Q1 2022 TTEC Holdings Inc Earnings Call

May 5, 2022

Please standby your conference will begin momentarily please continue to standby.

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Yes.

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Welcome to <unk> first quarter 2022 earnings conference call.

I'd like to mine all third 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'd now like to turn over the call 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 to check is hosting this call to discuss its first quarter financial results for the period ended March 31, 2022 participating on today's call are Ken Tuchman, <unk>, Chairman and Chief Executive Officer, <unk>, <unk>, Chief Financial Officer, and Shelley sworn back our newly appointed Chief Executive Officer.

There are <unk> engaged yesterday <unk> issued a press release announcing its financial results. While this call will reflect items discussed within that document for complete information about our financial performance. We also encourage you to read our first quarter 2022 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.

<unk>, which 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.

More detailed description of our risk factors. Please review our 2021 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 Jim.

Thanks, Paul and thanks, everyone for joining us this morning.

Before I discuss the highlights of our first quarter performance I'd like to share details on the exciting announcement yesterday that we've named Shelly swung back as our new Chief Executive Officer of T. Chek engage with a proven track record driving significant growth in a dynamic digital environment Shelley as both a market maker and a strong cultural leader with over 30.

30 years of experience in digital transformation strategic consulting technology services analytics and M&A.

Many of you May know Shelley from her time at Accenture, where she launched and built accenture digital into a global transformation powerhouse with more than $20 billion in annual revenue skill to driving innovation globally and at scale Shelley brings vertical industry knowledge customer experience domain expertise and strengths.

In digital product development to GTECH Shelly.

Shelley loves to win and is completely aligned with our ambition to double our business in the next five years, a season market facing leader, who excels at creating street strategic value for clients partners employees and shareholders shall he has the energy intellect and expertise to take <unk> to the next level at the helm of our.

Our engage business she will be responsible for driving growth digital innovation and global expansion.

And finding the right leader for T. Chek engage character and cultural fit we are extremely important to us shelley's authentic empathetic leadership style emerged immediately in our discussions and her passion for developing and bringing out the best in every employee aligns perfectly with our value driven culture.

At this time of explosive growth in the digital experience economy, Shelly will amplify and accelerate our progress as we further capitalize on the immense opportunity for T Tech on the horizon.

Now, let's turn to the first quarter 2022 is off to a solid start demand for digital CX transformation continues to grow as top performing companies across industries and geographies intensified their focus and investment in digitizing the customer experience.

Through our two businesses digital and engage we operate at the heart of these transformation agenda is our ability to help clients drive growth increased revenue improved profitability and build lasting trust and brand loyalty continues to position us as a strategic go to CX partner across the globe.

Our holistic customer experience as a service platform provides all the capabilities of our corporate brand or government agency needs to deliver the effortless experiences that today's hyperconnected customers require.

With a strong pipeline and significant large deal activity underway T Tech remains well positioned to benefit from the healthy market momentum.

Our performance in the first quarter was driven by a broad and diverse set of established marquee brands hyper growth disruptors and public sector agencies across the full range of our comprehensive CX technology and service capabilities bookings increased 15% to $195 million.

Revenue increased 9% to $589 million and adjusted EBITDA was $86 million as we executed on our planned increase in growth oriented investments.

We made meaningful progress this quarter against our five strategic priorities.

First technology innovation and differentiated IP.

Second deep vertical.

Skus me deep industry verticals <unk>.

Third enterprise wide diversification across client segments industries capabilities and geographies.

And fourth strategic and accretive M&A and lastly, maintaining a strong financial profile.

Today I'll focus my remarks on several representative examples of execution of these priorities. This quarter I'll begin with technology innovation and differentiated IP, which is driving growth for both our digital and engage businesses.

We're very pleased with the progress on the digital side of our business over the last 12 months, we've sold over $265 million in bookings up 97% over the prior year period.

Added 47, new logos up 194% from the prior period grew revenue, 58% over the prior year period accelerated the growth of our IP business, which is up 64 business on a pro forma basis and won several partner awards, reflecting our deep relationships with the CX technology ecosystems.

In addition, we've dramatically expanded our total addressable market to include the growing universe of midsize companies and we've added new IP innovative technologies service capabilities and partnerships to a comprehensive CX platform.

The market response to our diversified set of premium CX technology solutions and services has been extremely positive our domain expertise and exclusive focus on CX continues to set us apart.

As T tech clients increasingly take advantage of the full breadth of our omni channel CRM automation and analytics solutions, we're seeing engagements increase in scale scope strategic impact and economic value for our clients their customers and T Chek.

In our engage business innovation is taking the form of new technologies tools and processes to help our teammates be more efficient effective and empathetic.

We're investing in collaboration automation.

And analytics to ensure each health care advocate financial service adviser citizen engagement partner retail cones, Here's auto mobility expert and our other industry brand advocates have the technology and the knowledge they need to deliver seamless experiences to every one of our clients' customers.

Our next pillar.

His deep industry verticals Asian is designed to help clients deliver experiences that our intent driven relevant specialized and personalized at scale, we built vertical pods that link or our go to market motion with our operational delivery teams to continue to stay ahead of the changing dynamics in each industry.

This integrated approach is unlocking deep industry expertise and building materials scale to strengthen our long term client relationships and provide momentum for the most compelling future growth opportunities.

A prime example of this vertical is the approach is our continued focus on the public sector. In early April we closed the asset acquisition to the public sector citizen experienced leader Fanueil, Inc. To further enhance our government services expertise.

Integrating this new asset entity Tech will enable us to respond with services built for fast growing public sector demand in areas, such as mobility fleet management congestion management tolling and transportation.

<unk> health care exchanges labor and social benefit delivery and emergency response systems. In addition, this example of our strategic accretive M&A growth pillar brings us expanded back office capabilities, including image review and processing and machine learning enabled data annotation.

These solutions are in high demand and will provide us with a broader foundation for growth across multiple industries and clients. We've doubled down on the public sector in response to several sustainable trends specific to government.

Last year, President Biden issued an executive order on transforming the customer experience and service delivery to rebuild trust and the federal government.

This presidential action emphasized the urgency to improve the citizen experience by modernizing technology, automating processes, and reducing friction to better meet the needs of citizens.

The spotlight on citizens Centricity shines right in our sweet spot.

We've been partnering with federal state and local agencies for decades, and we've worked hard to earn the credentials and certifications required to do the business in the public sector. These authorizations create a high barrier to entry for competitors wanting to move into this space.

Our differentiated citizen first approach continually delivers the best outcomes for public sector clients, whether we're redesigning complex processes standing up a CX ecosystem or launching new digital solutions to personalized high volume interactions at scale. For example, this quarter, we were awarded a significant contract with the state of Indiana.

To transform their citizen experience across the entire state. This comprehensive win includes Upfronts CX consulting detailed journey mapping the migration of their technology from on premise to cloud and managers managed services required to ensure that going forward every citizen of Indiana has an experience that is modern seamless and positive across.

All interaction channels.

This meaningful win is but one of many conversations we're having with public sector agencies around migration to the cloud once hesitant about security and operational constraints, they're now fully embracing the idea of making the move to take advantage of the speed flexibility and feature rich capabilities to cloud provides these transformation projects are complex.

And provides long term reoccurring revenue for <unk> Tec with decades of experience working in the public sector and partnerships with all the leading CX technology providers.

We expect to see a long tail of public sector opportunity in the quarters ahead now.

Now I'd like to share our perspective on the current global market backdrop, which is highly dynamic and has numerous variables at play as an industry pioneer who is constantly pushing the boundaries of what is possible now and into the future. We have proven time and time again that are defensible model enables us to quickly adjust to changing conditions we've endured.

Hurricanes Pandemics earthquakes tsunamis, social unrest recessions in the full range of economic cycles through trusted partnerships with our clients and the grit and dedication of our employees we've excelled through them all.

Our solid track record of innovation and leadership across the full range of business cycle. As a result of our deliberate diversification strategy that includes geographic geographies verticals clients partners and solutions. We've built a flexible operating model and made the investments required to ensure that we have the <unk>.

With Optionality resilience and balance sheet required to navigate the potential headwinds on the horizon.

And we continue to invest in our future as demonstrated with our announcement yesterday about our new engage CEO Shelly swamp back we'll continue to add significant leadership strength to our senior management. In addition, we continue to seek out strategic and accretive acquisitions, and we're continually creating new solutions to expand our total addressable market and.

Stay ahead of our clients and their customer needs.

We are honored that our market strength continues to be recognized by leading industry analyst firms this quarter.

Our engage business was recognized by Gartner as one of the select few leaders in their 2022 magic quadrant for customer service P. P O.

Our position in the upper right quadrant illustrates our continued leadership in both CX technology and services.

In an increasingly competitive virtual environment the ability to personalize every act interaction with empathy and context is what separates brands that are trusted and loved from those that are avoided or abandoned or almost 40 years for.

For almost 40 years, we've been partnering with the most customer obsessed brands to acquire retain and grow trusted profitable customer relationships by delivering effortless engaging experiences that build brand loyalty today, we're well positioned as ever to continue to deliver these positive outcomes to our clients their customers our employees and our shareholders.

<unk>, we're thrilled to welcome Shelley to our T Chek family and she can't wait to get to know each of you on behalf of our board management team and our amazing employees across the globe. Thank you for your continued support I'll now hand, it off to Dustin for the financial details.

Thanks, Ken and good morning, everyone as Ken mentioned, we had a solid start to the year as we execute on our strategic priorities. The demand side remained strong as evidenced by record first quarter revenue result in meaningful new business signings were capitalizing on a large growing addressable market characterized by a heightened level of urgency and the growing importance for brand.

To distinguish themselves with exceptional customer experiences and outcomes.

Now I'll move to our first quarter results.

First quarter bookings increased 15% to $195 million over the prior year period, resulting in $776 million bookings over the last 12 months.

In our digital segment bookings increased 137% in the first quarter over the prior period and 97% over the last 12 months versus the prior period.

Strong demand continues for our Genesis, Amazon connect and Microsoft CX solution, including larger CX technology transformational engagements like the public sector client example, Ken shared earlier.

Our engage segment also saw healthy demand across our core customer acquisition hyper growth in carrier services.

Our first quarter bookings included six multi segment deals approximating 17 million and 60, new logos with cumulative bookings exceeding $23 million, many of which were hyper growth clients.

We exited the first quarter with 2022 revenue backlog of $2 3 billion or 91% at the midpoint of our guidance. Our current any year sales pipeline was $1 8 billion up 12% over the prior year period, we are well positioned for strong profitable growth.

'twenty two.

My discussion of the first quarter 2020 results referenced revenue is on a GAAP basis, while EBITDA operating income and earnings per share on a non-GAAP adjusted basis.

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 2022 revenue was $588 million an increase of nine 2%.

EBITDA was $85 5 million or 14, 5% of revenue compared to $95 9 million or 17, 8% in the prior year period.

Operating income was $67 2 million or 11, 4% of revenue compared to $79 9 million or 14, 8% in the prior prior year end.

<unk> was $1 eight compared to $1 26 in the prior year.

Foreign exchange had a negative $5 2 million impact on revenue given the recent strengthening of the U S dollar against select foreign currencies and a positive $3 1 billion impact on operating income.

Is that primarily impacted our engage segment.

Our first quarter revenue performance was primarily driven by the <unk> acquisition, which we will lap in April increased business as usual volumes from existing clients and new business from our expanded client base.

Our other revenue highlights include the booking details outlined earlier as well as a 22% increase in revenue from EMEA, 124% increase in travel and hospitality a.

A 13% increase in health care.

A 21% increase from a hyper growth sector and continued momentum in our client engagements that are utilizing multiple offerings within our wood across our digital and engage businesses.

We're also pleased with our performance when adjusting for foreign exchange and higher pandemic related revenue in the prior year period.

Excluding FX and pandemic volumes revenue.

Revenue increased 23% in the first quarter of 2022 versus the reported nine 2%.

Okay.

Our first quarter profitability is broadly benefiting from topline scale and a combination with value and outcome based pricing and increased mix of higher margin offerings offshore delivery and lower depreciation expense as a percentage of revenue.

The year over year moderation in operating profits is within our guidance range and reflects last quarters communicated and incremental growth oriented investments that were broad based across leadership sales and marketing product and engineering talent.

And security infrastructure geographic expansion as well as reflecting upon the reduction of higher margin pandemic related work from the prior year period.

Turning now to our first quarter 2022 segment results.

Our digital segment revenue increased 78, 6% to $113 6 million in the first quarter of 2022 over the prior year period.

Operating income was $14 million or 12, 3% of revenue compared to $6 seven or 10, 5% of revenue.

Topline growth was primarily attributable to increased contribution from our higher margin Genesis and Amazon connect Omnichannel cloud solutions. In addition to Omnichannel product sales to support our clients' infrastructure investments as.

As mentioned during the last couple of quarters, we continue to partner with Cisco is a renewed focus on this cloud CX platforms.

Continue to work through the transition of our existing customer base growth was muted in the short term.

Excluding the Cisco practice, our digital business grew 16, 6% on a pro forma basis in line with our long term growth rates of 15% to 25%.

Our recurring cloud and managed services revenue grew 75% in the first quarter of 2022 over the prior year period.

Presenting 55% of digital total revenue.

Our diverse systems integration services, which had a high attachment rate for supporting future upgrade and expansion engagements grew 79% representing 26% of total revenue.

Margins reflect the impact from acquisition related integration costs and incremental investments in <unk> leadership, and engineering talent sales and marketing and product and technology development.

Our engage segment reported first quarter 2022 revenue of $475 1 million steady with the prior year, which included a high contribution where pandemic related revenue.

Excluding FX and pandemic related work engage revenue increased 13, 7% all organic.

Operating income was $53 2 million or 11, 2% of revenue compared to $73 2 million or 15, 4%.

We are experiencing increased business as usual volumes across numerous industries as we further vertical is our operating model and expertise new lines of business and hyper growth client acquisition platforms.

Our embedded base continues its strong performance as demonstrated by engaged revenue retention rate of 102%.

Excluding pandemic related volumes engaged revenue retention rate is up to 111%.

Our engaged profit margin is benefiting from topline scale and increased percentage of revenue in our higher margin verticals and offerings and efficiency and our asset utilization leading to lower depreciation expense as a percentage of revenue.

Margin pressures reflect those highlighted in my comments on total company results.

I will now share some metrics related to our cash flow liquidity and capital deployment before discussing our outlook at.

At quarter end cash was $156 8 million with $807 9 billion of debt of which 803 represented borrowings under our $1 5 billion credit facility.

Net debt increased to 44.

Excuse me $446 6 million to $651 1 million year over year as our strong cash flow generation was offset primarily by acquisition related investments and capital distributions.

Cash flow from operations was $13 7 million in the first quarter of 2022 compared to $69 8 million in the prior year.

Decrease was primarily a result of higher use of working capital due to the timing of select customer billings that mood that accounts receivable collection to the second quarter.

<unk> was 61 days in the first quarter of 2022 up from 59 in the prior year period.

Capital expenditures remained very low as a percentage of revenue coming in at $16 7 million or two 8% of revenue for the first quarter of 2022 compared to $11 6 million or two 1% of our in the prior year.

Normalized tax rate was 21, 5% in the first quarter of 2022 versus the 23, 7% in the prior year.

The reduction is primarily related to beneficial jurisdictional mix of income and the benefit of various tax credits.

Anticipate our for tax rate in the range of 21% to 23%.

In February the board declared the next semiannual dividend of <unk> 50 per share, which was paid on April 22022 to shareholders of record as of March 31 2022.

This dividend represents a six 4% increase over the October 21 dividend and a 16, 3% over the April 21 dividend.

We remain committed to our capital distribution to shareholders through a semi annual dividend, which we have consistently increase since the dividend program inception in 2015.

Turning to our outlook, we are well positioned for continued profitable growth in 2020 to augmenting our organic growth a meaningful strategic acquisitions, we are experiencing a strong growing sales pipeline strong bookings and an increased revenue backlog.

We are pleased with our go to market platform, which is delivering a differentiated set of <unk> solutions.

As a result, we are reiterating our guidance for 2022 and with that said I'm going to give you. Some further context on outlook.

First we closed the acquisition of certain <unk> assets on April one and have begun integration to the broader GTECH engage segment.

We are on track to invest an incremental $50 million leadership sales marketing and product innovation. This year to capitalize on the marketplace opportunities inclusive of our virtualization and diversification strategies.

Our margin profile. This year reflects these incremental investments within anticipated payback in the form of margin expansion next year and beyond.

Growth is anticipated to increase in the second half of 2020 do given the bookings composition timing of projects and program launches and the comparison to a more normalized pandemic related volumes in the second half of 2021.

Guidance for the second quarter revenue and profitability reflects a slower than normal ramp in new bookings in both digital and engage based on the mix of bookings and we deem as to be short term.

For further details on our guidance. Please reference our commentary on the business outlook section to our first quarter 2022 earnings press release to obtain our expectations for the second quarter and full year 2022 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 expanded CX technology and service solutions and improved go to market platform investments, we are making the client relationships, we have built and our talented leadership team position us well for the next phase of growth. Thank you for your continued interest and support GTECH.

I will now turn it back over to Ken.

Thank you Dustin I'm excited to announce that Shelley is here with us on the call today and I'm happy to formally introduce you to our new Chief Executive officer of engage Shelly swung back.

Thank you Ken and good morning, everyone, it's great to be here and to be joining <unk> at such an exciting time and market opportunity is tremendous as every business regardless of their sector knows that to win in the experienced economy.

It must deliver customer experiences that are both effortless and also engaging.

I just love the CX space and I joined <unk> for a couple of reasons.

First I believe our customer experience as a service platform is unique we can bring together technology customer insights and talent to help clients design build and also operate experiences at scale like no announced Ken.

And second I'm inspired by the company's vision and values driven culture.

I'm passionate about partnering with clients passionate about driving growth and also building high performing teams and Thats, what makes us a perfect set.

Looking forward to taking <unk> to the next level and also looking forward to spending more time with all of you in the future as we work toward our goal and ambition of doubling our business.

And back to you Paul Thanks, Shelley as we open the call. We ask that you limit your questions to one at a time operator, you may open the line.

Thank you we will now begin the question and answer session to ask a question. Please press star one.

One moment please for the first question.

Our first question comes from George Sutton of Craig Hallum.

Your line is open.

Thank you and first Shelly welcome to teach out.

We certainly understand how big a deal it is that you've come on I would tell you that when I went to feel good about myself for the market I pull up to 10, and 20 year ACM chart and it just makes me feel good so.

What I am aware of or Accenture and this is really a question for Ken.

It's normally eto style growth and I'm just curious if this gives us a message that youre going to be moving in that direction a little bit.

What I would say to you is we're already doing a fair bit of back office services as I mentioned, even in my script today as it relates to public service area and some other areas that we're focused on providing back office and claims area et cetera, what I would just simply say to you is is that we're going to stay very very focused.

On anything and everything that drives overall, a better client relationship for our customers and in many cases, our clients back offices are broken they need new technology.

Because if the back office isn't working properly than the front office gets the complaints and vice versa. So that's my way of saying to you that.

It's one of many areas that we see as a growth area, but the reality is is that there is so much growth just in our core business of what we currently do today that I think youre going to see that Shelley is really going to be doubling down in that area and expanding us.

On multiple fronts, there as well as internationally as well so.

I hope that answers your question.

Well, that's great just a follow up on the government.

Congratulations on Indiana and getting this annual deal closed as well can you just talk about how broad the government opportunities already since that youre seeing a bit of an increase in demand there and I just wanted to be clear how significant that could be.

Yeah. So as all of you know we've had a couple of administrations that have decided to.

Put out trillions of dollars something that none of us have ever experienced in our lifetime.

Those trillions of dollars the majority of which flows down to state in public sector and so we're a big believer in following the money and that's really all we're doing and so consequently, what the pandemic did.

Is it made it brutally honest to each and every one of these states that theyre not equipped to provide virtual capabilities.

And that when there's a pandemic and you can't get your drivers license renewed you can't pay a ticket.

You can't pay franchise your franchise tax or get a building permit et cetera, and so our focus is going to be in the area of helping these these governments provide E government services. So that we have the ability to assist them in having a more digital interface to the public they need.

It they want it for a myriad of reasons and frankly selfishly for them not the least of which is political.

And so we all saw what happened to department of Labor we.

We did a ton of work for many states in that area and basically all their systems crashed they had no real ability to deal with people because they're used to people standing in line to get their checks et cetera.

We saw the same thing across a myriad of other government entities. So I think what youre going to see is that there's going to be massive investment across the United States and.

And other countries, where theyre going to want to modernize their platforms on the technology side as well as take advantage of our of our of our CX capabilities with our with our citizen ambassadors.

And that's part of what Fanueil helps us to.

Today, we're covering.

Just in the health exchange area alone I don't want to give a wrong stat, but I believe that 40% of the health exchanges, where know interfaced to and providing.

Providing services.

And the same thing you know our tolling business is growing very rapidly.

Our roads are falling apart, we all know that and so the solution to solve this since they don't want to raise the federal gas tax is to start converting roads to toys and so we're very excited about what we can bring to the table.

In this area of toll weed management, not just the classic way that people pay tolls, but also taking advantage of new Iot services that we plan on being very involved with in the future. So sorry for the long winded answer but the bottom line is is that we see a lot of potential.

That's great detail. Thank you very much.

Thanks George.

Our next question comes from Vincent Colicchio of Barrington Research your.

Your line is open.

Yes nice quarter.

I'm curious.

If there's any thoughts on the overall economic outlook and if youre seeing any signs of weakness in any of your geos or verticals Ken.

Yeah.

I think it's a little premature.

For us to really give you an accurate answer what I would say to you is we're not seeing volumes coming down.

What we will start looking for.

As we slide into a higher interest rate environment is are people going to start downgrading various different services.

Which doesn't necessarily affect us it just simply means that they go from a premium.

<unk> and cable are canceling HBO or whatever I'm using that as an example.

I don't think we are.

Yet seen that but I won't be surprised if in fact over time, we do begin to see that.

We're somewhat insulated because we have very consciously built our business around health care.

And we have a very very significant.

Our health care business and health care is really not affected by recessions.

Companies issue.

Benefits and consumers sign up for those benefits.

Regardless of whats happening to their paycheck or their their mortgage.

Cetera. So we think that we have multiple segments and verticals that we're focused on that really don't get a hugely impacted or impacted at all.

But the recession, the same thing with public sector, and we were very conscious about that that money is going to be spent regardless of what is going on in the economy.

So.

But what I would say is it's a good question Vincent and.

I think that on the next call im going to be able to give you a much better read than I can.

Today I just think it's premature because the fed is really just now starting to tighten things up.

And one for duston, what percentage of bookings were deals that combine to engage in digital and.

How does that compare to the prior quarter.

Youre looking at about Vince I don't want to say about $10 million excuse me about 10% of our overall bookings.

Slightly down from the prior quarter when it's a six deals overall.

Thanks for asking and answering my questions.

Thank you Vincent.

Our next question comes from Bryan Bergin of Cowen your.

Line is open.

Hi, This is actually Jared Levine on for Bryan first in terms of the fiscal year 'twenty two guidance can you discuss what went into the <unk>.

To reiterate the guide despite the <unk> beat and healthy bookings commentary.

Just any way to answer that.

So there are a couple of things I would say first off we're still it's Q1 right. So we're early part of the year.

And as I mentioned earlier, so part of it just reiterate from that basis, we feel good about the pipeline and feel good about our overall backlog, we talked about both are increasing and growing and we had a really strong bookings.

Part of it we mentioned that there is some some of the deals you think about some of the more transformational deals that we did a larger ramp times et cetera, leading to revenue kind of in Q2 shifting into the second half and Thats, what led us to kind of reiterate guidance at this point.

But we're very very confident about the second quarter and feel good about where we're at from a bookings momentum and a pipeline perspective and <unk>.

We will come out in August and have a further discussion about it.

Okay, Great and then what was the scaled those incremental $50 million of growth investments in <unk> and was that in line with your expectations and are you expecting any change in the pace of that expected spend.

I mean, as we mentioned before even in Q4 right. We're always evaluating our overall investments and how we're deploying it and making sure we're getting the right return on investment and it is on pace in Q1, it will ramp throughout the year right just kind of if you think about us relative to our overall SG&A profile, our revenue profile as well and then ramping more in the second half.

As evidenced by the even the announcement today of Shelly and some investments, we're making in leadership and so in Q1 work we're on pace.

Okay sneaking one more real quickly what was that our organic revenue growth rate in <unk>.

Organic revenue growth rate was roughly flat.

Alright. Thank you that goes back to the discussion that we had again as we guided this as it relates to <unk>.

Difficult compare as it relates to pandemic related volumes in Q1.

Excluding that Youre looking at roughly eight points of growth with total company organically.

Thanks.

Our next question comes from Joseph <unk>.

Of Canaccord your line is open.

Hey, guys. Good morning, good quarter and welcome onboard Shelley.

Right.

I wanted to go back to your comment I think you said something about EMEA growth of 20%.

In the quarter.

Just given the macro drop backdrop in Europe I was wondering if we get a little more color on that.

Sure Yeah, so keep in mind, our EMEA business is still relatively small to the bar.

Our portfolio that's number one number two is as we mentioned Youll go back to exposure.

We only had businesses within Poland, Bulgaria, and a lot of that growth is coming from other areas.

Keep in mind contracts that may be in the UK as an example, or in western Europe , while being delivered out of the Philippines are being delivered out of another location, which is part of the reason is we haven't seen it begin.

You can answer directly to your question, we haven't seen a slowdown in that particular space or impacting.

Our ability to deliver our impacting our ability to win in the market.

Got it and any kind of change of pace and kind of your thoughts.

Growth Internet native.

Clients this quarter.

We talked about.

Highlighted that as well so hyper growth grew 21%.

A couple of different clients drove that particularly in the travel space, where we have a couple of hyper growth customers, but did very well as part of the reason we call. It out travel more broadly there has hyper growth embedded in that number. So it's still the business is still very strong and continue to accelerate and we feel really good about that we've talked about some of the new logos, we won as well and and even in that new logo space for storage.

We're still doing very well in terms of being able to acquire customers.

Is that kind of profile.

Great. Thanks, guys.

Thank you Joseph.

Our next question comes from Maggie Nolan of William Blair. Your line is open.

Hi, This is jesse on for Maggie Congrats on the quarter.

I wanted to touch on talent. So how many employees do you have in the Philippines, and what steps are you taking to mitigate attrition there.

And you can take that or do you want to take the go ahead.

You know the stats as well.

Yes, so youre looking at roughly roughly.

Roughly 25000 within the Philippines.

Keep in mind too that you are going back now with the pandemic started we shifted broadly speaking that entire employee base to work from home right and we did that I would say in a much more differentiated way relative to our competitors and that led to a lot of the lot of the growth that we were able to secure during that period of time as well as it relates to.

<unk> a lot of it there is a number of things that we're doing.

In terms of being able to improve that but we haven't seen and I can go into in a second but we haven't seen a notable uptick in attrition.

While it is still I would say labor markets across other geos are difficult.

I would say the most difficult labor market that we're dealing with it's still the U S and in Philippines, We haven't seen a notable change and I do think that part of the flexibility that we're offering in this work from home type environment is driving some of the new is driving some of that benefit.

In terms of broader initiatives that we have we talked about before you added by neighborhood and so as we think of it as a broader statement about going into a work from home environment and making sure that you are keeping our overall employee base engaged and connected and so a lot of our initiatives are around around those aspects.

Other pieces would be.

Improving our overall work from home kind of training and Virtualized training aspects like that that we continue to work on that not only do we do for our own internal customers and.

But we also do externally with our digital segments, who are applying a lot of those technologies to improve the overall experience when they're onboarding coming onboard and reducing attrition in that way and they can't I'll turn it to you and see if you have any other color you want to add.

No I don't think so I mean, I think that we feel very comfortable with what our attrition is running right now and I guess, all I would add is that.

We've never been in a situation in our entire.

History of being in business, where clients are more understandable about.

Age increases et cetera, because they are experiencing such significant shortages with their internal operations and so they are working with us when we see the need to adjust wages up.

I'm, obviously pass that on.

And so we feel we feel.

Really good about this I mean at the end of the day the services that we provide are mission critical.

I mean, we.

Just yesterday evening as an example, I was speaking to our Chief revenue Officer, and she was telling me about a particular client.

That is 4000.

Associates.

Deficit.

And as desperately trying to get back add back 4000 associates. So we're seeing this across the board and that creates opportunity for us.

Very good at talent acquisition.

Got quite the machine for that.

And we're very good at Onboarding and training and good at showing the love to our employees for retention, So I would say that.

Right now we feel.

Quite good about.

Where we stand with with our labor at this point in time.

That's great to hear and then one follow up from me on IP Howard connector sales progressing nowhere approaching almost halfway through the year.

So yeah I'll hop back in the queue. Thanks.

You may dislike any yeah, I think he's referring to the marketplace sales of the Apis and connectors is that correct just Brian I would say broadly speaking, our connector business and and to answer that question directly.

The comment that Ken referenced in terms of the past 12 months on that business is growing at 65% and we feel very good about how sales are progressing and we expect a number of new product releases for this year to continue to accelerate in the night that overall business and it tends to be a primary focus.

Thanks.

Thank you.

Our next question comes from Mike Latimore of Northland Capital markets. Your line is open.

Hi, Mike.

Hi, Nathan.

Northland Securities.

Im sorry, youre coming across so it is very difficult to hear.

Yes.

A couple of questions.

The first one.

Yes.

Slowing customer impacting volumes in any way.

I'm, sorry, it's still a little difficult to hear you are saying something about customer interaction volumes in different verticals maybe.

Yes, I was asking.

<unk> is slowing down customer impact from London, and Amy Brandt.

Yes, I think you can kind of had been on the head a little bit earlier, which was that right now at this point in time is a little early to call. It and then broadly speaking the comment was that we don't see any reduction in volume at this point in time, and we can give a broader update on kind of how inflation is affecting different areas in Q2.

I think the point he made earlier in his comments, which I think is important to reference is that we do have a highly defensible model in a very diversified set of businesses.

That can weather any type of challenge like that.

Yes.

But nothing.

Second question.

Okay.

Second question, then is Cisco contact center demand is booming.

Yes, yes, definitely definitely the pipeline is far better than it than we've seen it in a year and a half.

And people are really starting to now resonate.

Two there are new offerings et cetera. So.

Time will tell.

If it becomes a.

A major force in the marketplace, but definitely we are seeing.

A much more significant pipeline and more deals coming through and more clients that want to transfer their premise licenses to Webex C C.

Et cetera. So.

Right now we definitely are feeling it seeing and feeling it as a matter of fact I just spoke to the gentleman that's running that unit yesterday. He ran it through the.

The pipeline and that was pretty pretty surprised.

To the positive.

Yes.

Thank you.

Thanks, that's it from my side I have a nice day.

You too.

The next question comes from James Faucette of Morgan Stanley .

Hey, it's Jonathan on for James Thanks for taking my question can you help decompose growth in hyper growth.

Want to better understand how much of that is <unk>.

Driven by share gains versus new clients versus volume growth if possible.

Yes, we typically so John that I spent a couple of different ways. So right now if you look at the business more broadly.

Go back to last year, we probably had two or three significant customers that ramped on the back half of 'twenty, one that are ramping across 2022.

So that is driving that.

They're performing very well.

Driving if you think about it it's very similar or comparable to that kind of what we talk about is our overall embedded base versus new logos, where youre looking at roughly 80% of the business is driven by our embedded base I would say the same for hyper growth and then roughly 20% is driven by new logos and but we did have a couple of last year that are that ramp and there continue to drive significant growth in <unk>.

2022.

Got it that's helpful I think.

One thing is important to note in that segment and it is a very diverse segment in terms of size of the clients et cetera, So and a lot of weight and if you think about the size of the customer the end customer and that speaks to a lot of it. So it's a highly diversified hyper growth sector, which I do think differentiates us relative to our competitive set.

I appreciate that clarity and then a follow up if I may on on head count It looks like head count declined sequentially at least based on your filings and I fully recognize that the delta there maybe because of seasonal temp workers can you talk about a rate of head count additions that you expected this year and what you need to achieve your outlook.

Yeah.

The JV number for the full year.

Yes, yes.

The things I would tell you is the one is if you go back to our guidance when we talked about and that we are looking to shift it was a little bit different about our business I think relative to using that metric, which candidly. We typically don't always used as a leading indicator for growth and for a simple reason that we're in the process of rotating our overall head count and business, we talked about the focus on offshore delivery.

We're going to continue to focus there, but we have a very strong kind of U S. Domestic business as a result of that our head count metrics are different I would say in a lot of ways relative to peers. This year. So with that said to answer your question directly youre looking at roughly 10000 kind of.

Total head count year over year, but from a seasonal perspective incentive like Saint <unk> like end of quarter.

Parison.

Got it really helpful color. Thanks, guys.

<unk>.

Thank you.

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

Yes. Thank you all for your participation and have a great day. This concludes our call.

Thank you.

This concludes.

First quarter 2022 earnings Conference call you may disconnect at this time.

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