Teleperformance Ord

Welcome to TP 2025 Annual Results Conference Call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to Thomas Mackenbrock, Deputy CEO. Please go ahead.

Good evening, everybody. Welcome to our 2025 results presentation. And as you have probably seen, we have a lot of news to share. As always with me in the room is Olivier Rigaudi, my dear colleague and CFO of the group. And we have a special guest today, Jorge Amar, our incoming new CEO for the group, who will present and introduce himself later today. But let's first have a look at the agenda for today's call and what we will cover in the next 50, 60 minutes or so. First, I will give you an update on the key highlights of 2025. provide a strategy update of where we stand today with the implementation of our future forward plan and an outlook for the future. Olivier, as always, will cover in detail the financial results and at the end we have ample space for Q&A. Let's look at the key highlights and let's focus first on the financial aspect and then talk about in a second step about some of the strategy and government changes we're seeing. 2025 has been a turbulent year for the world and for our industry, but we at STP have delivered solid results. And as you have seen in our press release, we have met all our updated 2025 objectives. If you see on the group revenue, we're reporting again a bit over $10 billion in net revenue, and we have grown on a like-for-like basis, excluding the hyperinflation effect of 1.3%. If you exclude that 1% on a reported basis, giving the weak U.S. dollars minus 0.7%. It's particularly noteworthy, and we talked about this in our Q3, our H1, and our Q1 presentation, that our core services are a stable growth momentum and a stable growth anchor for the group with reported 2.7% like-for-like growth, which is remarkable in this environment, while at the same time our specialized services division faced some unique challenges last year. On the profitability, again we delivered our updated 2025 guidance. We have reported an EBITDA of almost 1.5 billion with a margin of 14.8%, excluding the currency effect, which means on a reported basis, 40.6%. And this also translates into a very healthy net free cash flow. If you exclude the non-recurrence of over 900 million, and we had a record cash flow generation in the second half of the year with more than 640 million. So we are quite proud about the results in 2025. And when we look at 2026, we provide the following guidance. For this year, we expect a growth rate, again, between 0 and 2%. but given how we started into the year and how we ended last year and given some of the uncertainty in particular in the core onshore market, the US and continental Europe, we anticipate for Q1 a revenue development which will be low the annual guidance. Secondly, And you will see later in detail some of the measures we're implementing. We also expect a stable EBITDA margin, which means 14.6% on a reported basis. That assumes a dollar of 1.20. The net free cash flow generation is expected to be this year slightly below last year, giving the strong euro. And so we see here a range between 800 and 850 million, excluding the non-recurring items. And our proposal, we just had the board meeting this afternoon to the annual shareholders assembly at the end of May, is to increase the dividend from 4,20 to 4,50 per shareholder. That's on the financial side. Let's take a look on some of the governance and strategy updates. So we are very happy sort of to announce the long-awaited process of our governance change. The chairman, Mulea Feed, Danielle, the founder, and Sion, myself, has recommended to the board, and the board sort of followed that recommendation to appoint Rocha Amar, who's a very world-renowned AI expert and leader of McKinsey's global customer service practice, to be the new CEO of the group. He will start officially March 16th. I've known Jorge for quite some time, and I'm very excited that he steps into this role. This also means naturally that Danielle, myself, and Olivier will step down a day before. Danielle will also step down from the board of directors. And we also at the same moment to really make sort of the governance renewal complete, also co-opting to the board for new members. One will be Jorge starting middle of March, sort of stepping into the role of Daniel. Myself also, I will continue to support the group that is very close to my heart, but then in a different role as a board member. And two very exciting new board members who have been co-opted and are then up for the approval by the shareholders assembly at the end of May. One lady from Qatar and one lady from South Africa which I'll explain later, her qualifications. So that's really, I think, quite exciting news. There have been many discussions over the last years, when will this happen? I do believe we have there the right team on the start, and I'm excited sort of to support this group in this new role, in particular Jorge and his new task. Then future forward. We launched this initiative last summer. You saw in Q3 a quick update. We are now in full swing and 2026 will be the first full year of implementation. We have really mobilized the organization with hundreds of different initiatives. And as I explained and hinted towards in our Q3 presentation, we are working strong on essentially three levers. We want to accelerate the growth. We want to drive efficiency, also leveraging AI, and we want to transform the company. And we are making sort of good steps on all three elements. And on the internal AI efficiency, we are starting a program as we speak that will drive efficiency savings for the group targeted to be over 100 million in 2026. We have launched more than 500 AI projects last year and expect it to scale further with our TP.AI strategy. And we are also happy to share that also under the new governance, we are launching a comprehensive strategic portfolio review of the group. So a lot to be discussed. Let's quickly look at the highlight numbers. I think no surprises here for the audience. Of course, happy to answer more questions, but we see the strong core services that we saw throughout the year. There has been a little bit of weaker momentum in Q4 that we anticipated in our November presentation. What for me particularly positive is to see the momentum in the Americas. As you remember, it was a bit negative before, but we have seen an excellent development in India as well as Latin America. And given the strong momentum, we are reporting growth of 1.4% like for like in the Americas. In the EMEA, again, very strong with close to 4% in 2025. We have seen great momentum in the U.K., South Africa, Egypt, APEC as well, sub-Saharan countries. So they are across the board a very strong momentum, while also a bit subdued in Q4. Specialized services, on the other hand, you know the challenges on the non-renewable of the significant visa contract and the market environment for our specialized services in the U.S. So from that perspective, a bit more than minus 9% like-for-like growth. If you adjust for the effect of the visa services contract, we have, as indicated and as expected, a slight positive like-for-like growth for specialized services. But important to note, yes, the momentum has been reduced, but given all the measures we have taken last year, we have proven to maintain a strong profitability. There's only a slight decrease of this highly attractive business. Second comment, again, in times of uncertainty, having a broad client portfolio is key, and giving our broad exposure to multiple different industries has been and will be a strength of TP. For 2025, we continue to see strong momentum, public sector, fast-moving consumer goods, and strategically very important, the strong sector of financial services and insurance. This really has been sort of supporting the growth last year. We saw a bit of low activity automotive and energy utilities last year. Also, the portfolio, we talked about it a lot. TP is not a company that stands still. over the years always have been able to develop new business lines and build out building on its capabilities, new services line, along with our articulated future forward plan. And you'll remember the presentations last year. We have seen strong growth momentum in AI data services, and we call this outdoor for the first time. We have seen very strong high single-digit growth in sales, which is 7% of the group and which is a critical factor to provide revenue as a service for our clients, and also very strong momentum, double digit actually, in our back office and BPO related tasks, which is important to sort of have an end-to-end service chain for our clients. Trust and safety has indicated resource and revenue decrease. There is some automation happening on our client side. And care overall broadly in line with the overall core services growth. So also healthy development, but changing the way we operate for our clients. Now, a quick update to our platform. two new executive managers um as i said very happy i got to know him very closely really now for quite some time he has been working with the group for quite some time but why don't you introduce yourself to the audience and to our investors

thank you very much thomas and thank you for the warm welcome into into the group um today is not the day to speak at length as i will officially become the the group ceo starting march 16th but it's a quick introduction for hamar i was born in argentina but most of my professional career has been in the us where i've worked with some of the largest companies in topics around customer experience and service operations and in particular over the last few years on the topic of artificial intelligence, not only from a technology perspective, but also how to think about consumer and employee adoption. So all this feels like the right combination of things that are leading me now to be very proud in joining the group. So, again, more to come starting March 16th, but very, very excited to join the group.