TTEC Holdings, Inc.

Welcome to T-TECH's third quarter 2024 earnings conference call. I would like to remind all parties that you will be in a listen-only mode until the question and answer session. This call is being recorded at the request of T-TECH. I would now like to turn the call over to Paul Miller, T-TECH's Senior Vice President, Treasurer, and Investor Relations Officer. Thank you, sir, and you may begin.

Good morning, and thank you for joining us today. T-TECH is hosting this call to discuss its third quarter results for the period ended September 30, 2024. Participating on today's call are Ken Tuckman, Chairman and Chief Executive Officer of T-TECH, Kenny Wagers, Chief Financial Officer of T-TECH, and Shelley Swanback, Chief Executive Officer of T-TECH Engage. 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 2024 quarterly report on Form 10-Q. Before we begin, I want to remind you that matters discussed on today's call may include forward-looking statements related to our operating performance, financial goals, and business outlook, which are based on management's current beliefs and assumptions. Please note that these forward-looking statements reflect our opinions as of the date of this call, and we undertake no obligation to revise this information as a result of new developments that may occur. Forward-looking statements are subject to various risks, uncertainties, and other factors that could cause our actual results to differ materially from those expected and described today. For a more detailed description of our risk factors, please review our 2023 Annual Report on Form 10-K. Before we proceed, I want to mention that our call today will not address any questions about Mr. Tuchman's September 27, 2024 proposal to the company's board of directors to take T-TECH private. As the company shared in the press release on September 30th, the board formed a special committee of independent directors to consider Mr. Tuchman's proposal, and the committee, in consultation with independent legal and financial advisors, is evaluating and considering that proposal. 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. As shared in prior quarters, 2024 is a transitional year for T-TECH. Across the company, we remain focused on our four priorities, winning new clients and continuing to execute our diversification strategy, enhancing our portfolio of AI-enabled CX solutions, improving our operational agility, and strengthening our financial performance. In the third quarter of 2024, revenue was $529 million, and non-GAAP adjusted EBITDA was $50 million. The dynamics of the CX industry and the macroeconomic environment continue to create headwinds as select clients delay decision-making and or focus on near-term cost savings. The uncertainties around the election and the Fed's monetary policies have added to this wait-and-see mindset. Despite these market realities, our teams continue to close new business. CX remains a high priority as we engage in productive CX conversations with current and potential new clients. We believe these initiatives will normalize over the course of the next six months and lead to a more attractive demand environment. We recently held one of our regularly scheduled client advisory board meetings. which included CX operational and technology-focused leaders from many of our largest clients. The conversations highlighted their business priorities and focus areas as they navigate the current environment and set their priorities for 2025. Let me share a few recurring themes. Clients are weighing the promise of AI against the necessary work required in their systems, data architecture, and CX infrastructure to realize the full benefits. Pilots are delivering encouraging results. However, expense, accuracy, data protection, and organizational readiness concerns continue to be top of mind. A more integrated and holistic view of CX processes and technology stack are a priority. Regardless of their current landscape, clients are looking for ways to get more value from their CX investments. They're focused on activating new AI-enabled capabilities, as well as building tighter integrations between their contact center, CRM, and analytics platforms. With limited near-term budget increases, clients are pursuing savings to invest in future innovation. This approach will increase operating efficiencies, improve the quality of the customer experience, and strengthen the brand differentiation. I deeply value these in-person discussions with our advisory board, and appreciate hearing what is top of mind for these CX executives and their companies. As the market continues to evolve, these discussions help validate our innovation agenda as well as uncover new growth opportunities for both of our business segments. Now let's discuss T-TECH Engage. Despite the current wait-and-see mindset in some pockets of the market, we continue to win new clients and expand our relationship and our embedded base. we are on track to meet our goal of a dozen new meaningful client relationships by year-end. These wins are strategic and diversified across industries including financial services, healthcare, and retail. As we've shared before, we're keenly focused on winning new clients that will scale profitably as we leverage our expanded geographic footprint. In addition, we continue to make progress selling new work types into our embedded base. This new business includes AI-enabled solutions for back office, revenue generation, fraud prevention, learning and knowledge services, as well as work in new lines of business within several of our vertical portfolios. For example, in fourth quarter of 2023, we launched a loan origination support program with a leading digital financial services brand. Based on our strong performance, the account has grown to hundreds of associates delivering five different work types, including care, quality, tech support, knowledge, and workforce management as a service. Another example includes a recent win with a long-term healthcare client. This exciting new opportunity extends our footprint into the provider market with patient access and back-office support services. Increasingly, our new and existing business opportunities are offshore and leverage our expanded geographic footprint. The headcount in our new geographies has scaled 43% from the second to third quarter of this year. In addition, more than 60% of the annual contract value of our five new client wins this quarter will be delivered offshore. While we're excited about this trend, it is important to note that the deal size of our offshore contracts are initially smaller, As illustrated in previous examples, these relationships have the potential to grow as we introduce new work types into the account. Our focus on innovation continues to be a priority with an emphasis on practical use cases and applications. Our product and engineering teams have built a deep understanding of the evolving AI landscape for CX and have prioritized our roadmap based on what solutions are ready today and what will be potentially viable in the future. Above all, we're focused on delivering solutions that can be implemented successfully and will return a positive ROI for our clients and our business. Let me share a few examples. The ability to process call and digital transcripts at scale using AI is fueling operational efficiencies and revenue growth opportunities for our clients. Insights gleaned from real-time customer interactions are delivering benefits across multiple industries. These benefits include improving coaching effectiveness in e-commerce, identifying customer journey pain points in luxury retail, and accelerating sales in automotive. We anticipate the impact from these insights will continue to grow as pilot programs move into production with our clients. We're also making progress with voice and digital language translation as the quality of these AI-enhanced services rapidly evolves and improves. We're developing native language translation tools to meet our clients' practical use cases and cost requirements and see language translation as a substantial area of future opportunity. Now let me switch gears to T-TECH Digital, where we create value at the intersection of contact center, CRM, AI, and analytics underpinned with software engineering and led with consulting. As the CX technology landscape continues to evolve, clients are leaning into our deep CX expertise to help them navigate their path forward. Here are a few highlights. We're on pace to close more than 60 new strategic clients in 2024. These clients typically begin their relationship with us in one specific CX solution and have the potential to expand with adjacent services. More than 75% of our bookings last quarter were with existing clients who were choosing us for additional CX solutions. Year-to-date through September, the total number of clients with revenues greater than $1 million continues to grow, and our recurring revenue has increased quarter-over-quarter and year-over-year. While we've made progress, we also faced some headwinds in the second half of the quarter with delayed decision-making by clients on several of our larger deals. our digital professional services revenue, was lower than expected in the third quarter. As many of our current clients complete their contact center cloud migrations, they're considering the next CRM, contact center, or AI investment. As I mentioned earlier, while clients are enthusiastic about the potential of AI, they must address data and organizational readiness before they commit to full-scale rollouts. To provide clients with a low-risk environment to test learn, and deploy their AI solutions, we built a technology innovation environment we call Sandcastle CX. And when combined with our technology management approach called Surround CX, we're providing innovation and continuous technology optimization so clients can easily create, change, tailor, and evolve their cloud-based AI CX platforms over time. This year, approximately 45% of our top 100 clients have deployed well-defined AI projects with us. These projects are yielding positive results and are making the case for full-scale implementations. Our ability to help clients integrate their myriad of technology solutions and activate relevant AI capabilities continues to set T-TECH Digital apart. For example, we closed an exciting new opportunity with a professional services firm using our enterprise knowledge engineering and content intelligence solutions. This three-year CX engagement includes a comprehensive overall and reclassification of all the client's unstructured data so it can be used for various CX and AI applications. For a global technology integrator, we modernized their CRM systems and created a data-driven sales optimization solution that serves 1,700 sales executives in 62 countries, With a 92% adoption rate, the program has delivered over 150,000 new sales opportunities with substantial increases in data accuracy and win rates. And with a large media and entertainment client, we're in the midst of a multi-phase transformation in which we're migrating over 4,000 on-premise contact center associates to a cloud platform. Once that phase is complete, We will be launching several AI capabilities, including self-service bots, agent assist, and analytics. These are just a few of the many AI-enabled transformation initiatives underway. Through our ongoing partner diversification strategy, we've added new capabilities to our portfolio of CX solutions. We're excited about the growth in these new partnerships and are now selling and implementing projects with all of the leading CX technology platforms. Before I hand it over to Kenny, I'd like to recognize and thank Shelley Swanback for her many contributions to the company over the past two years. As we previously shared, Shelley has made a personal decision to leave T-TECH at the end of this year for health reasons. She will be missed, and we wish her all the best as she takes a well-deserved break. Supporting a smooth transition, I'd like to formally welcome John Abu to our company as president of T-TECH Engage. A 27-year industry veteran and proven leader in the BPO space, John joined us several months ago and is already making a material impact. A great cultural fit, John brings both growth and operational expertise to his role, leading our engage, go-to-market, and operational teams. In conclusion, while taking more time than expected, we're prudently working through various challenges during this transition year. We are executing against our top strategic priorities while also taking the necessary cost reductions and profit improvement actions to strengthen our balance sheet and return the company to long-term revenue growth and increased profitability. As a management team, we're focused on our path forward and are actively executing on our strategy and improvement initiatives. On behalf of the Board of Directors, our leadership team, and our employees around the world, we look forward to continuing to share our progress in the quarters to come. I will now turn the call over to Kenney.