retail dining healthcare fitness entertainment and others to reconfigure and rethink how they deliver their services.

And their products.

For many of it has opened up new digital sales channels and growth opportunities.

These new ways of living and working have increased interaction volumes exponentially and have accelerated the demand for high quality virtual support and connectivity that we at <unk> provide the direct to consumer model is thriving native digital businesses continued to flourish over the past year.

As consumers embraced the ease of buying direct they rejected third party intermediaries that slowed down the process and provided little to no value from the start these born digital companies launch their business with virtual support from CX partners now as their brands mature and grow their investing even.

Moore with customer experience technology and delivery partners like us.

The.

<unk> to the cloud is accelerating and creating new opportunities for companies to re imagine their customer experience.

Companies are recognizing that the move to the cloud offers innovative features and functions to dramatically improve their customer experiences. They see the promise of increased agility scalability and of ubiquitous experience, but they need an experienced partner to help them envision and unlock the meaningful benefits.

Of migrating to the cloud more.

Many lack the CX design and technology expertise Theyre actively looking for proven thought leaders and implementation partners, who can help them design and build the transformation roadmap the roadmap and then bring it to life.

They are coming the T tech because of our singular focus on customer experience. There are very few partners in the world that have the size scale and reputation technology and IP to deliver the speed and value the market demands today.

As the volumes of interactions increase exponentially the ability to balance efficiency with humanity requires the intelligent use of automation.

Consumers continue to demand convenience and ease with every interaction and are welcoming automation to accomplish simple task when they reach the point of escalation. However, they expect to interact with of trained knowledgeable and compassionate human expert.

AI enabled intelligent automation plays an essential role in the empowering these frontline experts it streamlines repetitive desktop tasks. So that they have the time resources and empathy to solve higher value more.

More complex customer challenges this.

This careful blending of competency of tech and the warmth of humanity is becoming the face of their brands done poorly it destroys customer value done well it unlocks unlimited potential companies need experts to help them get this careful balance right.

Real time data is informing all key decisions gone are the days of batch reporting and historical analysis to day decisions or cognitive preemptive and are happening instantaneously companies are building massive data lakes to compile zettabyte of customer data and are using prebuilt connectors.

To use.

To put this price lists insight to work at scale. They are creating a common data model with the embedded AI to help shape the journey for customers.

Data has become the nucleus of successful.

<unk> strategies it.

<unk> companies to proactively respond to their customers' needs in real time.

Data helped pinpoint the optimal moment for social push identified specific product preferences and anticipates the path of an omni channel journey, making data actionable in real time is hard to do it requires harmonious integration into the front end CX technology and back end operations.

Few if any of our competitors have the industry specific knowledge CX design technology integration and orchestration capabilities that we deliver.

Companies are realizing the need to shift from captive in house models to specialized customer experience innovators.

We see of large scale of structural shifts happening in the marketplace right now managing CX is getting more complex every day and tight labor markets are making it harder than ever for companies and government agencies to successfully manage their customer experience operations themselves.

The ability to stay ahead of technology innovation and complex analytical models require a specialized expertise that is difficult to find and maintained in house. They are realizing that they're stuck with legacy operating models, it's simply too hard and too costly to reinvent how they interact with their customers in response.

They're shedding of portion of their captive operations to a select set of strategic partners that they know and trust.

These mega trends are converging to create a total addressable market of over $640 billion and growing this massive opportunity includes customer experience consulting technology and operations with the combination of <unk>, we now have over 700 brands.

Of our client portfolio. Many of these clients have just begun their digital transformation journey and need our help architect Inc. And planning their CX roadmap many of Reimagining their CX of need analytics and cloud technology to enable richer more meaningful customer experiences and many others are growing so rapidly they need our opera.

<unk> capabilities to help them scale overnight for every one of these clients. We have just scratched the surface the opportunity within our embedded base is immense.

Now let me demonstrate how these trends are playing out in the market by sharing some recent work with a few clients.

It is important to note that each of the solutions was architect Architected with an outcome first mindset. These initiatives were viewed as high value investments not cost cutting.

Commodities are clients had specific business objectives, and we use design thinking to collaborate on holistic solutions that we've strategy technology analytics and operations together to deliver specific and measurable outcomes.

The first example is with the very large health care client.

We've been a strategic partner, we've been strategic partners for years and most recently the face the time sensitive challenged and asked us to help as part of the national vaccine rollout they needed to educate and motivate an underserved population the had to move quickly and they didn't have the tools or the expertise to do so.

So in less than 10 days, we stood up and delivered of turnkey program to identify contact schedule remind and remind patients to get their vaccine. Our solution was virtual cloud based and combined automation and specially trained frontline health care experts our ability to meet their pressing need has expanded our client relationships.

<unk> chip and as open the door into other therapeutic in geographic areas of their operations. Our next example comes from one of the largest consumer electronics retailers in the world.

This industry has been under intense pressure to innovate and stay relevant and survive our client had the best of breed CX platform already in place, but needed guidance on how to optimize the technology innovate ahead of competitors and drive a better overall experience on an ongoing basis.

We re imagine the use of their existing tools migrated them to the cloud and integrated them using our own IP. The result was the single ubiquitous CX technology platform a line to an overarching strategy that achieve their desired experience outcomes. The solution is just one example of how our ability to match.

<unk> and integrate disparate CX technologies helps organizations minimize fragmented CX and drive the cost of complexity out of the organization.

As these key studies demonstrate modern digital technologies in a central component to delivering effortless customer experiences.

We've spent the last decade building, our <unk> digital business to meet this growing need in the marketplace through organic innovation and tuck in acquisitions today, we provide a future ready comprehensive data driven technology platform.

As a single source, we are unique in our ability to offer clients across the globe every function featuring outcome they need to deliver of cognitive seamless experience across every touch point in the customer journey at scale. Our most recent acquisition of CX technology leader <unk>.

Is the latest step in the strategy. This transformation move delivers on our goal of becoming one of the world's largest pure play end to end CX technology companies.

We have essentially doubled our addressable market and can now meet the needs of clients from mid market to the Mega enterprise.

Part of the integration I am delighted to announce that the president and CEO of <unk> George IMMU has taken the role of President of T Tech digital with over 25 years at the helm of successful CX technology companies George is a proven leader innovator and customer experience evangelists and Peru.

<unk>, most importantly, George shares and live <unk> core values.

<unk> has achieved Genesis as partner of the year recognition for several consecutive years and as part of the coveted Microsoft Inner circle for its industry, leading IP cloud analytics and AI solutions. In addition, they have built the set of proprietary built in connectors that seamlessly net disparate systems together.

To facilitate the flow of information across platforms.

<unk> complements the strategic go to market partnerships, we've already forged with Amazon connect Cisco sales force peg of systems among others. When we combine this ecosystem with our own proprietary machine learning AI practice that includes conversational messaging chat bots and data analytics we are in.

The unbeatable SaaS customer experience portfolio.

Clients are choosing our technology platform because it delivers the best outcomes, we stared, we stand out as the go to partner for CX transformation for three reasons first speed to value our deployment platform brings together entrenched legacy systems and advanced SaaS.

Occasions, and empowers customer experience teams to enable contextual and personalized customer engagements. The result is increased customer satisfaction implementations are typically three to five times faster than point to point integration of alternatives.

Reliability as the global operator, we manage the CX ecosystem across hundreds of thousands of users. We are one of the largest CX technology players in the world. We know what works what doesn't and what will deliver the best outcomes for our clients.

Third global scalability of our Humana five cloud enables the largest most complex organizations in the world to obtain an operating all of the cloud technologies will ever need to interface seamlessly with their customers. It routinely serves with hundreds of millions of end customers and has the ability to scale within <unk>.

<unk> versus months.

Now I'd like to move on to our <unk> Tec engage business.

We continue to complement our accelerating organic growth with M&A to bolster our total addressable market to cover all company sizes across all geographies.

Increasingly clients are coming to us because they need of robust technology infrastructure and technology enabled frontline talent, we use best of breed tools to out the employee lifecycle to find train nurture and support our knowledgeable associates. In addition, we have worked hard to build an engaging culture that draws passionate.

Dedicated employees to our company are transparent and inclusive culture is the connective tissue that energizes. Our teams. We are extremely proud that in the midst of the pandemic. We were named one of the best large employers to work for by Forbes magazine.

Our values driven culture guides everything we do we remain deeply committed to delivering on our promises to our clients employees shareholders and partners.

For our clients, we're driven to generate sustainable valuable outcomes that strength and brand affinity and financial results are industry, leading client metrics are a testament to our position as the trusted long term strategic partner for our employees. We are committed to nurturing their health and wellbeing at the start of the pandemic, we prioritized the safety.

Above all as we emerge our employee basis is as engaged and motivated and productive as ever.

In addition to ongoing investments in our ESG programs were helping to improve the quality of life in the communities, where we operate and the world in which we live and most recently, we dedicated additional resources to support our employees in countries that are most challenged and continuing the spread of the corona virus and treating in <unk>.

Overwhelming number of cases.

For our investors, we have set financial goals and consistently have achieved them in our most recent three year plan, we targeted of $500 million in digital revenue.

We are on track to reach that goal ahead of schedule, we committed to a 9% growth in engage and as you will hear from Regina, we're increasing our engage revenue guidance, we said, we'd supplement our growth through acquisitions and of successfully closed and integrated over a dozen acquisitions over the past decade.

We promise to return significant capital to our shareholders.

As a result, we repurchased approximately half of our outstanding shares over the years and commenced the semi annual dividend in 2015, and we have increased that payout every six months since 2016.

In closing we remain extremely excited about our future. The experienced economy has created an unprecedented opportunities for our innovative CX company like ours. We have built an exceptional management team of highly coveted client base of industry leaders and digital Disruptors and a proven set of <unk>.

<unk> technology enabled assets with our unique ability to enable new interaction channels unlock operational agility and stimulate substantial revenue growth, we've become a powerful force and fueling modern commerce today and for many years to come on behalf of our executive team our board of directors.

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

Thanks, Ken and good morning, everyone I'll start with the review of our first quarter 2021 results and then provide some context regarding our full year 2021 guidance, which we are raising to reflect our improved outlook.

2021 is off to a strong start formed in the first quarter with record financial results and are now positioned to exceed our original guidance given improved first quarter bookings current revenue backlog and in your pipeline.

Turning to our new business signings, we had another strong bookings quarter with $170 million up 95% over the prior year period with meaningful contribution from both our digital and engage segments. Our bookings included eight multi segment deals totaling $41 million and 25, new logos with cumulative bookings exceeding.

72 million of <unk>.

Banking financial financial services, and insurance health care technology, and public sector verticals, each added over 20 million of bookings.

Our direct to consumer hyper growth offering new signings with 243% and we began adding volumes in our travel and leisure vertical which the past $10 million.

The average deal size expanded near 100% in bookings related to the pandemic, where less than 15%. We continue to see good migration of pandemic volumes into permanent lines of business and currently estimate that our fourth quarter 2021 will be comprised of volumes that are nearly 100% longer term.

The permanent business.

We exited the first quarter of 2021 with revenue backlog of $2 4 billion or <unk> 92, 3% of the midpoint of our revised guidance of 25% increase over the prior year or current in year sales pipeline is $136 billion of 22% increase over the prior year.

My comments regarding our first quarter results referenced revenue on a GAAP basis, and EBITDA operating income and earnings per share on a non-GAAP basis.

I want to reemphasize that starting last quarter, our non-GAAP operating income and EPS are now adjusted for stock based compensation and acquisition related amortization expense.

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 first quarter of 2021 revenue increased 24, 8% to $539 2 million of which 22, 5% was organic growth.

Adjusted EBITDA increased 57% to $95 9 million or 17, 8% of revenue compared to 14, 7% in the prior year.

Operating income increased 63, 8% to $79 9 million or 14, 8% of revenue of 350 basis point improvement over the prior year.

<unk> increased 69, 5% to $1 26 compared to <unk> 70.

74.

Up 70% versus the prior year.

Foreign exchange, primarily from a weaker dollar U S. Dollar had a positive impact of $7 1 million on revenue and a positive impact of $1 million on operating income the majority of which is in our engage segment.

Our revenue growth is enabled by an expanding total addressable market, our expanded sales and marketing platform a growing portfolio of offerings continued momentum in our multi segment deals geographic expansion into EMEA and of vertical focus on higher growth sectors.

Our improved profitability is a function of top line scale in combination with value and outcome based pricing and of persistent focus on the optimizing and innovating our cost structure offset by an increased investment in R&D sales and marketing and acquisition related expenses.

Our digital segment revenue was $63 6 million in the first quarter compared to $77 6 million in the prior year operating income was $6 7 million or 10, 5% of revenue compared to $12 6 million or 16, 2% in the prior year period.

Digital revenue, excluding the large government contract and exited the consulting practices was 23, 3% higher in the first quarter with cloud and managed service revenue growing 14, 4% and the professional services revenue inclusive of our CX consulting systems integration.

Product growing 36, 1%.

Our engage segment continues to significantly outperform in the first quarter revenue grew 34, 1% to $475 6 million compared to $354 7 million in the prior year all of which was organic.

Operating income grew 102, 4% to $73 2 million versus $36 2 million in the prior year.

Engages operating income margin expanded 520 basis points to 15, 4%.

The majority of growth is non pandemic related work from our longer term embedded base and new client contracts, including significant volume increases from our financial services healthcare automotive technology and retail clients are growing demand for our virtual and digital delivery capabilities.

Existing client program expansions and new lines of business, both within and across our engage customer care and born digital sector growing contributions from our EMEA client acquisition platform and increased client engagements to modernize their end to end CX strategies.

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

I will now share a few other first quarter 2020 measures before discussing our outlook at March 31, 2021, cash was $144 2 million and debt $348 7 million of which $339 million represented borrowings under our recently Upsized credit facility.

From $900 million to 1 billion too.

Net debt increased by $9 3 million to $204 $5 million year over year, primarily related to acquisition related investments and capital distributions largely offset by strong cash flow generation.

First quarter cash flow from operations improved $69 8 million from 62 million $62 2 million of 12, 3% increase over the prior year the increase is attributable.

To improve the near our profitability and working capital management.

<unk> reached a record low of 59 days in the first quarter of 2021 down from 66 days in the prior year period, and 61 days sequentially.

Capital expenditures were $11 6 million of two 1% of revenue for the first quarter 2021, compared to $16 $8 million of three 9% from the prior year the.

Notable decrease as a percentage of revenue was primarily due to our focus on improvement of our fixed asset utilization in particular facility and technology assets.

Our normalized tax rate was 23, 7% in the first quarter of 2021 versus 24, 1% of the prior year. The slight reduction is primarily due to jurisdictional mix of income we anticipate of forward tax rate in the range of 22% to 24%.

In the first quarter of Board announced the next semiannual dividend in the amount of <unk> 43.

Approximately $20 million, which was paid on April 21, 2021 to shareholders of record on April five 2021. This dividend represents a 26, 5% increase of at the semiannual dividend paid in April 2020.

Turning to our 2021 outlook, we are well positioned for meaningful profitable growth in 2021, we are experiencing an elevated level of bookings pipeline and revenue backlog across both digital and engage our go to market platform continued to deliver a differentiated set of CX solutions.

And we continue to augment our organic growth with meaningful accretive strategic acquisitions.

Our improved top and bottom line outlook is a function of the aforementioned items. In addition to the marketplace dynamics and industry trends that Ken mentioned.

Turning to the midpoint of our 2021 guidance as outlined in greater detail in our first quarter earnings press release GAAP revenue of two point.

206 billion, an increase over the prior year of 13, 2%, excluding the large government contracting consulting practices exited the growth rate of 18, 6% of which $133 million or seven two percentage points is app text the.

Backlog supporting the revenue growth is two 4 billion or <unk> 92, 3% with engage at 97, 3% and digital at 70%.

You will note of decline in the revenue growth rate in the engage segment first half to second half. This is related to the 2020 COVID-19 volumes, excluding COVID-19 related volumes the engage revenue at the midpoint of our guidance is estimated to grow 9% in the second half of 2021 versus 2020.

Non-GAAP adjusted EBITDA of $334 million, an increase of nine 9% over the prior year and 15, 2% of revenue compared to 15, 6% in the prior year, excluding the large government contract and consulting practices the.

EBITDA growth rate is 26, 2% of which eight seven percentage points is optics.

Non-GAAP operating income of $269 million, an increase of 10, 9% over the prior year and 12, 2% of revenue compared to 12, 4% in the prior year, excluding the large government contract and consulting practices. The go.

Growth rate is 31, 4% of which 10 seven percentage points is <unk>.

Non-GAAP earnings per share of $4 23, an increase of 41 or 10, 8% over the prior year, excluding the large government contracted consulting practices. The growth rate is approximately 32, 6%.

At the midpoint of our 2021 guidance, we estimate <unk> will contribute.

$33 million of revenue $23 million of adjusted EBITDA and $22 million of non-GAAP operating income.

These estimates are subject to finalization of the purchase accounting related to the acquisition of <unk>, which will be completed during the second quarter.

Other relevant guidance metrics include capital expenditures between three 1% and three 3% of revenue of which approximately six percentage growth oriented of full effective tax rate between 22% and 24% and of diluted share count between $47 two of $47 6 million. Please.

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

In closing we are executing on numerous fronts across the business and realizing tangible results from our strategy differentiated CX solutions portfolio and improved go to market platform undeniably. The investments we have made the client relationships, we have built and the talented team. We have attracted has transformed our company increased.

Our value proposition in the marketplace and change the financial profile and trajectory of the business. We are of high degree of confidence in delivering against our raised 2021 outlook. Thank you for your continued interest and support in <unk> I will now turn the call back to Paul.

Thanks, Regina as we open the call I'd ask that you limit your questions to one of the time operator, you may open the line.

Thank you we will now begin the question and answer the question.

Like to ask the question you May press star followed by the number of clients.

Following record your name and the aluminum from Jade. Your name is required to introduce your question and to cancel your request you May press the star and then demand breakdown.

Our first question is coming from the line of George Sutton.

Of Craig Hallum. Please proceed.

Thank you Super job guys, Ken I would note I was not on mute.

I wanted to bring together a couple of things that I may be conflating two items, but.

You mentioned earlier in the call that <unk>.

You are becoming increasingly the single source for your customers and the Orchestrator of all of the things they need to do.

You said that you have 700 brands you work with the new just scratched the surface.

For most of those so I just wanted to bring those two thoughts together, if you could kind of help them.

Yes, well first of all our goal I want to stress is to be the single source from of CX technology standpoint to our clients.

No way was I, suggesting that we are currently the single source of technology at all of our clients. So that is clearly our goal and that's what we're focused on.

And I might add debt, we're making really good progress.

Not only with net new logos of providing the.

All of the CX technology, Thats required or at least a portion of the CX technology required, but we're also now starting to focus on our embedded base. So is that.

That might be surprising.

To hear the reality is is that we've been very busy and have been very <unk>.

Successful in winning net new business and with the.

The recent tuck in acquisitions, it's added a significant amount of new additional logos and so now we are in the process of building out of account plans for each and every client.

So that we can offer them our full suite of capabilities.

That help.

That does if I could just.

Follow on relative to the hyper growth vertical, which you mentioned grew 243%.

I know you've had of market focus there from a selling perspective can you talk about your solution and how it is addressing the needs of those types of customers I found that number of particularly encouraging.

So when you look at the companies that are basically born digital.

A couple of things one of those companies really day, one out of the chute are looking for people to partner with.

Yeah.

No way.

Suggesting that the.

Of the born digital companies are.

Of our more enlightened, but what I would say is that they are much more focused on getting off to a strong start and so consequently, those born digital companies tend to want to outsource everything their technology as well as.

There their entire operation operating the execution of their customer interface and so what we are very focused on is working with those types of companies because of their mindset is already in place and theyre not looking to half of large captive, whereas the legacy companies tend to have.

Very large captives.

And what we what I mentioned in our script is that they are actually beginning to now realize that this is not really their strength and that originally emotionally they felt that there was the need for them to manage their own customers because logically that field sounds right, but the reality is when they compare themselves.

<unk> two how we're performing we're performing significantly better and at a lower overall cost to serve so consequently, we're seeing this entire captive marketplace kind of beginning to realize on the legacy side of the institutional side that it no longer makes sense to have 70.

<unk> of their business in house.

We're versus when you contrast that with the hyper growth accounts day, one they want it all partnered with somebody.

Gotcha perfect. That's it from me thanks, guys.

<unk>.

Thank you and next one is from the line of Mike Latimore from Northland Capital markets. Please proceed.

Thank you. Thank you, yes spectacular results there.

I just wanted to clarify I think you said, maybe it was new bookings the average selling price was up about 100% or something like that maybe can you just kind of clarify that is in fact, correct and maybe provide a little detail all of them kind of what the growing.

Of these average deal size is a little more clarity there would be great.

Yeah, I mean, some of it is mix in the quarter about I would say that.

It's it has to do with.

The number of the <unk>.

Very large deal so that will always be an indication of.

Larger deals. It's also an indication as I said that.

We had.

Eight multi segment deals that comprised.

41.

Yeah.

And so it's really a function of larger deals the integration of both <unk>.

<unk> engaged driving those larger deals.

And in some cases.

Particularly in public sector, and healthcare and financial services, it's just the.

Evidence of the comments that Ken has made time and again that the level of the outsourcing right.

Is it is not even about it's not it's not about taking market. It's also about the fact that there is a tremendous amount of volume out there that is moving from captive to working with the partner and so all of those themes all of those trends are playing into.

Higher.

Average.

Deal size.

Okay.

And then another part of me, while he was seeing exponential interaction the volume growth I guess any quantification of that and maybe.

From the segmentation between voice and messaging.

I think that if you look at of the Gartner reports from the various different reports that have come out recently I think that it's suffice to say that with what I would call persistent communication where.

Every company is messaging you an inter are attempting to interact with you on almost a daily basis, that's driving a significant amount of of of <unk>.

Net new interactions. Additionally.

As retail has been shut down and as people are beginning to realize that buying direct is dramatically more convenient.

In order for them to make these large capital purchases, whether it be with automotive appliances high end consumer electronics et cetera, they need somebody to support them in making that decision as well as support them not only through the buying process, but the actual ownership process.

Yes, and so consequently.

People are not getting in their car and driving to X y Z.

Or.

Whether it be.

The <unk>.

Dealership auto appliance store et cetera, and they are interacting more and more through chat channel through voice channels.

Cetera. It allows them to continue on with their life and not have to inner.

Interrupt their entire Saturday to purchase the car et cetera. So we're seeing this across.

The really every vertical but we're also seeing that just the overall explosion of brands that I have discussed over the last two three years is also really impacting the interaction volume the interaction volumes as well as as you can see just the number of net new logos that we're winning.

So you couple the significant amount of new clients that are coming onboard the.

The entire Lee new way that we.

As society are interacting with companies versus how we used to interact with companies and that basically equals an increase in.

In the.

The need to interact.

And we're obviously at the center of that.

Hi, Thanks, good luck with that and I'm happy to by the way I will make sure that Paul gets you. Some of the reports that talk about interaction volumes an increase in interaction volumes by third parties as.

As well so thanks for your question.

Okay.

Next question is coming from the line of Maggie Nolan of William Blair. Your line is now open.

Thank you that morning.

Morning, Matt Your total number of clients has increased substantially with the addition of AD Tech. So I am wondering if there are any changes to your client facing teams or how you stratify in these accounts.

And then how many of them do you view as kind of high potential or are receiving enhanced level of resources.

In terms of those client facing teams.

Maggie that's an excellent question and yes. It is changing how we're interfacing with our accounts.

I'm not necessarily comfortable just for proprietary reasons of getting into all of the nitty gritty details of what we're doing but suffice to say that.

A there is far more verticals Asian focus.

And B there is there will be significantly more account management focus.

And that has.

That is something that we started on.

Earlier at the very beginning of this year.

And are definitely investing for obvious reasons, because theres more opportunity within each one of these clients and our goal is to be able to maximize the opportunities.

And what we're demonstrating to our clients is that the more areas that they allow us to get involved with technology wise. The more we can actually impact nominally their net promoter score of their customer satisfaction score, but the retention rates and the overall cost to serve so to do that requires much more <unk>.

<unk> focus on the clients than we've historically had.

And what I would just say.

As.

The.

We see this as a very positive opportunity.

Okay. Thanks, Ken.

And then can you give a little more color on the the puts and takes of the 528 basis points of margin expansion with an engaged because of it.

It seems like the drivers that Regina lifted are in my mind, largely sustainable going forward. So I'm wondering what is kind of of that range that youre expecting for engage margin overall.

Over a longer period of time.

Sure, Yeah, I'm going to handle that yes share so.

I would say that when we gave guidance.

At the beginning of the year.

Think about for the first half of 15, 8%.

EBITDA.

Our new guidance at the midpoint.

The kind of brings us to 16% and what Youre seeing in Q1 is.

Kind of hyper EBITDA.

It's about 170 basis points of excuse me 270 basis points of that coming from gross margin and of that 100.

Yes.

And engage I'm talking about engages out of about 180 from SG&A.

And so.

This also we have to remember is the last quarter in which we.

Of our building into an LTM or COVID-19 volumes.

So.

As we as the COVID-19 volumes come down, we're certainly replacing them with other but.

We will see.

C between of 15 and 16%.

EBITDA on a on a go forward basis. So some of that I would say is mix of business and pricing and some of that is.

And it's going to stay for example facilities.

Just from a scale point of view, we continue to express that scale means an awful lot to this business in both of the businesses.

So as we get through.

The year.

At the midpoint of that.

The overall EBITDA margin.

<unk>.

<unk> is about 15, 2%.

And for engage.

The just under 15%.

Thanks Regina.

Okay.

Thank you. Our next question is from Bryan Bergin of Cowen.

Your line is now open.

Hi, Good morning. Thank you can you comment on the mix within engage of the higher growth higher margin businesses like the hyper growth the customer acquisition and the fraud detection services versus the traditional base of work I'm, just curious where the share stands now between those groups and then also how that looks in your pipeline for engage.

Yes so.

And then on an on an annual basis that hyper growth segment is.

Just under.

Let's say $400 million.

So from.

The engage perspective again, if you look at the midpoint of the guidance, it's about 1 billion eight.

Okay, I'm, sorry can you repeat the other pieces.

Yes, just how it looks in the pipeline as well.

Yes, I would say that.

It's pretty it's pretty.

The correlation is.

It's about the same we'd probably see about 25% of that pipeline and that <unk>.

Type of growth segment that hyper growth segment is a combination of startups.

But it is also right the growth.

We'll be in the born digital direct to consumer some of them who are now having.

<unk> thousand $31 million of revenue with us.

Okay. That's helpful and then it looks like the performance from your largest customer was notable here can you comment on the outlook in that relationship for 'twenty. One I'm just curious how we should think about the composition of surge versus regular or permanent engage activity.

Yeah. So.

That that.

<unk> is on an annual basis, probably a quarter of the million dollars.

The 22.

<unk> a quarter of a million dollars in 2021.

We are in the process, it's a mix of AAU and COVID-19 and our view is that at this point and we certainly got three quarters to go with that business.

<unk> to about $170 million of longer term permanent business, that's the status.

We've done some really good work in.

Ensuring that that those agents.

The quality of work and the reliability.

We're now moving those associates to other work like.

Broader fraud.

Retail banking, so we feel pretty good that we feel very good.

That.

The benefit of those volumes have strengthened the relationship allowed.

That.

Client to see.

The broader capability of T chek and debt.

Of that that business continues to grow but as others grow with it.

<unk>.

Below the 10%.

But over the next couple of years, probably $200 million or so.

Piece of business for.

T Tech and again I'll just stress that if you looked at Q3, and Q4 and Q1 and we're in the middle of Q2 now and.

I would add the comment for Q2.

The level of permanent long term business in our bookings in conjunction right with reflecting on the fact that we're a longer longer longer Paul business in the sense of that takes time to close and it takes time to build that we will see kind of going into the second half.

<unk> right.

<unk> start a peak of the volume that we booked in the previous quarters that very nicely replaces.

The work that we were the search work that we got with.

With with the COVID-19, so feel very comfortable of that.

At 7% to 9%.

Kind of mid term growth that we talked about at the beginning of the year and last year for engage is there.

And certainly <unk>.

Even beyond kind of the surge that we get from the acquisition of <unk> and digital right that we're a strong 15% to 25% growth on that business.

Okay. Thanks for all of the detail.

Thank you. Our next question is from Joseph <unk> of Canaccord. Your line is now open.

Hey, guys. Good morning, Great results.

Folks from the supply side of the second line or you will kind of emerge.

I mentioned just here a second ago Regina.

The strong business growth.

Dynamic.

The captives perhaps.

Giving up some share.

Two of the captive.

The captive employees.

Just how you're seeing the supply side right now.

Paul perhaps.

COVID-19 a little bit.

So hey, Joe its Ken how are you.

Good morning, when you say supply side are you asking is the re badge opportunities is that your question because the answer is yes, we are receiving.

The request to re badge.

Certain clients cash.

Captives.

But I'm not sure whether your where your questions going and I want to make sure I answer it thoroughly share just in general with kind of the acceleration in the business.

<unk>.

If you look at some of the newer clients.

Perhaps.

Pretty.

Perhaps maybe a little bit more intense capability requirements. How are you just from looking of supply side in general and the.

The ability to continue the key.

Keep pace with I guess with the <unk>.

Accelerated pace of of revenue revenue growth machine and engage yes.

Yes.

So the it sounds to me like it's almost like a labor market question.

More of a left field yes.

Yes so.

Right now we are very fortunate that.

We've been able to.

So successfully operate in a virtual at home environment.

We are confident that as long as we continue to stay as heavily at home.

That there will be ample supply because there are so many people that have decided that they want to kind of change their work life balance for a lack of of better term. So we are seeing no issue and meeting our recruitment needs whatsoever.

No that we are a premium provider and that means that we're also of premium payer and so it's one of the benefits that we.

Enjoy is that in virtually every market we operate in we tend to pay and the higher percentile, which helps attract not only better people, but keep the so our whole focus is on building a workforce debt.

That we can retain but also of workforce that's highly capable. So right now we are we're really.

Benefiting.

From the work at home and what I would say is as debt a very significant portion of our clients are realizing the benefits that we're achieving by not only paying the associates more but also by keeping them at home versus bringing them back to bricks and mortar and.

So.

We're not yet prepared to announce what percentage, we think will come back to bricks and mortar other than that we've always said that we think it will be no less than 30% to 35% I think we think it's now quite a bit more than that that's going to stay at home.

Based on what our clients are now, saying that they want to do.

Long term.

So for now we feel.

Really we feel really positive about the labor markets and what we're able to achieve especially in light of the fact that so many companies are having difficulty I actually think it's feeding our net new clients I was on a call yesterday with a large financial client that has.

2000, captive and they're not able to.

Fill all of our positions and they've made the decision that they want to partner with somebody and so.

So I think that more and more of these companies are just realizing that they just don't have the talent acquisition capabilities.

And the automation to attract into to really cast a very wide net.

And so consequently, I think that this is going to play into more captives wanting to convert to a partner based solution.

I would just add that.

When we look at our wins in the reasons that we win.

Yes.

Many of our wins on the engage side wood.

Indicate on the top three reasons T tech our ability to.

To be in the market attract the talent and keep the talent, but also say that there is pressure there and that pressure ultimately adjust as it did during COVID-19 will help us to work with our clients to drive more automation.

To augment the the.

The human labor and the second is that I do think that it will open up a greater opportunity.

For North America to leverage offshore and that increased offshore mixed alongside our onshore.

Is the piece that will continue to.

Help us maintain and grow <unk>.

H EBITDA.

EBITDA margins.

Sure that's great. Thanks, Regina and Ken and then just one quick follow up I know you mentioned a lot of the new logos came in through healthcare and government.

Perhaps maybe a little of Underpenetrated, but.

The commentary there might be helpful on.

Or are there some of new logos, there and then maybe just update on Europe. Thanks, a lot.

Well first of all I think on the government side, it goes without saying that.

The government is going to increasingly.

<unk> for <unk>.

Because they got caught with.

And the very awkward situation, whether it be with department of Labor Department of Health Human services I could go on and on and on.

And so consequently, I think theres been quite of a real epiphany within state local and federal government that there is a need to partner with experts and them doing this work internally frankly makes no sense whatsoever. So we.

<unk>.

We're very focused in that area, we have some very.

<unk> unique technology as far as our status with the government of.

Of certifications et cetera, with our technology et cetera that certainly.

Helps us and we're pretty unique in that area and so we're going to continue to keep focusing in that in that area. It's good long term reoccurring business and we see huge opportunities for our technology digital.

Acknowledging.

Group to be able to help create E gov across a myriad of of areas.

Areas as it relates to.

Healthcare look healthcare is one of three trillion dollars of year industry in the United States. We the truth of the matter is even though we have many of the major healthcare payers, we're now picking up providers.

And we still only have a small percentage of the amount of business that they have to offer a ton of their business is captive I'd say easily 70% of their business is captive.

And frankly, they're running into issues, whether it be dealing with their staffing their surge.

And we're showing the new modern ways to be able to handle their volumes by introducing technologies like conversational messaging chat box voice spots.

At cetera, So we are.

We are very focused on that area of what I would also say is that in healthcare historically, we've only focused on the mega operators the largest payers.

And then and then.

The.

Cases, the largest providers with.

With the <unk> acquisition, it's really allowing us to dropdown of little bit and go after still large health care of providers, but theyre not the mega providers through more of the regional providers and that is also creating opportunity for us. So overall, we just think it's a very robust space.

And there is frankly the.

Theres more volume in health care than we could probably ever even handled just as the single company.

Great and then Europe.

I am sorry, then what I didn't hear you are in Europe.

Yes look Europe is an area that we have.

But we have really doubled down on our on investing in and expanding.

We are definitely very focused on the digital side right now.

And again, bringing app text capabilities into Europe.

Genesis is pretty much the number one almost the de facto.

Provider or capability that most of European companies have gone with the that was one of our one of the many reasons why we decided to to double down on Genesis.

And so we're partnering with them to help them expand in Europe.

As well as.

On the engage side we.

We see significant opportunity because none of our actual competitors in Europe really half of technology solution. They are more of a labor augmentation solution.

So.

We're increasing our efforts in that area.

Well, so we think Europe is a pretty much an untapped market.

That said.

It goes without saying that in North America.

We are extremely busy.

Great. Thanks, Ken.

Thank you.

Next is from Jason Kupferberg of Bank of America. Your line is now open.

Hey, good morning, Ken and Regina. This is cash me answer Jason on the wall.

I have to dig a little bit deeper on the engage revenue guidance, though.

You guys delivered 34% per the quarter, but the outlook, obviously implies a pretty material deceleration for the remainder of the year understand the comps get tougher club the related volumes of rolling off of the fuel.

Quite low, especially given the momentum you've seen an engaged and the conversion to sort of longer term engagements.

A little bit more about the dynamic and maybe quantify those copay related volume like one of that rolling off and by how much.

Well first before Regina answers that question I want to just address something that she said I don't want to make sure that everyone hears.

Our pipeline is so strong.

And the conversion of our pipeline.

And the bookings that we've already booked.

From fourth quarter of last year, and first quarter of this year.

But we're very confident.

That any of the surge work that we have that.

We've won in the past.

But we feel very confident that we are.

Doing a very good job of filling in for that and really as you heard Regina, let's say, we're not concerned so let's don't make a big deal about the COVID-19.

The surge work that we've won when our when we're when we're.

When we're showing 95% bookings growth as an example, so I just want to stress that.

That should not be in any any any ones worry.

As to as the COVID-19 bookings over time.

Yeah.

And potentially reduce the fact of the matter is in the majority of cases, we have converted the COVID-19 work to lump either longer term or long term relationships.

And so it's been really a very positive.

Situation for Us and we believe will continue to be so Regina why don't you take it from there.

I don't have much else to say than what I said earlier.

Yes.

$75 million or so of COVID-19 stuff in Q1, and you have non in Q4 and that comes down over time. So if you look at.

The underlying growth without the search volumes here in the kind of 9% to 10%.

The higher on the high end of our range. So it's just a matter of that conversion is happening.

And it's happening.

Direct lea within certain accounts of minutes.

The replaced despite virtue of the the <unk>.

Volumes, we have in our bookings.

Okay got it and as a follow up.

With.

This quarter, you were able to be EPS estimates pretty significantly by almost 25.

One five times at least relative to estimates, but the guidance range of the only for around nine John could you just help us reconcile all of that.

Element of conservatism or are there some other factors in play there, yes. So again what happens at the revenue level happens at that kind of the EBITDA NOI level and EPS and so.

As as you.

Go through.

The the quarters.

The growth year over year is is very different. So you have a you have a significant.

<unk> performance you have the significant over performance, but you have a significant just in general that's where our guidance was the performance in Q1 and it gets a little bit more to our normalized growth in the ensuing quarters.

Still showing.

Quarter year over year of growth, but not out of spectacular as in Q1 and again I think the important thing here is that.

On <unk>.

Our views on revenue.

Without COVID-19 are.

We're now of 7% to 9% organic growth grower in engage and if you strip out.

Acquisition stuff, where ultimately of 15% to 25% grower in digital but the.

The the growth rates are pretty spectacular when you include.

The acquisitions, which are very much of a part of our strategy.

Okay. Thanks very helpful.

Thank you.

Next question is from James Faucette of Morgan Stanley. Your line is now open.

Thank you very much and thanks for all of the great details and color.

And entertaining all the questions. Thus far I just had a couple of quick follow ups.

First.

You've talked a lot about the obviously the drivers that are shifting Paul.

<unk>.

Customer engagement processes as well as.

How how companies are looking at outsourcing or partnering with people like T Tech, but I'm wondering how much of of your growth and he is also being helped.

By competitive wins is that much of a dynamic in the current market for you or is it really just the.

The real change in views and plans by by your partners and customers.

Hi, James I think it's both to tell you the truth I mean, I think that there is a definite mind shift change in.

In the marketplace as it relates to clients realizing how absolutely critical it is that they are fully digital and that day.

Or have increased their touch points across every aspect of of how they do business, whether it be physical in bricks and mortar whether it be in app, whether it be in the web on the website.

Or virtually through.

With voice and so I think that.

Everybody is scrambling to become omni channel everybody is scrambling to be 24 by seven everybody is scrambling.

The two.

To address every culture meeting speak multiple languages.

And.

I would say in a high percentage if not most of our clients are trying to figure out how to be more direct to the consumer even if their model historically was not direct to consumer. They are now trying to figure out how to go direct to consumer.

We represent in the United States over 75% of the automotive industry.

Without getting into brands I'll, just tell you that many of the major luxury brands major sport cars et cetera.

Although the absolutely are going to sell their cars through dealers theyre. Realizing the customers don't have patients with the existing process and therefore, they're going to do everything they can to more of less help the dealers sell cars online for lack of the better way of getting into it because it's the law.

The conversation.

That creates immense opportunity for us.

And so we're involved across many many different.

Opportunities in the automotive space, where we're helping them in addition to that high.

The high percentage of the automotive industry is getting ready to go subscription based and so.

I won't mention brands, but we have multiple clients that you can now pay a subscription fee and pick out the car you want and traded over the weekend and change it to of convertible car.

Pay a subscription fee and everything's included that requires a lot of support and interaction and coordination et cetera.

And then on the competitive side look I think that high tides raise all boats.

I would be surprised if the competitors on the engage side arent also seen.

Increased opportunities it goes without saying that we are we are definitively winning.

Many opportunities on the competitive side.

And.

But that truthfully is not our focus our focus is really to have a mindset, where we're working with chief digital officers chief customer officers, chief marketing officers and Cio's to.

To help them and business unit leaders transform their business and in doing so that is not typically working via an RFP.

Cetera, instead, we are proactively reaching out to these companies and the beauty is that we have so many clients with that of gone through similar experiences as the clients that we're approaching that it's very comfortable to do peer to peer selling meaning where they can contact other companies in their space and say hey, how did these guy.

The is due.

Et cetera, and we're very comfortable with the references that our clients will provide prospective clients. So I hope that helps.

That's really helpful, Ken and great color of nuance there.

My second.

Follow up question or just a clarification is the Ken you talked a lot about the obvious the traction too.

For employees and now your partners are starting to see the benefit of at least for some people work from home et cetera, I'm just wondering.

How youre doing on things like employee retention and turnover and recruiting and what that environment looks like right now, particularly as you said there does seem to be a rising tide.

I think well first of all of management, our employee retention is phenomenal.

Rare that we lose anybody in management.

We're very energized very excited the love what they're doing.

And so there is no issue there whatsoever.

On on the frontline, which I'm assuming is where you are.

Were your focus of your question is.

I would say that we're seeing attrition significantly lower than pre COVID-19 times meeting in 2019.

We attribute that to work at home and that that is of more desirable place for these types of jobs to be able to operate when they can avoid driving in traffic and spending money on gas and in some cases, having to find the parking space.

Cetera, and they can do it from the convenience of their home when they can have a more flexible schedule. It just simply works.

For their lifestyle.

So I think thats been very beneficial to the retention of our employees and to lowering the attrition from what we were seeing in 2019.

As it relates to our current ability to hire.

Sure.

I must say and I know, it's counterintuitive, we're very comfortable with our ability to hire right now and I only say, it's counterintuitive because I have so many friends and so many of the businesses right now, especially in the restaurant space, the leisure, where they're having difficulty hiring but those jobs require people to get in their car and drive somewhere et cetera.

And our jobs are paying as well or better than those types of jobs. So I think that for now we're in great shape of.

Obviously, I don't have a crystal ball.

And I don't know what is going to take place with the stimulus package going forward, but my guess is that the labor market's going to open up quite a bit more in that September October timeframe when the.

When the when the.

Moneys stops flowing so to speak.

From some of the stimulus plans.

And people will.

Many of them that much larger of the workforce needs too.

I actually get a job.

Yes that makes sense, thanks for that Ken Thank you.

The question is from Josh Vogel of Sidoti. Your line is now open.

Thank you and good morning, Regina and Ken.

But the results for share and you feel that a lot of my questions already so just a quick one when you are looking.

Looking at the pipeline I'm curious if you're seeing any notable difference in the sales cycle and conversions when engaging with let's.

The hyper growth company versus one of those traditional larger enterprises that are looking to shed of portion of their captive in house operations.

So first of all I would just simply say as it relates to pipeline and conversion and REIT and Regina Please feel free to.

To.

Add anything to this but I would say that the pipeline is definitively conversion is compressed and the reason for the compression as theres a much higher sense of urgency on the areas that we're focused on whether it be on digital or whether it be on engage.

So across the board the pipe the conversion.

The time to sale I think has compressed significantly in.

Frankly, I'd be happy to try to do some more research and get back to you offline or have Regina get back to you offline or Paul.

Hence too.

How much more.

Impressive the time itself, but I think it's pretty significant.

There is like I said of much higher sense of urgency and then on the hyper growth.

I would normally I would say that they are.

<unk>.

50% faster in wanting to make a decision, but I think with the overall sense of urgency in the marketplace. Maybe now there are only 25% faster and I'm really just guessing.

From that but we're it's rare that we're seeing deals that we're pursuing for 14 months or 12 months et cetera.

I'd say the other thing is that because we have so many.

Poc's that we're capable of doing proof of concepts, where we will create capabilities for our client.

<unk> launched those capabilities in a very short period of time 30 day 60 day something that they may be we're working on internally for a year and couldn't accomplish that that really also helps us in our ability to demonstrate what we can do and in many cases, we're willing to do.

A certain amount of that work on our dime.

To create the proof point and to prove to them.

The ability and the efficacy of whatever it is that we're that we're creating on the technology side. So I think debt a the market has a much higher sense of urgency than it did before overall, regardless of whether <unk> is involved or not b I think that we have some pretty incredible tool.

<unk> and demonstration capabilities.

Get people to want to move faster on what were showing them and they have a higher sense of urgency and need.

For those capabilities and I think thats playing across all of all of the accounts from government, which is typically very slow moving health care, which is typically very slow moving.

Two more <unk>.

Faisel more agile.

Our clients like hyper growth.

Really good insights there thank you Ken.

Thank you.

And operator of this does conclude our call don't mind for the close.

Thank you everybody.

Yes.

This concludes the <unk> first quarter 2021 earnings Conference call you may disconnect at this time.

Okay.

[music].

[music].

Welcome to the T tax first quarter 2021 earnings conference call.

I would like to remind all parties that you won't be in a listen only mode until the question and answer session. This call is being recorded at the request of Chi Tak.

Now I'd like to turn the call over to Paul Miller, <unk> Senior Vice President Treasurer, and Investor Relations Officer. Thank you Sir you may begin.

Good morning, and thank you for joining us today <unk> is hosting this call to discuss its first quarter earnings results of the period ended March 31 2021.

Dissipating in 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 those documents are complete information about our financial performance. We also encourage you to read our first quarter.

2021 quarterly report on form 10-Q, 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.

These 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 a more detailed description of our risk factors. Please review our 2020 annual report on form 10-K, a replay of this conference call will be available on our website under.

The Investor Relations section I will now turn the call over to Ken Tuchman, <unk>, Chairman and Chief Executive Officer.

And are you able to Harris.

Excuse me I was on mute, thanks, Paul and good morning, our focus on digital innovation and operational excellence continues to deliver differentiated outcomes for our clients engaging careers for our employees and increasing value for our shareholders. I am pleased to report that our broad based financial momentum can.

And for the fourth consecutive quarter, we have delivered record results in the first quarter of 2021 over the prior year period bookings increased 95% to $170 million the new business is diversified across our existing embedded base and <unk>.

Net new clients. These new wins are healthy mix of digital and engage capabilities.

We added 25, new client relationships across several industry focus areas with nearly half coming from our rapidly growing healthcare and public sector verticals.

Revenue increased 25% to $539 million <unk>.

The adjusted EBITDA increased 51% to $96 million non-GAAP operating income increased 64% to $80 million non-GAAP EPS increased 70% to of $1 26, and free cash flow.

<unk> increased 28% to $58 million.

Over the last four quarters, we have booked $742 million of new business up 68% over the comparable 12 month period based on our sustained momentum our record first quarter performance solid pipeline and backlog we are raising our two.

'twenty one guidance.

Our financial momentum has not only continued but it is accelerating the convergence of the experienced economy increased virtualization and the thriving direct to consumer marketplace has put customer experience at the epicenter of modern commerce experience.

Has become the new competitive battleground, among all brands and our turnkey customer experience at the service platform delivers all of the mission critical technologies and services companies need to win today across our focused industries and geographies improving the customer experience has never been.

The more urgent the experienced economy has created an explosion of interaction volumes across the myriad of channels.

The result is of Disney more of challenges for companies and government entities alike.

<unk> brand equity in their financial success now depends on their ability to rapidly modernize their technology operations and processes to deliver a frictionless personalized experience the.

The demand for our end to end approach continues to Mount.

Enterprises that have tried to improve their CX by stitching together.

<unk> of point solutions service providers and technology platforms are falling short disconnected.

<unk> systems are creating disconnected experiences when customers are demanding seamless and intuitive interactions.

Our customer experiences of service platform takes the burden off of our client's shoulders as a single integrated source, we serve as the CX Orchestrator administrator and journey partner with established best practices and priority.

Excuse me the.

Best practices and proprietary prebuilt technology connectors, we synchronize strategy analytics technology and operational execution to produce personalized experiences that consistently deliver superior results.

It has been proven.

Time, and again the companies with the highest net promoter scores continually outperformed the laggards companies that invest in customer experience as a strategic differentiator when with customers who stay longer spend more and are passionate advocates for brands that they love.

Now, let me share our perspective on several megatrends that have gained momentum over the past 12 months the.

These factors will continue to provide strong tailwind for <unk> Tec.

<unk> virtualization.

This is changing everything consumer habits have changed for good the convenience of everything from home has forced traditional brick and mortar operations in industries like retail dining healthcare fitness entertainment and others to reconfigure and rethink how they deliver their services.

And their products.

For many of it has opened up new digital sales channels and growth opportunities.

These new ways of living and working have increased interaction volumes exponentially and have accelerated the demand for high quality virtual support and connectivity that we at <unk> provide the.

The direct to consumer model is thriving native digital businesses continued to flourish over the past year as consumers embraced the ease of buying direct they rejected third party intermediaries that slowed down the process and provided little to no value from the start these born digital companies launch their business with.

Virtual support from CX partners.

Now as their brands mature and grow their investing even more with the customer experience technology and delivery partners like us.

The migration to the cloud is accelerating and creating new opportunities for companies to re imagine their customer experience company.

Companies are recognizing that the move to the cloud offers innovative features and functions to dramatically improve their customer experiences. They see the promise of increased agility scalability and of ubiquitous experience, but they need an experienced partner to help them envision and unlock the meaningful benefits.

Of migrating to the cloud more.

Many lack the CX design and technology expertise Theyre actively looking for proven thought leaders and implementation partners, who can help them design and build the transformation roadmap the roadmap and then bring it to life.

They are coming the T tech because of our singular focus on customer experience. There are very few partners in the world that have the size scale and reputation technology and IP to deliver the speed and value the market demands today.

As the volumes of interactions increase exponentially the ability to balance efficiency with humanity requires the intelligent use of automation.

Consumers continue to demand convenience and ease with every interaction and are welcoming automation to accomplish simple task when they reach the point of escalation. However, they expect to interact with of trained knowledgeable and compassionate human expert.

AI enabled intelligent automation plays an essential role in the empowering these frontline experts it streamlines repetitive desktop tasks. So that they have the time resources and empathy to solve higher value more.

More complex customer challenges this.

This careful blending of competency of tech and the warmth of humanity is becoming the face of their brands done poorly it destroys customer value done well it unlocks unlimited potential companies need experts to help them get this careful balance right.

Real time data is informing all key decisions gone are the days of batch reporting and historical analysis to day decisions or cognitive preemptive and are happening instantaneously companies are building massive data lakes to compile zettabyte of customer data and are using prebuilt connectors.

To use.

To put this price list insight to work at scale. They are creating a common data model with the embedded AI to help shape the journey for customers.

Data has become the nucleus of successful <unk>.

<unk> strategies it enables companies to proactively respond to their customers' needs in real time day.

Data helps pinpoint the optimal moment for our social push identified specific product preferences and anticipates the path of an omni channel journey.

Making data actionable in real time is hard to do it requires harmonious integration into the front end CX technology and back end operations few if any of our competitors have the industry specific knowledge CX design technology integration and orchestration capabilities that we deliver.

<unk>.

Companies are realizing the need to shift from captive in house models to specialized customer experience innovators.

We see of large scale structural shifts happening in the marketplace right now managing CX is getting more complex every day and tight labor markets are making it harder than ever for companies and government agencies to successfully manage their customer experience operations themselves.

The ability to stay ahead of technology innovation and complex analytical models require a specialized expertise that is difficult to find and maintained in house. They are realizing that they're stuck with legacy operating models, it's simply too hard and too costly to reinvent how they interact with their customers in response.

They're shedding of portion of their captive operations to a select set of strategic partners that they know and trust.

These mega trends are converging to create a total addressable market of over $640 billion and growing this massive opportunity includes customer experience consulting technology and operations with the combination of <unk>, we now have over 700 brands.

Of our client portfolio. Many of these clients have just begun their digital transformation journey and need our help architect Inc. And planning their CX roadmap many of Reimagining their CX of need analytics and cloud technology to enable richer more meaningful customer experiences and many others are growing so rapidly they need our opera.

<unk> capabilities to help them scale overnight for every one of these clients. We have just scratched the surface the opportunity within our embedded base is immense.

Now let me demonstrate how these trends are playing out in the market by sharing some recent work with a few clients.

It is important to note that each of the solutions was architected architected with an outcome first mindset. These initiatives were viewed as high value investments not cost cutting.

Commodities are clients had specific business objectives, and we use design thinking to collaborate on holistic solutions that we've strategy technology analytics and operations together to deliver specific and measurable outcomes.

The first example is with the very large health care client.

We've been a strategic partner, we've been strategic partners for years and most recently the face the time sensitive challenge and asked us to help as part of the national vaccine rollout they needed to educate and motivate an underserved population the had to move quickly and they didn't have the tools or the expertise to do so.

So in less than 10 days, we stood up and delivered of turnkey program to identify contact schedule remind and remind patients to get their vaccine. Our solution was virtual cloud based and combined automation, especially trained frontline health care experts our ability to meet their pressing need has expanded our client really.

<unk> chip and has opened the door into other therapeutic in geographic areas of their operations. Our next example comes from one of the largest consumer electronics retailers in the world.

This industry has been under intense pressure to innovate and stay relevant and survive our client had of best of breed CX platform already in place, but needed guidance on how to optimize the technology innovate ahead of competitors and drive a better overall experience on an ongoing basis.

We re imagine the use of their existing tools migrated them to the cloud and integrated them using our own IP. The result was the single ubiquitous CX technology platform a line to an overarching strategy that achieve their desired experience outcomes. The solution is just one example of how our ability to match.

<unk> and integrate disparate CX technologies helps organizations minimize fragmented CX and drives the cost of complexity out of the organization.

As these key studies demonstrate modern digital technologies in a central component to delivering effortless customer experiences.

We've spent the last decade building, our <unk> digital business to meet this growing need in the marketplace through organic innovation and tuck in acquisitions today, we provide of future ready comprehensive data driven technology platform.

As a single source, we are unique in our ability to offer clients across the globe every function feature of an outcome they need to deliver of cognitive seamless experience across every touch point in the customer journey at scale. Our most recent acquisition of CX technology leader <unk>.

Is the latest step in this strategy. This transformation move delivers on our goal of becoming one of the world's largest pure play end to end CX technology companies.

We have essentially doubled our addressable market and can now meet the needs of clients from mid market to the Mega enterprise.

Part of the integration I am delighted to announce that the president and CEO of App text, George IMMU has taken the role of President of <unk> digital with over 25 years of the home of successful CX technology companies George is a proven leader innovator and customer experience evangelists and Peru.

<unk>, most importantly, George shares and lives <unk> core values.

<unk> has achieved Genesis as partner of the year recognition for several consecutive years and as part of the Covenant, Microsoft Inner circle for its industry, leading IP cloud analytics and AI solutions. In addition, they have built a set of proprietary built in connectors that seamlessly net disparate systems together.

To facilitate the flow of information across platforms.

<unk> complements the strategic go to market partnerships, we've already forged with Amazon connect Cisco sales force peg of systems among others. When we combine this ecosystem with our own proprietary machine learning AI practice that includes conversational messaging chat bots and data analytics we are in.

The unbeatable SaaS customer experience portfolio.

Clients are choosing our technology platform because it delivers the best outcomes, we stared, we stand out as the go to partner for CX transformation for three reasons first speed to value our deployment platform brings together entrenched legacy systems and advanced SaaS.

<unk> and empowers customer experience teams to enable contextual and personalized customer engagements. The result is increased customer satisfaction implementations are typically three to five times faster than point to point integration of alternatives.

Reliability as the global operator, we manage the CX ecosystem across hundreds of thousands of users. We are one of the largest CX technology players in the world. We know what works what doesn't and what will deliver the best outcomes for our clients.

Third global scalability of our Humana Fi cloud enables the largest most complex organization from the world to obtain and operate all of the cloud technologies the ever need to interface seamlessly with their customers. It routinely serves with hundreds of millions of end customers and has the ability to scale within <unk>.

<unk> versus months.

Now I'd like to move on to our <unk> Tec engage business.

We continue to complement our accelerating organic growth with M&A to bolster our total addressable market to cover all company sizes across all geographies.

Increasingly clients are coming to us because they need of robust technology infrastructure and technology enabled frontline talent, we use best of breed tools to out the employee lifecycle to find train nurture and support our knowledgeable associates. In addition, we have worked hard to build an engaging culture that draws passionate.

Dedicated employees to our company are transparent and inclusive culture is the connective tissue that energizes. Our teams. We are extremely proud that in the midst of the pandemic. We were named one of the best large employers to work for by Forbes magazine.

Our values driven culture guides everything we do we remain deeply committed to delivering on our promises to our clients employees shareholders and partners.

For our clients, we're driven to generate sustainable valuable outcomes that strength and brand affinity and financial results are industry, leading client metrics are a testament to our position as the trusted long term strategic partner for our employees, we're committed to nurturing their health and wellbeing at the start of the pandemic, we prioritized the safety.

Above all as we emerge our employee basis is is as engaged and motivated and productive as ever.

In addition through ongoing investments in our ESG programs were helping to improve the quality of life in the communities, where we operate and the world in which we live most recently, we dedicated additional resources to support our employees in countries that are most challenged and continuing the spread of the corona virus and treating in <unk>.

Overwhelming number of cases.

For our investors, we have set financial goals and consistently have achieved them in our most recent three year plan, we targeted of $500 million in digital revenue.

We're on track to reach that goal ahead of schedule, we committed to a 9% growth in engage and as you will hear from Regina, we're increasing our engage revenue guidance, we said, we'd supplement our growth through acquisitions and of successfully closed and integrated over a dozen acquisitions over the past decade.

We promise to return significant capital to our shareholders.

As a result, we repurchased approximately half of our outstanding shares over the years and commenced the semi annual dividend in 2015, and we have increased that payout every six months since 2016.

In closing we remain extremely excited about our future. The experienced economy has created an unprecedented opportunities for our innovative CX company like ours. We have built an exceptional management team of highly coveted client base of industry leaders and digital Disruptors and a proven set of <unk>.

<unk> technology enabled assets with our unique ability to enable new interaction channels unlock operational agility and stimulate substantial revenue growth, we've become a powerful force and fueling modern commerce today and for many years to come on behalf of our executive team our board of directors.

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

Thanks, Ken and good morning, everyone I'll start with the review of our first quarter 2021 results and then provide some context regarding our full year 2021 guidance, which we are raising to reflect our improved outlook.

2021 is off to a strong start formed in the first quarter with record financial results and are now positioned to exceed our original guidance given improved first quarter bookings current revenue backlog and in your pipeline.

Turning to our new business signings, we had another strong bookings quarter with $170 million up 95% over the prior year period with meaningful contribution from both of our digital and engage segments of <unk>.

<unk> included eight multi segment deals totaling $41 million and 25, new logos with cumulative bookings exceeding $32 million.

Banking financial financial services, and insurance healthcare technology, and public sector verticals, each added over $20 million of bookings.

Our direct to consumer hyper growth offering new signings grew 243% and we began adding volumes in our travel and leisure vertical which the past $10 million. The average deal size expanded near 100% in bookings related to the pandemic, where less than 15% we continue to see good.

<unk> of pandemic volumes into permanent lines of business and currently estimate that our fourth quarter 2021 will be comprised of volumes that are nearly 100% longer term permanent business.

We exited the first quarter of 2021 with revenue backlog of $2 4 billion or <unk> 92, 3% of the midpoint of our revised guidance of 25% increase over the prior year or current in your sales pipeline is $136 billion of 22% increase over the prior year.

My comments regarding our first quarter results referenced revenue on a GAAP basis, and EBITDA operating income and earnings per share on a non-GAAP basis.

I want to reemphasize that starting last quarter, our non-GAAP operating income and EPS are now adjusted for stock based compensation and acquisition related amortization expense a full reconciliation of our GAAP to non-GAAP results is included in the tables attached to our range.

<unk> press release.

On a consolidated basis in the first quarter of 2021 revenue increased 24, 8% to $539 2 million of which 22, 5% was organic growth.

Adjusted EBITDA increased 57% to $95 9 million or 17, 8% of revenue compared to 14, 7% in the prior year.

Operating income increased 63, 8% $79 9 million or 14, 8% of revenue of 350 basis point improvement over the prior year.

EPS increased 69, 5% to $1 26 compared to <unk> 70.

74.

Up 70% versus the prior year.

Foreign exchange, primarily from a weaker dollar U S. Dollar had a positive impact of $7 1 million on revenue and a positive impact of $1 million on operating income the majority of which is in our engage segment.

Our revenue growth is enabled by an expanding total addressable market, our expanded sales and marketing platform a growing portfolio of offerings continued momentum in our multi segment deals geographic expansion into EMEA and of vertical focus on higher growth sectors.

Our improved profitability is a function of top line scale in combination with value and outcome based pricing and of persistent focus on the optimizing and innovating our cost structure offset by an increased investment in R&D sales and marketing and acquisition related expenses.

Our digital segment revenue was $63 6 million in the first quarter compared to $77 6 million in the prior year operating income was $6 7 million or 10, 5% of revenue compared to $12 6 million or 16, 2% in the prior year period.

Digital revenue, excluding the large government contract and exited consulting practices was 23, 3% higher than the first quarter with cloud and managed service revenue growing 14, 4% and the professional services revenue inclusive of our CX consulting systems integration.

Plus product growing 36, 1%.

Our engage segment continues to significantly outperform in the first quarter revenue grew 34, 1% to $475 6 million compared to $354 7 million in the prior year all of which was organic.

Operating income grew 102, 4% to $73 2 million versus $36 2 million in the prior year.

Engages operating income margin expanded 520 basis points to 15, 4%.

The majority of growth is non pandemic related work from our longer term embedded base and new client contracts, including significant volume increases from our financial services and healthcare automotive technology and retail clients the growing demand for our virtual and digital delivery capabilities.

Existing client program expansions and new line of business, both within and across our engage customer care and born digital sector growing contributions from our EMEA client acquisition platform and increased client engagements to modernize their end to end CX strategies.

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

I will now share a few other first quarter 2020 measures before discussing our outlook at March 31, 2021, cash was $144 2 million and debt $348 7 million of which $339 million represented borrowings under our recently Upsized credit facility.

From 900 million two of 1 billion too.

Net debt increased by $9 3 million to $204 5 million year over year, primarily related to acquisition related investments and capital distributions largely offset by strong cash flow generation.

The first quarter cash flow from operations improved $69 8 million from 60 to $62 2 million of 12, 3% increase over the prior year the increase is attributable.

The improvement in our profitability and working capital management.

<unk> reached a record low of 59 days in the first quarter of 2021 down from 66 days in the prior year period, and 61 days sequentially.

Capital expenditures were $11 6 million of two 1% of revenue from the first quarter 2021, compared to $16 $8 million of three 9% from the prior year the no.

The decrease as a percentage of revenue was primarily due to our focus on improvement of our fixed asset utilization in particular facility and technology assets.

Our normalized tax rate was 23, 7% in the first quarter of 2021 versus 24, 1% of the prior year. The slight reduction is primarily due to jurisdictional mix of income we anticipate of forward tax rate in the range of 22% to 24%.

In the first quarter of Board announced the next semiannual dividend in the amount of <unk> 43.

Approximately $20 million, which was paid on April 21, 2021, the shareholders of record on April five 2021 is given and represents a 26, 5% increase of at the semiannual dividend paid in April 2020.

Turning to our 2021 outlook, we are well positioned for meaningful profitable growth in 2021, we are experiencing an elevated level of bookings pipeline and revenue backlog across both digital and engage our go to market platform continued to deliver a differentiated set of CX solutions.

And we continue to augment our organic growth with meaningful accretive strategic acquisitions.

The top and bottom line outlook is a function of the aforementioned items. In addition to the marketplace dynamics and industry trends that Ken mentioned.

Turning to the midpoint of our 2021 guidance as outlined in greater detail in our first quarter earnings press release GAAP revenue of 2.206 billion an increase over the prior year of 13, 2%, excluding the large government contracting consulting practices exited the growth rate of $18 <unk>.

6% of which $133 million or seven two percentage points is <unk> the.

Backlog supporting the revenue growth is $2 4 billion or <unk> 92, 3% with engage at 97, 3% and digital at 70%.

You will note of decline in the revenue growth rate in the engage segment first half. The second half. This is related to the 2020 COVID-19 volumes, excluding COVID-19 related volumes the engage revenue at the midpoint of our guidance is estimated to grow 9% in the second half of 2021 versus 2020.

Non-GAAP adjusted EBITDA of $334 million in.

An increase of nine 9% over the prior year and 15, 2% of revenue compared to 15, 6% in the prior year, excluding the large government contract and consulting practices.

The EBITDA growth rate is 26, 2% of which eight seven percentage points is optics.

Non-GAAP operating income of $269 million, an increase of 10, 9% over the prior year and 12, 2% of revenue compared to 12, 4% in the prior year, excluding the large government contract and consulting practices. The growth rate is 31, 4% of which 10 seven.

<unk> points is optics.

Non-GAAP earnings per share of $4 23, an increase of 41 or 10, 8% over the prior year, excluding the large government contracted consulting practices. The growth rate is approximately 32, 6%.

At the midpoint of our 2021 guidance, we estimate <unk> will contribute $133 million of revenue $23 million of adjusted EBITDA and $22 million of non-GAAP operating income. These estimates are subject to finalization of the purchase accounting related to the acquisition of <unk>, which will be completed during the second.

<unk>.

Other relevant guidance metrics include capital expenditures between three 1% and three 3% of revenue of which approximately six percentage growth oriented.

Full effective tax rate between 22% and 24% and of diluted share count between $47 two of $47 6 million.

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

In closing we are executing on numerous fronts across the business and realizing tangible results from our strategy differentiated CX solutions portfolio and improved go to market platform undeniably. The investments we have made the client relationships, we have built and the talented team. We have attracted has transformed our company increased.

Our value proposition in the marketplace and change the financial profile and trajectory of the business. We are of high degree of confidence in delivering against our raised 2021 outlook. Thank you for your continued interest and support in <unk> I'll now turn the call back to Paul.

Thanks, Regina as we open the call I'd ask that you limit your questions to one of the time operator, you may open the line.

Thank you we will now begin the question and answer the question.

Like to ask the question you May press Star followed by the number one.

You're following record your name Toledo Lewin from Jade.

Name is required to introduce your question.

I have to cancel your request you May press Star and then the non breakout.

Our first question is coming from the line of George Sutton.

Of Craig Hallum. Please proceed.

Thank you Super job guys, Ken I would note I was not on mute.

I wanted to bring together a couple of things and I may be conflating two items, but.

You mentioned earlier in the call that <unk>.

You are becoming increasingly the single source for your customers and the Orchestrator of all of the things they need to do.

You said that you have 700 brands you work with the new just scratched the surface.

For most of those so I just wanted to bring those two thoughts together, if you could kind of help them.

Yes, well first of all our goal I want to stress is to be the single source from of CX technology standpoint to our clients.

No way was I, suggesting that we are currently the single source of technology to all of our clients. So that is clearly our goal and that's what we're focused on.

And I might add debt, we're making really good progress.

Not only with net new logos of providing all.

All of the CX technology, that's required or at least a portion of the CX technology required, but we're also now starting to focus on our embedded base.

As that might be surprising.

To hear the reality is is that we've been very busy and have been very.

Successful in winning net new business and with the.

The recent tuck in acquisitions, it's added a significant amount of new additional logos and so now we are in the process of building out of account plans for each and every client.

So that we can offer them our full suite of capabilities.

Of that help.

That does if I could just.

Follow on relative to the hyper growth vertical, which you mentioned grew 243%.

I know you've had of market focus there from a selling perspective can you talk about your solution of how it is addressing the needs of those types of customers I found that number of particularly encouraging.

So when you look at the companies that are basically born digital.

A couple of things one those companies really day, one out of the chute are looking for people to partner with.

Yeah.

No way.

Suggesting that the.

Of the born digital companies are.

Of our more enlightened, but what I would say is that they are much more focused on getting off to a strong start and so consequently, those born digital companies tend to want to outsource everything their technology as well as.

There their entire operation operating the execution of their customer interface and so what we are very focused on is working with those types of companies because of their mindset is already in place and theyre not looking to have a large captive, whereas the legacy companies tend to have.

Very large captives.

And what we what I mentioned in our script is that they are actually beginning to now realize that this is not really the strength and that originally emotionally they felt that there was a need for them to manage their own customers because logically that just feels sounds right, but the reality is when they compare themselves.

<unk> two how we're performing we're performing significantly better and at a lower overall cost to serve so consequently, we're seeing this entire captive marketplace kind of beginning to realize on the legacy side of the institutional side that it no longer makes sense to have 70.

<unk> of their business in house.

Versus when you contrast that with the hyper growth accounts day, one they want it all partnered with somebody.

Gotcha perfect. That's it from me thanks, guys.

You.

Thank you. Your next one is from the line of Mike Latimore from Northland Capital markets. Please proceed.

Thank you. Thank you, yes spectacular results there.

I just wanted to clarify I think you said, maybe it was new bookings the average selling price was up about 100% or something like that maybe can you just kind of clarify that was in fact, correct and maybe provide a little detail on kind of what the growing.

Of these average deal size is a little more clarity there would be great.

Yeah, I mean, some of it is mix in the quarter of about I would say that.

It has to do with.

The number of debt.

A very large deal so that will always be an indication of.

Larger deals. It's also an indication as I said debt.

We had.

Eight multi segment deals that comprised.

The 41.

<unk>.

And so it's really a function of larger deals the integration of both <unk>.

Little and engaged driving those larger deals.

And in some cases.

Particularly in public sector, and healthcare and financial services, it's just the.

Evidence of the comments that Kenneth need time, and again that the level of outsourcing right.

Is it is not even about it's not it's not about taking market. It's also about the fact that there is a tremendous amount of volume out there that is moving from captive to working with the partner and so all of those themes all of those trends are playing into a higher.

Average.

Deal size.

Kevin.

Then another part of me well.

Seeing exponential interaction the volume growth I guess, the whole any quantification of that and maybe Paul.

So the segmentation between the voice and messaging.

I think that if you look at of the Gartner reports from the various different reports that have come out recently I think that it's suffice to say that with what I would call persistent communication where.

Every company is messaging you an inter are attempting to interact with you on almost a daily basis, that's driving a significant amount of of.

Of net new interactions. Additionally.

Retail has been shut down and as people are beginning to realize that buying direct is dramatically more convenient.

In order for them to make these large capital purchases, whether it be with automotive appliances high end consumer electronics et cetera, they need somebody to support them in making that decision as well as support them not only through the buying process, but the actual ownership process.

And so consequently piece.

People are not getting in their car and driving to X y Z.

Whether it be.

Dealership auto appliance store et cetera, and they are interacting more and more through chat channel through voice channels et cetera. It allows them to continue on with their life and not have to.

Interrupt their entire Saturday to purchase the car etcetera. So we're seeing this across.

The really every vertical but we're also seeing that just the overall explosion of brands that I have discussed over the last two three years is also really impacting the interaction volume the interaction volumes as well as as you can see just the number of net new logos that we're winning.

So you couple of this significant amount of new clients that are coming on board the entire the new way that we.

As society are interacting with companies versus how we used to interact with companies and that basically equals an increase in.

And the need to interact.

And we're obviously at the center of that.

Hi, Thanks, Good luck with here and I'm happy to by the way.

I will make sure that Paul gets you some of the reports that talk about interaction volumes an increase in interaction volumes by third parties.

As well so thanks for your question.

Okay.

Next question is coming from the line of Maggie Nolan of William Blair. Your line is now open.

Thank you good morning.

Maggie the total number of clients has increased substantially with the addition of AD Tech. So I'm wondering if there are any changes to your client facing teams or higher stratify in these accounts.

And then how many of them do you view as kind of high potential or are receiving enhance level of resources.

In terms of those client facing teams.

Maggie that's an excellent question and yes. It is changing how we're interfacing with our accounts.

I'm not necessarily comfortable just for proprietary reasons of getting into all of the nitty gritty details of what we're doing but suffice to say that.

A there is far more verticals Asian focus.

And B there is there will be significantly more account management focus.

And that has.

That is something that we started on.

Earlier at the <unk>.

Beginning of this year.

And and are definitely investing for obvious reasons, because there is more opportunity within each one of these clients and our goal is to be able to maximize the opportunities.

And what we're demonstrating to our clients is that the more areas that they allow us to get involved with technology wise. The more we can actually impact not only their net promoter score of their customer satisfaction score, but the retention rates and the overall cost to serve so to do that requires much more into.

<unk> focus on the clients than we've historically had.

And what I would just say.

As is.

We see this as a very positive opportunity.

Okay. Thanks, Ken and then can you give a little more color on the the puts and takes at the back on the 28 basis points of margin expansion with an engaged.

It seems like the drivers that Regina listed are in my mind, largely sustainable going forward. So I'm wondering what is kind of of that range that youre expecting for engage margin.

Over a longer period of time.

Sure, Yeah, I'm going to handle that yes share so.

I would say that when we gave guidance.

At the beginning of the year.

We are about for the first half of 15, 8%.

EBITDA.

The guidance at the midpoint kind of <unk>.

<unk> us to 16%.

And what Youre seeing in Q1 is.

Kind of hyper EBITDA.

It's about 170 basis points of excuse me 270 basis points of that coming from gross margin.

About 100 and well.

Engage I'm talking about engages out of about 180 from SG&A.

And so.

This also we have to remember is the last quarter in which we are.

Our building into an LTM of.

COVID-19 volumes.

So.

As we as of the COVID-19 volumes come down, we're certainly replacing them with other but.

We will.

The between of 15 and 16%.

EBITDA of.

On a go forward basis. So some of that I would say is mix of business and pricing and some of that is real and is going to stay for example facilities.

Just from a scale of point of view, we continue to express that scale means an awful lot to this business in both of the businesses.

So as we get through the.

The year.

At the midpoint of that.

The overall EBITDA margin with <unk>.

<unk> is about 15, 2% and for engage.

The just under 15%.

Thanks Regina.

Okay.

Thank you. Our next question is from Bryan Bergin of Cowen.

Your line is now open.

Hi, Good morning. Thank you can you comment on the mix within engage of the higher growth higher margin businesses like the hyper growth the customer acquisition and the fraud detection services versus the traditional base of work I'm, just curious where the share stands now between those groups and then also how that looks in your pipeline for engage.

Yes so.

On an annual basis that hyper growth segment is.

Just under.

Let's say $400 million.

So from.

And engage perspective again, if you look at the midpoint of the guidance, it's about a 1 billion eight.

Okay, I'm, sorry can you repeat the other pieces.

Yeah, just how it looks in the pipeline as well.

Yes, I would say that.

It's pretty it's pretty.

The correlation is.

Is about the same we'd probably see about 25% of that pipeline and that <unk>.

Hyper growth segment, the hyper growth segment is the combination of startups.

But it is also right the growth.

We'll be in the born digital direct to consumer some of them who are now having.

<unk> thousand $30 million of revenue with us.

Okay. That's helpful and then it looks like the performance from your largest customer was notable here can you comment on the outlook in that relationship for 'twenty. One I'm just curious how we should think about the composition of surge versus regular or permanent engage activity.

Yeah. So.

That that business is on an annual basis, probably a quarter of the million dollars in 'twenty.

The 20 end of quarter $1 million in 2021.

We are in the process, it's a mix of AAU and COVID-19 and our view is that at this point and we certainly got three quarters to go that business converts to about $170 million of longer term permanent business. That's the status.

We've done some really good work in Inc.

Ensuring that that those agents.

Given the quality of work and the reliability.

We're now moving those associates to other work like <unk>.

<unk> fraud like retail banking, so we feel pretty good that we feel very good.

At the.

Of the benefit of those volumes have strengthened the relationship allowed.

That <unk>.

Client to see.

The broader capability of T chek and debt.

Of that that business continues to grow.