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.

So I think not just Jorge is excited, the entire group is excited. I think it will be a great addition for the company. And as he indicated, he brings three key components that are critical for the group. a deep understanding how AI works in enterprise environments, which is absolutely critical for our journey ahead. Secondly, he has a strong proximity to existing and potential clients of TP, understanding their need, understanding their environment, having these relationships, which I think is super critical also for our path in the future. And thirdly, obviously giving his background, he has a strong analytical mind and sort of will shape the strategic path for TP in the years ahead. I can also, he's not with us today, but also I can only praise our new interim CFO. Benoit Gabel has been a deputy CFO for TP for some years now. Before he was advising the group, he was a partner at EY. He is an absolutely excellent person. We are very excited that he will sort of step up into this new role and will support Roche from the financial side. Also, as I said, it's not just the executive management team, but also the board is renewed and has co-opted today Four new members, three of them immediately, Sheikha Hanadi Bin Nasser El Thani, a very renowned Qatari entrepreneur, investment business leader. We are very excited that she brings her expertise, her network into the board realm for TP. She has strong expertise when it comes to investment and the investment in capital markets. Secondly, Ingrid Johnson, she's a South African lady, also with a broad understanding about capital markets investment, but also the banking insurance space where she led several companies. So quite excited for that sort of additional expertise on the board as well. Jorge Amar will join middle of March. And as I said, I'm very dedicated to the group, and I'm excited to continue the journey with the group in this new role as well. Of course, all of these co-optations are subject to the shareholders' approval at the meeting at the end of May. Now, let's look at the numbers, and Olivier will guide us through.

Thank you, Thomas. Good evening, everyone. I'm happy to present you the 2025 figure. As mentioned by Thomas, I do believe and we do believe that we have delivered very good year despite this global challenging business environment as you can see here you have the full pnl but before commenting in detail i just wanted to highlight three topics the first one that that was unexpected when the year started the macro environment has been difficult all along the year and the growth that you know different market was probably lower than we expected Secondly, we had a fixed environment that was not really exactly what was supposed to happen. For you, I remember that we start the year with a dollar that was at 1.03 to a euro and finish it at 1.17. So it has been a global wash all along the year, especially in the H2. We will come back in a minute to that. That was not exactly the plan. And lastly, the impact of the Trump administration policy on our major business, of specialised service, and I was thinking of course of LLS, has also an expected impact on the growth that we were supposed to deliver this year. But beyond that, despite that, we have been able to post a sales figure of 10.2 billion, 1.3% like-for-like growth, excluding in-pay inflation, and EBITDA, which is above 2 billion, and EBIT, before non-recurring marketing, close to 1.5 billion, 1.1 billion and 485 million, aiming to 14.6% rate to sales versus 15% last year. I'll come back to explain where come from the difference. Finally, the operating profit is roughly equal to last year. We will see why. We've been able to reduce tax charge significantly and our net profit is roughly the same than last year. As you can see, this is a 40 basis point difference in EBITDA margin, of which 20% of it is coming from the FX. Let's have a look to the figure of sales first. The first thing to tell is that, of course, when you start to have a look to the figure of last year, you start with 10.3 billion, and you have a currency effect of 362 million, of which 240 came in the second part of the year, so you had a 50% increase of the negative impact in the second part of the year, that was significant. So when you start to look at the precise figure of the way they have been built, you have of course the change in scope of consolidation, which is a consolidation of ZP Beta together you remember that we bought this company last year and we consolidated early February 2025 and we had also a small company called Agent Only that came on board early July 2025 so you have a positive impact of scope of 196 covering the decrease of specialized service 132 that was mentioned by Thomas some minutes ago, of which most of it is coming from this UK contract that we have not been able to renew last year. That has a big impact on ourselves, 140 million to be precise. And beyond that, the core service activity has been able to grow by close to 3%, 2.7%, which I believe is beyond the market figures that we will get in some weeks from now, showing that this group has been able to continue to deliver significant growth in different markets. It was mentioned by Thomas in the UK, in different sectors, in the public sector, in banking, where we are able to match the demand of the client. Let's have a look at what happened specifically this year. When you look at the FX environment, things are clear. you have all our currencies in which a group operates have been degraded versus last year. So it has an impact. Of course, the dollar, but not only the dollar, the Indian rupee, the Philippine pesos, sterling, everywhere. So we are facing a situation where we have not been able to cover, of course, all these translation effects that has a final impact on our mix of margin. This is an adverse ethics environment in 2025 that was significantly higher than people were waiting. If we look now to the result by sector, by zone and by activity. I would like two points. The first one is a strong EBITDA margin improvement that we have been able to do in specialist service in H2. You remember that in Q1 specifically, but also in H1, LLS has been hit by this Trump effect, if I may say. but the group has been able to react quickly and to adjust its course quickly to match the global demand. So the demand is flat, the volume is flat in specialized services, notably in LLS, but we have been able to recover significantly the margin, and we have just a small negative effect for the full year that is going to be positive next year. again with LLS given the measures that has been taken all along the year 2025. When it comes to core service, there are two issues to have in mind. Of course, the FX impact, which I just mentioned, is very significant. And the group decided to put some money, some investment in AI, in IT technology, that has been, I would say, spent notably in holding, as you can see on this table, to... to support the future growth that was absolutely needed for the future. So all in all, the result in... in margin are not dramatic, if you look at that. They are much more positive. If you look what happened, you have, versus last year, an impact of specialized service that is roughly neutral. Of course, we have lost 70 basis points with the TLS contact impact, notably the UK contract. That has been covered by two things. One is the acquisition of ZP that came on time and that has been made on time accordingly. and also by the mixed effect linked to the work that has been done all along the year with the LLS to improve the margin. So all of that, meaning that the cost on a specialized service, the impact on the margin is neutral, and we have been able to swallow all the impact of the TLS contract that we lost. Beyond that, you have the 20 basis points that are linked to the FX roughly, and you have the 15 basis points which are the costs related to AI, notably spent in holding, as I mentioned earlier on. So I do believe this delivery of EBITDA margin is really good and shows how the group has been able to adapt to this global environment, either in terms of demand for LLS or either in terms of adverse FX condition across the board. If we now move to the other part of the result, what we can say is that the amortization of intangible assets are flat versus last year, and the non-recurring items are a little bit better than last year. You remember that last year we had a significant amount of money that was spent to deliver the synergy from Majorelle, of course this year significantly less, but we have been obliged to get out of some countries, of course Russia, that was one of the actions that we did all along the year, but also two other countries like Guyana and Trinidad where we wanted to get out. besides that we have been careful on the impairment of some assets notably on PSG which is a recruiting activity that we bought four years ago and where we are really, I would say, cautious on the future market for 2026. And we thought it was clear better to be cautious and to impair at least 60 million, 67 million for this business. It doesn't mean that the business is not good, but we are very, very careful here. I remind you that this impairment of goodwill has, of course, no impact on cash. So the operating profit is roughly flat, 1.55 billion versus 1.82 billion last year. And when you look what's happening on the final part of the P&L, we have been able to... maintain our net financial charge at the same level despite the fact that we have an outstanding debt that was increasing in the year. But, of course, last year, you remember, we had a very, very positive edge impact coming from the devaluation of the Egyptian pound. That didn't happen again this year. The impact of this edge was 50 million. That is not happening again. So, besides that, we are flat in finance costs. What is interesting is that we have now mostly finished the integration of Majorelle and we have been able to reduce significantly the accounting tax rates. The impact is 56 million improvements in 2025 versus 2024. And we have still more things to come and the full year effect of the decisions that we took and implemented in 2024 and 2026. That's the reason why we believe that in 2026 our tax credit will be below 30%. Beyond that, very few things to tell that we are roughly at 500 million at net profit level versus 523 last year. Remember, we impaired 67 million from PSG. That has a big impact on the net profit. More interestingly, and it was mentioned by Thomas a minute ago, is a strong free cash flow generation. You remember that was a question about our ability to deliver a free cash flow for the full year following the performance of H1 that was hit by some one-offs that were, I would say, exceptional. We have been able to deliver the best cash flow that we ever had in the second part of the year in 2025. $642 million versus $636 million for the previous year. We did that because we manage strongly the working capital management or working capital as expected. But we did that without cutting the capex. And that is absolutely key. We continue to invest reasonably, but clearly in some place where the demand is rising, notably India, South Africa, where the market is asking for site and for volume. So we increased... or capex to 2.4 sales through the sales this year. So at the end of the day, the free cash flow is at 900 million, 9001, keeping in mind that we have to pay. Of course, you remember that we have the French restructuring plan, the voluntary restructuring plan that was partially paid in 2025 for 25 million out of the 31 that are shown here. and of course will continue to be paid in 2026. So as a whole, strong free cash flow generation, I know it was a concern about the market, but the company continued to deliver its strong free cash flow and will continue to deliver its strong free cash flow. If we now move to the situation of the group in terms of balance sheet, As you can see, we have been able to stabilize the debt roughly, below two times the net debt to EBITDA, while returning to the shareholder 42% of the free cash flow through dividend and share buyback, and continuing to invest in business, I just mentioned it a minute ago, but also acquiring ZP and establishing some AI partnerships that are going to be the promise for the future. So all in all, we continue to have a strong balance sheet while continuing to develop the business. And when you look at the indebtedness, there is no reason to be afraid. We are triple B rating as standard S&P. We have launched, I remember you that we launched early last year, a bond of 500 million that has been easily covered by the market. And we have a debt that is, I would say, balanced between the financing source and by nature of rate. To be clear, the group has the ability to reach, to have access to LITI between 3 and 4 billion euros easily through commercial paper, through medium-term bonds or banking facility. So the average cost of the debt is below four. We have an average maturity which is around three years, and we are absolutely confident about the ability to continue to finance and support the business and the growth of the business in the future. That's what I wanted to tell you. I'm holding back to Thomas for the strategic part.

Thanks, Olivier, and thank you also because this will be your last presentation to present in your results after 16 years with the company. So a big thank you on behalf, I think, of the entire board, the entire organization for this wonderful sort of indecisive action over the last 16 years.

Thank you.

Let's look at... And I'm in the interest of time quickly as an update on future forward that you see where we stand and what will be continued. So, as I said, the Value Creation Office for Future Forward is in place, hundreds of initiatives activating. I brought for today's presentation, as promised last time, four examples to give you a little bit of a flavor, where do we stand and what is happening, and to have a little bit more tangible view on these growth levers, transformation levers, as well as efficiency levers. Internally, as we talked about, we see three big levers on driving change in the organization. Of course, leveraging AI in everything we do internally when it comes to recruiting, training, workforce management, supervisor, quality, but all corporate function, if you will. An AI adoption allows us to reach another level of quality, but also efficiency. Hand-in-hand with this internal AI transformation goes the cost optimization, addressing structural changes through de-layering automation on our SG&A and our overhead parts, as well as on our direct costs as well. many, many plans in place now that are being implemented and that allow us to drive the savings that you see below. And thirdly, that is part, obviously, of the new leadership role with Roche to find a simplified organizational redesign and to choose some lever there to have a more agile, leaner organization. Overall, for all of these three levers, the current expectation is that this will deliver above $100 million run rate savings, and we expect a one-time cost this year, of course, depending on negotiation on some of the levers, between $70 million and $90 million. These plans are already in action. If you look at our annual results, you see that in January, February, we have the first measures announced with a corresponding cost of 56 million. So it is happening, it's being implemented, and it will be continued seamlessly also by HOCHE in the future. So this is on track and in execution. Second one, transformation. All of you remember this chart that I presented in Q3, that we as TP believe AI is not a piece of software that is being sold. It is an incremental part of our operating fabric. to drive outcomes for our client. This is true on the functional side, so industry agnostic, and we have made good progress on some of our functional solutions, as you see later, as well as of the industry solution side. You need to orchestrate, like we do today with TOPS and BEST, the human dimension. You need to orchestrate the AI dimension as well, that it really can unfold as ROI and impact for our enterprise clients, because otherwise it's just a nice demo, but not really something delivering value. For this, we have started, as you remember, our Capital Markets Day, our Q3 presentation, TPI Fab, our foundational AI backbone. We have launched more than 500 AI projects this year, integrating what we have done in the past into our new solution seat and really driving impact for our client. the biggest impact because there we had a head start in the past is augmenting with ai our existing human delivery engine there we have seen more than 270 projects last year of doing this human augmentation but we also started to see some traction on FabConnect, which is basically orchestrating human and agentic AI, FabGrowth, enabling with AI revenue as a service for our client, and FabCollect, agentic AI collection where we see a lot of potential. This is a journey that will basically carry on the next years ahead, but the foundation is laid. We are continuing to developing, and the examples are real. Wherever you look, whatever new proposal you have, whatever new When you have for a client, AI is part of our offering, is attached and ingrained what we do today, whether this is for a leading healthcare insurance company in the U.S., where we built an AI-based tool that allows faster access to the knowledge base. We won a client last year in Asia. It's a large bank where we integrated human customer support with agentic AI customers on board to manage high-volume cases. And at the same time, this orchestration between human AI and agentic AI was the winning case that the client entrusted their most treasured, valuable resource, their clients, to us with our FabConnect solution. We have won a large telco company in Latin America where we do agentic AI collection. So we can be earlier on in the billing cycle, reach out with an agentic collection tool, and then hand over in complex cases to a human. And this is an example, again, where is the value at for TP? We are knowing which AI technology is available in the market depending on the situation depending on the client lead to plug it in our processes. But as we work with dozens of different telcos in different countries, we work on many different debt collection services. We have the data now. How do you orchestrate the process to unfold the power of the AI? And we've seen great results after the implementation, actually quite recently when I visited the client. And lastly, FAP growth. 7% of our business today is sales. There we are not a cost center, but a revenue engine for our clients. And it's obvious, but it's hard to implement how AI augments our humans to drive better sales for our clients. We have started working for many high tech companies in that felt with really incredible success. And I see there's really a great momentum combining the human power of sales with the tools of AI. Maybe in the interest of time, just a quick sneak preview, and I'm sure you will see in the next years more from Jorge and the team. I really believe if you think about and sort of cut through all the noise in AI, finding the right recipe, how you orchestrate, In a world where AI is ubiquitous, the human power with the AI power is key. It's not just about load balancing. This call is done by AI, this by a human. It's about understanding where hallucinations happen. How do you design the data flow? Where does AI play a role for better outcomes and maybe a human? How do you manage this handover? We're investing quite a lot right now of building this tool, including in a responsible AI control center that can detect hallucination, accuracy problems, false answers, defines the right guardrails and really configures outcomes for the client. TP is not a company that is selling AI solution. We are a company that drives outcomes for our clients and managing the orchestration of an operating machine. And the operating machine has a human hand and an AI hand or AI leg. And doing this orchestration the right way is key in the future because our clients don't want to see a demo or buy a tool like in a software. They want to see an enterprise process managed with a measurable impact. And that's, I think, the role for TP. You will see more in the future, but it's on the move. It's being developed. It's being deployed in client places. And I think we're all around the table are quite excited about it. Then many of you asked, what is happening? Can you show us more concrete examples for sales? I talked about it. 7% of the group, 700 million is sales. We do B2B2C and B2B2B sales. Started with high-tech clients. We invested last year in the team, build it out. to not just focus on high tech block fast moving consumer goods banking telco with really some good traction we've seen high single digit growth last year we expect nothing less this year from the team and you see it's again this blend of human talent with ai and the same is true with data services for i we called it out now it's two percent of the group i think we all wish it will be a higher number but we see double digit growth with the team it's a market that is growing it is moved from general data labeling annotation based on general knowledge to way more specific needs way more specific expertise for client really combining domain expertise on certain subject area experts and bring it again for enterprises to life and having enterprise solution for medical companies, for car companies, for banking companies and combining our know-how is quite critical. We won there five new clients and again the expectation for this year is at least to continue the growth momentum we've seen in 2025. And with this, I think these two examples it shows you how the portfolio of TP is changing over time. Last but not least, outlook. As you all know, the world is uncertain, our market is uncertain. If you look at last year's numbers, we expect a growth more or less in the same range, 0% to 2%. Based on how the year ended and started into the year, we expect Q1 to be a bit softer and to be below that guidance range. EBITDA margin with all the measures remains stable at 40.6, of course, assuming no major fluctuation on the FX side. Cash flow again, 800 to 850 million, excluding the non-recurring cash outs. This is due to, if you look at this year's numbers, which is a bit higher, due to the stronger euro versus the dollar and dollar-correlated currencies, because if you think about India, Philippines, and the U.S., of course, where cash is being generated and translated to euro, the amounts might be lower given the current FX environment and the AI efficiency program that I talked before. Overall, I would say TP is in a position of strength. will remain a position of strength but needs to transform. Olivier, myself, and I know also Daniel are quite excited about the future. We're stepping down, knowing the company in good sense with Jorge, and are looking forward to any questions from the group. Ah, sorry. I think you have seen this. This is the proposal for the dividend, of course, for our investors' support. It's being up for approval in May 21 in the General Assembly. It's an increase of 7%, if I remember well, to €4.50 the share, which is an increase in line, obviously, with the position of TP we're in. And the mid-time guidance, there's no change there. With this, sorry for that, open for Q&A, and I'm sure there are many more.

Ladies and gentlemen, if you wish to ask a question, please dial pound key five on your telephone keypad. If you wish to withdraw your question, please dial pound key six. The next question comes from Suhasini Varanasi from Goldman Sachs. Please go ahead.

Hi, good evening. Thank you for taking my questions. First of all, a lot of changes. Just trying to make my way through all of that, but maybe three questions just to keep it short. When I think about the guidance for 2026, especially on the top line, can you help us understand your assumptions in core services and specialized services here and the implications that you're seeing on margins as well? The second question is on the strategic portfolio review that you have announced. I see that you've taken a few impairments below the line in the last couple of years. Is that mainly in specialized services that you are directing this portfolio review, or does it also encompass core services? And it's interesting to see some of the color that you have talked about on FAP deployment. Thank you for that. And it's good to see the benefits as well. Is it possible to help us understand the impact on contracted revenues and profits, margins, et cetera, as a result of deploying all of these AI solutions? Thank you.

Okay, let me start, and then I hand over to Olivier for some of the impairment in financial topics. First one on FAP AI. If you look at the market, Suhasini, I think it's too early to say what is the impact for the group. We're there in the beginning. It's part of the solutioning more and more. The question of course, how do you price some of these AI solutions? How do you price some of the benefits? As we move forward, as we said in the past, there are some ideas to make this more tangible, but it's too early to tell what is the impact because we are also investing in this solution at the same time in terms of margin or not and in terms of pricing model in the future. But you see there is traction, there is interest from the client. Every new offer that we have has a FAP solution inside. I would be positive to see in the next nine months some more traction granularity that provides you also some facts that you can put in the model what the impact might be. Strategic portfolio review. As also discussed in the past, of course, there's always the question on certain specialized services assets, but there is a clean sheet. Horkama has the mandate for the board to review the entire portfolio of the group. To be very clear, and as we put in the press release, including divestitures as well as including M&A. So both options are open. As I said, he has a very strategic mind. I think many of our analysts have looked at the group and he has a blank sheet from the board also to date to there do a thorough review on the portfolio of the group. Guidance, 0 to 2%. What was the question? We see a weakness. We don't, as you know, we don't give a guidance for specialized services in core. I think the story of two tails that we have seen in the past, that the core... shows higher growth momentum than specialized service is also true for 2026. I think that's fair to say. We have invested, as you know, in business development and AI capabilities on our core services, and we do expect a successive increasing momentum of our core services throughout the year, but we don't give different guidance. Maybe on the impairment, Olivier?

On the impairment, so of course we are going to continue to look at our business plan for all the business. There is no decision that has been made for 2026, as you can imagine, so we are going to look at that very precisely. We will be very, very careful, as we have always been in our business, but so far today we have no specific reason to change what we have done in 2025. What we've done in 2025 was just to be on the safe side on PSG and to a lesser extent on Health Advocate. That's it. It's not a big amount compared to the balance sheet of the group where we have 4 billion of goodwill and 2 billion of intangible assets, but we saw that in accordance with the auditor, it was more careful to take this stance.

Thank you. It was great working with you, Thomas and Olivier, over the years. I wish you all the best for the future.

Thank you, Susanne.

Thank you. Is there another question?

The next question comes from Remy Grenou from Morgan Stanley. Please go ahead.

Good evening. A few questions on my side as well. So the first one is on the organic growth guidance. Can you help us understand what you mean with a softer performance expected in Q1 based on any details on the current trading discussion with clients? How should we expect that organic growth in Q1 versus the 0% to 2% for the full year? um the second one is on your cost saving plan so um 70 to 90 million of restructuring costs this year but can you help us understand the net impact if we integrate the savings that you expect to generate as soon as 2026 and overall discussion on on the payback that you expect on on the 70 to 90 million you're investing in your structuring and the last one is probably a bit of a broader question a lot went back from from the announcement tonight so what what do you think are the top priority for the group is it about first setting the right perimeter so do the digestment and potential lemonade or first delivering on the cost saving program detailing the capital allocation. There's still a little bit of uncertainty there. So just want to understand in your mind what's the top priority in which order to understand when things are going to materialize.

So I would start hand over to Olivier, but I would ask for forgiveness that as we speak today, Jorge is still employed by McKinsey & Company. He will start with the group on March 16. We will be then available, myself and him, to go and talk to investors obviously, but till then he cannot speak for the group. And so I try to cover your question. First, guidance, yes, as we indicated in the press release, we expect based on the start of the year, We see in particular weakness in onshore markets. There is an increasing momentum for offshore and uncertainty with some clients to be below the guidance range, meaning below 0% for Q1, to be very clear. There's also the weakness with specialized services, but we expect for the group to be below one and then in continued and sustained improvement throughout the year to reach the guidance range. Second, On cost impact, we do, I think we also stipulate this in the press release, of course, subject to negotiation with the employee representations. subject to the implementation of some of our internal initiative measures the i deployment etc but we expect from the 100 million plus saving this year around 50 million to materialize and olivia can give you more details what the net effect will be for this year also on the cash side but we expect from the 100 million plus 50 million to realize this year And then you talked about capital allocation. I think also there we had the discussion today in the board. It is noted very well the request from our shareholders or for some shareholders who reached out to have an increased capital allocation by the group. And it will be considered going forward, obviously, in strong collaboration with the management. And in terms of priorities, the good thing with TP, as you know, All of the things that you mentioned at the same time. So, yes, of course, there is a strong focus on the existing business. There will be a strong focus on the transformation of the group. There will be at the same time, and that's where I articulate, a strong focus on the portfolio review. I do believe we act from a position of strength. given the situation we are in, but there is a moment of transformation for the group that is clear and there will be not the luxury to focus only on one thing.

Just to come on the selling plan, of course, the impact in 2026 will be at best neutral. We have launched all these selling plans early this year, notably in domestic markets in Europe. And we do believe that, depending on what size and what speed this plan will be developing, we do believe that it will be neutral at best in 2026. And I'm sure you have noticed that we have announced a flat margin in 2026 versus 2025. That shows that we are reasonably confident to deliver these savings. Of course, the main positive impact will be seen much more in 2027 and onwards than in 2026. All the job of the team today is just to make sure that we have no negative impact in 2026, which I believe we will be able to do.

Thank you very much. Next question, please.

The next question comes from Carl Green from RBC. Please go ahead.

Thank you very much, and good evening to everyone. I appreciate Hawker can't speak on behalf of the company or anything to do with talent performance, but would it be possible for him to give any kind of broad view around the market, potentially, just in terms of how he potentially thinks about talent? outsourcing unfolding, organic consolidation in the market? That would be the first potential question. And then just in terms of more sort of technical questions, I think, Olivier, that you mentioned that the margin guidance does include an assumed negative impact from further U.S. dollar depreciation year on year. I just wondered if you could very simply just quantify roughly how many basis points of FX headwind are embedded in that margin flat margin guidance or stable margin guidance. And then a final, again, margin question would be just, again, you've indicated that you would expect the specialised services margin to improve further in 26. Any kind of quantification around that would be really helpful. Thank you.

Let's start with the market.

Excellent. I'll start with the market with just an overall expert view, not at all speaking on behalf of teleperformance. As I mentioned before and Thomas reiterated, I will be officially with the company starting March 16th. But if I look at the market and what we are seeing today in terms of trends, there's definitely a component of the rise of the hybrid workforce. And this means just having AI and humans interacting together, sometimes AI managing end-to-end interactions, and many times AI augmenting the humans to deliver a better customer experience. So I would put that on the table as one big element that we're seeing because it informs some of the other implications. The second one that I see is there are many companies out there right now offering their AI solutions. And some people talk about an AI bubble. Some people talk about, like, hey, what is going to happen with all these companies? And I am confident that the companies that will win in that space will be the companies that have some sort of differentiation. not only from a technology perspective, but also from a data perspective, and the ability to integrate the solution vis-à-vis the humans. If we play forward the movie and we believe that, you know, in the doomsday scenario, customer care will become just a bunch of models that are owned by a software company, That is highly unlikely, and we would see then many companies returning to some sort of differentiation in their customer experience strategy that involves a combination of both AI and human. And I think that that part is something that we will need to continue tracking and seeing how it unfolds. And then I think a little bit of your question where it was going is in this space, in this market, how do we see outsourcing versus moving more operations in-house? And look, right now the market, the data that we have from external analysts is showing a slight increase in terms of outsourcing. We still believe outsourcing. Roughly that 65%, 66% of the capacity is still in-house, so there is still ample space for growth when it comes to outsourcing. And I think that companies will be looking more and more for partners that can deliver not only on the geographic footprint, but also on some of the technology solutions, the risk and compliance, the data security, as they continue to do that. So that's hopefully as much as I can share right now, but a little bit on the perspective on the market.

Thanks, Paul.

Coming on the margin and the impact on dollar on 2026, I must confess it's a little more complex than the pure dollar, because as mentioned by Thomas a minute ago, it's not only the dollar, it's the dollar linked and currency linked to the dollar, including Indian Rupee, Philippine Pesos, and the mix of this currency versus the previous year. So what is difficult today is to predict this mix. So today we have not a huge impact on the guidance on the dollar and currency linked to dollar impact in 2026 margin. There is a limited impact. depending, of course, of the mix that might change. So we will update you probably. People after me will update you about that because it's too early to tell. On the margin on specialized service, what we can say is that I'm not waiting a big change versus 2025, except that we'll probably be better in Q1 versus last year. You remember that in Q1 last year we have been, I must say... amazed by the impact of the reduction of the growth that we were waiting for. So now we are absolutely ready to do that. So we will be able to pass on this Q1 that was difficult last year in terms of margin. So probably a little bit better in margin in specialized service. Everything equal, which is not going to happen, I'm sure.

But maybe as a reference, as we also indicated in our press release in the presentation, the EBITDA margin or the stable EBITDA margin, Kaizen, assumes a 120 euro-dollar exchange rate.

What I would say is that, of course, there are uncertainties and you understood that, but what I would draw as a lesson from 2025 is the ability of this group across the board, across the different divisions, across the different countries to adjust quickly. Of course, it's easier in some geographies than in others. We have been able to adjust it, of course, easily in the U.S., easily in India, easily in the Philippines. It's more complex in the domestic European market and other markets. But what you have to keep in mind is that decisions are taken quickly. They are made thoroughly, quickly, and implemented quickly in the country. And I'm convinced that the company will continue to deliver such products such a reaction in case of of issues or specific topic this is something that i want to align because we have a system that enables us to detect quickly what's happening on the field and to react if needed as quick as possible of course there are limits to to adjust but the company is able to do so super maybe one last quick question in the interest of time if there's any

The next question comes from Nicole from UBS. Please go ahead.

Hi, Nicole.

Hi, good evening. Thanks for taking my questions. I do have a few, but I'll try to be quick. The first one is just on the revenue outlook, actually, so sorry to kind of go back there. But given the visa exit should be fully annualized, at least for the most part, and your comments about Q1 and the growth outlook in general, The implication there is probably that the LLS situation is still deteriorating. So any kind of detail on that that you can give will be great. Secondly, just on trust and safety, which I think was 8% of group revenue this year. That's down from, I think, 10% in the presentation last year, which obviously is a bit of a significant drop year over year. um i know we've all seen the headlines about some of the companies in that space maybe scaling back some of the services but i wonder if you could maybe talk about whether it is that that's driving the step down in your numbers or whether it's ai disruption or anything else and then finally just a very quick one on the one-time costs um you've indicated 70 to 19 million for 26 But then you've talked about 56 million of costs so far from measures that were launched starting January. Is that correct to think about that 56 million as sort of relative to that 70 to 90 million guide? Because obviously that's already quite a significant chunk of that budget. So it's quite front end weighted if that's the case. Thank you.

Okay, let's get started. So yes, the announcement and as you see in our annual results of the 56 million are all the announced social plans already today. So these are sort of earmarked in our annual results and is part of the 70 to 90 million. On the second question, trust and safety, we do see effects, as you rightly said, for some of our clients, and it's also linked to increased automation and AI improvements in that space. So as I indicated before, there is some automation happening with this. We called out a bit now what is really data services in that category. Remember, it was split between other and trust and safety, but it is also automation that we see in the trust and safety space, and that's why it's reducing. On revenue development and LLS, so we don't call out in particular the development on LLS or revenue, but if you look in the news and at the situation in the U.S., I think you have an idea that it was not such an easy start for LLS this year. Anything to add?

No, no, but it's far from being a collapse, just to be clear. Of course, what's happening on the political stuff doesn't help. On top of that, the weather didn't help as well, but we are not in a disaster mode, far from it. I just wanted to mention it.

I see there's one last question. Maybe we squeeze that in, even though we're a little bit over the time. From Deutsche Bank.

The next question comes from Ben Wild from Deutsche Bank. Please go ahead.

Hi, everyone. I've got two questions, please. The first is on the guidance and particularly the gap between your adjusted EBIT and your FCF guide. So the guide obviously implies adjusted EBIT close to flat or modestly up before FX. And your FCF guide implies free cash flow down 9% year-on-year. Can you help us understand what's going on in 26, the results in that differential? Is there a working capital reversal or any other one-off effect in 25 that reverses next year on the free cash flow? The second question, just very, very broadly, your valuation is implying an existential trajectory for the group over the midterm. I suppose very simply you talked about the investment opportunities and potential divestments, but more broadly how do you think about the relative returns of deploying capital organically in the group through OPEX and CAPEX inorganically through M&A versus the returning the significant cash that you generate to your shareholders?

Thanks.

So I start with the second part and then over to... No, there is nothing hidden in terms of working cap or capex or tax to be paid. I just wanted to say that we know that a significant part of our cash flow is coming from America. Of course, there is a lag between the EBIT and the cash item. So there is mostly this lag between the working cap that is you know, balance sheet as of today that would be paid in 2026, the same for the tax, but there is no specific impact. We might say that we are careful, as always, and there is uncertainties that lead us to just to be on the safe side on top of that.

And the question was on valuation. Oh, so at this point in time with the new CEO coming in, I cannot say more than what we have written in the press release. The board has acknowledged the request from Shells also for an increased return, and we'll look into this. So at this point, I ask for your understanding. I don't want to preempt any decisions being made by the new management on that front.

Olivier, if I may just quickly follow up on the FCF as a clarification point. Does the adjusted FCF include the non-recurring restructuring costs that you've talked about in the release today? Of course. Okay. Thank you.

and then i thank you also everybody for your attention your interest i'm sure there are more questions in the weeks ahead we're looking forward to answer them again welcome to the group it's a pleasure to have you on board and thank you for all the time and thank you for your interest and continued support of the company thank you very much thank you to all thank you