Q1 2024 TTEC Holdings Inc Earnings Call

Yes.

[music].

Operator: Thank you for standing by. The conference will begin momentarily. Until such time, you will hear music. Thank you, and please continue to stand by. Thank you for standing by. The conference will begin momentarily. Until such time, you will hear music.

Speaker Change: Thank you for standing by the conference would they gave them entirely until such time, you will hear music again, please continue to standby.

Speaker Change: [music].

Speaker Change: Thank you for standing by the conference will begin momentarily until such time, you will hear music. Thank you and please continue to standby.

Speaker Change: [music].

Operator: Thank you, and please continue to stand by. Thank you for standing by. The conference will begin momentarily. Until such time, you will hear music.

Speaker Change: Thank you for standing by the conference will begin momentarily until such time, you will hear music thinking please continue to standby.

Speaker Change: [music].

Operator: Thank you, and please continue to stand by. Welcome, everyone, to TTEC's first quarter 2024 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 TTEC. I would now like to turn the call over to Paul Miller, TTEC's Senior Vice President, Treasurer, and Investor Relations Officer. Thank you, sir, and you may begin. Good morning, and thank you for joining us today.

Speaker Change: Welcome everyone to detect first quarter 'twenty 'twenty four earnings conference call.

Speaker Change: I'd 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 Chi Tak.

Speaker Change: Now I'd like to turn the call over to Paul Miller <unk>.

Paul Miller: And your Vice President Treasurer, and Investor Relations Officer. Thank you Sir you may begin.

Paul Miller: TTEC is hosting this call to discuss its first quarter results for the period March 31, 2024. Participating on today's call are Ken Tuchman, Chairman and Chief Executive Officer of TTEC, Shelley Swanback, President of TTEC and Chief Executive Officer of TTEC, and Kenny Wagers, CFO of TTEC. Yesterday, TTEC issued a press release announcing its financial results.

Paul Miller: Good morning, and thank you for joining us today <unk> is hosting this call to discuss its first quarter results for the period ended March 31, 2020 for participating on today's call are Ken Tuchman, <unk>, Chairman and Chief Executive Officer of T. Chek shall we swung back president of T Chek and Chief Executive Officer of T. Chek.

Paul Miller: Cage, and Jenny Wagers CFO, a pretax 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 2024 quarterly report on Form 10-Q.

Paul Miller: 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 2024 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.

Paul Miller: Forward-looking statements are subject to various risks, uncertainties, and other factors that may cause actual results to differ materially from those expected and described today. For a more detailed description of our risk factors, please review our 2023 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 you. Good morning, everyone, and thank you for joining us today.

Paul Miller: 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.

Paul Miller: Which are based on management's current beliefs and assumptions. Please note that these forward looking statements reflect our opinion as of this call and we undertake no obligation to revise this information as a result of mute.

Paul Miller: Forward looking statements are subject to various risks uncertainties and other factors that may cause actual results to differ materially from those expected and described today or.

Paul Miller: For a more detailed description of our risk factors. Please review our 2023 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 okay.

Kenneth D. Tuchman: We started the year focused on the strategic priorities that we outlined last quarter. Our first quarter 2024 revenue was $577 million. On a non-GAAP basis, our adjusted EBITDA was $55 million, and adjusted EPS was $0.27.

Speaker Change: Good morning, everyone and thank you for joining US today, we started the year focused on the strategic priorities that we outlined last quarter. Our first quarter 2024 revenue was $577 million.

Speaker Change: On a non-GAAP basis, our adjusted EBITDA was $55 million and adjusted EPS was <unk> 27.

Kenneth D. Tuchman: We met our first-quarter objectives while navigating a fluid demand environment and continue to make progress on our diversification strategy that has three focus areas, including one, attracting new clients. We established new relationships with over two dozen accounts, several of which are large enterprises that present strong long-term growth opportunities. Two, we expanded our geographic footprint and increased our offshore mix.

Speaker Change: We met our first quarter objectives, while navigating a fluid demand environment and continued to make progress on our diversification strategy that has three focus areas, including one attracting new clients, we establish new relationships with over two dozen accounts several of which are large enterprises.

Speaker Change: It presents strong long term growth opportunities two we expanded our geographic footprint and increased offshore mix, we continued to scale with new and existing client programs across our growing geographic footprint.

Kenneth D. Tuchman: We continue to scale with new and existing client programs across our growing geographic footprint. And three, collaborative partnerships and innovative solutions. We strengthen our partnerships with the hyperscalers and CX technology players, and we launch several new AI-enabled solutions in TTEC Digital and TTEC Engage.

Speaker Change: Mm three collaborative partnerships and innovative solutions, we strengthened our partnerships with the Hyperscale and.

Speaker Change: In CX technology players and we launched several new AI enabled solutions in <unk> digital and T Chek engage.

Kenneth D. Tuchman: Looking at our two business segments, TTEC Digital is gaining momentum with consecutive quarters of strong bookings and pipelines, and TTEC Engage, we have two dynamics currently impacting our results. First, while we're encouraged by the number and quality of the new enterprise clients we're winning, they do take time to yield. Second, while we're pleased with the new clients, some of our embedded base volumes are down.

Speaker Change: Looking at our two business segments GTECH digital is gaining momentum with consecutive quarters of strong bookings and pipeline and.

Speaker Change: And T chek engage with two dynamics currently impacting our results first while we are encouraged by the number and quality of the new enterprise clients were winning.

Speaker Change: It will take time to yield second while we're pleased with the new clients some of our embedded base volumes are down were.

Kenneth D. Tuchman: We're making progress managing through these challenges in TTEC Engage, and management believes, as previously communicated, that TTEC Engage and the company overall will be back to positive growth in 2025, delivering double-digit EBITDA margins. Now, I'd like to now transition to my perspective on the current state of the industry. It's no secret that the customer experience space is in the midst of dramatic change. As a pioneer and leader in this industry, we've experienced and thrived through every evolution.

Speaker Change: We're making progress managing through these challenges and T Chek engage and management believes as previously communicated the T chek engage and the company overall, we'll be back to positive growth in 2025, delivering double digit EBITDA margins.

Speaker Change: Yeah.

Speaker Change: I'd like to note transition to my perspective on the current state of the industry.

Speaker Change: It's no secret that the customer experience space is in the midst of dramatic change.

Speaker Change: As a pioneer and leader in this industry, we have experienced and thrive through every evolution.

Kenneth D. Tuchman: Since we started this business 40 years ago, I was told that every innovation was going to eliminate or have an impact on the industry. First it was voicemail, then email, then interactive voice response. Next, it was the dawn of the Internet, the proliferation of smartphones and apps, and then the migration to the cloud. Each evolution has created more opportunities.

Speaker Change: Since we started this business 40 years ago I was told that every innovation was going to eliminate or have an impact on the industry.

Speaker Change: First it was voicemail than email then interactive voice response next it was the dawn of the Internet the proliferation of smartphones and apps and then the migration to the cloud.

Speaker Change: Each evolution has created more opportunity today it is no different.

Kenneth D. Tuchman: Today, it's no different. With the advent of generative AI and all of its types, some analysts and pundits are predicting a negative impact on the industry. Instead, new pockets of opportunity are emerging and diversifying the space. New work types like content moderation, data annotation, and fraud mitigation are creating new growth opportunities for businesses like ours. These didn't exist in any material way 10 years ago.

Speaker Change: With the advent of generative AI and all the type some analysts and pundits are predicting a negative impact on the industry instead, new pockets of opportunity are emerging and diversifying the space new work types like content moderation data annotation fraud mitigation are creating new growth opportunities for businesses like ours.

Speaker Change: This didn't exist in any material way 10 years ago.

Kenneth D. Tuchman: I want to remind you that the total addressable market for Just Contact Center Services is well over $400 billion. Lately, however, it feels like Wall Street believes the industry is on its last legs and has written it off. If you speak with any one of my competitive peers, our clients, or any CX industry analyst, they will tell you the same thing: this space is not going away. It is consolidating, bifurcating, and evolving and creating new opportunities for the industry. This future is already in motion, and we see three interaction categories emerging. Simple repetitive tasks like making a basic reservation, checking on delivery status, and setting up appointments are already being automated.

Speaker Change: I want to remind you that the total addressable market.

Speaker Change: We're just contact center services is well over 400 billion.

Speaker Change: Lately. However, it feels like Wall Street believes the industry is on its last legs and has written it off if you speak with any one of my competitive peers are clients or any CX industry analysts. They will tell you. The same thing this space is not going away.

Speaker Change: It is consolidating bifurcated and evolving and creating new opportunities for the industry.

Speaker Change: This future is already in motion and we see three interaction categories emerging.

Speaker Change: Simple repetitive tasks like making the basic reservation checking on delivery status and setting up appointments are already being automated active.

Kenneth D. Tuchman: Activities that require in-the-moment human interaction, like bank tellers, fast-food drive-thru cashiers, and building receptionists, are now happening via virtual kiosks. These on-screen contacts are being staffed with friendly and cost-effective resources based thousands of miles away in many cases. And when it comes to high-value, high-risk decisions about health, family, money, life events, or large capital purchases, the need for skilled guidance from an empathetic, compassionate human remains non-negotiable. What is open for discussion, however, is where these trained nurses, financial advisors, health advocates, and others are based.

Speaker Change: Activities that require in the moment accumulate interaction like bank pillars fast food drive thru cashiers.

Speaker Change: Building Receptionists are now happening via virtual kiosks. These on screen contacts are being staffed with friendly and cost effective resources based thousands of miles away in many cases.

Speaker Change: And when it comes to high value high risk decisions about health family money life events or large capital purchases the need for skilled guidance from an empathetic compassionate human remains non negotiable.

Speaker Change: Is open for discussion however is where these trained nurses financial advisors health advocates and others are based as technology continues to improve these interactions are being delivered virtually from anywhere on the globe.

Kenneth D. Tuchman: As technology continues to improve, these interactions are being delivered virtually from anywhere on the globe. However, the need for human interactions is not going away. Similar to what occurred in previous technology cycles, the industry is transforming, changing shape, and creating opportunities for forward-thinking, technology-enabled players like TTEC. We've consistently invested in building sophisticated technology and consulting expertise. We've forged collaborative partnerships with the hyperscalers and the leading technology players with the most advanced AI, and we've built an enviable bench of global CX talent that includes every skill a company needs to design, build, operate, optimize, and deliver a seamless customer experience at scale. Now, I'll share how this is playing out with our business segment. In TTEC Digital, our focus is on helping clients modernize their CX technology platforms to take full advantage of new AI-enabled capabilities.

Speaker Change: The need for human interaction is not going away and similar to what occurred in previous technology cycles. The industry is transforming changing shape and creating opportunities for forward thinking technology enable enable players like GTECH.

Speaker Change: We've consistently invested in building sophisticated technology and consulting expertise, we forge collaborative partnerships with the hyper scalar and the leading technology players with the most advanced AI and we've built an enviable bench of global CX talent that includes every skill a company needs to design build.

Speaker Change: Operate optimize and deliver seamless customer experience at scale.

Speaker Change: Now I'll share how this is playing out with our business segments.

Speaker Change: And key Tech digital our focus is on helping clients modernize their CX technology platforms.

Speaker Change: Take full advantage of the new AI enabled capabilities climb.

Kenneth D. Tuchman: Clients are choosing us because we're CX specialists who operate at the intersection of contact center technology, CRM, analytics, and AI. We're a pure play CX technology and services firm with solutions that are wrapped in consulting and analytics and underpinned by software engineering. We have the know-how and the talent to seamlessly integrate the full suite of CX technology required to meet our clients' unique and evolving operating needs. We are technology agnostic, certified AI experts, and our bench of full-stack engineers and data scientists continues to grow, enabling our clients to benefit from our CX best practices, regardless of platform. By the end of Q3, 100% of our TTEC digital team will be certified on partner platforms and through our own AI accreditation program.

Speaker Change: Clients are choosing us because we're CX specialist who operate at the intersection of contact Center technology.

Speaker Change: RM analytics and AI.

Speaker Change: We're a pure play CX technology and services firm with solutions that are wrapped in consulting and analytics and underpinned with software engineering, we have the knowhow and the talent to seamlessly integrate the full suite of CX technology required to meet our clients' unique and evolving operating needs.

Speaker Change: We are technology agnostic certified AI experts, our bench of full stack engineers and data scientists continues to grow enabling our clients to benefit from our CX best practices, regardless of platform by the end of Q3, a 100% of our T Tech digital team will be certified on partner platforms.

Speaker Change: And our own AI accreditation programs.

Kenneth D. Tuchman: And most importantly, we're delivering the outcomes that clients value. The business segment has produced consecutive quarters of strong bookings and continues to have a growing pipeline. Management believes the team is on track to achieve our goal of double-digit top line and bottom line growth over the next few years. Now on to TTEC Engage, where our focus is on integrating technology and AI into everything we do to improve associate productivity and customer satisfaction.

Speaker Change: And most importantly, we are delivering the outcomes that clients value.

Speaker Change: The business segment as produce consecutive quarters of strong bookings and continues to have a growing pipeline Manny.

Speaker Change: Management believes the team is on track to achieve our goal of double digit topline and bottom line growth over the next few years.

Speaker Change: Now onto T chek engage.

Speaker Change: Where our focus is on integrating technology and AI into everything we do to improve associate productivity and customer satisfaction.

Kenneth D. Tuchman: We're using AI on the front lines, as a companion for our associates with real-time language translation, intuitive generative knowledge support, and post-call summarization. Additionally, our team leaders are using AI as a coach to help them provide individualized training and curriculum enhancement.

Speaker Change: We are using AI on the frontline.

Speaker Change: As a companion for our associates with real time language translation intuitive generative knowledge support and post call summarization.

Speaker Change: Our team leaders are using AI as a coach.

Speaker Change: To help them provide individualized training and curriculum enhancements are data scientist or providing clients with actionable insights with conversational intelligence gleaned from the next generation quality technology.

Kenneth D. Tuchman: Our data scientists are providing clients with actionable insight. Across both business segments, we have hundreds of AI-enabled projects underway, with many more in development. While still early days, the opportunities continue to unfold as clients embrace our services that drive higher quality outcomes at the lowest total overall cost to serve. In closing, as I mentioned earlier, TTEC and the entire industry are going through a dynamic period of evolution, which creates some volatility that is unavoidable.

Speaker Change: Across both business segments, we have hundreds of AI enabled projects underway with many more in development, while still early days the opportunities continue to unfold as clients embrace our services that drive higher quality outcomes at the lowest total overall cost to serve.

Speaker Change: In closing as I mentioned earlier T chek and the entire industry are going through a dynamic period of evolution, which creates some volatility the volatility that is unavoidable I speak for the board and our entire management team that we're taking the necessary actions. During this transition year to return to long term growth and increased profit.

Kenneth D. Tuchman: I speak on behalf of the board and our entire management team that we're taking the necessary actions during this transition year to return to long-term growth and increased profitability. I recently returned from a trip to the Philippines and continue to be energized by our highly motivated teams in that region and across the globe. I look forward to sharing our progress on the topics we just discussed in the quarters to come. And I'll now turn the call over to Shelley.

Speaker Change: Ability.

Speaker Change: I recently returned from a trip to the Philippines and continue to be energized by our highly motivated teams in that region and across the globe I look forward to sharing our progress on the topics. We just discussed in the quarters to come and I'll now turn the call over to Shelly.

Michelle R. Swanback: Thank you, Ken, and good morning. This quarter, we continue to make progress on the company's strategic growth initiatives by acquiring new clients, expanding with our existing base, delivering quality services, and creating innovative solutions that deliver the outcomes our clients need. Let me start with TTEC Digital, where we're off to a solid start delivering our second consecutive quarter of strong bookings. We continue to win exciting new business across partners, geographies, and industries with companies that are in the early stages of their CX cloud migrations, as well as brands that are well on their way to optimizing their CX platforms with AI.

Shelly: Thank you Ken and good morning. This quarter, we continued to make progress on the company's strategic growth initiatives by acquiring new clients expanding with our embedded base delivering quality services and creating innovative solutions that deliver the outcomes our clients need let.

Shelly: Let me start with key Tech digital where we're off to a solid start delivering our second consecutive quarter of strong bookings, we continue to win exciting new business across partners geographies and industries with companies that are in the early stages of their CX cloud migration as well as brands that are well on their way to optimizing their CX platforms with AI.

Michelle R. Swanback: Our pipeline and backlog continue to grow with our existing clients, as more and more of them are choosing to expand our relationships from individual projects to longer and larger multi-phase professional and managed service contracts. Approximately 75% of our bookings are coming from existing clients who are seeking to achieve better customer experiences at the intersection of CCAS, CRM, AI, and analytics. Now, let me share an example of a client who's a global online delivery service that TTEC engaged to support with care and workforce management services.

Shelly: Our pipeline and backlog continued to grow with our existing clients as more and more of them are choosing to expand our relationships from individual projects the longer and larger multi phase professional and managed service contracts.

Shelly: Approximately 75% of our bookings are coming from existing clients, who are seeking to achieve better customer experiences at the intersection of Sekos CRM AI and analytics.

Shelly: Now let me share. An example, with the client is a global online delivery service that <unk> engaged supports with care and workforce management services.

Michelle R. Swanback: Our TTEC digital team was chosen to help this client leverage features in the technology they already own. We activated several AI functions in their CCAS platform, built a self-help solution, and an advanced routing approach that is providing impressive productivity gains. During the pilot phase, the solution improved CSAT by 15%, reduced call transfers by 40%, and also reduced call duration by 25%.

Shelly: Our T Chek digital team has chosen to help this client leveraged features and the technology they already own.

Shelly: We activated several AI functions in our <unk> platform built to help self bulk solution and advanced routing approach that is providing impressive productivity gains.

Shelly: In the pilot phase of this solution improves default by 15% reduce call transfers by 40% and also reduce call duration by 25% the.

Michelle R. Swanback: The pilot was so successful that the client chose to expand her scope of work from three lines of business to six. This is just one of the many examples of how we're expanding our client relationships by helping them get more value out of their technology and AI. As the technology environment grows more complex, we continue to innovate our project-based professional services and also our ongoing managed services. For example, in professional services, our AI CX Readiness Assessment and Rapid Prototyping approach, which we call Sandcastle CX, is helping clients identify and visualize areas of greatest return.

Shelly: The pilot was so successful that the client chose to expand our scope of work from three lines of business.

Shelly: Yes.

Shelly: This is just one of the many examples of how we're expanding our client relationships by helping them get more value out of their technology and AI.

Shelly: As a technology environment grows more complex, we continue to innovate our project based professional services and also our ongoing managed services.

Shelly: And professional services, our AIC ex readiness assessment and rapid prototyping approach that we call Sandcastle CX is helping clients identify and visualized areas of greatest return. These.

Michelle R. Swanback: These engagements provide us with a quick and easy way to get started and highlight our differentiation and ability to deliver shareholder value with more velocity than the generalist technology firms. In managed services, our trademarked CX approach moves beyond breaking to help our clients take advantage of our technology and consulting capabilities so that they can continually absorb, implement, and also optimize the new innovations in their CF technology platform. We continue to invest in our TTEC digital growth agenda to fully capitalize on the addressable market for CX technology solutions. The team remains confident in our plans for the remainder.

Shelly: These engagements provide us with a quick and easy way to get started and highlight our differentiation and ability to deliver shareholder value with more velocity than the generalist technology firms.

Shelly: And managed services, our trademark surround CX approach moves beyond break fix to help our clients take advantage of our technology and consulting capabilities. So that they can continuously absorb implement and also optimize the new innovation in our CX technology platforms.

Shelly: We continue to invest in our key tech digital growth agenda to fully capitalize on the addressable market for CX technology solutions. The team remains confident in our plans for the remainder of the year.

Michelle R. Swanback: Now, let's move on to TTEC Engage, where we have forward momentum but continue to work through the three factors we described last quarter. First, I'm pleased to say that our relationship remains strong with a client who is exiting the market for one of their lines of business that we support. We're pleased that we recently expanded our wallet share with them and another part of their operation. However, the new work is only a partial replacement for the work that was discontinued.

Shelly: Now, let's move onto <unk> engage where we have forward momentum, but continue to work through the three factors we described last quarter.

Shelly: First I'm pleased to say that our relationship remains strong with a client who is exiting the market for one of their lines of business that we support we're pleased that we recently expanded our wallet share with them in another part of their operation.

Shelly: The new work is only a partial replacement for the work that was discontinued.

Michelle R. Swanback: Second, we continue to work closely with our clients who have fluctuating volume forecasts. Right now, we're facing the most variability and downward pressure in the telco vertical. And third, as we mentioned previously, our investments in our new geographies are attracting new business. However, because of the lag effect caused by the delayed signings in 2023 and the time it takes to ramp new client programs, our fixed cost structure is temporarily higher as a percentage of revenue.

Shelly: Second we continue to work closely with our clients who have fluctuating volume forecast.

Shelly: Right now we're facing the most variability and downward pressure in the telco vertical.

Shelly: And third as we mentioned previously our investments in our new geographies or attracting new business. However, because of the lag effect caused by the delayed signings in 2023 and the time it takes to ramp new client programs, our fixed cost structure is temporarily higher as a percentage of revenue.

Michelle R. Swanback: Speaking of new business, this quarter we added nine new clients in financial services, retail, media, and technology, with almost two-thirds of the work to be delivered offshore. One of our financial services wins was with a global bank that chose us for our domain expertise and regulated industry experience. In addition, we were recently selected by an enterprise healthcare company for our unique Healthcare Center of Excellence in South Africa, which offers a hub of specialized capabilities and the benefits of offshore economics. We also continue to close deals with our embedded base. Examples include Expanded Care Services with one of our largest financial services.

Shelly: Speaking of new business. This quarter, we added nine new clients in financial services retail media and technology with almost two thirds of the work to be delivered offshore.

Shelly: One of our financial services lenses with a global bank that chose us for our domain expertise and regulated industry experience.

Shelly: In addition, we are also recently selected by an enterprise healthcare company for our unique health care Center of Excellence in South Africa and offers a hub of specialized capabilities and the benefits of offshore economics.

Shelly: We also continue to close deals with our embedded base. Examples include extended care services with one of our largest financial services clients increased Asheville support for a large tech client out of Central Europe, and additional trust and safety services for our longstanding strategic travel and hospitality climate.

Michelle R. Swanback: Increased ad sales support for a large tech client out of Central Europe, and additional trust and safety services for a long-standing strategic travel and hospitality client. Several of our new client and embedded base wins include our non-associate base. These strategic services include workforce management, learning and knowledge services, and conversation and business intelligence. While these deals are typically not large, their high value delivers significant impact and cements our relevance and differentiation with our clients.

Shelly: Several of our new client and embedded based wins include our non associate based services. These strategic services include workforce management learning and knowledge services and conversation of business intelligence.

Shelly: While these deals are typically not large they're high value deliver significant impact and cement, our relevance and differentiation with our clients.

Michelle R. Swanback: Our pipeline includes several new strategic growth accounts that provide enterprise companies with the ability to expand. In addition to our technology-enabled services, many of these large brands are choosing us for our vertical expertise and global scale. Now on the topic of innovation, I'm especially proud of the team working on our own generative knowledge management solution called Let Me Know that is built on Google's Vertex AI technology. Our Let Me Know solution was recently featured at the Google Next conference and was recognized with a Gold Stevie Award for Innovation.

Shelly: Our pipeline includes several new strategic growth accounts, the enterprise companies with the ability to expense. In addition to our technology enabled services. Many of these large brands are choosing us for our vertical expertise and global scale.

Shelly: Now on the topic of innovation I'm, especially proud of the team working on our own generative knowledge management solution called let me know that is built on Google's vertex AI technology.

Shelly: Let me now solution was recently featured at the Google Next conference and was recognized with a gold Stevie Award for innovation.

Michelle R. Swanback: This associate productivity solution is embedded in our TTEC engaged delivery platform and provides clients seamless access to our knowledge management services. The solution was recently deployed in a helpdesk environment and improved average handle time by 12%.

Shelly: This associate productivity solution is embedded in our <unk> engage delivery platform and provides clients seamless access to our knowledge management services the.

Shelly: The solution was recently deployed in help desk environment and improved average handle time by 12%.

Michelle R. Swanback: Based on those results, we're in the process of adapting Let Me Know to vertical-specific use cases, including travel and hospitality and financial services. Let Me Know is just one example of our human-centered philosophy around AI or CX. Overall, and engaged, we have solid momentum with new business while we work through the revenue and timing issues due to the lag effect. As our CFO, Kenny Wagers, will discuss shortly, we have a specific public sector client ramp impacting Q1 and Q2. We're very enthusiastic about this large outcome-based contract, but due to client circumstances, we're incurring delays in revenue realization and heightened startup costs for kidney's quarter.

Shelly: Just on those results were in the process of adapting let me now to vertical specific use cases, including travel and hospitality and financial services.

Shelly: Let me now is just one example of our human centered philosophy around AI.

Shelly: Yes.

Shelly: Overall, an engaged we have solid momentum with new business, while we work through the revenue and timing issues due to the lag effect as our CFO Kenny Wagers will cover shortly we have a specific public sector client ramp impacting Q1 and Q2.

Shelly: Very enthusiastic about this large outcome based contracts, but due to client circumstances, we're incurring delays and revenue realization and heightened startup costs in these quarters.

Michelle R. Swanback: In conclusion, during this transitional year, our investments to accelerate our growth in TTEC Digital, along with improved execution and scale in our new geographies in TTEC Engage, will set us up for profitable growth in 2025 and beyond. With our teams across the globe dedicated to delivering exceptional quality experiences for our clients and their customers every day, I look forward to sharing our progress in the quarters to come. And now, I'm happy to welcome our CFO, Kenny Wagers, to our call.

Shelly: In conclusion during this transitional year, our investments to accelerate our growth and T. Chek digital along with improved execution and scale in our new geographies and T. Chek engage will set us up for profitable growth in 2025 and beyond.

Shelly: With our teams across the globe dedicated delivering exceptional quality experiences for our clients and their customers every day I look forward to sharing our progress in the quarters to come.

Michelle R. Swanback: As you may remember, Kenny joined TTEC at the beginning of March and has been moving quickly as he gets to know our team, our clients, and our operators. And now, I'll turn the call over to Kenny. Thank you, Shelly, and good morning.

Kenneth R. Wagers: I'm excited to join TTEC as a recently appointed CFO and look forward to working with you. I will start with a review of our first quarter financial results before providing context for our reiterated full year 2024 financial outlook. In my discussion of the first quarter financial results, reference to revenue is on a gap basis, while EBITDA, operating income, and earnings per share are on a non-gap adjusted basis. The full reconciliation of our GAAP to non-GAAP results is included in the tables attached to our earnings press release.

Kenneth R. Wagers: Turning to our first quarter consolidated results, revenue exceeded our guidance range, which was attributable to the strong demand in both segments. The adjusted EBITDA contribution was in line with the midpoint of our guidance range. The lower margin percentage was primarily due to the delayed launch of the Public Sector Engage Program that impacted the timing for certain calls.

Shelly: Lower margin percentage was primarily due to the late launch of the public sector engaged program that impacted the timing for certain costs.

Kenneth R. Wagers: On a consolidated basis for the first quarter of 2024 compared to the prior year period, revenue was $577 million compared to $633 million, a decrease of 8.9%. Adjusted EBITDA was $55 million, or 9.5% of revenue compared to $83 million, or 13.1%. Operating income was $38 million, or 6.6% of revenue, compared to $61 million, or 9.6%, and EPS was $0.27 compared to

Shelly: On a consolidated basis for the first quarter of 2024 compared to the prior year period revenue was $577 million compared to $633 million a decrease of 8.9%.

Shelly: Justin EBITDA was $55 million or 9.5% of revenue compared to $83 million or 13.1%.

Shelly: Operating income was $38 million or 6.6% of revenue compared to $61 million or 9.6%.

Shelly: <unk> was 27th compared to 78.

Kenneth R. Wagers: Foreign exchange had a $1.8 million positive impact on revenue in the first quarter over the prior year period, while negatively impacting operating income by half a million, primarily in our engaged segment. If not for FX, EBITDA would have exceeded the midpoint of our first quarter guidance by one million. Turning to our first quarter 2024 segment, our digital segment's revenue was $112 million, a decrease of 4.2% over the prior year period, higher than expectations as in-quarter bookings had a greater impact on revenue in the period.

Shelly: Foreign exchange had a 1.8 million positive impact on revenue in the first quarter over the prior year period, while negatively impacting operating income by half a million dollars, primarily NR engage segment.

Shelly: If not for FX EBITDA would have exceeded the midpoint of our first quarter guidance by $1 million.

Shelly: Turning to our first quarter of 2024 segment results.

Shelly: Our digital segments revenue was $112 million, a decrease of 4.2 per cent over prior year period higher than expectations as the in quarter bookings had a greater impact on revenue in the period.

Kenneth R. Wagers: Managed services continue to deliver sequential growth quarter over quarter and increased by approximately 5% over the prior year, in large part attributable to our Genesis practice. Our Cisco practice was relatively flat with the same period last year and is expected to stabilize for the remainder of the year. Operating income was $9 million, or 8.3% of revenue, in line with the midpoint of our guidance.

Shelly: Managed services continue to deliver sequential growth quarter over quarter and increased by approximately 5% over the prior year in large part attributable to our Genesis practice.

Shelly: Our Cisco practice was relatively flat with the same period last year and is expected to stabilise for the remainder of the year.

Shelly: Operating income was 9 million or eight 3% of revenue in line with the midpoint of our guidance. This compares to 9% of revenue in the prior year, primarily due to the different revenue mix in the quarter.

Kenneth R. Wagers: This compares to 9% of revenue in the prior year, primarily due to the different revenue mix in the quarter. On the back of record bookings in the fourth quarter of last year, Digital had another strong first quarter of bookings to start the year. Our clients continue to invest in their CX ecosystems, and our unique capabilities remain in demand. This acceleration in digital backlog demonstrates TTEC Digital's consulting and engineering expertise across an expanded suite of best-in-class CX technology and service solutions.

Shelly: On the back of record bookings in the fourth quarter of last year digital had another strong first quarter of bookings to start the year, our clients continued to invest in their CX ecosystem and our unique capabilities remain in demand.

Shelly: This acceleration in digital backlog demonstrates T Tech digital's consulting and engineering expertise across an expanded sweet a best in class CX technology and service solutions.

Kenneth R. Wagers: Digital's backlog increased to $399 million, or 80% of our 2024 revenue guidance at the midpoint, a favorable comparison to 75% in the prior year. Our engaged segment revenue decreased 10% to $465 million in the first quarter of 2024 compared to the prior year period. Revenue exceeded our guidance range due to higher than anticipated seasonal volume. Operating income was $29 million, or 6.2% of revenue, compared to $50 million, or 9.7% of revenue, in the prior year.

Shelly: Digital's backlog increased to $399 million or 80% of our 2024 revenue guidance at the midpoint of favorable comparison to 75% in the prior year.

Shelly: Are engaged segment revenue decreased 10% to $465 million in the first quarter of 2024 over the prior year period <unk>.

Shelly: Revenue exceeded our guidance range due to higher than anticipated seasonal volumes.

Shelly: Operating income was $29 million or 6.2% of revenue compared to $50 million or 9.7% of revenue in the prior year.

Kenneth R. Wagers: While our engaged segment suggested EBITDA margin improved sequentially by 180 bps, it came in at the lower end of our first quarter guidance range. This was primarily a function of the timing impact from one new large program delay that Shelley discussed. The margin improvement in the second half of the year anticipates the normalization of operations from the line of business exited by one of our large clients, the impact of the cost optimization effort discussed last quarter, and the benefits from economies of scale as new programs move into production and leverage our new geography.

Shelly: While our engage segments adjusted EBITDA margin improved sequentially by 180 bps. It came in at the lower end of our first quarter guidance range. This.

Shelly: This was primarily a function of the timing impact from one new large programme delay that's Shelly discussed the.

Shelly: The margin improvement in the second half of the year anticipates the normalization of operations from the line of business exited by one of our large clients impact from the cost optimization effort discuss last quarter and the benefits from economies of scale is new programs move into production and leverage our new geographies.

Kenneth R. Wagers: The quality of the opportunities in the ENGAGE pipeline continues to improve. Our ENGAGE backlog for the next 12 months is $1.76 billion, or 96.5% of our 2024 revenue guidance at the midpoint of the range, compared to 97% in the prior year. Engage's last 12-month revenue retention rate was 92%, compared to 97% in the prior year.

Shelly: The quality of the opportunities and the engaged pipeline continues to improve our engaged backlog for the next 12 months is one 706 billion or $96 five per cent of our 2024 revenue guidance at the midpoint of the range compared to 97% in the prior year.

Shelly: Engages last 12 month revenue retention rate was 92% compared to 97% in the prior year.

Kenneth R. Wagers: The decline is mostly explained by the prior year revenue reduction in our hyper growth portfolio and the first quarter impact from one large client exiting their line of business supported by TTEC. I will now share other first quarter 2024 metrics before discussing our outlook. Free cash flow was a negative $29 million in the first quarter of 2024 compared to a positive $35 million in the prior year.

Shelly: The decline is mostly explained by the prior year revenue reduction in our hyper growth portfolio in the first quarter impact from one large client exiting their line of business supported by <unk>.

Shelly: I will now share other first quarter of 2024 metrics before discussing our outlook.

Shelly: Free cash flow was the negative $29 million in the first quarter of 2024 compared to a positive $35 million in the prior year.

Kenneth R. Wagers: The year-over-year variance is the result of lower profitability, a one-time tax payment related to international cash repatriation, and lower working capital conversion that will normalize in the next quarter. Capital expenditures were $13 million, or 2.3% of revenue, for the first quarter of 2024, compared to $14 million, or 2.2% in the prior year. Our normalized tax rate was 32.7% in the first quarter of 2024, compared to 26% in the prior year. The increase is primarily a function of lower pre-tax income and jurisdiction mix.

Shelly: The year over year variances, the result of lower profitability, a one time tax payment related to international cash repatriation and lower working capital conversion that will normalize in the next quarters <unk>.

Shelly: Capital expenditures were $13 million or 2.3% of revenue for the first quarter of 2024 compared to $14 million or $2, 2% in the prior year.

Shelly: Are normalised tax rate was 32.7% in the first quarter of 2024 compared to 26% in the prior year. The increase is primarily a function of lower pretax income and jurisdiction mix. It is expected to normalize over the year to be at the midpoint of our guidance.

Kenneth R. Wagers: It is expected to normalize over the year to be at the midpoint of our guidance. As of March 31, 2024, cash was $92 million, with $957 million of debt, of which $953 million represents borrowings under our $1.3 billion credit facility. Net debt increased year-over-year by $83 million to $865 million, primarily associated with final acquisition-related payments, geographic expansion investments, and higher interest expense, partially offset by positive cash flow from operations.

Shelly: As of March 31, 2024, cash was $92 million with $957 million of debt of which $953 million represents borrowings under our 1.3 billion credit facility.

Shelly: Net debt increased year over year by 83 million to $865 million, primarily associated with final acquisition related payments geographic expansion investments and higher interest expense, partially offset by positive cash flow from operations. We ended the quarter with a net debt to EBITDA ratio of 3.6 and.

Kenneth R. Wagers: We ended the quarter with a net debt to EBITDA ratio of 3.6 in compliance under our credit facility. As discussed last quarter, beyond returning the company to sustainable long-term organic growth, we are also taking prudent actions to improve our cash flow and balance sheet strength, including profit margin expansion initiatives, capital allocation reprioritization, and cash and working capital optimization, inclusive of cash repatriation strategies of foreign earnings to the U.S. Turning to our 2024 outlook, our digital segment ended the first quarter at the higher end of the guidance range on both top and bottom lines with another quarter of strong book.

Shelly: Compliance under a credit facility.

Shelly: As discussed last quarter beyond returning the company to sustainable long term organic growth. We're also taking prudent actions to improve our cash flow and balance sheet strength, including profit margin expansion initiatives capital allocation Reprioritization and cash in working capital optimization inclusive of cash repatriate.

Shelly: <unk> strategies, a foreign earnings to the U S.

Shelly: Turning to our 2024 outlook.

Shelly: Our digital segment ended the first quarter at the higher end of the guidance range, all both top and bottom lines with another quarter of strong bookings. It adds to an already solid foundation for the remainder of the year. Despite the continuous elongated sales cycle noted across the industry.

Kenneth R. Wagers: It adds to an already solid foundation for the remainder of the year despite the continuous elongated sales cycle noted across the industry. The engaged segment has recently been successful with winning enterprise deals, but these larger deals take more time to launch and meet production and profitability levels. Therefore, this creates less predictability in our quarterly revenue and impacts near-term margin percentages due to underlying fixed costs.

Shelly: The engage segment has recently been successful with winning enterprise deals, but these larger deals take more time to launch and meat production and profitability levels.

Shelly: Therefore, this creates less predictability in our quarterly revenue and impacts near term margin percentages due to underlying fixed cost.

Kenneth R. Wagers: The demand environment also remains fluid as client conservatism still impacts budgeting and volume awards. While our business has a long sales cycle, we are encouraged by the number of active opportunities with new prospects who have the potential to expand into strategic growth accounts, fueling our client diversification strategy. That said, we are resolute in our commitment to build back our engaged profit margin profile in the second half of this year and beyond.

Shelly: The demand environment also remains fluid as client conservatism still impacts budgeting and volume awards.

Shelly: While our business has a long sales cycle. We are encouraged by the number of active opportunities with new prospects, who have the potential to expand into strategic growth accounts fueling our client diversification strategy.

Shelly: That said, we are resolute and our commitment to build back are engaged profit margin profile and the second half of this year and beyond.

Kenneth R. Wagers: As we continue to rebalance our fixed and variable cost structure, we are moving forward with a set of actions to strengthen our margin optimization efforts and are confident in achieving our full-year outlook and delivering double-digit EBITDA margins in 2025. I want to convey a change that during the balance of this transitional period, I'm moving to provide guidance only on an annual basis with directional commentary provided each quarter as viewed appropriate.

Shelly: We continue to rebalance our fixed and variable cost structure. We are moving forward with a set of actions to strengthen our margin optimization efforts and are confident in achieving our full year outlook and delivering double digit EBITDA margins in 2025.

Speaker Change: I want to convey a change that during the balance of this transitional period I'm moving to provide guidance only on an annual basis with directional commentary provided each quarter is viewed appropriate.

Kenneth R. Wagers: As a result, please reference our commentary in the Business Outlook section of our first quarter 2024 earnings press release to obtain our expectations for our reiterated 2024 full year guidance at the consolidated and segment levels. In closing, the start of the year was in line with our expectations as we navigate the current landscape, balance our focus on continuous CX innovation and long-term growth initiatives, while advancing our operational and financial rigor. We maintain our conviction that the delivery of quality customer experiences is a business imperative, a brand differentiator, and a strategic driver of profitable growth.

Speaker Change: As a result, please reference or commentary in the business outlook section of our first quarter of 2024 earnings press release.

Speaker Change: <unk>, our expectations for our reiterated 2024 full year guidance at the consolidated and segment level.

Speaker Change: In closing the start of the year was in line with our expectations as we navigate the current landscape balance our focus on continuous CX innovation and long term growth initiatives, while advancing our operational and financial rigour.

Speaker Change: We maintain our conviction that the delivery of quality customer experience as a business imperative Ah brand differentiator in a strategic driver a profitable growth.

Kenneth R. Wagers: I want to convey our confidence in the fundamental attractiveness of the CX market opportunity and our differentiated technology and service capabilities across digital and engagement, and our commitment to execute and deliver long-term value to our clients, employees, and shareholders. We look forward to providing an update on our full year outlook when we announce our second quarter earnings results in early August. I will now turn the call back to Paul. Thanks, Kenny.

Speaker Change: I want to convey our confidence in the fundamental attractiveness of the CX market opportunity and are differentiated technology and service capabilities across the digital and engage in our commitment to execute and deliver long term value to our clients employees and shareholders.

Speaker Change: We look forward to providing an update on our full year outlook would we announce our second quarter earnings results in early August.

Speaker Change: I will now turn the call back to Paul.

Kenneth R. Wagers: As we open the call, we ask that you limit your questions to two at a time. Operator, you may open the line. Thank you, sir. We will now begin the question and answer session. If you would like to ask a question, please press star and then the number one.

Paul Miller: Thanks, K as we open the call we ask that you or any of your questions to to assign operator Eubank open the life.

Operator: Thank you, Sir and they will not begin the question and answer session. If he would like to ask a question. Please press star and then the number one and you can make your phone and record your name actually electric company name clearly even pumpkin your name and company name are required to introduce your question to cancel your request. Please press time that <unk> our first question.

Operator: Please unmute your phone and record your name as well as your company name clearly when prompted. Your name and company name are required to introduce your question. To cancel your request, please press star and then the number two.

George Frederick Sutton: Our first question comes from the line of George Sutton of Craig Allam. Sir, your line is now open. Thank you. I'm curious how you think about guidance relative to, you know, the stock's been quite weak, the market effectively giving you permission to lower guidance if necessary. So really wanted to test your conviction and thought process relative to the maintenance of the guidance, which, you know, feels somewhat heroic.

Operator: Comes from the line charges tiny Craig Allen's or your line is now open.

Craig Allen: Thank you I'm curious how you thought about guidance relative to the stock spent quite weak the market effectively giving you permission to lower guidance if necessary. So really wanted to test your conviction and thought process relative to the the maintenance of the guide which feels.

Speaker Change: Somewhat heroic.

Kenneth R. Wagers: Yeah, thanks for the question. You know, first of all, I would tell you it's my preference to manage this environment through this transitional year that we're having in 2024 for TTEC. And from what we see and from the improvements that we're making with our cost optimization efforts and from what we're working on to rebalance our fixed and variable costs going forward, we just reaffirm where we're going to land for the full year. And so that's where we see the business moving as of today. Okay, great.

Craig Allen: Yeah. Thanks for the question you know first of all I would tell you. It's my preference and managing through this environment through this transitional year that we're having in 2024 for T Tech.

Speaker Change: And from what we see in from the improvements that we're making with our cost optimization efforts and what we are working on to rebalance, our fixed and variable costs going forward.

Speaker Change: I, we just reaffirm where we're going to land for the full year.

Speaker Change: And so that's where we see the business moving as of today.

Kenneth D. Tuchman: And a question for Ken, you mentioned that AI is creating new pockets of opportunity and specifically mentioned content moderation and data annotation, not areas that you've necessarily, to my knowledge, been focused on. Can you talk about whether those are areas you're planning to build out to take advantage of these market changes? Yeah, we've always done certain aspects of content moderation and data annotation. The difference is that we've never been focused on what I would call the moderation of violent videos and the type of stuff that we think causes emotional trauma for our employees.

Speaker Change: Okay, Great and question for can you you mentioned that AI is creating new pockets of opportunity and specifically mentioned content moderation in data annotation <unk>.

Speaker Change: Not areas that you've necessarily to my knowledge been focused on can you talk about are those areas you're planning to build out to take advantage of these.

Speaker Change: These market changes.

Speaker Change: Yeah, we've always done certain aspects of content motto moderation and data annotation. The differences is that we've never been focused on what I would call the.

Speaker Change: Moderation of violent video and.

Speaker Change: That type of stuff that we think causes emotional trauma for our employees and so with AI would it brings us is because of the training of AI because of the tagging of AI et cetera, it creates new opportunities and my whole point.

Kenneth D. Tuchman: And so with AI, what it brings is because of the training of AI, because of the tagging of AI, et cetera, it creates new opportunities. And my whole point in my comments on just these new areas was just simply to say that as one door potentially narrows, many new doors open, which is what AI, we believe, is doing for us. It's allowing us to take advantage of areas that were never, frankly, previously not even available to us.

Speaker Change: In my comments on just on these new areas was just simply to say that.

Speaker Change: One door potentially narrows, many new doors open which is what.

Speaker Change: We believe is doing for us.

Speaker Change: Allowing us to take advantage of areas that we never.

Speaker Change: Frankly previously were not even available to us and it's also opening our clients minds to new things that we could be doing for them that historically they never even we're considering outsourcing. So what I would say to you is is that again the whole point in my commentary was to just simply say that as.

Kenneth D. Tuchman: And it's also opening our clients' minds to new things that we could be doing for them that, historically, they never even considered outsourcing. So what I would say to you is that again, the whole point of my commentary was to just simply say that, as Wall Street is known to do, they tend to over-rotate in both directions, whether it be to the positive or whether it be to the negative. And I was simply trying to say that the hype that's behind AI and the pundits that are declaring that this is going to have this massively negative impact, what I would just simply say is that for those of us who are highly technology enabled and who have all the right partnerships with all the AI players and have been working on this not as of six months ago but for years, we feel like we've got a head start to be able to help our clients So, overall, we believe that, you know, we're a bit misunderstood. We believe the whole industry is a bit misunderstood. And you know what?

Speaker Change: Wall Street is known to do they tend to over rotate.

Speaker Change: Both directions, whether it be to the the positive or whether it be to the negative and I was simply just simply trying to say that the hype that's behind the AI and the pundits that are declaring that this is going to have this massively negative impact what I would just simply say is is that.

Speaker Change: For those of US who were highly technology enabled and who have all the right partnerships with all the AI players and have been working on this not as of six months ago, but for years.

Speaker Change: We feel like we've got a headstart to be able to help our clients to take advantage of these technologies as well as create new service offerings that take advantage of the technologies the AI technology. So.

Speaker Change: Overall.

Speaker Change: We believe that that were a bit misunderstood we believe the whole industry is a bit misunderstood and.

George Frederick Sutton: Unfortunately, we've been here before. We'll get through this, and we'll be bigger and better and stronger in the long run. Perfect. Thanks, guys. Thanks, George.

Speaker Change: Unfortunately, we have been here before we will get through this.

Speaker Change: And will be bigger and better and stronger.

Speaker Change: In the long run.

Speaker Change: Perfect. Thanks, guys.

Speaker Change: Thanks George.

Operator: Thank you. Our next question is from the line of Maggie Nolan, from William Blair. Your line is now open. Hi, good morning. This is Jesse Wilson on behalf of Maggie Nolan.

George: Thank you. Our next question is from the line of Maggie Novak William Blair. Your line is that okay.

Speaker Change: Hi, Good morning. This is Jesse Wilson on from Maggie Nolan, Thanks for taking our questions.

Jesse Wilson: Thanks for taking our questions. And it's nice to hear from you, Kenny. So I guess to start, similar to the first question, on the call, the press release mentioned the anticipated headwinds you expected to see in the first half here. Can you just comment on if those have been better, worse, or the same as expected from last quarter? Hey, Jesse, good morning.

Jesse Wilson: And it's nice to hear from you Kenny So I guess start similar to the first question on the call. The press release you mentioned.

Jesse Wilson: Anticipated headwinds you expected to see in the first half here can you just comment on if those have been better worse or the same as expected from last quarter.

Kenneth R. Wagers: The headwinds that we talk about are what was in Shelley's script and what I described. As we moved out of the end of 2023, with the lag effect of those, that customer base that we're working from, and the timing impact of the program delay that we articulated about our public sector client, the headwinds are where we expected them to be, and that is where we are pivoting from as we moved into the second half of this year. That also supports the reiteration of our full-year guidance. Shelley, I don't know if you want to support anything else on that.

Kenneth R. Wagers: Hey, Jessie good morning, the headwinds that we talk about is what was in show the script than what I described as as we moved out of the end of 2023 with the lag effect of those that customer base that we're working from and as.

Speaker Change: The timing impact of the program delay that we articulated about our public sector clients.

Jesse Wilson: The headwinds are where we expected them to be and that is where we are pivoting from as we moved into the second half of this year that also supports the reiteration of our full year guidance Shelly I don't know if you want to support anything else on that.

Michelle R. Swanback: No, I mean, the PubSec client that I had mentioned where we've got some delays in terms of full revenue ramp and some extra startup costs here, it's a large multi-year program. We're very excited about it. It's an outcome-oriented contract.

Jesse Wilson: Okay.

Shelly: Perfect client that I had mentioned, where we've got some delays in terms of full.

Shelly: Full revenue ramp and some extra startup costs here, it's a large multiyear program I'm very excited about it that's an outcome oriented contrast, unfortunately, a complex situation and some you know Ah client circumstances that are causing some delays here, but we are working through that we expect to have that sorted out.

Shelly: Q2 and ramping too.

Shelly: At full ramp into Q3, and Q4 I think it's more more broadly speaking Jesse we talked last quarter, just about our clients volume forecasts are embedded Nathan I mentioned earlier that we see some volume down with some of those clients, but we're also seeing some of the clients Po.

Michelle R. Swanback: Unfortunately, a complex situation and some client circumstances that are causing some delays here, but we're working through that. But we're also seeing some of the clients, particularly in financial services, that took a cautious outlook at the beginning of the year, beginning to change their forecast for the better. So, based on the visibility that we have right now, we're expecting a strong healthcare season in the back half of the year. That's why we've reiterated our guidance. I got it.

Shelly: Equally in like financial services that took a cautious outlook at the beginning of the year beginning to changed our forecasts for the better so based on the disability that we have right now are expecting a strong healthcare season in the back half of the year.

Shelly: That's why we've reiterated Manhattan.

Jesse Wilson: That makes sense. And then for my follow-up, I just wanted to clarify, do you expect to return to providing quarterly guidance maybe when the dust has settled or the clouds are gone here over a multi-year period? Yeah, Jesse, as I've stepped in here in the last two months, and again, as I reiterated, as we look at this transitional year, we're not going to revisit that during 2024. But we'll take a look at it at the end of this year, moving into 2025, to see if we return back to quarterly in the upcoming years. But for the balance of this year, we're going to stick to the full year. Got it. Thanks again.

Speaker Change: Got it that makes sense and then from our follow up I just wanted to clarify.

Speaker Change: Do you expect to return to providing quarterly guidance may be one.

Speaker Change: The delta settled or the clouds are gone here over a multi year period.

Jesse Wilson: Yeah Jesse.

Speaker Change: As I've stepped in here in the last two months and again as I reiterated as we look at this transitional year, we're not going to revisit that during 2024, but but we will take a look at it at the end of this year moving into 2025.

Speaker Change: To see if we returned back to quarterly.

Speaker Change: In the upcoming years, but for the balance of this year, we're going to stick to the full year.

Speaker Change: Got it thanks again.

Speaker Change: Thank you.

Operator: Thank you. Thank you. Once again, to all participants, to ask a question, please press star and then the number one and record your name and company name clearly when prompted. To cancel your request, please press star and then the number two.

Speaker Change: 19, once again to all fine that's to ask a question. Please press star and then the number of lines and require your name and company name cleared up.

Speaker Change: To cancel your request please press time that they don't worry.

Jinli Chan: We'll take our next question from Cassie Chen of Bank of America. Your line is now open. First, I know you said you kind of provided some maybe directional commentary on the quarter. Can you just give us a little bit more detail around that for both the revenue margin side and EPS? Hey Cassie.

Kathy K: We'll take our next question from Kathy K, a bank of America Your line.

Kathy K: Hey, guys. Thanks for taking my question first I know you said you kind of provide some maybe directional commentary on the corner. It can you just give us a little bit more detail around that for both hope Avenue Martin side and India.

Kathy K: Hey, Cassie good morning.

Kenneth R. Wagers: Good morning. What I would say from a commentary standpoint is, just right now, as we see Q2 and as we see the second half of this year, I'm just going to continue to reiterate where we are guiding for the full year. We're reiterating where we're going to land on the full year towards the midpoint. And that's the extent of where we're at today from a commentary standpoint. Okay.

Speaker Change: What I would say from a commentary standpoint is just right now as we see Q2 and as we see the second half of this year.

Cassie: I'm just going to continue to reiterate where we are guiding for the full year, where reiterating where we're going to land on the full year towards the midpoint.

Speaker Change: And that's that's the extent of where we're at today from a commentary standpoint.

Jinli Chan: And then I guess, you know, in terms of onshore and offshore demand, any change in terms of some of the client conversations or the tone of client conversations that you're having? You know, maybe any commentary on pricing as well? Thank you.

Speaker Change: Okay got it and then I guess you know.

Speaker Change: And.

Speaker Change: Sure offshore demand any change in Kansas and the client conversations with a posture client conversation that you're having you know maybe any commentary on pricing as well. Thank you.

Kathy K: Hi, Kathy.

Michelle R. Swanback: Well, I would just say, let me take the second part of your question first. Certainly, a competitive environment; we're probably hearing that from everybody. You might have heard me say in my prepared remarks that two-thirds of the new business that we're winning from new clients is to be delivered offshore, a lot of that, by the way, in our new geography. So we continue to be pleased with the demand that we're seeing. You know, particularly, I would probably point out South Africa.

Kathy K: Well I would just say it let me let me take the second part of your question first certainly a competitive environment, probably hearing that from everybody.

Speaker Change: You might've heard anything in my prepared remarks that two thirds of the new business that we're winning for new clients is to be delivered offshore.

Speaker Change: Lot of that by the way in or near geography. So we continue to be pleased with the demand that we're seeing particularly I waited properly point out South Africa.

Michelle R. Swanback: I mentioned one of our new healthcare logos is taking advantage of our capabilities there in South Africa. So I'd say, you know, we continue to see strong demand from new clients for our offshore capabilities. And then with our embedded-based clients, we're beginning, you know, really, I would say, across industry verticals with the exception of the public sector, to have conversations and add new lines of business with our existing clients, leveraging our offshore footprint.

Speaker Change: I mentioned, one of our new healthcare Lopez is I'm, taking advantage of our capabilities there in South Africa I think.

Speaker Change: Continue to see strong demand from new clients for our offshore capabilities and then with our embedded these clients were beginning really I would say across industry verticals with the exception of public sector, beginning to have conversations and add new lines of business with our existing clients.

Speaker Change: Leveraging our offshore footprint I'd say in financial services that tend to be more nearshore. So some of the locations that we've added in Latin America, where many other seat and we still see some demand in Philippines, but also as I said, South Africa getting a lot of attention a lot of demands and a lot of.

Michelle R. Swanback: I'd say in financial services, it tends to be more nearshore. So some of the locations that we've added in Latin America, where many others, you know, we still see some demand in the Philippines, but also, as I said, South Africa, is getting a lot of attention, a lot of demand, and a lot of interest in terms of some of the opportunities in our pipeline. Thank you. Hope to see you next time.

Speaker Change: Interest in terms of some of the opportunities in our pipeline.

Speaker Change: Got it thank you hopefully that helps.

Jinli Chan: Bye. Thank you. Our next question is from the line of Vincent Colicchio of Barrington Research. Your line is now open. Yeah, Kenneth Shelley.

Speaker Change: Thank you. Our next question is from the line of Vincent. Thank you all very can research. Your line is now open.

Vincent: Yeah Kenneth Shelley.

Vincent Alexander Colicchio: Are you, in terms of the new clients you're attracting, a good number? New to outsourcing, which may be signaling an expansion in the market penetration potential, which is, I think, a part of a positive. Yeah, and I would say it's a mix actually, so we definitely have a couple of wins that we have.

Vincent: Are you in terms of the new client you're attracting are.

Vincent: Good number new to outsourcing, which may be signaling an expansion in the market penetration potential.

Vincent: Which is I think.

Vincent: Part of a positive thesis.

Speaker Change: Yeah and I'm.

Speaker Change: So I would say, it's a mix actually so we definitely have a couple of wins that we had.

Michelle R. Swanback: Actually, in Q4 and Q1, together, we had a couple of companies that are new to outsourcing, absolutely, just like we talked about last quarter. Interesting, some of these clients are going straight to places like South Africa, right? Many are also taking advantage of our near-shore footprint, so a mix for sure. And one of the things I'm excited about, actually, they might have been doing outsourcing already, but they are choosing an approach where maybe they're consolidating their vendor footprint, looking for something a bit different in terms of vertical expertise, technology-enabled solutions, and the like, and adding us as a partner to their network.

Vincent: Actually in Q4, and Q1 together, we had it for a couple of companies that are needed to outsourcing absolutely just like we talked about last quarter interesting. Some of these clients are going straight to places like South Africa. Many are also taking advantage of our nearshore footprints. So Ah mix for sure. We also.

Vincent: Some of the some of the enterprise whether that we've won recently one of the things I'm excited about is actually they might have been doing outsourcing already but they are choosing an approach where maybe they're consolidating evans footprint looking for something a bit different in terms of vertical expertise technology enables solution and the like and adding us as a partner.

Vincent: To their network and so part of what we've been talking about here in terms of the lag effect is some of these new enterprises, we're starting small in terms of.

Michelle R. Swanback: And so part of what we've been talking about here in terms of the lag effect is some of these new enterprises were starting small in terms of the original scope of work, but we see ample room for growth and scale in the work that they're hiring us for here at the beginning, but also expanding into different lines of business. In fact, you know, there are a couple of financial services clients that we've just recently won, and we're literally in the midst of launching our first set of services with them and already talking to them about new lines of business. So I see that as, you know, very, very pleased with the quality of logos that we're adding to our client portfolio. And curious in the AI situations where you're improving agent productivity.

Vincent: The original scope of work, but we see ample room for growth in scale and the work that they are hanging us for here at the beginning but also expanding into different lines of business. In fact, there's a couple of financial services clients that we've just recently won and we're literally in the midst of launching our first set of services with them in already.

Vincent: Talking to them about new lines of business, So I see that as you know.

Vincent: Very pleased with the quality of focus that we're adding to our client portfolio.

Vincent: And the curious.

Vincent: The AI situations, where you're improving agent productivity.

Michelle R. Swanback: Are there currently discussions about sharing in the economic improvement with your clients? Lots of discussions. Lots of discussions.

Vincent: Are the currently discussions, but sharing and the economic improvement with your client.

Michelle R. Swanback: You know, I mean, in some cases, we bring the technology just as part of our services so we can provide good quality services and, you know, be able to reduce attrition and some of the things that help us and help the client. In other cases, we have clients that are deploying technology, and we're adopting the technologies that they have in their environment. So I would say it is certainly a mix.

Vincent: [laughter] lots of discussion lots of discussions.

Vincent: In some cases you know.

Vincent: And in some cases, where bringing the technology just as part of our services that we can provide good quality services and.

Vincent: Be able to reduce attrition and some of the things that help.

Vincent: Help us and help the client and.

Vincent: In other cases, we have clients are deploying technology and we're adopting the technologies that they have in their environments I would say certainly a mix.

Michelle R. Swanback: But we're very pleased with this Let Me Know solution that I mentioned earlier, and it's still early days. Thank you. Thank you. Once again, a reminder to all participants, to ask a question, please press star and then the number one. Record your name and company name clearly when prompted. To cancel your request, please press star and then the number two.

Vincent: But we're we're very.

Vincent: Very pleased with this let me know solution that I mentioned earlier and it's still early days.

Speaker Change: Thank you.

Speaker Change: Thank you once again, a reminder to all participants to ask a question. Please press star and then the number one record your your name and company name clearly even pumpkin to cancel your request. Please press star and then the number of.

Operator: Our next question is coming from the line with Jonathan Lee of Guggenheim Securities. Your line is now open. Particularly in an environment of... I'm sorry, Partitioning Environment of What? Title Microsoft Office Word Document MSWordDoc Word.

Speaker Change: Our next question is coming from the liner Jonathan Lee Secondhand Securities. Your line is now open.

Jonathan Lee: Great. Thanks Kennedy.

Jonathan Lee: With you it's encouraging to hear about your offshore progress as you scale your offshore footprint.

Jonathan Lee: Gives you confidence than offshore shift one cannibalize entrepreneur walliams outside of your regulated industries, and particularly in an environment of Bill paid.

Jonathan Lee: I'm, sorry, I, particularly an environment of west.

Jonathan Lee: Tightening budgets.

Jonathan Lee: Document.8, Oh, Belt tightening and budget tightening. Okay. Well, so far, Jonathan, you know, we've talked about... With very few exceptions, the offshore work that we're adding is actually, it's not a movement of onshore work to offshore, so it's actually net new volume, net new business from existing clients or the new logos that we're adding. And don't forget, a large percentage of our work, actually almost 40% of our work comes from regulated industries and PubSec, where the work is required to be onshore.

Jonathan Lee: Oh about taking a bunch of saying, okay, well so far John.

Jonathan Lee: Jonathan you know as we've talked about.

Jonathan Lee: With very few exceptions the offshore work that we are adding that we're adding is actually it's not a movement of onshore works offshore so is actually net new.

Jonathan Lee: <unk> net new business from existing clients or spending logos that we're adding and don't forget.

Jonathan Lee: A large percentage of our work actually almost 40% of our where it comes from regulatory regulated industries and pub Sac where the work is is required to be onshore and so I think and we've talked about that Ah obviously in the past so far what I would say, it's the offshore work that we're adding it's just that we're.

Jonathan Lee: And so I think, and we've talked about that obviously in the past, and so, so far, what I would say is the offshore work that we're adding is just that. We're adding work. It's not about, it's not about taking work from onshore to offshore.

Jonathan Lee: Adding work, it's not about it's not about taking work from onshore to offshore.

Michelle R. Swanback: In financial services, in particular, I'd say it tends to be more nearshore work. We're starting to see some interest in South Africa in healthcare, lots of interest in South Africa, as an example. So, so far, what we're seeing is it's additive; it's not cannibalizing our onshore work. But keep in mind, a lot of that onshore work, as I said, it's regulated, it's licensed work, so the clients either can't take it offshore or are choosing not to. Got it, that's helpful.

Jonathan Lee: And financial services in particular, I would say it tends to be more national where we're starting to see some interest in South Africa and healthcare lots of interest in South Africa. As an example, so so far what we're seeing is is additive. It's not cannibalising are onshore work to keep in mind a lot of that entre work.

Jonathan Lee: As I said, it's regulated it's license work so the clients either can't take it offshore are choosing not to.

Speaker Change: Got it that's helpful and just as a follow up you know how much of your 24 revenue outlook has already contracted can can you talk about any change in visibility you may have seen in the quarter.

Jonathan Lee: Well, so what were some of the backlog numbers that can be shared.

Jonathan Lee: On the digital side, we have 80% of revenue in backlog today, which is actually slightly higher and where we stood this time last year.

Jonathan Lee: Keep in mind on the digital side rates are the foundation of that revenue bases are managed services, but those are those are.

Jonathan Lee: Longer term contracts, where we have a very high right now alright and then.

Jonathan Lee: Confidence in terms of our digital plan based on the bookings momentum and professional services.

Jonathan Lee: I'm engaged side is Kenny Sharon our backlog is $96, 5% the midpoint and last year, we were right around 97, so very similar to where we were this time last year.

Speaker Change: Got it thanks for clarifying.

Speaker Change: Thank you for your questions that is all the time, we have today. This concludes detects first quarter of 2024 earnings Conference call. You may disconnect at this time.

Speaker Change: [music].

Speaker Change: [music].

Jonathan Lee: And just as a follow-up, you know, how much of your $24 revenue outlook is already contracted? Transcribed by https://otter.ai. Well, as we thought, the backlog numbers that Kenny shared, on the digital side, we have 80% of revenue in backlog today, which is actually slightly higher than where we stood this time last year. Keep in mind on the digital side, right, sort of the foundation of that revenue base is our managed services. So those are long-term, you know, those are longer-term contracts where we have a very high renewal rate.

Speaker Change: Welcome everyone to the tax first quarter 'twenty 'twenty four 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 T. Chek I would now like to turn the call over to Paul Miller, <unk> Senior Vice President Treasurer and <unk>.

Michelle R. Swanback: And then, you know, confidence in terms of our digital plan based on the bookings momentum in professional service. On the engaged side, as Kenny shared, our backlog is 96.5% to the midpoint, and last year we were right around 97, so very similar to where we were this time last year. Yeah, I think it's perfect.

Paul Miller: Mr Relations officer. Thank you Sir you may begin.

Operator: Thank you for your questions. That is all the time we have today. This concludes TTEC's first quarter 2024 earnings conference call. You may disconnect at this time. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Welcome, everyone, to TTEC's first quarter 2024 earnings conference call.

Paul Miller: Good morning, and thank you for joining us today <unk> is hosting this call to discuss its first quarter results for the period ended March 31, 2020 for participating on today's call are Ken Tuchman, <unk>, Chairman and Chief Executive Officer of T. J Shelley swung back President and Chief Executive Officer of T. Chek.

Speaker Change: And Kenny Wagers CFO Peter.

Speaker Change: 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 2024 quarterly report on Form 10-Q.

Speaker Change: 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.

Speaker Change: Which are based on management's current beliefs and assumptions. Please note that these forward looking statements reflect our opinion as of this call and we undertake no obligation to revise this information as a result of new talent.

Speaker Change: Forward looking statements are subject to various risks uncertainties and other factors.

Speaker Change: Cause actual results to differ materially from those expected and described today.

Speaker Change: For a more detailed description of our risk factors. Please review our 2020 <unk> 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 okay.

Operator: 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 TTEC. I would now like to turn the call over to Paul Miller, TTEC's Senior Vice President, Treasurer, and Investor Relations Officer. Thank you, sir, and you may begin. Good morning, and thank you for joining us today.

Speaker Change: Good morning, everyone and thank you for joining US today, we started the year focused on the strategic priorities that we outlined last quarter. Our first quarter 2024 revenue was $577 million.

TTEC is hosting this call to discuss its first quarter results for the period March 31, 2024. Participating on today's call are Ken Tuchman, Chairman and Chief Executive Officer of TTEC, Shelley Swanback, President of TTEC and Chief Executive Officer of TTEC, and Kenny Wagers, CFO of TTEC. Yesterday, TTEC 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 2024 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.

Speaker Change: On a non-GAAP basis, our adjusted EBITDA was $55 million and adjusted EPS was <unk> 27.

Speaker Change: We met our first quarter objectives, while navigating a fluid demand environment and continued to make progress on our diversification strategy that has three focus areas, including one attracting new clients, we established new relationships with over two dozen accounts several of which are large enterprises.

Forward-looking statements are subject to various risks, uncertainties, and other factors that may cause actual results to differ materially from those expected and described today. For a more detailed description of our risk factors, please review our 2023 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 you... Good morning, everyone, and thank you for joining us today.

Speaker Change: It presents strong long term growth opportunities two we expanded our geographic footprint and increased offshore mix, we continued to scale with new and existing client programs across our growing geographic footprint.

We started the year focused on the strategic priorities that we outlined last quarter. Our first quarter 2024 revenue was $577 million. On a non-GAAP basis, our adjusted EBITDA was $55 million, and adjusted EPS was $0.27.

Speaker Change: And three collaborative partnerships and innovative solutions, we strengthen our partnerships with the Hyperscale and CX technology players and we launched several new AI enabled solutions in <unk> digital and T Chek engage.

Speaker Change: Looking at our two business segments <unk> digital is gaining momentum with consecutive quarters of strong bookings and pipeline.

Speaker Change: <unk> engaged with two dynamics currently impacting our results first while we are encouraged by the number and quality of the new enterprise clients were winning.

We met our first quarter objectives while navigating a fluid demand environment and continue to make progress on our diversification strategy, which has three focus areas, including one, attracting new clients. We established new relationships with over two dozen accounts, several of which are large enterprises that present strong long-term growth opportunities. Two, we expanded our geographic footprint and increased our offshore mix.

Speaker Change: Do take time to yield second while we're pleased with the new clients some of our embedded base volumes are down were.

Speaker Change: We're making progress managing through these challenges and <unk> Tec engage and management believes as previously communicated the <unk> engage and the company overall, we'll be back to positive growth in 2025, delivering double digit EBITDA margins.

Speaker Change: I'd like to note transition to my perspective on the current state of the industry.

We continue to scale with new and existing client programs across our growing geographic footprint. And three, collaborative partnerships and innovative solutions. We strengthen our partnerships with the hyperscalers and CX technology players, and we launch several new AI-enabled solutions in TTEC Digital and TTEC Engage.

Speaker Change: It's no secret that the customer experience space is in the midst of dramatic change.

Looking at our two business segments, TTEC Digital is gaining momentum with consecutive quarters of strong bookings and pipelines, and TTEC Engage, we have two dynamics currently impacting our results. First, while we're encouraged by the number and quality of the new enterprise clients we're winning, they do take time to yield. Second, while we're pleased with the new clients, some of our embedded base volumes are down.

Speaker Change: As a pioneer and leader in this industry, we have experienced and thrived through every evolution.

Speaker Change: Since we started this business 40 years ago I was told that every innovation whats going to eliminate or have an impact on the industry.

Speaker Change: First it was voicemail than email then interactive voice response next it was the dawn of the Internet the proliferation of smartphones and apps and then the migration to the cloud.

Speaker Change: Each evolution has created more opportunity today it is no different.

We're making progress managing through these challenges in TTEC Engage, and management believes, as previously communicated, that TTEC Engage and the company overall will be back to positive growth in 2025, delivering double-digit EBITDA margins. Now, I'd like to now transition to my perspective on the current state of the industry. It's no secret that the customer experience space is in the midst of dramatic change. As a pioneer and leader in this industry, we've experienced and thrived through every evolution.

Since we started this business 40 years ago, I was told that every innovation was going to eliminate or have an impact on the industry. First it was voicemail, then email, then interactive voice response. Next, it was the dawn of the Internet, the proliferation of smartphones and apps, and then the migration to the cloud. Each evolution has created more opportunities.

Speaker Change: With the advent of generative AI and all of the type some analysts and pundits are predicting a negative impact on the industry and.

Today, it's no different. With the advent of generative AI and all of its hype, some analysts and pundits are predicting a negative impact on the industry. Instead, new pockets of opportunity are emerging and diversifying the space. New work types like content moderation, data annotation, and fraud mitigation are creating new growth opportunities for businesses like ours. These didn't exist in any material way 10 years ago.

Speaker Change: Instead, new pockets of opportunity are emerging and diversify in the space New work types like content moderation data annotation fraud mitigation are creating new growth opportunities for businesses like ours be simply exist in any material way 10 years ago.

I want to remind you that the total addressable market for Just Contact Center Services is well over $400 billion. Lately, however, it feels like Wall Street believes the industry is on its last legs and has written it off. If you speak with any one of my competitive peers, our clients, or any CX Industry Analyst, they will tell you the same thing: this space is not going away. It is consolidating, bifurcating, and evolving and creating new opportunities for the industry. This future is already in motion, and we see three interaction categories emerging. Simple, repetitive tasks like making a basic reservation, checking on delivery status, and setting up appointments are already being automated.

Speaker Change: I want to remind you that the total addressable market.

Speaker Change: For just contact center services is well over 400 billion.

Speaker Change: Lately. However, it feels like Wall Street believes the industry is on its last legs and has written it off if you speak with any one of my competitive peers are clients or any CX industry analysts. They will tell you. The same thing this space is not going away.

Speaker Change: It is consolidating bifurcated and evolving and creating new opportunities for the industry.

Speaker Change: This future is already in motion.

Speaker Change: And we see three interaction categories emerging.

Speaker Change: Simple repetitive tasks like making the basic reservation checking on delivery status and setting up appointments are already being automated.

Activities that require in-the-moment human interaction, like bank tellers, fast-food drive-thru cashiers, and building receptionists, are now happening via virtual kiosks. These on-screen contacts are being staffed with friendly and cost-effective resources based thousands of miles away in many cases. And when it comes to high-value, high-risk decisions about health, family, money, life events, or large capital purchases, the need for skilled guidance from an empathetic, compassionate human remains non-negotiable. What is open for discussion, however, is where these trained nurses, financial advisors, health advocates, and others are based.

Speaker Change: Activities that require in the moment human interaction like bank pillars fast food drive thru cashiers.

Speaker Change: Building Receptionists are now happening via virtual kiosks. These on screen contacts are being staffed with friendly and cost effective resources based thousands of miles away in many cases.

Speaker Change: And when it comes to high value high risk decisions about health family money life events or large capital purchases the need for skilled guidance from an empathetic compassionate human remains non negotiable.

Speaker Change: What is opened for discussion however is where these trained nurses financial advisors health advocates and others are based as technology continues to improve these interactions are being delivered virtually from anywhere on the globe.

As technology continues to improve, these interactions are being delivered virtually from anywhere on the globe. However, the need for human interactions is not going away. Similar to what occurred in previous technology cycles, the industry is transforming, changing shape, and creating opportunities for forward-thinking, technology-enabled players like TTEC. We've consistently invested in building sophisticated technology and consulting expertise. We've forged collaborative partnerships with hyperscalers and the leading technology players with the most advanced AI.

Speaker Change: The need for human interactions is not going away and similar to what occurred in previous technology cycles. The industry is transforming changing shape and creating opportunities for forward thinking technology enable enable players like T Tech.

Speaker Change: We've consistently invested in building sophisticated technology and consulting expertise, we forge collaborative partnerships with the Hyperscale and the leading technology players with the most advanced AI and we've built an enviable bench of global CX talent that includes every skill a company needs to design build.

And we've built an enviable bench of global CX talent that includes every skill a company needs to design, build, operate, optimize, and deliver a seamless customer experience at scale. Now, I'll share how this is playing out with our business segment. At TTEC Digital, our focus is on helping clients modernize their CX technology platforms to take full advantage of the new AI-enabled capabilities.

Speaker Change: Operate optimize and deliver seamless customer experience at scale.

Speaker Change: Now I'll share how this is playing out with our business segments.

Speaker Change: And key Tech digital our focus is on helping clients modernize their CX technology platforms to take full advantage of the new AI enabled capabilities.

Clients are choosing us because we're CX specialists who operate at the intersection of contact center technology, CRM, analytics, and AI. We're a pure play CX technology and services firm with solutions that are wrapped in consulting and analytics and underpinned by software engineering. We have the know-how and the talent to seamlessly integrate the full suite of CX technology required to meet our clients' unique and evolving operating needs. We are technology agnostic, certified AI experts, and our bench of full-stack engineers and data scientists continues to grow, enabling our clients to benefit from our CX best practices, regardless of platform. By the end of Q3, 100% of our TTEC digital team will be certified on partner platforms and through our own AI accreditation program.

Speaker Change: Clients are choosing us because we're CX specialist who operate at the intersection of contact Center technology, CRM analytics and AI.

Speaker Change: We're a pure play CX technology and services firm with solutions that are wrapped in consulting and analytics and underpinned with software engineering, we have the knowhow and the talent to seamlessly integrate the full suite of CX technology required to meet our clients' unique and evolving operating needs.

Speaker Change: We are technology agnostic certified AI experts, our bench of full stack engineers and data scientists continues to grow enabling our clients to benefit from our CX best practices, regardless of platform by the end of Q3, a 100% of our T Tech digital team will be certified on partner platforms and.

Speaker Change: Our own AI accreditation programs.

And most importantly, we're delivering the outcomes that clients value. The business segment has produced consecutive quarters of strong bookings and continues to have a growing pipeline. Management believes the team is on track to achieve our goal of double-digit top line and bottom line growth over the next few years. Now on to TTEC Engage, where our focus is on integrating technology and AI into everything we do to improve associate productivity and customer satisfaction.

Speaker Change: And most importantly, we are delivering the outcomes that clients value. The business segment has produced consecutive quarters of strong bookings and continues to have a growing pipeline.

Speaker Change: Management believes the team is on track to achieve our goal of double digit topline and bottomline growth over the next few years.

Speaker Change: Now on to <unk> engage.

Speaker Change: Where our focus is on integrating technology and AI into everything we do to improve associate productivity and customer satisfaction.

We're using AI on the front line, as a companion for our associates with real-time language translation, intuitive generative knowledge support, and post-call summarization. Additionally, our team leaders are using AI as a coach to help them provide individualized training and curriculum enhancement.

Speaker Change: We are using AI on the frontline.

Speaker Change: As a companion for our associates with real time language translation intuitive generative knowledge support and post call summarization.

Speaker Change: Our team leaders are using AI as a coach.

Speaker Change: To help them provide individualized training and curriculum enhancements are data scientist or providing clients with actionable insights with conversational intelligence gleaned from the next generation quality technology.

Our data scientists are providing clients with actionable insights. Across both business segments, we have hundreds of AI-enabled projects underway, with many more in development. While still early days, the opportunities continue to unfold as clients embrace our services that drive higher quality outcomes at the lowest total overall cost to serve. In closing, as I mentioned earlier, TTEC and the entire industry are going through a dynamic period of evolution, which creates some volatility that is unavoidable.

Speaker Change: Across both business segments, we have hundreds of AI enabled projects underway with many more in development, while still early days the opportunities continue to unfold as clients embrace our services that drive higher quality outcomes at the lowest total overall cost to serve.

Speaker Change: In closing as I mentioned earlier T chek and the entire industry are going through a dynamic period of evolution, which creates some volatility volatility that is unavoidable I speak for the board and our entire management team that we're taking the necessary actions. During this transition year to return to long term growth and increased profit.

I speak on behalf of the board and our entire management team that we're taking the necessary actions during this transition year to return to long-term growth and increased profitability. I recently returned from a trip to the Philippines and continue to be energized by our highly motivated teams in that region and across the globe.

Speaker Change: Ability.

Speaker Change: I recently returned from a trip to the Philippines and continue to be energized by our highly motivated teams in that region and across the globe I look forward to sharing our progress on the topics. We just discussed in the quarters to come and I'll now turn the call over to Shelly.

I look forward to sharing our progress on the topics we just discussed in the quarters to come. And I'll now turn the call over to Shelley. Thank you, Ken, and good morning. This quarter, we continue to make progress on the company's strategic growth initiatives by acquiring new clients, expanding with our existing base, delivering quality services, and creating innovative solutions that deliver the outcomes our clients need. Let me start with TTEC Digital, where we're off to a solid start delivering our second consecutive quarter of strong bookings.

We continue to win exciting new business across partners, geographies, and industries with companies that are in the early stages of their CX cloud migrations, as well as brands that are well on their way to optimizing their CX platforms with AI. Our pipeline and backlog continue to grow with our existing clients, as more and more of them are choosing to expand our relationships from individual projects to longer and larger multi-phase professional and managed service contracts.

Shelly: Thank you Kevin and good morning. This quarter, we continued to make progress on the company's strategic growth initiatives by acquiring new clients expanding with our embedded base delivering quality services and creating innovative solutions that deliver the outcomes our clients need let.

Shelly: Let me start with key Tech digital where we're off to a solid start delivering our second consecutive quarter of strong bookings, we continue to win exciting new business across partners geographies and industries with companies that are in the early stages of their CX cloud migration as well as brands that are well on their way to optimizing their CX platforms with AI.

Shelly: Our pipeline and backlog continued to grow with our existing clients as more and more of them are choosing to expand our relationships from individual projects the longer and larger multi phase professional and managed service contracts.

Approximately 75% of our bookings are coming from existing clients who are seeking to achieve better customer experiences at the intersection of CKAS, CRM, AI, and analytics. Now, let me share an example with a client who's a global online delivery service that TTEC engages to support with care and workforce management services. Our TTEC digital team was chosen to help this client leverage features in the technology they already owned. We activated several AI functions in their CCAS platform, built a self-help solution, and an advanced routing approach that is providing impressive productivity gains. In the pilot phase, the solution improved CSAT by 15%, reduced call transfers by 40%, and also reduced call duration by 25%.

Shelly: Approximately 75% of our bookings are coming from existing clients, who are seeking to achieve better customer experiences at the intersection of Sekos CRM AI and analytics.

Shelly: Now let me share. An example, with the client is a global online delivery service that <unk> engaged supports with care and workforce management services.

Shelly: Our <unk> digital team has chosen to help this client leveraged features and the technology they already own.

Shelly: We activated several AI functions in our <unk> platform built to help self book solution and advanced routing approach that is providing impressive productivity gains.

Shelly: In the pilot phase of this solution improves T cell by 15% reduce call cancers by 40% and also reduce call duration by 25% the.

The pilot was so successful that the client chose to expand her scope of work from three lines of business to six. This is just one of the many examples of how we're expanding our client relationships by helping them get more value out of their technology and AI. As the technology environment grows more complex, we continue to innovate our project-based professional services and also our ongoing managed services. For example, in professional services, our AI CX Readiness Assessment and Rapid Prototyping approach, which we call Sandcastle CX, is helping clients identify and visualize areas of greatest return.

Shelly: The pilot was so successful that the client chose to expand our scope of work.

Shelly: <unk> from three lines of business.

Shelly: Yes.

Shelly: This is just one of the many examples of how we're expanding our client relationships by helping them get more value out of their technology and AI.

Shelly: As the technology environment grows more complex, we continue to innovate our project based professional services and also our ongoing managed services.

Shelly: And professional services, our AIC ex readiness assessment and rapid prototyping approach that we call sand Castle CX is helping clients identify and digitalize areas of greatest return.

These engagements provide us with a quick and easy way to get started and highlight our differentiation and ability to deliver shareholder value with more velocity than the generalist technology firms, and Managed Services, our trademark Surround CX approach moves beyond break to help our clients take advantage of our technology and consulting capabilities so that they can continually absorb, implement, and also optimize the new innovations in their CX technology platform. We continue to invest in our TTEC digital growth agenda to fully capitalize on the addressable market for CX technology solutions. The team remains confident in our plans for the remainder.

Shelly: These engagements provide us with a quick and easy way to get started and highlight our differentiation and ability to deliver shareholder value with more velocity than the generalist technology firms.

Shelly: And managed services, our trademark surround CX approach moves beyond break fix to help our clients take advantage of our technology and consulting capabilities. So that they can.

Shelly: Can continuously absorb implement and also optimize the new innovation in our CX technology platforms.

Shelly: We continue to invest in our key tech digital growth agenda to fully capitalize on the addressable market for CX technology solutions. The team remains confident in our plans for the remainder of the year.

Now, let's move on to TTEC Engage, where we have forward momentum but continue to work through the three factors we described last quarter. First, I'm pleased to say that our relationship remains strong with a client who is exiting the market for one of their lines of business that we support. We're pleased that we recently expanded our wallet share with them in another part of their operation. However, the new work is only a partial replacement for the work that was discontinued.

Shelly: Now, let's move onto <unk> engage where we have forward momentum, but continue to work through the three factors we described last quarter.

Shelly: First I'm pleased to say that our relationship remains strong with a client who is exiting the market for one of their lines of business that we support we're pleased that we recently expanded our wallet share with them in another part of their operation.

Shelly: The new work is only a partial replacement for the work that was discontinued.

Second, we continue to work closely with our clients who have fluctuating volume forecasts. Right now, we're facing the most variability and downward pressure in the telco vertical. And third, as we mentioned previously, our investments in our new geographies are attracting new business. However, because of the lag effect caused by the delayed signings in 2023 and the time it takes to ramp new client programs, our fixed cost structure is temporarily higher as a percentage of revenue.

Shelly: Second we continue to work closely with our clients who have fluctuating volume forecast.

Shelly: Right now we're facing the most variability of downward pressure in the telco vertical.

Shelly: And third as we mentioned previously our investments in our new geographies or attracting new business. However, because of the lag effect caused by the delayed signings in 2023 and the time it takes to ramp new client programs, our fixed cost structure is temporarily higher as a percentage of revenue.

Speaking of new business, this quarter we added nine new clients in financial services, retail, media, and technology, with almost two-thirds of the work to be delivered offshore. One of our financial services wins was with a global bank that chose us for our domain expertise and regulated industry experience. In addition, we were recently selected by an enterprise healthcare company for our unique Healthcare Center of Excellence in South Africa, which offers a hub of specialized capabilities and the benefits of offshore economics. We also continue to close deals with our embedded base. Examples include Expanded Care Services with one of our largest financial services.

Shelly: Speaking of new business. This quarter, we added nine new clients in financial services retail media and technology with almost two thirds of the work to be delivered offshore.

Shelly: One of our financial services lenses with a global bank that chose us for our domain expertise and regulated industry experience.

Shelly: In addition, we are also recently selected by an enterprise healthcare company for our unique health care Center of Excellence in South Africa and offers a hub of specialized capabilities and the benefits of offshore economics.

Shelly: We also continue to close deals with our embedded base. Examples include extended care services with one of our largest financial services clients increased Asheville support for a large tech client out of Central Europe, and additional trust and safety services for our longstanding strategic travel and hospitality climate.

Increased ad sales support for a large tech client out of Central Europe, and additional trust and safety services for a longstanding strategic travel and hospitality client. Several of our new client and embedded-based wins include our non-associate-based, These strategic services include workforce management, learning and knowledge services, and conversation and business intelligence. While these deals are typically not large, their high value delivers significant impact and cements our relevance and differentiation with our clients.

Shelly: Several of our new client and embedded these wins include our non associate based services. These strategic services include workforce management learning and knowledge services and conversation of business intelligence.

Shelly: These deals are typically not large they're high value deliver significant impact and cement, our relevance and differentiation with our clients.

Our pipeline includes several new strategic growth accounts that provide enterprise companies with the ability to expand. In addition to our technology-enabled services, many of these large brands are choosing us for our vertical expertise and global scale. Now on the topic of innovation, I'm especially proud of the team working on our own generative knowledge management solution called Let Me Know that is built on Google's Vertex AI technology. Our Let Me Know solution was recently featured at the Google Next conference and was recognized with a Gold Stevie Award for Innovation.

Shelly: Our pipeline includes several new strategic growth accounts that enterprise companies with the ability to expense. In addition to our technology enabled services. Many of these large brands are choosing us for our vertical expertise and global scale.

Shelly: Now on the topic of innovation I'm, especially proud of the team working on our own generative knowledge management solution called let me know.

Shelly: It's built on Google's vertex AI technology.

Shelly: Let me now solution was recently featured at the Google Next conference and was recognized with a gold Stevie Award for innovation.

This associate productivity solution is embedded in our TTEC Engaged Delivery Platform and provides clients seamless access to our knowledge management services. The solution was recently deployed in a help desk environment and improved average handle time by 12%. Based on those results, we're in the process of adapting Let Me Know to vertical specific use cases, including travel and hospitality and financial services. Let Me Know is just one example of our human-centered philosophy around AI or CI.

Shelly: This associate productivity solution is embedded in our <unk> engage delivery platform and provides clients seamless access to our knowledge management services the.

Shelly: The solution was recently deployed in help desk environment and improved average handle time by 12%.

Shelly: Just on those results we are in the process of adapting let me announce the vertical specific use cases, including travel and hospitality and financial services.

Shelly: Let me now is just one example of our human centered philosophy around AI for <unk>.

Shelly: Yes.

Overall, and engaged, we have solid momentum with new business while we work through the revenue and timing issues due to the lag effect. As our CFO, Kenny Wagers, will discuss shortly, we have a specific public sector client ramp impacting Q1 and Q2. We're very enthusiastic about this large outcome-based contract, but due to client circumstances, we're incurring delays in revenue realization and heightened startup costs in these quarters. In conclusion, during this transitional year, our investments to accelerate our growth in TTEC Digital, along with improved execution and scale in our new geographies in TTEC Engage, will set us up for profitable growth in 2025 and beyond.

Shelly: Overall, an engaged we have solid momentum with new business, while we work through the revenue and timing issues due to the lag effect as our CFO Kenny Wagers will cover shortly we have a specific public sector client ramp impacting Q1 and Q2.

Shelly: Very enthusiastic about this large outcome based contracts, but due to client circumstances, we're incurring delays and revenue realization and heightened startup costs in these quarters.

Shelly: In conclusion during this transitional year, our investments to accelerate our growth and T. Chek digital along with improved execution and scale in our new geographies and T. Chek engage will set us up for profitable growth in 2025 and beyond.

With our teams across the globe dedicated to delivering exceptional quality experiences for our clients and their customers every day, I look forward to sharing our progress in the quarters to come. And now, I'm happy to welcome our CFO, Kenny Wagers, to our call. As you may remember, Kenny joined TTEC at the beginning of March and has been moving quickly as he gets to know our team, our clients, and our operators. Now, I'll turn the call over to Kenny. Thank you, Shelly. And good morning.

Shelly: With our teams across the globe dedicated delivering exceptional quality experiences for our clients and their customers every day I look forward to sharing our progress in the quarters to come.

Kenneth R. Wagers: And now I'm happy to welcome our CFO, Kenny wagers to our call as you May remember Kenny joined <unk> at the beginning of March and has been moving quickly as it gets in our team our clients and our operation and now I will turn the call over to Kenny.

I'm excited to join TTEC as a recently appointed CFO and look forward to working with you. I will start with a review of our first quarter financial results before providing context for our reiterated full year 2024 financial outlook. In my discussion of the first quarter financial results, reference to revenue is on a gap basis, while EBITDA, operating income, and earnings per share are on a non-gap adjusted basis. The full reconciliation of our GAAP to non-GAAP results is included in the tables attached to our earnings press release.

Kenny: Thank you Shirley and good morning, I'm excited to join <unk> as our recently appointed CFO and look forward to working with you.

Kenny: I will start with a review of our first quarter financial results before providing context into our reiterated full year 2024 financial outlook.

Kenny: In my discussion on the first quarter financial results referenced a revenue was on a GAAP basis, while EBITDA operating income and earnings per share are on a non-GAAP adjusted basis, a full reconciliation of our GAAP to non-GAAP results is included in the tables attached to our earnings press release.

Turning to our first quarter consolidated results, revenue exceeded our guidance range, which was attributable to the strong demand in both segments. The adjusted EBITDA contribution was in line with the midpoint of our guidance range. The lower margin percentage was primarily due to the delayed launch of the Public Sector Engage Program that impacted the timing for certain clients.

Kenny: Turning to our first quarter consolidated results revenue exceeded our guidance range, which was attributable to the strong demand in both segments. The adjusted EBITDA contribution was in line with the midpoint of our guidance range. The lower margin percentage was primarily due to the delayed launch of the public sector engaged program that impacted the <unk>.

Kenneth R. Wagers: Timing for certain costs.

On a consolidated basis for the first quarter of 2024, compared to the prior year period, revenue was $577 million compared to $633 million, a decrease of 8.9%. Adjusted EBITDA was $55 million, or 9.5% of revenue, compared to $83 million, or 13.1%. Operating income was $38 million, or 6.6% of revenue, compared to $61 million, or 9.6%, and EPS was $0.27 compared to $0.78. Foreign exchange had a 1.8 million positive impact on revenue in the first quarter over the prior year period, while negatively impacting operating income by half a million, primarily in our engaged segment.

Kenneth R. Wagers: On a consolidated basis for the first quarter of 2024 compared to the prior year period revenue was $577 million compared to $633 million a decrease of eight 9% adjusted EBITDA was $55 million or nine 5% of revenue compared to $83 million or 13, 1%.

Kenneth R. Wagers: Operating income was $38 million or six 6% of revenue compared to $61 million or nine 6%.

Kenneth R. Wagers: And EPS was <unk> 27, compared to <unk> 78.

Kenneth R. Wagers: Foreign exchange had a $1 8 million positive impact on revenue in the first quarter over the prior year period, while negatively impacting operating income by $5 million, primarily in our engage segment.

If not for FX, EBITDA would have exceeded the midpoint of our first quarter guidance by $1 million. Turning to our first quarter 2024 segment. Our digital segment's revenue was $112 million, a decrease of 4.2% over the prior year period, higher than expectations as the in-quarter bookings had a greater impact on revenue in the period. Managed services continue to deliver sequential growth quarter over quarter and increased by approximately 5% over the prior year, in large part attributable to our Genesis practice.

Kenneth R. Wagers: If not for FX EBITDA would have exceeded the midpoint of our first quarter guidance by $1 million.

Kenneth R. Wagers: Turning to our first quarter 2024 segment results.

Operator: Our digital segments revenue was $112 million, a decrease of four 2% over prior year period higher than expectations as the in quarter bookings had a greater impact on revenue in the period.

Operator: Managed services continued to deliver sequential growth quarter over quarter and increased by approximately 5% over the prior year in large part attributable to our Genesis practice our.

Our Cisco practice was relatively flat with the same period last year and is expected to stabilize for the remainder of the year. Operating income was $9 million, or 8.3% of revenue, in line with the midpoint of our guidance.

Kenneth R. Wagers: Our Cisco practice was relatively flat with the same period last year and is expected to stabilize for the remainder of the year.

Kenneth R. Wagers: Operating income was $9 million or eight 3% of revenue in line with the midpoint of our guidance. This compares to 9% of revenue in the prior year, primarily due to the different revenue mix in the quarter.

This compares to 9% of revenue in the prior year, primarily due to the different revenue mix in the quarter. On the back of record bookings in the fourth quarter of last year, Digital had another strong first quarter of bookings to start the year. Our clients continue to invest in their CX ecosystems, and our unique capabilities remain in demand. This acceleration in digital backlog demonstrates TTEC Digital's consulting and engineering expertise across an expanded suite of best-in-class CX technology and service solutions.

Operator: On the back of record bookings in the fourth quarter of last year digital had another strong first quarter of bookings to start the year.

Operator: Our clients continue to invest in their CX ecosystem and our unique capabilities remain in demand.

Kenneth R. Wagers: This acceleration in digital backlog demonstrates <unk> digital's consulting and engineering expertise across an expanded suite of best in class CX technology and service solutions.

Digital's backlog increased to $399 million, or 80% of our 2024 revenue guidance at the midpoint, a favorable comparison to 75% in the prior year. Our engaged segment revenue decreased 10% to $465 million in the first quarter of 2024 compared to the prior year period. Revenue exceeded our guidance range due to higher than anticipated seasonal volume. Operating income was $29 million, or 6.2% of revenue, compared to $50 million, or 9.7% of revenue, in the prior year.

Kenneth R. Wagers: Digital's backlog increased to $399 million or 80% of our 2020 for revenue guidance at the midpoint, a favorable comparison to 75% in the prior year.

Kenneth R. Wagers: Our engage segment revenue decreased 10% to $465 million in the first quarter of 2024 over the prior year period.

Kenneth R. Wagers: Revenue exceeded our guidance range due to higher than anticipated seasonal volumes.

Operator: Operating income was $29 million or six 2% of revenue compared to $50 million or nine 7% of revenue in the prior year.

While our engaged segment suggested EBITDA margin improved sequentially by 180 bps, it came in at the lower end of our first quarter guidance range. This was primarily a function of the timing impact from one new large program delay that Shelley discussed. The margin improvement in the second half of the year anticipates the normalization of operations from the line of business exited by one of our large clients, the impact of the cost optimization effort discussed last quarter, and the benefits from economies of scale as new programs move into production and leverage our new geography.

Kenneth R. Wagers: While our engaged segment's adjusted EBITDA margin improved sequentially by 180 bps. It came in at the lower end of our first quarter guidance range. This.

Kenneth R. Wagers: This was primarily a function of the timing impact from one new large program delay that Shelly discussed.

Kenneth R. Wagers: The margin improvement in the second half of the year anticipates the normalization of operations from the line of business exited by one of our large clients impact from the cost optimization effort discussed last quarter and the benefits from economies of scale as new programs move into production and leverage our new geographies.

The quality of the opportunities in the ENGAGE pipeline continues to improve. Our ENGAGE backlog for the next 12 months is $1.76 billion, or 96.5% of our 2024 revenue guidance at the midpoint of the range, compared to 97% in the prior year. Engage's last 12-month revenue retention rate was 92%, compared to 97% in the prior year.

Kenneth R. Wagers: The quality of the opportunities in the engaged pipeline continues to improve our engaged backlog for the next 12 months was $1 76 billion or <unk> 96, 5% of our 2020 for revenue guidance at the midpoint of the range compared to 97% in the prior year.

Operator: Engages last 12 month revenue retention rate was 92% compared with 97% in the prior year.

The decline is mostly explained by the prior year revenue reduction in our hyper growth portfolio and the first quarter impact from one large client exiting their line of business supported by TTEC. I will now share other first quarter 2024 metrics before discussing our outlook. Free cash flow was a negative $29 million in the first quarter of 2024 compared to a positive $35 million in the prior year.

Operator: The decline is mostly explained by the prior year revenue reduction in our hyper growth portfolio in the first quarter impact from one large client exiting their line of business supported by Tito.

Operator: I will now share other first quarter 2024 metrics before discussing our outlook.

Operator: Free cash flow was a negative $29 million in the first quarter of 2024 compared to a positive $35 million in the prior year.

The year-over-year variance is the result of lower profitability, a one-time tax payment related to international cash repatriation, and lower working capital conversion that will normalize in the next quarter. Capital expenditures were $13 million, or 2.3% of revenue, for the first quarter of 2024, compared to $14 million, or 2.2% in the prior year. Our normalized tax rate was 32.7% in the first quarter of 2024, compared to 26% in the prior year. The increase is primarily a function of lower pre-tax income and jurisdiction mix.

Operator: The year over year variance is the result of lower profitability of onetime tax payment related to international cash repatriation and lower working capital conversion that will normalize in the next quarters.

Operator: Capital expenditures were $13 million or two 3% of revenue for the first quarter 2024, compared to $14 million or two 2% in the prior year.

Operator: Our normalized tax rate was 32, 7% in the first quarter 2024 compared to 26% in the prior year. The increase is primarily a function of lower pretax income and jurisdiction mix. It is expected to normalize over the year to be at the midpoint of our guidance.

It is expected to normalize over the year to be at the midpoint of our guidance. As of March 31, 2024, cash was $92 million, with $957 million of debt, of which $953 million represents borrowings under our $1.3 billion credit facility. Net debt increased year-over-year by $83 million to $865 million, primarily associated with final acquisition-related payments, geographic expansion investments, and higher interest expense, partially offset by positive cash flow from operations.

Operator: As of March 31, 2024, cash was $92 million with $957 million of debt of which $953 million represents borrowings under our $1 3 billion credit facility.

Operator: Net debt increased year over year by $83 million to $865 million, primarily associated with final acquisition related payments geographic expansion investments and higher interest expense, partially offset by positive cash flow from operations. We ended the quarter with a net debt to EBITDA ratio of three six and.

We ended the quarter with a net debt to EBITDA ratio of 3.6 in compliance under our credit facility. As discussed last quarter, beyond returning the company to sustainable long-term organic growth, we are also taking prudent actions to improve our cash flow and balance sheet strength, including profit margin expansion initiatives, capital allocation reprioritization, and cash and working capital optimization, inclusive of cash repatriation strategies of foreign earnings to the U.S. Turning to our 2024 outlook, our digital segment ended the first quarter at the higher end of the guidance range on both top and bottom lines with another quarter of strong booking.

Operator: Compliance under our credit facility.

Operator: As discussed last quarter beyond returning the company to sustainable long term organic growth. We are also taking prudent actions to improve our cash flow and balance sheet strength, including profit margin expansion initiatives capital allocation re prioritization and cash and working capital optimization inclusive of cash repatriation.

Operator: Strategies of foreign earnings to the U S.

Operator: Turning to our 2020 for outlook.

Operator: Our digital segment ended the first quarter at the higher end of the guidance range on both top and bottom lines with another quarter of strong bookings. It adds to an already solid foundation for the remainder of the year. Despite the continuous elongated sales cycle noted across the industry.

It adds to an already solid foundation for the remainder of the year despite the continuous elongated sales cycle noted across the industry. The engaged segment has recently been successful with winning enterprise deals, but these larger deals take more time to launch and meet production and profitability levels. Therefore, this creates less predictability in our quarterly revenue and impacts near-term margin percentages due to underlying fixed costs.

Operator: The engage segment has recently been successful winning enterprise deals, but these larger deals take more time to launch and meat production and profitability levels. Therefore, this creates less predictability in our quarterly revenue and impacts near term margin percentages due to underlying fixed costs.

The demand environment also remains fluid as client conservatism still impacts budgeting and volume awards. While our business has a long sales cycle, we are encouraged by the number of active opportunities with new prospects who have the potential to expand into strategic growth accounts, fueling our client diversification strategy. That said, we are resolute in our commitment to build back our engaged profit margin profile in the second half of this year and beyond.

Operator: The demand environment also remains fluid as client conservatism still impacts budgeting and volume awards.

Operator: While our business has a long sales cycle. We are encouraged by the number of active opportunities with new prospects, who have the potential to expand into strategic growth accounts fueling our client diversification strategy.

Operator: That said, we are resolute in our commitment to build back our engaged profit margin profile in the second half of this year and beyond.

As we continue to rebalance our fixed and variable cost structure, we are moving forward with a set of actions to strengthen our margin optimization efforts and are confident in achieving our full-year outlook and delivering double-digit EBITDA margins in 2025. I want to convey a change that during the balance of this transitional period, I'm moving to provide guidance only on an annual basis with directional commentary provided each quarter as viewed appropriate.

Operator: As we continue to rebalance our fixed and variable cost structure. We are moving forward with a set of actions to strengthen our margin optimization efforts and are confident in achieving our full year outlook and delivering double digit EBITDA margins in 2025.

Operator: I want to convey a change that during the balance of this transitional period I am moving to provide guidance only on an annual basis with directional commentary provided each quarter as viewed appropriate.

As a result, please reference our commentary in the Business Outlook section of our first quarter 2024 earnings press release to obtain our expectations for our reiterated 2024 full year guidance at the consolidated and segment levels. In closing, the start of the year was in line with our expectations as we navigate the current landscape, balance our focus on continuous CX innovation and long-term growth initiatives, while advancing our operational and financial rigor. We maintain our conviction that the delivery of quality customer experiences is a business imperative, a brand differentiator, and a strategic driver of profitable growth.

Operator: As a result, please reference our commentary in the business outlook section of our first quarter 2024 earnings press release to obtain our expectations for our reiterated 2020 for full year guidance at the consolidated and segment level.

Operator: In closing the start of the year was in line with our expectations as we navigate the current landscape balance our focus on continuous CX innovation and long term growth initiatives, while advancing our operational and financial rigor.

Operator: We maintain our conviction that the delivery of quality customer experience is a business imperative a brand differentiator and a strategic driver of profitable growth.

Operator: I want to convey our confidence in the fundamental attractiveness of the <unk> market opportunity and our differentiated technology and service capabilities across digital and engage in our commitment to execute and deliver long term value to our clients employees and shareholders.

Operator: We look forward to providing an update on our full year outlook when we announce our second quarter earnings results in early August.

Operator: I will now turn the call back to Paul.

I want to convey our confidence in the fundamental attractiveness of the CX market opportunity and our differentiated technology and service capabilities across digital and engagement, and our commitment to execute and deliver long-term value to our clients, employees, and shareholders. We look forward to providing an update on our full year outlook when we announce our second quarter earnings results in early August. I will now turn the call back to Paul. Thanks, Kenny. As we open the call, we ask that you limit your questions to two at a time. Operator, you may open the line.

Speaker Change: Thanks, Kenny as we opened the call we ask that you limit your questions to two assigned operator, you may open the lines.

Thank you, sir. We will now begin the question and answer session. If you would like to ask a question, please press star and then the number one. Please unmute your phone and record your name as well as your company name clearly when prompted. Your name and company name are required to introduce your question. To cancel your request, please press star and then the number two.

Speaker Change: Thank you Sir we will now begin the question and answer session. If you would like to ask a question. Please press star and then the number one please make yourself and record your name as well as your company name clearly with your.

Operator: Your name and company name or record introduce your question to cancel your request. Please press Star then the number two our first question comes from the line of George Sutton.

Operator: Craig Allen Sir your line is now open.

Our first question comes from the line of George Sutton, Craig Allum. Sir, your line is now open. Thank you. I'm curious how you think about guidance relative to, you know, the stock's been quite weak, the market effectively giving you permission to lower guidance if necessary. So really wanted to test your conviction and thought process relative to the maintenance of the guidance, which, you know, feels somewhat heroic.

Operator: Thank you.

Speaker Change: I'm curious how you thought about guidance relative to the stock has been quite weak the market effectively giving you permission to lower guidance if necessary. So really wanted to test your conviction and thought process relative to the the maintenance of the guide which feels somewhat heroic.

Yeah, thanks for the question. You know, first of all, I would tell you it's my preference to manage this environment through this transitional year that we're having in 2024 for TTEC. And from what we see and from the improvements that we're making with our cost optimization efforts and what we're working on to rebalance our fixed and variable costs going forward, we just reaffirm where we're going to land for the full year. And so that's where we see the business moving as of today. Okay, great.

George Frederick Sutton: Yes, thanks for the question.

Operator: First of all I would tell you its my preference in managing through this environment through this transitional year.

Operator: That were having in 2024 for <unk>.

Operator: And from what we see and from the.

Operator: It's that we're making with our cost optimization efforts and what we're working on to rebalance, our fixed and variable costs going forward.

Operator: We just reaffirm where we're going to land for the full year.

Operator: And so that's where we see the business moving as of today.

And a question for Ken, you mentioned that AI is creating new pockets of opportunity and specifically mentioned content moderation and data annotation, not areas that you've necessarily, to my knowledge, been focused on. Can you talk about whether those are areas you're planning to build out to take advantage of these market changes? Yeah, we've always done certain aspects of content moderation and data annotation. The difference is that we've never been focused on what I would call the moderation of violent videos and the type of stuff that we think causes emotional trauma for our employees.

Speaker Change: Okay, Great and quest.

Operator: Question for Ken you mentioned that AI is creating new.

Operator: Pockets of opportunity and specifically mentioned content moderation in data annotation not areas that <unk> necessarily.

Speaker Change: Knowledge been focused on can you talk about are those areas youre planning to build out to take advantage of.

Operator: These market changes.

Operator: Yes, we've always done certain aspects of concept modest moderation and data annotation. The differences that we've never been focused on what I would call the.

Operator: Moderation of violent video and.

Operator: The type of stuff that we think causes emotional trauma for our employees. So with AI would it brings us is because of the training of AI because of the tagging of AI et cetera, it creates new opportunities and my whole point.

And so with AI, what it brings is because of the training of AI, because of the tagging of AI, et cetera, it creates new opportunities. And my whole point in my comments on just these new areas was just simply to say that as one door potentially narrows, many new doors open, which is what AI, we believe, is doing for us. It's allowing us to take advantage of areas that we never, you know, frankly, were not even available to us before.

Operator: In my comments on just on these new areas was just simply to say that as one door potentially narrows. Many new doors open which is what AI. We believe is doing for us, it's allowing us to take advantage of areas that we never.

Operator: Frankly previously were not even available to us and it's also opening our clients' minds to new things that we could be doing for them that historically, they never even were considering outsourcing. So what I would say to you is is that again the whole point in my commentary was to just simply say that as.

And it's also opening our clients' minds to new things that we could be doing for them that, historically, they never even considered outsourcing. So what I would say to you is that, again, the whole point in my commentary was to just simply say that, as Wall Street is known to do, they tend to over-rotate in both directions, whether it be to the positive or whether it be to the negative. And I was simply trying to say that the hype that's behind AI and the pundits that are declaring that this is going to have this massively negative impact, what I would just simply say is that for those of us who are highly technology-enabled and who have all the right partnerships with all the AI players and have been working on this not as of six months ago but for years, we feel like we've got a head start to be able to We believe the whole industry is a bit misunderstood. And you know what? Unfortunately, we've been here before.

Operator: Wall Street.

Operator: Is known to do.

Operator: They tend to over rotate.

Operator: Direction, whether it be to the positive or whether it be to the negative and I was simply just simply trying to say that.

Operator: The hike that's behind the AI and the pundits that are declaring that this is going to have this massively negative impact what I would just simply say is that for those of US who are highly technology enabled and who have all the right partnerships with all the AI players and have been working on this not.

Operator: As of six months ago, but for years.

Operator: We feel like we've got a head start to be able to help our clients take advantage of these technologies as well as create new service offerings that take advantage of the technologies the AI technology. So.

Operator: Overall.

Operator: We believe that.

Operator: But we're a bit misunderstood we believe the whole industry is a bit misunderstood and unfortunately, we've been here before we will get through this.

We'll get through this, and we'll be bigger and better and stronger in the long run. Perfect. Thanks, guys. Thanks, George.

Operator: And we will be bigger and better and stronger.

Operator: In the long run.

Speaker Change: Perfect. Thanks, guys.

Speaker Change: Thanks George.

Thank you. Our next question is from the line of Maggie Nolan, from William Blair. Your line is now open. Hi, good morning. This is Jesse Wilson on behalf of Maggie Nolan.

Operator: Thank you. Our next question is from the line of Maggie Nolan of William Blair. Your line is now open.

Thanks for taking our questions. And it's nice to hear from you, Kenny. So I guess to start, similar to the first question, on the call, the press release mentioned the anticipated headwinds you expected to see in the first half here. Can you just comment on if those have been better, worse, or the same as expected from last quarter? Hey, Jesse.

Operator: Hi, Good morning. This is Jesse Wilson on for Maggie Nolan, Thanks for taking our questions.

Jesse Wilson: And it's nice to hear from you Kenny So I guess to start similar to the first question on the call. The press release you mentioned.

Operator: Anticipated headwinds you expect it to see in the first half here can you just comment on if those had been better worse or the same as expected from last quarter.

Good morning. The headwinds that we talk about are what was in Shelley's script and what I described. As we moved out of the end of 2023 with the lag effect of that customer base that we're working from, and as the timing impact of the program delay that we articulated about our public sector client, the headwinds are where we expected them to be, and that is where we are pivoting from as we moved into the second half of this year. Shelley, I don't know if you want to support anything else on that.

Jesse Wilson: Hey, Jesse good morning.

Kenny: The headwinds that we talk about is what was in Shelby script, and what I described as as we moved out of the end of 2023 with the lag effect of those that customer base that we're working from and is the timing impact of the program delay that we articulated about our public sector.

Speaker Change: Our clients.

Shelley: The headwinds are where we expected them to be and that is where we are pivoting from as we moved into the second half of this year that also supports the reiteration.

Operator: Our full year guidance Shelley I don't know if you want to support anything else on that.

No, I mean, the PubSec client that I had mentioned where we've got some delays in terms of full revenue ramp and some extra startup costs here, it's a large multi-year program. We're very excited about it. It's an outcome-oriented contract. Unfortunately, a complex situation and some client circumstances are causing some delays here, but we're working through that. We expect to have that sorted out here in Q2 and ramping through at full ramp into Q3 and Q4.

Shelley: The clients that I had mentioned, where we've got some delays in terms of.

Operator: A full revenue ramp and some extra startup costs here. Its a large multiyear program. We're very excited about it it's an outcome oriented contracts.

Operator: Fortunately a complex situation and some.

Operator: Client circumstances that are causing some delays here, but we're working through that we expect to have that sorted out here in Q2 and ramping to Q at full ramp into Q3 and Q4 I think it's more more broadly speaking Jesse we talked last quarter just about.

I think, more broadly speaking, Jesse, we talked last quarter just about our client volume forecast and our embedded base, and I mentioned earlier that we see some volumes down with some of those clients, but we're also seeing some of the clients, particularly in financial services, that took a cautious outlook at the beginning of the year, beginning to change their forecast for the better. Based on the visibility that we have right now, we're expecting a strong healthcare season in the second half of the year. That's why we've reiterated our guidance. I got it. That makes sense.

Operator: Our client's volume forecast in our embedded basin.

Operator: Mentioned earlier that we see some volumes down with some of those clients, but we're also seeing some of the clients, particularly in like financial services that took a cautious outlook at the beginning of the year beginning to change to our forecast for the better so based on the visibility that we have right now we are expecting a strong healthcare season in the back half of the year.

Operator: <unk>.

Operator: That's why we reiterated our guidance.

And then for my follow-up, I just wanted to clarify, do you expect to return to providing quarterly guidance maybe when the dust has settled or the clouds are gone here over a multi-year period? Yeah, Jesse, as I've stepped in here in the last two months, and again, as I reiterated, as we look at this transitional year, we're not going to revisit that during 2024. But we'll take a look at it at the end of this year, moving into 2025, to see if we return back to quarterly in the upcoming years. But for the balance of this year, we're going to stick to the full year. Got it. Thanks again.

Jesse Wilson: Got it that makes sense and then for my follow up I just wanted to clarify.

Operator: Do you expect to return to providing quarterly guidance maybe one.

Operator: The Delta is settled.

Speaker Change: Clouds are gone here over a multiyear period.

Speaker Change: Yes Jesse.

Speaker Change: I've stepped in here in the last two months and again as I reiterated is we look at this transitional year.

Speaker Change: We're not going to revisit that during 2024.

Speaker Change: But we'll take a look at it at the end of this year moving into 2025.

Speaker Change: To see if we return back to quarterly.

Operator: In the upcoming years, but for the balance of this year, we're going to see.

Speaker Change: Stick to the full year.

Operator: Got it thanks again.

Speaker Change: Thank you.

Thank you. Thank you. Once again, to all participants, to ask a question, please press star and then the number one and record your name and company name clearly when prompted. To cancel your request, please press star and then the number two.

Speaker Change: Thank you once again to all participants to ask a question. Please press star and then the number one and record your name and company name clearly one to cancel your request. Please press Star then the number two we will take our next question from Cathy Chan of Bank of America. Your line is now open.

We'll take our next question from Cassie Chen of Bank of America. Your line is now open. First, I know you said you kind of provided some maybe directional commentary on the quarter. Can you just give us a little bit more detail around that for both the revenue margin side and EPS? Hey Cassie.

Jinli Chan: Hey, guys. Thanks for taking my question first I know you said you kind of provide some maybe directional commentary on the quarter can you just give us a little bit more detail around that for both for revenue margin side.

Operator: EPS.

Good morning. What I would say, from a commentary standpoint, is just right now as we see Q2 and as we see the second half of this year, I'm just going to continue to reiterate where we are guiding for the full year. We're reiterating where we're going to land on the full year towards the midpoint, and that's the extent of where we're at today from a commentary standpoint. Okay. And then I guess, you know, in terms of onshore offshore demand, any change in terms of some of the client conversations or the tone of client conversations that you're having? You know, maybe any commentary on pricing as well? Thank you. Hi Cassie.

Jinli Chan: Hey, Kathy good morning.

Operator: Yeah.

Operator: What I would say from a commentary standpoint is just right now as we see Q2 and as we see the second half of this year.

Operator: I am just going to continue to reiterate where we are guiding for the full year, we're reiterating where we're going to land on the full year towards the midpoint.

Operator: And that's that's the extent of where we're at today from a commentary standpoint.

Cassie: Okay got it and then I guess.

Speaker Change: The onshore offshore demand any change in terms of the Macquarie in conversations with a posture of client conversations that youre having.

Cassie: Maybe any commentary on pricing as well thank you.

Well, I would just say, let me take the second part of your question first. Certainly a competitive environment. You're probably hearing that from everybody.

Cassie: Hi, Kathy.

Cassie: Well I would just say it let me let me take the second part of your question first.

Speaker Change: Certainly a competitive environment, we probably hearing that from everybody.

You might have heard me say in my prepared remarks that two-thirds of the new business that we're winning from new clients is to be delivered offshore, a lot of that, by the way, in our new geography. So we continue to be pleased with the demand that we're seeing, particularly in South Africa.

Speaker Change: You might have heard me say in my prepared remarks that two thirds of the new business that we're winning from new clients is to be delivered offshore a lot of that by the way in our new geographies. So we continue to be pleased with the demand that we're seeing particularly elevated publicly pointed out South Africa.

I mentioned one of our new healthcare logos is taking advantage of our capabilities there in South Africa. So I'd say we continue to see strong demand from new clients for our offshore capabilities. And then with our embedded-based clients, we're beginning, I would say, across industry verticals, with the exception of the public sector, to have conversations and add new lines of business with our existing clients, leveraging our offshore footprint. I'd say in financial services, it tends to be more nearshore.

Operator: I mentioned, one of our new healthcare logos is taking advantage of our capabilities there in South Africa, So I would say.

Operator: Continue to see strong demand from new clients for our offshore capabilities and then with our embedded base clients will beginning really I would say across industry verticals with the exception of public sector, beginning to have conversations and add new lines of business with our existing clients.

Operator: Leveraging our offshore footprint I'd say in financial services, it tends to be more near shore. So some of the locations that we've added in Latin America, where many others, we still see some demand in Philippines, but also as I said, South Africa getting a lot of attention a lot of demand and a lot of.

Operator: Interest in terms of some of the opportunities in our pipeline.

Speaker Change: Got it thank you hopefully that helps.

So some of the locations that we've added in Latin America, where many others, we still see some demand in the Philippines, but also, as I said, South Africa, getting a lot of attention, a lot of demands, and a lot of interest in terms of some of the, Thank you. Thank you. Thank you. Our next question is from the line of Vincent Colicchio of Barrington Research. Your line is now open. Yeah, Ken O

Operator: Thank you. Our next question is from the line of Vincent Colicchio of Barrington Research. Your line is now open.

Vincent Alexander Colicchio: Yes, Ken as Shelly.

Are you, in terms of the new clients you're attracting, a good number? New to outsourcing, which may be signaling an expansion in the market penetration potential, which is, I think, a part of a positive. Yeah, and I would say it's a mix, actually.

Vincent Alexander Colicchio: Are you in terms of the new clients who are attracting.

Vincent Alexander Colicchio: Our good number.

Vincent Alexander Colicchio: New to outsourcing, which may be signaling an expansion in the market penetration potential which is I think.

Vincent Alexander Colicchio: A part of a positive thesis.

Operator: Yeah.

Operator: Im.

Vincent Alexander Colicchio: So I would say, it's a mix actually so we definitely have a couple of wins that we had.

So we definitely have a couple of wins that we had. Actually, in Q4 and Q1, together, we had a couple of companies that were new to outsourcing. Absolutely. Just like we talked about last quarter.

Operator: Actually in Q4 and Q1 together, we had a couple of companies that are new to outsourcing absolutely.

Interesting, some of these clients are going straight to places like South Africa, right? Many are also taking advantage of our near shore footprint. So, a mix for sure.

Operator: We talked about last quarter interesting. Some of these clients are going straight to places like South Africa. Many are also taking advantage of our near shore footprint. So a mix for sure. We also some of the some of the enterprise logos that we've won recently and one of the things I'm excited about is actually they might have been doing out.

We also, some of the enterprise logos that we've won recently, one of the things I'm excited about is actually, they might have been doing outsourcing already, but they are choosing an approach where maybe they're consolidating their vendor footprint, looking for something a bit different in terms of vertical expertise, technology-enabled solutions, and the like, and adding us as a partner to their network. And so, part of what we've been talking about here in terms of the lag effect is some of these new enterprises; they start small in terms of the original scope of work, but we see ample room for growth and scale in the work that they're hiring us for here at the beginning, but also expanding into different lines of business.

Operator: We're seeing already but they are choosing an approach where maybe they're consolidating their vendor footprint looking for something a bit different in terms of vertical expertise technology enabled solutions and the like and adding us as a partner to their network and so part of what we've been talking about here in terms of the lag effect is some of these new enterprises.

Operator: We're starting small in terms of.

Operator: The original scope of work, but we see ample room for growth and scale and the work that they are hiring us for here at the beginning but also expanding into different lines of business. In fact, there's a couple of financial services clients that we've just recently won and we're literally in the midst of launching our first set of services with them and already talked.

In fact, you know, there's a couple of financial services clients that we've just recently won, and we're literally in the midst of launching our first set of services with them and already talking to them about new lines of business. So I see that as, you know, very, very pleased with the quality of the logos that we're adding to our client portfolio. And curious in the AI situations where you're improving agent productivity.

Operator: To them about new lines of business, so I see that as well.

Operator: Very very pleased with the quality of logos that we're adding to our client portfolio.

Operator: And curious.

Operator: The AI situations, where you're improving agent productivity.

Are there currently discussions about sharing in the economic improvement with your clients? Lots of discussions. Lots of discussions.

Operator: Are there currently discussions, but sharing of the economic improvement with your clients.

You know, I mean, in some cases, we bring the technology just as part of our services so we can provide good quality services and, you know, be able to reduce attrition and some of the things that help us and help the client. In other cases, we have clients that are deploying technology, and we're adopting the technologies that they have in their environment. So I would say it is certainly a mix.

Operator: Lots of discussions lots of discussions.

Operator: In some cases.

Operator: And in some cases, we're bringing the technology just as part of our services that we can provide good quality services.

Operator: <unk> been able to reduce attrition and some of the things that.

Operator: Help us and help the client.

Operator: In other cases, we have clients are deploying technology and we're adopting the technologies that they have in their environment. So I would say certainly a mix.

But we're, we're, we're, we're very pleased with this let me know solution that I mentioned earlier, and it's still early days. Thank you. Once again, a reminder to all participants, to ask a question, please press star and then the number one. Record your name and company name clearly when prompted. To cancel your request, please press star and then the number two.

Operator: But.

Operator: We're very pleased with this let me know solution that.

Operator: Mentioned earlier and it's still early days.

Operator: Thank you.

Operator: Thank you once again, a reminder to all participants to ask a question. Please press star and then the number one record your name and company name clearly when prompted to cancel your request. Please press Star then the number two our next question is coming from the line of Jonathan Lee of Goldman.

Our next question is coming from the line with Jonathan Lee of Guggenheim Securities. Your line is now open. Particularly in an environment of... I'm sorry, a particle environment of what?

Jonathan Lee: <unk> Securities. Your line is now open.

Jonathan Lee: Great. Thanks, Kevin.

Jonathan Lee: And with you it's encouraging to hear about your offshore progress as you scale your offshore footprint.

Jonathan Lee: It gives you a confidence than offshore shift one cannibalize onshore volumes outside of your regulated industries, particularly in an environment of belt tightening.

Jonathan Lee: Im sorry, I, particularly in environment of West.

Bill Tightening and Budget, Oh, belt tightening and a bunch of other tightening. Okay. Well, so far, Jonathan, you know, we've talked about... With very few exceptions, the offshore work that we're adding is actually, it's not a movement of onshore work to offshore, so it's actually net new volume, net new business from existing clients or the new logos that we're adding. And don't forget, a large percentage of our work, actually almost 40% of our work comes from regulated industries and PubSec, where the work is required to be onshore.

Jonathan Lee: Our adult tightening and budgets.

Operator: Oh about taking a bunch of saying, okay, well so for Jonathan.

Operator: Jonathan you know as we've talked about.

Operator: With very few exceptions.

Operator: Offshore work that we are at in that we're adding is actually it is not a movement of onshore work for offshore so it's actually net new.

Operator: Following net new business from existing clients or new logos that we're adding and don't forget.

Operator: Large.

Operator: <unk> of our work actually almost 40% of our where it comes from regulatory regulated industries and pub SEC, where their work. It is required to be onshore and so I think and we've talked about that obviously in the past and so so far what I would say is the offshore work that we're adding is just that we're adding work it's not about.

And so I think, and we've talked about that obviously in the past, and so, so far, what I would say is the offshore work that we're adding is just that. We're adding work. It's not about, it's not about taking work from onshore to offshore. In financial services, in particular, I'd say it tends to be more nearshore work. We're starting to see some interest in South Africa, in healthcare, lots of interest in South Africa as an example, so, so far, what we're seeing is it's additive; it's not cannibalizing our onshore work. And keep in mind, a lot of that onshore work, as I said, it's regulated, it's licensed work, so the clients either can't take it offshore or are choosing not to. Got it. That's helpful.

Operator: It's not about taking work from onshore to offshore.

Operator: In financial services in particular, I would say it tends to be more near shore work, we're starting to see some interest in South Africa, and healthcare lots of interest in South Africa as an example.

Operator: So far what we're seeing is it's additive it's not cannibalizing our onshore work and keep in mind a lot of that onshore work as I said, it's regulated its license.

Operator: Work, so the clients either can't take it offshore are choosing not to.

And just as a follow-up, you know, how much of your $24 revenue outlook is already contracted? Transcribed by https://otter.ai. Well, as we thought, the backlog numbers that Kenny shared, on the digital side, we have 80% of revenue in backlog today, which is actually slightly higher than where we stood this time last year. Keep in mind on the digital side, right? The foundation of that revenue base is our managed services.

Speaker Change: Got it that's helpful and just as a follow up how much of your 24 revenue outlook is already contracted can you talk about any change in visibility you may have seen in the quarter.

Operator: Well, so what we thought so the backlog numbers that can be shared.

Operator: On the digital side, we have 80% of revenue in backlog today, which is actually slightly higher than where we stood this time last year.

So those are long, you know, those are longer-term contracts where we have a very high renewal rate. And then, you know, confidence in terms of our digital plan based on the booking momentum in professional services. On the engaged side, as Kenny shared, our backlog is 96.5% to the midpoint, and last year we were right around 97, so very similar to where we were this time last year. Yeah, thanks for clarifying. Thank you for your questions. That is all the time we have today. This concludes TTEC's first quarter 2024 earnings conference call. You may disconnect at this time.

Operator: Keep in mind on the digital side rates are the foundation of that revenue base is our managed services. So those are those are.

Operator: Longer term contracts, where we have a very high renewal rate and then.

Operator: Confidence in terms of our digital plan based on the bookings momentum and professional services.

Operator: The engage side as Kenny shared our backlog is 96, 5% the midpoint and last year, we were right around 97, so very similar to where we were this time last year.

Operator: Got it thanks for clarifying.

Operator: Thank you for your questions that is all the time, we have today. This concludes <unk> first quarter 2024 earnings Conference call. You may disconnect at this time.