TTEC Holdings, Inc.

Welcome to TTAC's third quarter 2023 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 TTAC. I would now like to turn the call over to Paul Miller, TTAC's Senior Vice President, Treasurer and Investor Relations Officer. Thank you. Sir, you may begin.

Good morning, and thank you for joining us today. T-TECH is hosting this call to discuss its third quarter financial results for the period ended September 30, 2023. Participating on today's call are Ken Tugman, Chairman and Chief Executive Officer of T-TECH, Shelley Swanback, Chief Executive Officer of T-TECH Engage and President of T-TECH, and Francois Bourret, Interim Chief Financial Officer of T-TECH. Yesterday, T-TECH issued a press release announcing its financial results. While this call will reflect items discussed within that document, for complete information about our financial performance, we also encourage you to read our third quarter 2023 quarterly report on Form 10-Q. Before we begin, I want to remind you that matters discussed on today's call may include forward-looking statements related to our operating performance, financial goals, and business outlook. which are based on management's current beliefs and assumptions. Please note that these forward-looking statements reflect our opinion as to the date of this call, and we undertake no obligation to revise this information as a result of new developments that may occur. Forward-looking statements are subject to various risks, uncertainties, and other factors that could cause our actual results to differ materially from those expected and described today. For a more detailed description of our risk factors, please review our 2022 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.

Good morning, and thank you for joining us today. This quarter, we continue to focus on delivering high-value CX outcomes for our clients and seamless technology-enabled experiences for their customers. In this current challenging environment, I am proud that our global team delivered on our Q3 forecast and that we have met or exceeded overall expectations each quarter year to date. Turning now to our third quarter consolidated results, revenue was $603 million. On a non-GAAP basis, adjusted EBITDA was $64 million, operating income was $47 million, and EPS was 48 cents. There is no question that businesses are operating in a state of unprecedented and accelerating change. The macroeconomic factors that we have been discussing for the last several quarters are unfortunately now playing out. Contributing factors include higher interest rates that are expected to last longer, ongoing inflation above target rates, labor strikes in multiple industries, looming student loan payments, inconsistent consumer spending habits, and geopolitical unrest. With all this uncertainty, it's no surprise that businesses and consumer confidence is beginning to fade and overall sentiment continues to decline. Every day, it's getting harder for businesses to predict and rely on their traditional indicators to plan for the future. While the economy may not technically be in a recession, many of our clients are now operating as though we are. Given all these factors, we're updating our outlook for Q4 and guidance for the full year. Clients are scrutinizing the dollars they spend. They're focusing their attention and resources on initiatives that are urgent, essential, and will have an immediate and predictable financial benefit on their business. The impact on us is mixed. For some of our clients, This mindset is delaying decision-making or driving last-minute, unexpected changes in forecasts as they prepare for future headwinds. Conversely, for other clients, these pressures are steering them towards options like offshoring, process improvements, and technology innovations, all areas where T-TECH excels. While the current dynamics may be temporarily uncertain, We maintain our conviction that CX is a business imperative, a brand differentiator, and will be a strategic driver of growth and profitability for decades to come. Although the sector is currently somewhat challenged, I want to reiterate our confidence in the attractiveness of the market opportunity, our differentiated capabilities, and our strategy to drive T-TECH forward. We are navigating this environment thoughtfully and will continue to balance our focus on innovation with operational and financial rigor. Shelley will share more details shortly. Now on to a discussion around AI. Last quarter, we outlined our AI strategy across both T-TECH Engage and T-TECH Digital, and we're making good progress. Market interest in AI remains high. However, implementation has been primarily limited to pilots, Many clients see the potential benefits. However, they currently lack the technology infrastructure, data readiness, and confidence that these initiatives can scale in a cost-effective and reliable manner. The findings of our recent AI benchmark study reflect the current limited state of market and client readiness. For example, one, for businesses to unlock the full benefit of AI, they must move to the cloud. Almost half the respondents to our study expressed concern about their technology platform readiness, and only a small fraction are operating at a scale in the cloud. Number two, the ability to understand and act on insights from conversational intelligence is essential to achieve the right balance of automation and human interaction. However, close to 75% of the respondents site issues around data quality, and customer privacy as current barriers to their success. And three, while new generative AI-enabled tools are emerging daily to augment associate productivity, only a few of our study respondents have even begun to pilot capabilities like proactive knowledge management, AI-generated response, and real-time coaching. It is clear that that the initial hype and early excitement around AI is moderating. As clients look beyond pilots, they're discovering that they need deep and practical CX expertise, like ours, to put these new AI-enabled capabilities to work. Through T-TECH Digital, T-TECH Engage, and our deep partnerships with the hyperscalers, we're uniquely positioned and ready to capture the opportunity as the market and technologies continue to evolve and mature. Now, let me briefly update you on several other key initiatives. We continue to expand our geographic footprint to provide clients with a variety of high-quality, lower-cost solutions. We've been operating on five continents for decades, and we continue to grow. Year to date, we've expanded to eight new offshore locations, with more on the horizon. In addition, through T-TECH Digital, we continue to broaden our global delivery capabilities, particularly in India, doubling the size of our Hyderabad engineering team since the start of the year. Our strategic relationships with the premier CX technology partners continues to grow stronger, stickier, and more valuable. With preferred status with all the CX hyperscalers, we're working together to pioneer new AI-based solutions, accelerate market adoption, and expand our global reach. For example, given our extensive public sector experience, we're working with one of our hyperscalers' strategic partners to help them navigate the complexity of public sector operations. Our engineers are supporting them in the development of their comprehensive roadmap for FedRAMP certification. For another hyperscaler, we're working side-by-side to architect next-generation AI-enabled workforce optimization capabilities for their CCaaS platforms. Before I turn it over to Shelley, I'd like to share a few closing comments. There is no doubt that every business, including ours, is operating in a rapidly changing and complex environment. However, it's important to emphasize that over the past 41 years, T-TECH has successfully navigated challenging economic cycles and technological disruptions before. Because of our trusted relationships with clients, market reputation as an innovator and leader, and the dedication of our employees across the globe, we've emerged stronger every time. As we move ahead in this climate, I'm confident in our leadership and go-forward strategy. Our focused approach will continue to enable us to deliver valuable CX outcomes for our clients, differentiated experiences for their customers, compelling career opportunities for our employees, and improve financial performance for our shareholders. And now, I'll hand it over to Shelley.