Q1 TTEC 2026 Holdings Inc Earnings Call

May 8, 2026

Speaker #1: Thank you for standing by the conference. We'll begin momentarily. Until such time, you will hear music. Thank you, and please continue to stand by.

Operator: Welcome to TTEC's Q1 2026 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 Bob Belknap, TTEC's Group Vice President, Corporate Finance. Thank you, sir. You may begin.

Operator: Welcome to TTEC's Q1 2026 Earnings Conference Call. I would like to remind all parties that you will be in a listen-only mode until the Q&A session. This call is being recorded at the request of TTEC. I would now like to turn the call over to Bob Belknap, TTEC's Group Vice President, Corporate Finance. Thank you, sir. You may begin.

Speaker #1: Welcome to TTEC's first quarter 2026 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.

Speaker #1: This call is being recorded. At the request of TTEC, I would now like to turn the call over to Bob Belknapp, TTEC's Group Vice President, Corporate Finance.

Speaker #1: Thank you, sir, and you may begin.

Speaker #2: Good morning, and thank you for joining us today. TTEC is hosting this call to discuss its first quarter 2026 results for the period ending March 31, 2026.

Bob Belknap: Good morning. Thank you for joining us today. TTEC is hosting this call to discuss its Q1 2026 results for the period ending 31 March 2026. Participating on today's call are Ken Tuchman, Chairman and Chief Executive Officer of TTEC, and Kenny Wagers, Chief Financial Officer of TTEC. Yesterday, TTEC issued a press release announcing its financial results. While this call will reflect items discussed in that document, for complete information about our financial performance, we also encourage you to read our Q1 2026 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.

Speaker #2: Participating on today's call are Ken Tuchman, chairman and chief executive officer of TTEC, and Kenny Wagers, chief financial officer of TTEC. Yesterday, TTEC issued a press release announcing its financial results.

Speaker #2: While this call will reflect items discussed in that document, for complete information about our financial performance, we also encourage you to read our Q1 2026 quarterly report on Form 10-Q.

Speaker #2: Before we begin, I want to remind you that managers 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.

Bob Belknap: 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.

Speaker #2: Please note that these forward-looking statements reflect our opinions as of the date of this call, and we undertake no obligation to update this information as a result of new developments that may occur.

Bob Belknap: Please note that these forward-looking statements reflect our opinions as of the date of this call, and we undertake no obligation to update this information as a result of new developments that may occur. Forward-looking statements are subject to various risks, uncertainties, and other factors that could cause our actual results to differ materially from those expected and described today. For a more detailed description of our risk factors, please review our 2025 annual report on Form 10-K. A replay of this conference call will be available on our website under the Investor Relations section. I will now turn the call over to Ken.

Speaker #2: Forward-looking statements are subject to various risks, uncertainties, and other factors that could cause our actual results to differ materially from those expected and described today.

Speaker #2: For a more detailed description of our risk factors, please review our 2025 annual report on Form 10-K. A replay of this conference call will be available on our website under the Investor Relations section.

Bob Belknap: For a more detailed description of our risk factors, please review our 2025 annual report on Form 10-K. A replay of this conference call will be available on our website under the Investor Relations section. I will now turn the call over to Ken.

Speaker #2: I will now turn the call over to Ken.

Speaker #3: Good morning, and thank you for joining us today. This quarter, we maintained our focus on strengthening our foundation while continuing to invest in AI-enabled innovations across our business.

Ken Tuchman: Good morning, and thank you for joining us today. This quarter, we maintained our focus on strengthening our foundation while continuing to invest in AI-enabled innovations across our business. For Q1 2026, revenue was $496 million. EBITDA was $46 million, and we generated $21 million in free cash flow this quarter, which contributed to our reduction of $79 million in our credit facility borrowings since Q1 2025. This reflects our continued focus on strengthening our balance sheet. I also want to call out that our Q1 EBITDA was impacted by a delayed receivable on one of our large Public Sector projects, for which a portion has already been approved. This receivable would have resulted in Q1 EBITDA of $49 million or 9.7% of revenue.

Speaker #3: For the first quarter of 2026, revenue was $496 million. EBITDA was $46 million, and we generated $21 million in free cash flow this quarter, which contributed to our reduction of 79 million dollars in our credit facility borrowings since the first quarter of 2025.

Speaker #3: This reflects our continued focus on strengthening our balance sheet. I also want to call out that our first quarter EBITDA was impacted by a delayed receivable on one of our large public sector projects, for which a portion is already been approved, this receivable would have resulted in first quarter EBITDA of $49 million, or 9.7% of revenue.

Ken Tuchman: This reflects our continued focus on strengthening our balance sheet. I also want to call out that our Q1 EBITDA was impacted by a delayed receivable on one of our large Public Sector projects, for which a portion has already been approved. This receivable would have resulted in Q1 EBITDA of $49 million or 9.7% of revenue.

Speaker #3: We expect the $3 million of EBITDA to be reflected in our Q2 financials. Regarding our outlook, we're reiterating our full-year guidance. While our year-over-year results reflect our offshore expansion and engage, a changing market remix in digital, and the deliberate rationalization of a handful of underperforming clients, we expect these dynamics to improve our year-over-year profitability as the year progresses.

Ken Tuchman: We expect the $3 million of EBITDA to be reflected in our Q2 financials. Regarding our outlook, we're reiterating our full-year guidance. While our year-over-year results reflect our offshore expansion in Engage, a changing market remix in Digital, and the deliberate rationalization of a handful of underperforming clients, we expect these dynamics to improve our year-over-year profitability as the year progresses. With that context as a backdrop, I'd like to turn to market insights from our recent client advisory meeting. Twice a year, we sit down with several of our largest and most strategic clients to understand what's shaping their priorities. It was no surprise AI and security were at the center of our conversations. We're seeing a real shift in how companies approach AI. Early adoption was limited to siloed proof of concepts with varied success. Now, leaders are taking a much broader view.

Speaker #3: With that context as a backdrop, I'd like to turn to market insights from our recent client advisory meeting. Twice a year, we sit down with several of our largest and most strategic clients to understand what's shaping their priorities.

Ken Tuchman: With that context as a backdrop, I'd like to turn to market insights from our recent client advisory meeting. Twice a year, we sit down with several of our largest and most strategic clients to understand what's shaping their priorities. It was no surprise AI and security were at the center of our conversations. We're seeing a real shift in how companies approach AI. Early adoption was limited to siloed proof of concepts with varied success. Now, leaders are taking a much broader view.

Speaker #3: It was no surprise AI and security were at the center of our conversations. We're seeing a real shift in how companies approach AI. Early adoption was limited to siloed proof-of-concepts with varied success.

Speaker #3: Now leaders are taking a much broader view. Instead of just plugging in new tech for tech's sake, they're starting with their actual business goals and working backward to build a roadmap.

Ken Tuchman: Instead of just plugging in new tech for tech's sake, they're starting with their actual business goals and working backward to build a roadmap. They've realized that real transformation isn't just about the software. It's about rethinking processes, culture, and how the work actually gets done. We also heard from our CAB members that their internal bandwidth-constrained IT teams are realizing they can't go it alone in such a fast-moving environment. They're looking for agile outside partners that have deep experience in CX, as well as expertise in specialized security and fraud prevention. Facing risk of potential AI hallucinations, rogue bots, and ballooning unplanned token compute expenses, business and IT leaders are seeking more than just technical help. They're looking for a partner that can turn these AI-specific technologies and financial challenges into a sustainable competitive advantage.

Speaker #3: They've realized that real transformation isn't just about the software. It's about rethinking processes, culture, and how the work actually gets done. We also heard from our cab members that their internal bandwidth-constrained IT teams are realizing they can't go it alone in such a fast-moving environment.

Speaker #3: They're looking for agile, outside partners that have deep experience in CX as well as expertise in specialized security and fraud prevention. Facing risk of potential AI hallucinations, robots, and ballooning unplanned token compute expenses.

Ken Tuchman: They're looking for agile outside partners that have deep experience in CX, as well as expertise in specialized security and fraud prevention. Facing risk of potential AI hallucinations, rogue bots, and ballooning unplanned token compute expenses, business and IT leaders are seeking more than just technical help. They're looking for a partner that can turn these AI-specific technologies and financial challenges into a sustainable competitive advantage.

Speaker #3: Business and IT leaders are seeking more than just technical help. They're looking for a partner that can turn these AI-specific technologies and financial challenges into a sustainable, competitive advantage.

Speaker #3: This environment plays directly into our AI strategy, which has three pillars of value. One, client transformation. Because we live exclusively in the CX space, we know exactly where technology succeeds and where it can be improved.

Ken Tuchman: This environment plays directly into our AI strategy, which has three pillars of value. One, client transformation. Because we live exclusively in the CX space, we know exactly where technology succeeds and where it can be improved. We combine premier tech partnerships with our own custom-built software to optimize our clients' tech stack, turning AI into a tool to augment associates, remove costly friction, and deliver insight-driven growth. Two, human augmentation. True augmentation isn't just about giving an agent a bot. It's about knowing the technology so deeply that we can fundamentally reshape the frontline experience. We optimize the human-to-tech interface, automating the mundane so our associates can leverage personalized insights to deliver more customized, higher-value customer experiences. Three, operational excellence. To strengthen our go-to market as well as our internal operations, we're leaning into our deep technology and process expertise.

Speaker #3: We combine premier tech partnerships with our own custom-built software to optimize our clients' tech stack. Turning AI into a tool to augment associates, remove costly friction, and deliver insight-driven growth.

Speaker #3: Two, human augmentation. True augmentation isn't just about giving an agent a bot. It's about knowing the technology so deeply that we can fundamentally reshape the frontline experience.

Ken Tuchman: Two, human augmentation. True augmentation isn't just about giving an agent a bot. It's about knowing the technology so deeply that we can fundamentally reshape the frontline experience. We optimize the human-to-tech interface, automating the mundane so our associates can leverage personalized insights to deliver more customized, higher-value customer experiences. Three, operational excellence. To strengthen our go-to market as well as our internal operations, we're leaning into our deep technology and process expertise.

Speaker #3: We optimize the human-to-tech interface, automating the mundane so our associates can leverage personalized insights to deliver more customized, higher-value customer experiences. And three, operational excellence.

Speaker #3: To strengthen our go-to-market as well as our internal operations, we're leaning into our deep technology and process expertise. We're automating internal redundant tasks and using analytics to gain insight into key value drivers to accelerate our growth and reduce cost.

Ken Tuchman: We're automating internal redundant tasks and using analytics to gain insight into key value drivers to accelerate our growth and reduce cost. Our AI strategy is woven throughout our end-to-end approach, spanning consulting, technology, and managed services. Now, I'll share two quick stories that highlight how AI is helping us bring people, processes, and technology together, not just to talk about innovation and positive business outcomes, but to deliver them. First, let's look at a new client of ours, a fast-growing telehealth provider. They needed to optimize a complex ecosystem of payers, providers, and patients with disparate systems, customer needs, and industry regulations. They chose us to design, build, and operate an AI-driven roadmap that will unify their tech stack and empower frontline human healthcare advisors with real-time insights.

Speaker #3: Our AI strategy is woven throughout our end-to-end approach, spanning consulting, technology, and managed services. Now I'll share two quick stories that highlight how AI is helping us bring people, processes, and technology together, not just to talk about innovation, and positive business outcomes, but to deliver them.

Speaker #3: First, let's look at a new client of ours, a fast-growing telehealth provider. They needed to optimize a complex ecosystem of payers, providers, and patients with disparate systems, customer needs, and industry regulations.

Ken Tuchman: First, let's look at a new client of ours, a fast-growing telehealth provider. They needed to optimize a complex ecosystem of payers, providers, and patients with disparate systems, customer needs, and industry regulations. They chose us to design, build, and operate an AI-driven roadmap that will unify their tech stack and empower frontline human healthcare advisors with real-time insights.

Speaker #3: They chose us to design, build, and operate an AI-driven roadmap that will unify their tech stack and empower frontline human healthcare advisors with real-time insights.

Speaker #3: With our solution in place, our client will be able to improve health outcomes at scale by balancing high-touch service with high-speed efficiency. The second example is a longtime partner of ours, a global travel brand.

Ken Tuchman: With our solution in place, our client will be able to improve health outcomes at scale by balancing high-touch service with high-speed efficiency. The second example is a longtime partner of ours, a global travel brand. They were struggling with fragmented AI adoption and inconsistent results across dozens of different partners. We've been helping them move millions of their travelers around the world for over a decade, so we understand the complexity and unpredictability that they face every day. When it was time to level up their CX, they realized that their outside consultants, systems integrators, and even their own internal IT teams didn't have the AI experience or operational depth to meet their needs. They chose us because we knew their systems, processes, business, and most importantly, their customers, almost as well as they did.

Speaker #3: They were struggling with fragmented AI adoption and inconsistent results across dozens of different partners. We've been helping them move millions of their travelers around the world for over a decade.

Ken Tuchman: We've been helping them move millions of their travelers around the world for over a decade, so we understand the complexity and unpredictability that they face every day. When it was time to level up their CX, they realized that their outside consultants, systems integrators, and even their own internal IT teams didn't have the AI experience or operational depth to meet their needs. They chose us because we knew their systems, processes, business, and most importantly, their customers, almost as well as they did.

Speaker #3: So we understand the complexity and unpredictability that they face every day. When it was time to level up their CX, they realized that their outside consultants, systems integrators, and even their own internal IT teams didn't have the AI experience or operational depth to meet their needs.

Speaker #3: They chose us because we knew their systems, processes, business, and most importantly, their customers. Almost as well as they did. Together, these examples highlight the strength of our AI-enabled end-to-end value proposition and why it's so important for our long-term growth.

Ken Tuchman: Together, these examples highlight the strength of our AI-enabled end-to-end value proposition and why it's so important for our long-term growth. By integrating strategy, technology, and operations into a single delivery engine, we address a core challenge in our industry, the execution gap. Because we deliver a continuously improving CX ecosystem with clear accountability, we're enabling solutions that are not only innovative, but durable and future-proof. We're encouraged that our strategy is beginning to take form, even if it hasn't hit the numbers column yet. Our pipeline is growing. We're closing new deals, and the level of engagement from our clients tells us we're on the right path for long-term growth. Now, I'll turn to our segments. We'll start with our digital customer experience business, TTEC Engage. We're continuing to focus our efforts on three specific areas of the business.

Speaker #3: By integrating strategy, technology, and operations into a single delivery engine, we address a core challenge in our industry: the execution gap. Because we deliver a continuously improving CX ecosystem, with clear accountability, we're enabling solutions that are not only innovative, but durable and future-proof.

Ken Tuchman: Because we deliver a continuously improving CX ecosystem with clear accountability, we're enabling solutions that are not only innovative, but durable and future-proof. We're encouraged that our strategy is beginning to take form, even if it hasn't hit the numbers column yet. Our pipeline is growing. We're closing new deals, and the level of engagement from our clients tells us we're on the right path for long-term growth.

Speaker #3: We're encouraged that our strategy is beginning to take form, even if it hasn't hit the numbers column yet. Our pipeline is growing. We're closing new deals, and the level of engagement from our clients tells us we're on the right path for long-term growth.

Speaker #3: Now I'll turn to our segments. We'll start with our digital customer experience business. TTEC Engage, we're continuing to focus our efforts on three specific areas of the business.

Ken Tuchman: Now, I'll turn to our segments. We'll start with our digital customer experience business, TTEC Engage. We're continuing to focus our efforts on three specific areas of the business.

Speaker #3: First, our continued offshore expansion is supporting both cost efficiency and scale. Our offshore revenue mix has increased from 34% to 38% for the 12 months ended March 31, 2026, compared to the prior year period.

Ken Tuchman: First, our continued offshore expansion is supporting both cost efficiency and scale. Our offshore revenue mix has increased from 34% to 38% for the 12 months ended 31 March 2026, compared to the prior year period. We expect by the end of the year, we will be delivering over 40% offshore. Second, we're actively refining our client mix by intentionally exiting a few lower-margin accounts and prioritizing higher value, more complex engagements. Third, embedding AI across our associates' life cycle from recruitment to learning and performance management. While these capabilities are just beginning to scale, results to date are encouraging. For example, through AI-aided hiring using our Smart Hire screening approach, we've increased interview-to-hire rates by as much as 25%, with early signals showing meaningful improvements in the retention and quality of the hire.

Speaker #3: We expect by the end of the year we will be delivering over 40% offshore. Second, we're actively refining our client mix by intentionally exiting a few lower-margin accounts and prioritizing higher-value, more complex engagements.

Ken Tuchman: Second, we're actively refining our client mix by intentionally exiting a few lower-margin accounts and prioritizing higher value, more complex engagements. Third, embedding AI across our associates' life cycle from recruitment to learning and performance management. While these capabilities are just beginning to scale, results to date are encouraging.

Speaker #3: And third, embedding AI across our associates' lifecycle. From recruitment to learning and performance management, while these capabilities are just beginning to scale, results to date are encouraging.

Speaker #3: For example, through AI-aided hiring, using our smart hire screening approach, we've increased interview-to-hire rates by as much as 25%. With early signals showing meaningful improvements in the retention and quality of the hire.

Ken Tuchman: For example, through AI-aided hiring using our Smart Hire screening approach, we've increased interview-to-hire rates by as much as 25%, with early signals showing meaningful improvements in the retention and quality of the hire.

Speaker #3: In learning and performance, over 100 engaged clients and over 25,000 associates now operate on our TTEC Perform platform, in select programs we're seeing improvements in MPS and higher-quality scores tied to AI-enabled coaching and support.

Ken Tuchman: In learning and performance, over 100 engaged clients and over 25,000 associates now operate on our TTEC Perform platform. In select programs, we're seeing improvements in NPS and higher quality scores tied to AI-enabled coaching and support. We're seeing strong results with our accent softening and language translation platforms. These AI-supported tools are enabling offshore deployment that delivers premium voice experiences without compromising scale. Our TTEC Engage pipeline is healthy as customer-centric brands seek partners that can move quickly and demonstrate results. Our vertical-focused go-to-market platform is yielding year-over-year pipeline growth with larger average deal sizes. While some of these opportunities involve more complex commercial models and therefore take longer to close, we remain confident in both the pipeline and our outcome-focused strategy. Now on to TTEC Digital, where we continue to evolve our professional and managed services to align with how clients are approaching digital transformation.

Speaker #3: And we're seeing strong results with our accent softening and language translation platforms. These AI-supported tools are enabling offshore deployment that delivers premium voice experiences without compromising scale.

Ken Tuchman: These AI-supported tools are enabling offshore deployment that delivers premium voice experiences without compromising scale. Our TTEC Engage pipeline is healthy as customer-centric brands seek partners that can move quickly and demonstrate results. Our vertical-focused go-to-market platform is yielding year-over-year pipeline growth with larger average deal sizes.

Speaker #3: Our TTEC Engage pipeline is healthy, as customer-centric brands seek partners that can move quickly and demonstrate results. Our vertical-focused go-to-market platform is yielding year-over-year pipeline growth with larger average deal sizes. While some of these opportunities involve more complex commercial models and therefore take longer to close, we remain confident in both the pipeline and our outcome-focused strategy.

Ken Tuchman: While some of these opportunities involve more complex commercial models and therefore take longer to close, we remain confident in both the pipeline and our outcome-focused strategy. Now on to TTEC Digital, where we continue to evolve our professional and managed services to align with how clients are approaching digital transformation.

Speaker #3: Now on to TTEC Digital, where we continue to evolve our professional and managed services to align with how clients are approaching digital transformation. As a data, AI, and security partner for our CX solutions, we're helping our clients optimize the tech they already have while making sure their CCAS, CRM, and AI investments are disciplined, secure, and built to scale.

Ken Tuchman: As a data, AI, and security partner for our CX solutions, we're helping our clients optimize the tech they already have while making sure their CCaaS, CRM, and AI investments are disciplined, secure, and built to scale. Q1 results were largely impacted by the short cycle nature of our professional services business. We achieved nearly 90% of our bookings target and a 96% book-to-bill ratio. 50% of our bookings closed in the final 3 weeks of the quarter. This concentration led to a shortfall against our initial targets. The increase in late quarter demand and pipeline strength is encouraging. With new leadership in place, we're confident in our ability to manage through these timing delays as we build a more consistent and resilient foundation for growth. Our progress is driven by a clear market evolution.

Speaker #3: Q1 results were largely impacted by the short cycle, nature of our professional services business. Although we achieved nearly 90% of our bookings target, and a 96% book-to-bill ratio, 50% of our bookings closed in the final three weeks of the quarter.

Ken Tuchman: We achieved nearly 90% of our bookings target and a 96% book-to-bill ratio. 50% of our bookings closed in the final 3 weeks of the quarter. This concentration led to a shortfall against our initial targets. The increase in late quarter demand and pipeline strength is encouraging. With new leadership in place, we're confident in our ability to manage through these timing delays as we build a more consistent and resilient foundation for growth. Our progress is driven by a clear market evolution.

Speaker #3: While this concentration led to a shortfall against our initial targets, the increase in late-quarter demand and pipeline strength is encouraging. With new leadership in place, we're confident in our ability to manage through these timing delays as we build a more consistent and resilient foundation for growth.

Speaker #3: Our progress has driven by a clear market evolution, clients want to navigate the AI landscape without abandoning their existing investments, our CX and technical expertise allows us to optimize their current platforms.

Ken Tuchman: Clients want to navigate the AI landscape without abandoning their existing investments. Our CX and technical expertise allows us to optimize their current platforms. Whether hyperscalers or best-in-breed tools, where we see gaps in the market, we're building proprietary software to stitch the CX ecosystem together. By infusing these tools with AI, we can deliver secure, rapid results without forcing our clients into those costly and disruptive rip-and-replace projects that everybody wants to avoid. Our AI Gateway launch this quarter highlights our fit-for-purpose software strategy. As a proprietary integration platform, it bridges existing CCaaS systems with leading AI platforms, shrinking deployment timelines from months to weeks. This momentum is extending across all our CX technology solutions, including our modern data state and our AI observability platforms currently in beta. These new software solutions are meeting growing demand as we address urgent client needs for data readiness and systems transparency and accuracy.

Speaker #3: Whether hyperscalers or best-in-breed tools, where we see gaps in the market, we're building proprietary software to stitch the CX ecosystem together. By infusing these tools with AI, we can deliver secure, rapid results without forcing our clients into those costly and disruptive, rip-and-replace projects that everybody wants to avoid.

Ken Tuchman: By infusing these tools with AI, we can deliver secure, rapid results without forcing our clients into those costly and disruptive rip-and-replace projects that everybody wants to avoid. Our AI Gateway launch this quarter highlights our fit-for-purpose software strategy. As a proprietary integration platform, it bridges existing CCaaS systems with leading AI platforms, shrinking deployment timelines from months to weeks.

Speaker #3: Our AI gateway launched this quarter, highlights our fit-for-purpose software strategy. As a proprietary integration platform, it bridges existing CCAS systems with leading AI platforms.

Speaker #3: Shrinking deployment timelines from months to weeks, this momentum is extending across all our CX technology solutions, including our modern data estate and our AI observability platforms, currently in beta.

Ken Tuchman: This momentum is extending across all our CX technology solutions, including our modern data state and our AI observability platforms currently in beta. These new software solutions are meeting growing demand as we address urgent client needs for data readiness and systems transparency and accuracy.

Speaker #3: These new software solutions are meeting growing demand as we address urgent client needs for data readiness and systems transparency and accuracy. These platforms, combined with our 10-year relationships with the leading CX technology titans, position TTEC as a partner designed to accelerate scalable growth.

Ken Tuchman: These platforms, combined with our tenured relationships with the leading CX technology titans, positions TTEC as a partner designed to accelerate scalable growth. Working side by side with our clients, we're unlocking faster insight to action cycles, strengthening trust in AI-driven decisions, and expanding long-term value creation through more intelligent, differentiated customer experiences. In closing, across both business segments, we recognize that our financial results are still catching up to our go-to-market and operational progress. The shift, however, towards our historic growth and margin profile is well underway. We remain disciplined and focused on our fundamentals that include strengthening our differentiated position as an end-to-end CX transformation partner through our vertical specific solutions, strategic technology partnerships, and proprietary software.

Speaker #3: Working side by side with our clients, we're unlocking faster insight-to-action cycles, strengthening trust in AI-driven decisions, and expanding long-term value creation through more intelligent, differentiated customer experiences.

Speaker #3: In closing, across both business segments, we recognize that our financial results are still catching up to our go-to-market and operational progress. The shift however towards our historic growth and margin profile is well underway, we remain disciplined and focused on our fundamentals that include strengthening our differentiated position as an end-to-end CX transformation partner through our vertical-specific solutions, strategic technology partnerships, and proprietary software.

Ken Tuchman: In closing, across both business segments, we recognize that our financial results are still catching up to our go-to-market and operational progress. The shift, however, towards our historic growth and margin profile is well underway. We remain disciplined and focused on our fundamentals that include strengthening our differentiated position as an end-to-end CX transformation partner through our vertical specific solutions, strategic technology partnerships, and proprietary software.

Speaker #3: Winning higher-value technology and services opportunities with our existing client base and new clients, and continuing to improve our profitability by strategically rebalancing our client portfolio, driving operational efficiencies, and capitalizing on global talent pools.

Ken Tuchman: Winning higher value technology and services opportunities with our existing client base and new clients, and continuing to improve our profitability by strategically rebalancing our client portfolio, driving operational efficiencies, and capitalizing on global talent pools. We have the right team, platform, and strategy in place to capture the significant long-term opportunities ahead. By applying an agile approach to innovation and doubling down on AI-driven efficiency, we're doing far more than just navigating a changing market. We're positioning TTEC to own it in the future. On behalf of our board, leadership, and teams around the world, thank you for your continued support, and I'll now hand the call over to Kenny.

Speaker #3: We have the right team, platform, and strategy in place to capture the significant long-term opportunities ahead. By applying an agile approach to innovation and doubling down on AI-driven efficiency, we're doing far more than just navigating a changing market; we're positioning TTEC to own it in the future.

Ken Tuchman: By applying an agile approach to innovation and doubling down on AI-driven efficiency, we're doing far more than just navigating a changing market. We're positioning TTEC to own it in the future. On behalf of our board, leadership, and teams around the world, thank you for your continued support, and I'll now hand the call over to Kenny.

Speaker #3: On behalf of our board, leadership, and teams around the world, thank you for your continued support. I'll now hand the call over to Kenny.

Speaker #2: Thank you, Ken, and good morning. I will start with a review of our first quarter 2026 financial results before discussing our reiterated full-year 2026 financial outlook.

Kenny Wagers: Thank you, Ken, and good morning. I will start with a review of our Q1 2026 financial results before discussing our reiterated full year 2026 financial outlook. In my discussion of the Q1 financial results, reference to revenue is 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 results. On a consolidated basis for Q1 2026 compared to the prior year period, revenue was $496 million compared to $534 million, a decrease of 7.1%. Adjusted EBITDA was $46 million or 9.2% of revenue compared to $56 million or 10.6%.

Speaker #2: In my discussion of the first quarter financial results, referenced to revenue as on a gap basis, while EBITDA, operating income, and earnings per share are on a non-gap adjusted basis.

Speaker #2: A full reconciliation of our gap-to-non-gap results is included in the tables attached to our earnings press release. Turning to our results on a consolidated basis for the first quarter of 2026 compared to the prior year period, revenue was $496 million compared to $534 million, a decrease of 7.1%.

Kenny Wagers: A full reconciliation of our GAAP to non-GAAP results is included in the tables attached to our earnings press release. Turning to our results. On a consolidated basis for Q1 2026 compared to the prior year period, revenue was $496 million compared to $534 million, a decrease of 7.1%. Adjusted EBITDA was $46 million or 9.2% of revenue compared to $56 million or 10.6%.

Speaker #2: Adjusted EBITDA was $46 million, or 9.2% of revenue, compared to $56 million, or 10.6%. Operating income was $32 million, or 6.4% of revenue, compared to $41 million, or 7.8%.

Kenny Wagers: Operating income was $32 million or 6.4% of revenue compared to $41 million or 7.8%. EPS was $0.15 compared to $0.28. Foreign exchange had a +$8 million impact on revenue in the Q1 over the prior year period, primarily in our Engage segment, while having a nominal impact on adjusted EBITDA and operating income. Turning to our Q1 2026 segment results. In our Engage segment, Q1 revenue decreased 7.5% over the prior year period to $394 million. Operating income was $25 million or 6.3% of revenue compared to $29 million or 6.9% of revenue in the prior year. The Engage segment's Q1 revenue was in line with our expectations.

Speaker #2: An EPS was $0.15 compared to $0.28. Foreign exchange had a positive $8 million impact on revenue in the first quarter over the prior year period, primarily in our engaged segment, while having a nominal impact on adjusted EBITDA and operating income.

Speaker #2: Turning to our first quarter 2026 segment results, in our engaged segment, first quarter revenue decreased 7.5% over the prior year period to $394 million.

Kenny Wagers: Turning to our Q1 2026 segment results. In our Engage segment, Q1 revenue decreased 7.5% over the prior year period to $394 million. Operating income was $25 million or 6.3% of revenue compared to $29 million or 6.9% of revenue in the prior year. The Engage segment's Q1 revenue was in line with our expectations.

Speaker #2: Operating income was $25 million, or 6.3% of revenue, compared to $29 million, or 6.9% of revenue in the prior year. The engaged segment's first quarter revenue was in line with our expectations.

Speaker #2: As discussed in my fourth quarter 2025 earnings comments and as Ken mentioned, we forecasted lower first-half revenue for engaged compared to the prior year as we rationalize a small number of underperforming clients and continue to expand our offshore mix.

Kenny Wagers: As discussed in my Q4 2025 earnings comments, as Ken mentioned, we forecasted lower H1 revenue for TTEC Engage compared to the prior year as we rationalize a small number of underperforming clients and continue to expand our offshore mix. These actions are deliberate as we continue to focus on profitability despite near-term pressure on revenue. Based on embedded base expansion and new client launches, we are still on track to return to top line growth in the H2 of the year at higher profit margins. Also important to note that the year-over-year revenue variance was impacted by a Public Sector seasonal client, which accounted for over 40% of the Q1 revenue decline.

Speaker #2: These actions are deliberate as we continue to focus on profitability despite near-term pressure on revenue. Based on embedded-based expansion and new client launches, we are still on track to return to top-line growth in the second half of the year at higher profit margins.

Kenny Wagers: Based on embedded base expansion and new client launches, we are still on track to return to top line growth in the H2 of the year at higher profit margins. Also important to note that the year-over-year revenue variance was impacted by a Public Sector seasonal client, which accounted for over 40% of the Q1 revenue decline.

Speaker #2: It is also important to note that the year-over-year revenue variance was impacted by a public sector seasonal client which accounted for over 40% of the first quarter revenue decline.

Speaker #2: First quarter 2026 engaged profitability was slightly below our plan, primarily related to a receivable generated from one of our largest public sector clients that Ken referenced in his comments.

Kenny Wagers: Q1 2026 Engage profitability was slightly below our plan, primarily related to a receivable generated from one of our largest Public Sector clients that Ken referenced in his comments. This impact was timing related and resulted in approximately $3 million of lower revenue and profitability in the quarter. Adjusting for this impact, Engage Q1 revenue was $397 million, with operating income of $28 million or 7% of revenue, a slight margin increase over the prior year. We expect this positive adjustment to be recorded in our Q2 results as a portion of this receivable has already been resolved. We remain confident in the actions we have taken and continue to implement to drive higher profitability in our Engage segment. That said, these decisions do not necessarily result in straight line improvements.

Speaker #2: This impact was timing-related and resulted in approximately $3 million of lower revenue and profitability in the quarter, adjusting for this impact engaged first quarter revenue was $397 million, with operating income of $28 million, or 7% of revenue, a slight margin increase over the prior year.

Kenny Wagers: Adjusting for this impact, Engage Q1 revenue was $397 million, with operating income of $28 million or 7% of revenue, a slight margin increase over the prior year. We expect this positive adjustment to be recorded in our Q2 results as a portion of this receivable has already been resolved. We remain confident in the actions we have taken and continue to implement to drive higher profitability in our Engage segment. That said, these decisions do not necessarily result in straight line improvements.

Speaker #2: We expect this positive adjustment to be recorded in our second quarter results as a portion of this receivable has already been resolved. We remain confident in the actions we have taken and continue to implement to drive higher profitability in our engaged segment.

Speaker #2: That said, these decisions do not necessarily result in straight-line improvements. While our first quarter engaged operating income declined versus the prior year, we anticipate this trajectory to positively change in the second quarter with margins further expanding throughout the second half of the year.

Kenny Wagers: While our Q1 Engage operating income declined versus the prior year, we anticipate this trajectory to positively change in Q2, with margins further expanding throughout the H2 of the year. The Engage backlog is $1.51 billion or 94% of our 2026 revenue guidance at the midpoint of the range, down from 101% for the same period of 2025. The Engage last 12-month revenue retention rate is 94%, an improvement over the 88% for the same period last year. In our Digital segment, Q1 revenue was $102 million, a decrease of 5.7% over the prior year. Operating income was $7 million or 6.6% of revenue compared to $12 million or 11.2% of revenue for the same period last year.

Speaker #2: The engaged backlog is $1.51 billion, or 94% of our 2026 revenue guidance at the midpoint of the range, down from $101% for the same period of 2025.

Kenny Wagers: The Engage last 12-month revenue retention rate is 94%, an improvement over the 88% for the same period last year. In our Digital segment, Q1 revenue was $102 million, a decrease of 5.7% over the prior year. Operating income was $7 million or 6.6% of revenue compared to $12 million or 11.2% of revenue for the same period last year.

Speaker #2: The engaged last 12-month revenue retention rate is 94%, and improvement over the 88% for the same period last year. In our digital segment, first quarter revenue was $102 million, a decrease of 5.7% over the prior year.

Speaker #2: Operating income was $7 million, or 6.6% of revenue, compared to $12 million, or 11.2% of revenue, for the same period last year. Digital's first quarter 2026 revenue was slightly below expectations, with revenue mix impacting profitability.

Kenny Wagers: Digital's Q1 2026 revenue was slightly below expectations, with revenue mix impacting profitability. Recurring revenue declined 7.3% primarily within one of our traditional CCaaS practices due to the ongoing market shift away from legacy contact center point solutions. This decline was expected, we continue to structure our managed services resources to align with forecasted revenue. Excluding our two legacy CCaaS practices, professional services grew 15.3% year-over-year. This growth reflects the momentum we are seeing in our expanded CX technology partnership network as we optimize clients' existing platforms through end-to-end transformative solutions. We are pleased with the Q1 double-digit growth in these practices and expect them to scale more rapidly throughout the year. TTEC Digital's total Q1 professional services revenue decreased 4.8% compared to the prior year as front-end consulting engagements related to cloud migrations declined.

Speaker #2: Recurring revenue declined 7.3% primarily within one of our traditional CCAS practices, due to the ongoing market shift away from legacy, contact center point solutions.

Speaker #2: This decline was expected, and we continue to structure our managed services resources to align with forecasted revenue. Excluding our two legacy CCAS practices, professional services grew 15.3% year over year.

Kenny Wagers: Excluding our two legacy CCaaS practices, professional services grew 15.3% year-over-year. This growth reflects the momentum we are seeing in our expanded CX technology partnership network as we optimize clients' existing platforms through end-to-end transformative solutions. We are pleased with the Q1 double-digit growth in these practices and expect them to scale more rapidly throughout the year.

Speaker #2: This growth reflects the momentum we are seeing in our expanded CX technology partnership network as we optimize clients' existing platforms through end-to-end transformative solutions.

Speaker #2: We are pleased with the first quarter double-digit growth in these practices, and expect them to scale more rapidly throughout the year. Digital's total first quarter professional services revenue decreased 4.8% compared to the prior year, as front-end consulting engagements related to cloud migrations declined.

Kenny Wagers: TTEC Digital's total Q1 professional services revenue decreased 4.8% compared to the prior year as front-end consulting engagements related to cloud migrations declined.

Speaker #2: The professional services revenue was also impacted by new contracted business signed during the quarter, with approximately 50% closed during the last three weeks. This pushed revenue out to the second quarter and beyond, negatively impacting first quarter profitability.

Kenny Wagers: The professional services revenue was also impacted by new contracted business signed during the quarter, with approximately 50% closed during the last three weeks. This pushed revenue out to Q2 and beyond, negatively impacting Q1 profitability. Although these deals are not reflected in our current quarter results, we are pleased with the sales momentum. Q1 revenue benefited from product resale, which represented 2.5% of Digital's total Q1 revenue compared to 1.7% in the prior year. Although we still expect these product resales to decline on a full year basis, as discussed in our Q4 commentary, we will participate in intermittent opportunities as they arise. However, we remain focused on our core growth strategies across professional services and recurring revenue in our non-traditional CCaaS practices.

Speaker #2: Although these deals are not reflected in our current quarter results, we are pleased with the sales momentum. First quarter revenue benefited from product resale, which represented 2.5% of Digital's total first quarter revenue, compared to 1.7% in the prior year.

Kenny Wagers: Q1 revenue benefited from product resale, which represented 2.5% of Digital's total Q1 revenue compared to 1.7% in the prior year. Although we still expect these product resales to decline on a full year basis, as discussed in our Q4 commentary, we will participate in intermittent opportunities as they arise. However, we remain focused on our core growth strategies across professional services and recurring revenue in our non-traditional CCaaS practices.

Speaker #2: Although we still expect these product resales to decline in a full-year basis, as discussed in our fourth quarter commentary, we will participate in intermittent opportunities as they arise.

Speaker #2: However, we remain focused on our core growth strategies across professional services and recurring revenue in our non-traditional CCAS practices. Our digital backlog is $325 million, or 76% of our 2026 revenue guidance at the midpoint of the range, essentially flat to the 77% for the same period last year.

Kenny Wagers: Our Digital backlog is $325 million or 76% of our 2026 revenue guidance at the midpoint of the range, essentially flat to the 77% for the same period last year. I will now share other Q1 2026 metrics before discussing our outlook. Free cash flow was $21 million in Q1 2026 compared to $16 million in the prior year. The year-over-year improvement of $5 million is due to an additional $6 million of cash flow from operations, less an increase in capital expenditures of $1 million. The increase in cash generation reflects our continued focus on cash management and working capital improvements. In Q1 2026, capital expenditures were $6 million or 1.3% of revenue compared to $5 million or 1% in the prior year.

Speaker #2: I will now share other first quarter 2026 metrics before discussing our outlook. Free cash flow was $21 million in the first quarter of 2026, compared to $16 million in the prior year.

Speaker #2: The year-over-year improvement of $5 million is due to an additional $6 million of cash flow from operations, less an increase in capital expenditures of $1 million.

Kenny Wagers: The year-over-year improvement of $5 million is due to an additional $6 million of cash flow from operations, less an increase in capital expenditures of $1 million. The increase in cash generation reflects our continued focus on cash management and working capital improvements. In Q1 2026, capital expenditures were $6 million or 1.3% of revenue compared to $5 million or 1% in the prior year.

Speaker #2: The increase in cash generation reflects our continued focus on cash management and working capital improvements. In the first quarter of 2026, capital expenditures were $6 million, or 1.3% of revenue, compared to $5 million, or 1% in the prior year.

Speaker #2: Approximately 60% of the current quarter spend relates to growth in product development, real estate expansion, and client technology investments. As of March 31, 2026, cash was $89 million, with $892 million of debt, primarily representing borrowings under our recently amended $1.05 billion revolving credit facility.

Kenny Wagers: Approximately 60% of the current quarter spend relates to growth in product development, real estate expansion, and client technology investments. As of 31 March 2026, cash was $89 million with $892 million of debt, primarily representing borrowings under our recently amended $1.05 billion revolving credit facility. The net debt position of $803 million represents a year-over-year decrease of $79 million as we continue to focus on cash flow generation and debt reduction. We ended Q1 2026 with a net leverage ratio as defined under our credit facility of 3.77x, relatively unchanged over the prior year period. Our normalized tax rate was 52.9% in Q1 2026 compared to 37.9% in the prior year.

Speaker #2: The net debt position of $803 million represents a year-over-year decrease of $79 million, as we continue to focus on cash flow generation and debt reduction.

Kenny Wagers: The net debt position of $803 million represents a year-over-year decrease of $79 million as we continue to focus on cash flow generation and debt reduction. We ended Q1 2026 with a net leverage ratio as defined under our credit facility of 3.77x, relatively unchanged over the prior year period. Our normalized tax rate was 52.9% in Q1 2026 compared to 37.9% in the prior year.

Speaker #2: We ended the first quarter 2026 with a net leverage ratio as defined under our credit facility of 3.77 times, relatively unchanged over the prior year period.

Speaker #2: Our normalized tax rate was 52.9% in the first quarter of 2026, compared to 37.9% in the prior year. The tax rate is primarily due to the jurisdictional mix of pre-tax income.

Kenny Wagers: The tax rate is primarily due to the jurisdictional mix of pre-tax income. The impact of the US valuation allowance recorded against the US pre-tax losses will continue to impact the normalized tax rate, with the rate fluctuating based on the total pre-tax income and the mix between foreign and US jurisdictions. Turning to our 2026 outlook, I will now provide some context supporting our full year financial guidance. Overall, our Q1 results were in line with expectations, taking into account the timing considerations mentioned for both Engage and Digital. Our Engage segment is expected to return to improved profitable year-over-year growth starting in Q2, primarily driven by the operating and cost management actions implemented over the past 2 years to return to historical margins.

Speaker #2: The impact of the US valuation allowance, recorded against the US pre-tax losses, will continue to impact the normalized tax rate, with the rate fluctuating based on the total pre-tax income and the mix between foreign and US jurisdictions.

Speaker #2: Turning to our 2026 outlook, I will now provide some context supporting our full-year financial guidance. Overall, our first quarter results were in line with expectations, taking into account the timing considerations mentioned for both engaged and digital.

Kenny Wagers: Turning to our 2026 outlook, I will now provide some context supporting our full year financial guidance. Overall, our Q1 results were in line with expectations, taking into account the timing considerations mentioned for both Engage and Digital. Our Engage segment is expected to return to improved profitable year-over-year growth starting in Q2, primarily driven by the operating and cost management actions implemented over the past 2 years to return to historical margins.

Speaker #2: Our engaged segment is expected to return to improved profitable year-over-year growth starting in the second quarter, primarily driven by the operating and cost management actions implemented over the past two years to return to historical margins.

Speaker #2: We continue to build on this foundation through the rationalization of certain clients' underperforming business and the growth of offshore revenue mix. These actions don't always translate to growth over the prior year in every quarter, but are important contributors to delivering our full-year improvements and keeping us on course for longer-term margin expansion.

Kenny Wagers: We continue to build on this foundation through the rationalization of certain clients' underperforming business and the growth of offshore revenue mix. These actions don't always translate to growth over the prior year in every quarter but are important contributors to delivering to our full year improvements and keeping us on course for longer-term margin expansion. In our Digital segment, we are executing on the shifting market demands through new partnerships for AI, data, and security. These factors, combined with our in-depth knowledge and years of experience working with end-to-end CX platforms, position us to profitably scale these practices in 2026. As with any market shift, the timing of revenue and related margins are not necessarily aligned to reflect consistent quarterly improvements. However, we remain confident in our ability to deliver on our full year 2026 guidance.

Speaker #2: In our digital segment, we are executing on the shifting market demands through new partnerships for AI, data, and security. These factors, combined with our in-depth knowledge and years of experience working with end-to-end CX platforms, position us to profitably scale these practices in 2026.

Kenny Wagers: In our Digital segment, we are executing on the shifting market demands through new partnerships for AI, data, and security. These factors, combined with our in-depth knowledge and years of experience working with end-to-end CX platforms, position us to profitably scale these practices in 2026. As with any market shift, the timing of revenue and related margins are not necessarily aligned to reflect consistent quarterly improvements. However, we remain confident in our ability to deliver on our full year 2026 guidance.

Speaker #2: As with any market shift, the timing of revenue and related margins are not necessarily aligned to reflect consistent, quarterly improvements. However, we remain confident in our ability to deliver on our full-year 2026 guidance.

Speaker #2: Please reference our commentary in the Business Outlook section of our first quarter 2026 earnings press release. To obtain our expectations for our reiterated 2026 full-year guidance at the consolidated and segment level.

Kenny Wagers: Please reference our commentary in the business outlook section of our Q1 2026 earnings press release to obtain our expectations for our reiterated 2026 full year guidance at the consolidated and segment level. In closing, we remain committed to our goals of continued profitable growth, cash flow improvement, and debt reduction. These objectives are at the forefront of every decision we make and require continued focus and operational execution across the business. We are appreciative of the dedication of our leadership and employees around the globe and for the support from all our stakeholders. I will now turn the call back to Bob.

Speaker #2: In closing, we remain committed to our goals of continued profitable growth, cash flow improvement, and debt reduction. These objectives are at the forefront of every decision we make and require continued focus and operational execution across the business.

Kenny Wagers: These objectives are at the forefront of every decision we make and require continued focus and operational execution across the business. We are appreciative of the dedication of our leadership and employees around the globe and for the support from all our stakeholders. I will now turn the call back to Bob.

Speaker #2: We are appreciative of the dedication of our leadership and employees around the globe, and for the support from all our stakeholders. I will now turn the call back to Bob.

Speaker #1: Thanks, Kenny. As we open the call, we ask that you limit your questions to one or two at a time. Operator, you may open the line.

Bob Belknap: Thanks, Kenny. As we open the call, we ask that you limit your questions to one or two at a time. Operator, you may open the line.

Speaker #3: 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.

Operator: Thank you, sir. We will now begin the question and answer session. Our first question will be coming from George Sutton of Craig-Hallum. Sir, your line is open.

Operator: Thank you, sir. We will now begin the Q&A 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 and company name clearly when prompted. These are required to introduce your question. To cancel your request, please press star and then the number two. Our first question will be coming from George Sutton of Craig-Hallum. Sir, your line is open.

Speaker #3: Please unmute your phone and record your name and company name clearly when prompted. These are required to introduce your question. To cancel your request, please press star and then the number two.

Speaker #3: Our first question will be coming from George Sutton of Craig Allen. Sir, your line is open.

Speaker #4: Thank you. Obviously, a little noise in the quarter, so I wanted to kind of think about the industry narrative around the whole space. On one hand, your Q4 would sort of play into the narrative, but I'd say on the other hand, your larger pipeline for engaged with higher average deal sizes would play against it.

George Sutton: Thank you. Obviously a little noise in the quarter, I wanted to kind of think about the industry narrative around the whole space. On one hand, your Q4 would sort of play into the narrative, I'd say on the other hand, your larger pipelines are engaged with higher average deal sizes would play against it. I just wanted to make sure I sort of fully understood the pipeline that you're looking at and at the same time, the deliberate rationalization you're having with some other clients. I assume the new clients you bring in come in at much higher margins than the clients that you are rationalizing.

Speaker #4: So I just wanted to make sure I sort of fully understood the pipeline that you're looking at. And at the same time, the deliberate rationalization you're having with some other clients.

George Sutton: I just wanted to make sure I sort of fully understood the pipeline that you're looking at and at the same time, the deliberate rationalization you're having with some other clients. I assume the new clients you bring in come in at much higher margins than the clients that you are rationalizing.

Speaker #4: I assume the new clients you bring in come in at much higher margins than the clients that you are rationalizing.

Ken Tuchman: Hi, George. How you doing? Good morning. I'm not fully understanding the question, but maybe what I'll do is just give a bit of a narrative on the health of the pipeline and of the business. Is that what you're asking of me?

Speaker #5: Hi, George. How are you doing? Good morning. So I'm not fully understanding the question, but maybe what I'll do is just give a bit of a narrative on the health of the pipeline and of the business.

Speaker #5: Is that what you're asking of me?

Speaker #4: Obviously, there's a narrative in the market about AI's impact. And your pipeline would suggest when you're seeing larger average deal sizes in that space, that's very intriguing.

George Sutton: Obviously, there's a narrative in the market about AI's impact, and your pipeline would suggest when you're seeing larger average deal sizes in that space, that's very intriguing.

George Sutton: Obviously, there's a narrative in the market about AI's impact, and your pipeline would suggest when you're seeing larger average deal sizes in that space, that's very intriguing. I wanted to get behind that a little bit and understand it.

Ken Tuchman: Yeah.

Speaker #4: I wanted to get behind that a little bit and understand it.

George Sutton: I wanted to get behind that a little bit and understand it.

Speaker #5: Yeah. So first of all, I'm not trying to come across as a contrarian. But up to this point, as it relates to the DCX engaged business, we're not feeling reduction in volumes due to AI.

Ken Tuchman: Yeah. First of all, I'm not trying to come across as a contrarian, but up to this point, as it relates to the DCX, Engage business, we're not feeling reduction in volumes due to AI. We're not suggesting that over time that won't take place. At this point in time, that is not something we're seeing. As a matter of fact, what we're actually seeing right now is a significant amount of activity with net new clients that are expanding, as well as our embedded base that is now coming to us and expanding on many of our larger accounts.

Speaker #5: We're not suggesting that over time that won't take place. But at this point in time, that is not something we're seeing. As a matter of fact, what we're actually seeing right now is a significant amount of activity with net new clients that are expanding as well as our embedded base that is now coming to us and expanding on many of our larger accounts.

Ken Tuchman: That coupled with the fact that on the DCX, the actual amount of deals that have already been closed in Q1 and the deals that we expect to close in the Q2 is what gives us confidence to maintain our guidance. Frankly, we're really feeling good right now about what we're seeing coming at us, the deals that we're closing, the mix of the deals that are now starting to take advantage of our digital capabilities. We feel like that's giving us a very significant edge because we can demonstrate to clients that not only do we have the right partnerships, but we have such a deep understanding technologically of what our clients are dealing with, as well as what our partners have to offer.

Speaker #5: So that, coupled with the fact that on the DCX, the actual amount of deals that have already been closed in the first quarter and the deals that we expect to close in the second quarter, is what gives us confidence to maintain our guidance. And, frankly, we're really feeling good right now about what we're seeing coming at us—the deals that we're closing, the mix of the deals that are now starting to take advantage of our digital capabilities.

Speaker #5: And we feel like that's giving us a very significant edge because we can demonstrate to clients that not only do we have the right partnerships, but we have such a deep understanding technologically of what our clients are dealing with as well as what our partners have to offer and, therefore, it's giving us an edge to be able to demonstrate to our clients that we can have an impact on their business from an efficiency standpoint as it relates to us applying technology and applying AI.

Ken Tuchman: We feel like that's giving us a very significant edge because we can demonstrate to clients that not only do we have the right partnerships, but we have such a deep understanding technologically of what our clients are dealing with, as well as what our partners have to offer.

Ken Tuchman: Therefore, it's giving us an edge to be able to demonstrate to our clients that we can have an impact on their business from an efficiency standpoint as it relates to us applying technology and applying AI. The fact of the matter is that the pot is still so large, and we're so relatively small to the overall size of that TAM, that we're still seeing and feeling, and winning, you know, many opportunities. In Q1, we'll wait till Q2 before we quote the number of net new clients that we've signed. What I would just simply say to you is that on a new logo standpoint, we're well ahead of last year's Q1 of net new logos.

Speaker #5: But the fact of the matter is that the pot is still so large, and we're so relatively small compared to the overall size of that TAM, that we're still seeing, feeling, and winning many, many opportunities.

Speaker #5: In the first quarter, I actually will wait till the second quarter before we quote the number of net new clients that we've signed. But what I would just simply say to you is that, on a new logo standpoint, we're well ahead of last year's first quarter of net new logos.

Ken Tuchman: In Q1, we'll wait till Q2 before we quote the number of net new clients that we've signed. What I would just simply say to you is that on a new logo standpoint, we're well ahead of last year's Q1 of net new logos.

Ken Tuchman: We're confident with the logos that we are in the process of signing that that trend is gonna continue for sure through Q2. I'm not trying to in any way, you know, over emphasize the potential in the market other than to just simply say that we feel that the marketplace is healthy. The providers that are providing high-quality service are winning consolidated business from other providers who, you know, for whatever reason, aren't performing. That unto itself provides very significant amounts of future opportunity for us as well as the space, you know, continues to kind of go through an organic and inorganic consolidation.

Speaker #5: And we're confident with the logos that we are in the process of signing that that trend is going to continue for sure through second quarter.

Speaker #5: So I'm not trying to in any way overemphasize the potential in the market other than to just simply say that we feel that the marketplace is healthy.

Speaker #5: The providers that are providing high-quality service are winning consolidated business from other providers who for whatever reason aren't performing. And that, unto itself, provides very significant amounts of future opportunity for us as well.

Ken Tuchman: The providers that are providing high-quality service are winning consolidated business from other providers who, you know, for whatever reason, aren't performing. That unto itself provides very significant amounts of future opportunity for us as well as the space, you know, continues to kind of go through an organic and inorganic consolidation.

Speaker #5: As the space continues to kind of go through an organic and inorganic consolidation.

George Sutton: My other question relative to the concept of avoiding rip and replace, and you mentioned you can actually bridge the existing CX with AI. Can you just give a sort of a tangible example of what you are referring to there?

Speaker #4: My other question relative to the concept of avoiding rip and replace. And you mentioned you can actually bridge the existing CX with AI. Can you just give sort of a tangible example of what you're referring to there?

Speaker #5: So you're speaking about what was in my script? Is that?

Ken Tuchman: You're speaking about what was in my script? Is that?

Speaker #4: Correct.

George Sutton: Correct.

Speaker #5: Is that what that's what you're pointing at? When you say just again, I want to make sure that I'm being more precise on answering your question.

Ken Tuchman: Is that what that's what you're pointing at? When you say taking, I just, again, I want to make sure that I'm being more precise on answering your question. We have, you know, with our AI Gateway, if that's what you're speaking about, we have multiple clients, and TTEC Digital is working on not only multiple clients, but actually working with multiple hyperscalers where they're taking advantage of our AI Gateway, which allows us to very quickly integrate to our client CCaaS systems, virtually all the major AI product offerings that are out there that people are focused on. I'm talking about, primarily the hyperscalers, which would be, you know, Google's CCAI product offerings. I'm talking about AWS's Llama offerings. I'm talking about Microsoft's Copilot offerings, et cetera.

Ken Tuchman: Is that what that's what you're pointing at? When you say taking, I just, again, I want to make sure that I'm being more precise on answering your question.

Speaker #5: So we have with our AI media gateway, if that's what you're if that's what you're speaking about, we have multiple clients and digital is working on not only multiple clients but actually working with multiple hyperscalers where they're taking advantage of our AI gateway which allows us to very quickly integrate to our client CCAS systems virtually all the major AI product offerings that are out there that people are focused on.

Ken Tuchman: We have, you know, with our AI Gateway, if that's what you're speaking about, we have multiple clients, and TTEC Digital is working on not only multiple clients, but actually working with multiple hyperscalers where they're taking advantage of our AI Gateway, which allows us to very quickly integrate to our client CCaaS systems, virtually all the major AI product offerings that are out there that people are focused on.

Speaker #5: I'm talking about primarily the hyperscalers which would be Google's CCAI product offerings. I'm talking about AWS's LLaMA offerings. I'm talking about Microsoft's Copilot offerings.

Ken Tuchman: I'm talking about, primarily the hyperscalers, which would be, you know, Google's CCAI product offerings. I'm talking about AWS's Llama offerings. I'm talking about Microsoft's Copilot offerings, et cetera.

Speaker #5: Etc. And so we're able to demonstrate to clients through our sandbox that we can implement this in a fraction of the time that the other whether they be GSIs or other companies.

Ken Tuchman: We're able to demonstrate to clients through our sandbox that we can implement this in a fraction of the time that the other whether they be GSIs or other companies. This has allowed us to really attract a very significant lead flow from our partners, and that lead flow is what we're focused on and what we're converting.

Speaker #5: And so this is allowed us to really attract a very significant lead flow from our partners and that lead flow is what we're focused on and what we're converting.

Speaker #4: Got it. Makes sense. Thanks for the clarity.

George Sutton: Got it. Makes sense. Thanks for the clarity.

Speaker #5: Thanks, George.

Ken Tuchman: Thanks, George.

Speaker #6: Thank you. Our next question will be coming from Maggie Nolan, William Blair. Your line is open.

Operator: Thank you. Our next question will be coming from Maggie Nolan of William Blair. Your line is open.

Speaker #7: Thank you. Good morning. I'm not sure if you can comment on—you made a comment that most of the new proposals now incorporate AI.

Maggie Nolan: Thank you. Good morning.

Ken Tuchman: Good morning.

Maggie Nolan: I'm hoping you can comment on, you made a comment that new proposals, most of the new proposals now incorporate AI, and I'm hoping you can give us some insight into kind of the average deal size and implementation timeline for some of these AI-enabled digital engagements as they compare to legacy contracts.

Speaker #7: And I'm hoping you can give us some insight into kind of the average deal size and implementation timeline for some of these AI-enabled digital engagements, as they compare to legacy contracts.

Speaker #4: Yeah, that's a great question. It's not an easy one to answer, only because it's so dependent upon our clients' data estates and how much data we can actually gain access to.

Ken Tuchman: Yeah, that's a great question. It's not an easy one to answer only because it's so dependent upon our clients' data estates and how much data that we can actually gain access to. What I mean by that is that if it's a company that was relatively born natively digital, then our ability to provide a much more AI-intensive capability, as it relates to voice bots and chat bots, can be done in a very reasonable period of time, measured in 3 months or so. In some cases, if it's just the basic front end, even less.

Ken Tuchman: Yeah, that's a great question. It's not an easy one to answer only because it's so dependent upon our clients' data estates and how much data that we can actually gain access to. What I mean by that is that if it's a company that was relatively born natively digital, then our ability to provide a much more AI-intensive capability, as it relates to voice bots and chat bots, can be done in a very reasonable period of time, measured in three months or so. In some cases, if it's just the basic front end, even less.

Speaker #4: What I mean by that is that if it's a company that was relatively born natively digital, then our ability to provide a much more AI-intensive capability for as it relates to voice bots and chat bots can be done in a very reasonable period of time.

Speaker #4: Measured in three months or so. And in some cases, if it's just the basic front end, even less. But with many of our clients that are in the Fortune 500 category, that have very large legacy systems with a myriad of siloed systems, to give you an example, a client that we recently completed a large project for, they have 235 separate systems that we had to actually connect to real-time.

Ken Tuchman: With many of our clients that are in the Fortune 500 category that have very large legacy systems with a myriad of siloed systems, to give you an example, a client that we recently completed a large project for, they have 235 separate systems that we had to actually connect to real time. That project took 24 months, in order for us to be able to write all the APIs, tap all the different systems, et cetera, and then get synchronization out of them. The big misnomer about taking advantage of AI is that people don't fully appreciate how complex it is for companies to achieve a modern data estate.

Speaker #4: That project took 24 months. In order for us to be able to write all the APIs, tap all the different systems etc. and then get synchronization out of them.

Ken Tuchman: That project took 24 months, in order for us to be able to write all the APIs, tap all the different systems, et cetera, and then get synchronization out of them. The big misnomer about taking advantage of AI is that people don't fully appreciate how complex it is for companies to achieve a modern data estate.

Speaker #4: So, the big misnomer about taking advantage of AI is that people don't fully appreciate how complex it is for companies to achieve a modern data estate.

Speaker #4: And that is really one of the biggest issues that most of these legacy companies have, is that their data is in so many different systems and those systems don't necessarily even talk to each other.

Ken Tuchman: That is really one of the biggest issues that most of these legacy companies have, is that their data is in so many different systems, and those systems don't necessarily even talk to each other. It's our job to bring all of that together. What our focus is when we're going into a client is the stuff that we know that we can turn on almost immediately. Therefore, those are the tools that augment their associates or our associates. What is it that we can do with AI from a QA standpoint? What is it that we can do with AI from a real-time language translation standpoint? What is it that we can do with AI from a scheduling and forecasting standpoint?

Speaker #4: And so then it's our job to bring all of that together. So what our focus is when we're going into a client is the stuff that we know that we can turn on almost immediately.

Speaker #4: And so therefore, those are the tools that augment their associates or our associates. So what is it that we can do with AI from a QA standpoint?

Ken Tuchman: Therefore, those are the tools that augment their associates or our associates. What is it that we can do with AI from a QA standpoint? What is it that we can do with AI from a real-time language translation standpoint? What is it that we can do with AI from a scheduling and forecasting standpoint?

Speaker #4: What is it that we can do with AI from a real-time language translation standpoint? What is it that we can do with AI from a scheduling and forecasting standpoint?

Speaker #4: What is it that we can do with AI from a training, a learning, and development standpoint, a building new curriculum, new capabilities? These are all things that are designed to augment the associate to get more proficiency, more accuracy, more quality, out of the associate and to allow them to focus more on the customer and less on the actual systems.

Ken Tuchman: What is it that we can do with AI from a training, a learning and development standpoint of building new curriculum, new capabilities? These are all things that are designed to augment the associate to get more proficiency, more accuracy, more quality out of the associate, and to allow them to focus more on the customer and less on the actual systems. We view that as phase one across all of our clients, whereas phase two, is going into how you can actually create self-service chatbots, voice bots, et cetera, that ultimately keep the human in the loop.

Speaker #4: So, we view that as phase one across all of our clients, whereas phase two is going into how you can actually create self-service chatbots, voice bots, etc.

Ken Tuchman: We view that as phase one across all of our clients, whereas phase two, is going into how you can actually create self-service chatbots, voice bots, et cetera, that ultimately keep the human in the loop.

Speaker #4: that ultimately keep the human in the loop. And I think that without getting on my soapbox, which I know I'm very guilty of doing, all I'm going to just simply say to you is that as I mentioned in our script, we do our CAB meetings every six months where some of the largest companies in the world come in and discuss what their strategies are and what they're trying to achieve.

Ken Tuchman: I think that without getting on my soapbox, which I know I'm very guilty of doing, all I'm gonna just simply say to you is that as I mentioned in our script, we do our CAB meetings every six months, where some of the largest companies in the world come in and discuss what their strategies are and what they're trying to achieve. I can say to a T that virtually every single one of them are focused on keeping the human in the loop. They're realizing that as much as AI is capable of replacing, in certain cases, certain interactions, the fact of the matter is they don't wanna lose the connective tissue to the customer. Therefore, they want to have us help them pick the points of intersection of where technology is touching the customer and where a human is touching the customer.

Speaker #4: And I can say to a T that virtually every single one of them are focused on keeping the human in the loop. They're realizing that as much as AI is capable of replacing in certain cases certain interactions, the fact of the matter is they don't want to lose the connective tissue to the customer and therefore they want to have us help them pick the points of intersection of where technology is touching the customer and where a human is touching the customer.

Ken Tuchman: I can say to a T that virtually every single one of them are focused on keeping the human in the loop. They're realizing that as much as AI is capable of replacing, in certain cases, certain interactions, the fact of the matter is they don't wanna lose the connective tissue to the customer. Therefore, they want to have us help them pick the points of intersection of where technology is touching the customer and where a human is touching the customer.

Speaker #4: And that's where we see this whole industry going. We see this industry going into where this is going to become a set of hybrid capabilities where customers are going to always have the ability and the access to a live human being and on interactions that are important to them, whether it be financial or healthcare-wise, etc.

Ken Tuchman: That's where we see this whole industry going. We see this industry going into where this is going to become a set of hybrid capabilities, where customers are gonna always have the ability and the access to a live human being, and on interactions that are important to them, whether it be financially or healthcare-wise, et cetera. In more cases than not, those will be augmented humans, meaning humans that are taking advantage of AI. In cases where it's low-hanging fruit, it's transactional, it provides no additional ability to build trust or loyalty, that is where we will provide self-service type capabilities, so to speak. Every one of our clients is trying to analyze this. They're going through journeys on this, journey mapping on this, et cetera.

Ken Tuchman: In more cases than not, those will be augmented humans, meaning humans that are taking advantage of AI. In cases where it's low-hanging fruit, it's transactional, it provides no additional ability to build trust or loyalty, that is where we will provide self-service type capabilities, so to speak. Every one of our clients is trying to analyze this. They're going through journeys on this, journey mapping on this, et cetera.

Speaker #4: In more cases than not, those will be augmented humans meaning humans that are taking advantage of AI and in cases where it's low-hanging fruit, it's transactional.

Speaker #4: It provides no additional ability to build trust or loyalty. That is where we will provide self-service-type capabilities so to speak. And so every one of our clients is trying to analyze this.

Speaker #4: They're going through journeys on this. Journey mapping on this, etc. And frankly, we're really excited about it. And this is why we feel like our digital business has so much potential as we go through this transition of less focus on the CCAS capabilities that we've historically had and much more focus on building modern data estates and providing AI capabilities and AI-based analytics.

Ken Tuchman: Frankly, we're really excited about it. This is why we feel like our digital business has so much potential as we go through this transition of less focus on the CCaaS capabilities that we've historically had and much more focus on building modern data estates and providing AI capabilities and AI-based analytics.

Speaker #5: Thanks, Ken. And then I liked the comment on the improvement in the retention and Engage revenues on a year-over-year basis. So could you link those continued efforts and expected improvements there—continued improvements, I would suspect—back to kind of the return to growth timeline and trajectory for Engage?

Maggie Nolan: Thanks, Ken.

Ken Tuchman: Thank you.

Maggie Nolan: I liked the comment on the improvement in the retention and Engage revenues on a year-over-year basis. Could you link those continued efforts and, you know, expected improvements there, continued improvements, I would suspect, back to kind of the return to growth timeline and trajectory for Engage?

Kenny Wagers: Hey, Maggie. Good morning. This is Kenny. I'll take that one. We are seeing very steady and good improvement in our embedded base growth. You know, we've talked about this quarter-over-quarter, I know in our one-on-one discussions, especially with John Abou. We're improving our quality and service, right? It has been a focus for Engage, over the last 2 years, to get back to the historical margins that we're committed to on the Engage business. There's a direct correlation to providing outstanding service, you know, on the floor of our operational centers.

Speaker #4: Hey, Maggie. Good morning. This is Kenny. I'll take that one. We are seeing very steady and good improvement in our embedded-based growth. We've talked about this quarter over quarter.

Speaker #4: I know in our one-on-one discussions, especially with John Aboo, we're improving our quality and service, right? It has been a focus for Engage over the last two years to get back to the historical margins that were committed to on the Engage business.

Kenny Wagers: We're improving our quality and service, right? It has been a focus for Engage, over the last 2 years, to get back to the historical margins that we're committed to on the Engage business. There's a direct correlation to providing outstanding service, you know, on the floor of our operational centers.

Speaker #4: There's a direct correlation to providing outstanding service on the floor of our operational centers. And so embedded-based growth, as we continue to, again, bring in the external talent that we have to our leadership team and engage and they bring expanded ideas around lines of business that we can get into, that we haven't traditionally been in, that are underpinning our offshore growth and engage, that gives us the breadth of offering.

Kenny Wagers: Embedded base growth, as we continue to, again, bring in the external talent that we have to our leadership team in Engage, and they bring, you know, expanded ideas around lines of business that we can get into that we haven't traditionally been in that are underpinning our offshore growth in Engage. That gives us the breadth of offering to go back to our embedded base and say, Hey, you know, we're investing in AI, and all the things that Ken talked about earlier, from our performance to our training to our QA. That with the footprint that we have, now we can go sell many, many different lines of business that we couldn't in the past. The embedded base is moving with us.

Kenny Wagers: That gives us the breadth of offering to go back to our embedded base and say, Hey, you know, we're investing in AI, and all the things that Ken talked about earlier, from our performance to our training to our QA. That with the footprint that we have, now we can go sell many, many different lines of business that we couldn't in the past. The embedded base is moving with us.

Speaker #4: To go back to our embedded base and say, 'Hey, we're investing in AI.' And all the things that Ken talked about earlier—from our performance, to our training, to our QA—with the footprint that we have, now we can go sell many, many different lines of business that we couldn't in the past.

Speaker #4: And so the embedded base is moving with us. They are underpinning the growth that you're going to see in the second half of the year.

Kenny Wagers: They are underpinning the growth that you're going to see in H2 of the year. We've talked about that with the reaffirm that we put out on guidance. We are going to return to top line growth in Engage by the end of the year. That's a big part of it. We're happy with where we're at with that. We're happy with, again, the service that we're providing the embedded base business and their desire to come back to us and grow in different lines of business in the different geographies.

Speaker #4: We've talked about that, the reaffirm that we put out on guidance. We are going to return the top line growth and engage by the end of the year.

Speaker #4: And that's a big part of it. And so we're happy with where we're at with that. We're happy with, again, the service that we're providing the embedded base business and their desire to come back to us and grow in different lines of business in the different geographies.

Speaker #5: Thanks, Kenny.

Maggie Nolan: Thanks, Kenny.

Speaker #6: Thank you. Our next question will be coming from Jonathan Lee of Guggenheim Partners, your line is open.

Operator: Thank you. Our next question will be coming from Jonathan Lee of Guggenheim Partners. Your line is open.

Speaker #7: Great. Thanks for taking my questions. Kenny, helpful that you broke out the Pub/Sec seasonal client as 40% plus of the decline in engage. Of the remaining call it 19 million of engage revenue client, was any of that unplanned volume loss on retained clients or was it entirely deliberate rationalization?

Jonathan Lee: Great. Thanks for taking my questions. Kenny, helpful that you broke out the PubSec seasonal client as, you know, 40% plus of the decline in Engage. Of the remaining, call it $19 million of Engage revenue decline, was any of that unplanned volume loss on retained clients, or was it entirely deliberate rationalization? What's the same client organic growth rate for the portfolio you're choosing to keep?

Speaker #7: And what's the same client organic growth rate for the portfolio you're choosing to keep?

Speaker #4: Yeah.

Kenny Wagers: Yeah, Jonathan, it is definitely a little of both. As we talked about, coming into this year, as I talked about in Q4, as we looked at our full year guidance, it was gonna be a story of two halves. We are rationalizing, as Ken mentioned, clients to make sure that we have the profit profile that we need for this business moving forward. I don't have the exact number for you, but it is definitely a portion of both. That, with the timing of the bookings and the pipeline and the momentum that Ken talked about earlier, leads to a stronger H2 than a H1 for Engage.

Speaker #8: Yeah, Jonathan. It is definitely a little of both. As we talked about coming into this year, as I talked about in Q4, as we looked at our full-year guidance, it was going to be a story of two halves.

Speaker #8: We are rationalizing as Ken mentioned clients to make sure that we have the profit profile that we need for this business moving forward. And so I don't have the exact number for you, but it is definitely a portion of both.

Kenny Wagers: I don't have the exact number for you, but it is definitely a portion of both. That, with the timing of the bookings and the pipeline and the momentum that Ken talked about earlier, leads to a stronger H2 than a H1 for Engage.

Speaker #8: That with the timing of the bookings and the pipeline and the momentum that Ken talked about earlier, leads to a stronger second half than a first half for engage.

Speaker #8: And so we're happy with where we're at. Absolutely. With the bookings that we have, with the new logos that we have, and how those are going to realize the revenue that's going to be realized out of that in the second half of the year.

Kenny Wagers: We're happy with where we're at, absolutely with the bookings that we have, with the new logos that we have, and how those are going to realize the revenue that's gonna be realized out of that in H2 of the year. Rationalizations with clients is a little bit of a push and take, right? We're going back to them, we're showing them, we're having a discussion about what we need from them and what they need from us in order to try to keep that business and make it profitable for us, as well as a good quality service for them. We'd rather work it out to keep them in the house. If we can't, that's fine because we have the demand, especially offshore.

Speaker #8: Rationalizations with clients is a little bit of a push and take, right? We're going back to them. We're showing them. We're having a discussion about what we need from them and what they need from us in order to try to keep that business and make it profitable for us as well as a good quality service for them.

Kenny Wagers: Rationalizations with clients is a little bit of a push and take, right? We're going back to them, we're showing them, we're having a discussion about what we need from them and what they need from us in order to try to keep that business and make it profitable for us, as well as a good quality service for them. We'd rather work it out to keep them in the house. If we can't, that's fine because we have the demand, especially offshore.

Speaker #8: So we'd rather work it out to keep them in the house, but if we can't, that's fine because we have the demand especially offshore as we've mentioned our pipeline is up 17% year over year with offshore demand.

Kenny Wagers: As we've mentioned, our pipeline is up 17% year over year with offshore demand. We are, again, very focused on the diversification of the Engage business from a geographic standpoint, from a line of business standpoint, and from a vertical standpoint.

Speaker #8: And so we are again very focused on the diversification of the engaged business from a geographic standpoint, from a line of business standpoint, and from a vertical standpoint.

Speaker #8: I will say, though, that interestingly enough, the public sector pipeline is actually fairly healthy. And what I will say is that with my personal involvement along with John Aboo's involvement, we are going out of our way in ensuring that the net new public sector accounts are accounts that are profitable day one to start.

Ken Tuchman: I will say, though, that, interestingly enough, the Public Sector pipeline is actually fairly healthy. What I will say is that, with my personal involvement, along with John Abou's involvement, we are going out of our way in ensuring that the net new Public Sector accounts are accounts that are profitable day one to start. We inherited multiple Public Sector clients through an old acquisition that was done many years ago, and that is some of those accounts, a few of them, you know, a couple of them are ones that Kenny was referring to, et cetera. What I would just simply say is that, the government sector is still a very healthy sector, not only for Engage, but also for Digital. Especially Digital, actually.

Speaker #8: We inherited multiple public sector clients through an old acquisition that was done many years ago. And that is some of those accounts, a few of them a couple of them are ones that Kenny was referring to, etc.

Ken Tuchman: We inherited multiple Public Sector clients through an old acquisition that was done many years ago, and that is some of those accounts, a few of them, you know, a couple of them are ones that Kenny was referring to, et cetera. What I would just simply say is that, the government sector is still a very healthy sector, not only for Engage, but also for Digital. Especially Digital, actually.

Speaker #8: And but what I would just simply say is that the government sector is still a very healthy sector. Not only for engage, but also for digital.

Speaker #8: Especially digital, actually. A lot of federal spending going on right now and modernization and our goals to get our piece of that.

Ken Tuchman: A lot of federal spending going on right now, and modernization, and our goal is to get our piece of that.

Speaker #7: Got it. And just as a follow-up, want to tie it back to margins. Adjusted your call it 7% for engage, but you've executed call it 400 base points of offshore shift.

Jonathan Lee: Got it. Just as a follow-up, I want to tie it back to margins. You know, adjusted, you're up, you're at, call it 7% for Engage, but you've executed, call it, 40 basis points of offshore shift. You're near full AI deployment, you've exited unprofitable work. In Q3 of last year, I think you told us you'd see far better efficiencies in 2026 than last quarter. Ken, I believe you said you're 100% volunteering AI savings on new pitches to win new business. Is that the answer? That the tailwinds are real, but you're giving them back on new deals? If so, when does volume from those wins overcome the rate concession?

Speaker #7: You're near full AI deployment. You've exited unprofitable work. And in three quarters of last year, I think you told us we'd see far better efficiencies in 2026.

Speaker #7: Then last quarter, Ken, I believe you said you're 100% volunteering AI savings on new pitches to win new business. Is that the answer? The tailwinds are real, but you're giving them back on new deals.

Jonathan Lee: Ken, I believe you said you're 100% volunteering AI savings on new pitches to win new business. Is that the answer? That the tailwinds are real, but you're giving them back on new deals? If so, when does volume from those wins overcome the rate concession?

Speaker #7: And if so, when does volume from those winds overcome the rate concession?

Speaker #4: Yeah. So I think you had multiple questions there. So no, we're not giving it away. So if that's your question, I'd rather, Kenny, answer the financial side, but only to say the following: in the script, I think you probably heard that our engage number but for receivable that's being pushed into second quarter was pretty much dead on the money.

Ken Tuchman: Yeah. I think you had multiple questions there. No, we're not giving it away. If that's your question, I'd rather Kenny answer the financial side, but only to say the following. In the script, I think you probably heard that our Engage number, but for receivable that's being pushed into Q2 was pretty much dead on the money of where management plan forecasted, which I believe was 9.8% or 9.7%. I'm not sure what you were referring to.

Speaker #4: Of where we’re management plan forecasted, which I believe was 9.8% or 9.7%. And so I’m not sure what you were referring to. Oh, the—okay.

Kenny Wagers: It's operating income.

Ken Tuchman: Oh, Okay. It was on OI. Excuse me.

Ken Tuchman: Oh, okay. It was on OI. Excuse me.

Speaker #4: It was on OI. Excuse me. So, my point is that we always anticipated that our EBITDA number was going to be at that number for the first quarter.

Kenny Wagers: Yeah.

Ken Tuchman: My point is that we always anticipated that our EBITDA number was going to be at that number for Q1. To answer your question, you know, it's all in the H2 of the year. We've always been rear-end loaded, in the 40 years we've been in business, it's always been, you know, towards the H2 of the year. You win the business in the Q1 and Q2. You continue to hopefully keep winning business in the Q3 and Q4, but meanwhile, you're ramping a big chunk of that business Q1 and Q2, and you realize the benefits of that business in Q3 and Q4. It's just the nature of the business as you're ramping.

Speaker #4: To answer your question, it's all in the second half of the year. And we've always been rear-end loaded in the 40 years we've been in business.

Speaker #4: It's always been towards the second half of the year. You win the business in the first two quarters; you continue to, hopefully, keep winning business in the third and fourth quarters. But meanwhile, you're ramping a big chunk of that business in the first and second quarters, and you realize the benefits of that business in the third and fourth quarters.

Ken Tuchman: You win the business in the Q1 and Q2. You continue to hopefully keep winning business in the Q3 and Q4, but meanwhile, you're ramping a big chunk of that business Q1 and Q2, and you realize the benefits of that business in Q3 and Q4. It's just the nature of the business as you're ramping.

Speaker #4: It's just the nature of the business as you're ramping. And because we are so focused on client diversification right now, there is a fair amount of ramps that are taking place.

Ken Tuchman: Because we are so focused on client diversification right now, there is a fair amount of ramps that are taking place, let alone embedded base that's ramping. Kenny, is there any else you want to add to that?

Speaker #4: Let alone embedded base that's ramping.

Speaker #8: Kenny, is there anything else you want to add to that?

Kenny Wagers: Jonathan, I think to your specific question on that, it, again, we are, as Ken mentioned earlier, we're still not seeing the monetization fall one way or the other on AI from a pricing standpoint. The AI that we have deployed around TA, quality, performance, those aren't hard negotiations around where does the pricing fall between client and us on that. What we're really seeing is, again, the normalization of the offshore growth, which has near-term pressure on the top line revenue, but ultimately, as you know very well, is a better EBITDA margin profile for us. As we move through the new business, the new logos, the embedded base growth that we have this year towards year-over-year top line revenue growth, that revenue is fortified on the offshore portion of the business.

Speaker #3: Yeah, Jonathan, I think to your specific question on that—again, as Ken mentioned earlier—we're still not seeing the monetization fall one way or the other on AI from a pricing standpoint.

Speaker #3: The AI that we have deployed around TA, quality, performance—those aren't hard negotiations around where the pricing falls between the client and us on that.

Speaker #3: What we're really seeing is, again, the normalization of the offshore growth, which has near-term pressure on the top-line revenue, but ultimately as you know very well, is a better EBITDA margin profile for us.

Kenny Wagers: What we're really seeing is, again, the normalization of the offshore growth, which has near-term pressure on the top line revenue, but ultimately, as you know very well, is a better EBITDA margin profile for us. As we move through the new business, the new logos, the embedded base growth that we have this year towards year-over-year top line revenue growth, that revenue is fortified on the offshore portion of the business.

Speaker #3: And so as we move through the new business, the new logos, the embedded-based growth that we have this year towards year-over-year top-line revenue growth, that revenue is fortified on the offshore portion of the business.

Speaker #3: Again, I think last quarter we committed to being over 40% by the end of the year. We're well on target to do that. And so it is that mix that is giving us the margin of a big portion of the margin improvement for the engaged business throughout the full year of guidance.

Kenny Wagers: I think last quarter, we committed to being over 40% by the end of the year, and we're well on target to do that. It is that mix that is giving us the margin a big portion of the margin improvement for the Engage business throughout the full year of guidance.

Speaker #7: Appreciate that. Thanks.

Jonathan Lee: Appreciate that. Thanks.

Speaker #1: Thank you for your questions. That is all the time we have today. This concludes TTEC's first quarter 2026 earnings conference call. You may disconnect at this time.

Operator: Thank you for your questions. That is all the time we have today. This concludes TTEC's Q1 2026 earnings conference call. You may disconnect at this time.