Teleperformance Ord

Welcome to TP2026 first half 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 Jorge Amar, CEO. Please go ahead.

Excellent. Good morning, good afternoon, good evening from wherever you are joining us. Welcome to the Q2 and the first half results update call for TP. Today I'm joined again by our Interim CFO, Benoit Gabelle. And without further ado, I will jump straight into the key messages for today. And of course, we will be happy to take the questions at the end of the presentation. So with that, as always, our remarks in terms of the representation of our financial figures and with that, I'll go straight into the key highlights for us. So we are very excited given the results that we come today to share with you. So the first one, it is the sequential improvement quarter over quarter on our like for like revenue, going from minus 2.2 in Q1, where I last talked to you all, to minus 1.2 in the second quarter. And we're going to dive deeper in a little bit around the trust and safety vertical that I also started updating you all in the last call. Without that, we are happy to report that we would be growing at a 1.7% like for like, especially in our core services division at a 2.3%. and there you see also some of the key numbers that Benoit will go in more detail in a bit when it comes to the performance of both core services and specialized services. We're also happy to report that our EBIT A number is stable first half versus first half of last year, mostly through the actions that we have started executing in terms of our SG&A control, Our internal AI efficiencies program that I will update a little bit more in a few slides. We're also happy to report that our net free cash flow before restructuring costs is above what it was last year in the same period of time, raising at around 299 million euros. I will give a little bit more update later when it comes to our detailed transformation plan, but we're happy to report the growth that we are seeing already in some of our specific verticals that we are focusing on. AI data services, data notation, data labeling, the same with some of our outcome-based type of lines of business, mostly a revenue as a service. And we're seeing the commercial momentum that is building up Not only of our human workforce, but also of our hybrid workforce powered by TP.AI and the entire set of solutions that we are building. We are confirming our guidance for 2026 And we're also updating our target for our savings plan in terms of efficiencies, both from SG&A, internal AI, and many other actions that we are taking, increasing the savings rate From 100 million euros plus that we told you the last time to somewhere between 150 and 170 million euros. And of course the corresponding impact on some of our restructuring costs increasing to around 120 to 140 million euros. If I dive deeper for a second into core services, I told you about the sequential improvement and the momentum that we are seeing in some of our verticals. We're seeing tremendous traction in the market when it comes to our AI-powered solutions. We are seeing them with our tech clients, with our banking clients, with our retail clients. So we're really seeing the momentum that everything that the team is building and working on is getting. The same on the work that we are doing in our revenue as a service vertical. We are now partnering with many of the AI companies and technology companies that are trusting on us the development of their small and medium business or mid-market strategy where we have unique expertise that we have developed over the years. and where we are investing some of our AI capabilities and team behind that. And the same, I always get this question, but we continue to see healthy growth in our care line of business that, as you know, represents still more than 50% of our revenues. And we continue to see that on the back of vendor consolidation that we continue to see in the market, on the back of our strong delivery and operational capabilities. So more to come and unpack as I later give you more details on where we are. If I now switch quickly to specialized services, there you have the number of a like-for-like growth for the first half, but I would like to focus on the two other columns. The first one is the impact on the revenue excluding the impact of our one-time hit on our visa contract that was not renewed for TLS, which shows the minus 1.7. But most importantly, and you will see it now as Benoit walk us through the profitability numbers, we have seen an increased profitability in specialized services coming from an internal synergies plan that we have put between specialized and the core services so our specialized services unit mostly language line solutions is leveraging some of our people in the core services and as such we need to report the net revenue numbers but if we were to express them in gross we're seeing actual growth in the first half for specialized services on the back of the strength of our solution, the strength that we are seeing mostly in our healthcare, public safety, and financial services verticals within the interpretation and translation vertical business, some of the AI solutions that we're already deploying when it comes to exactly this type of activity. And we're also very, very happy to see TLS reporting growth mostly in Q2, and we have also been awarded a significant contract for the TLS operation so congratulations to our TLS team that has worked so hard over the last few months to return to growth and get TLS back in a path of profitability. So with that, I'm going to pass it on to Benoit to walk us through the specific numbers and then I will give you a little bit more of the strategic update. So Benoit, all yours.

Thank you, Jorge. Good morning, good afternoon, good evening for everyone. We will start by looking in more details into the revenues for this year. As you said, we report a minus 4.5% growth for our revenues. The biggest part of that reduction comes from a currency effect, but the impact is significantly smaller in Q2 compared to Q1. The driver for that variation is essentially linked with the variation of USD against Euro and INR against Euro. Now, if we focus more on the performance of the operations, as you said, we have a minus 1.7% like for like revenue growth between H125 and H126. The biggest part of impacting our revenue is effectively coming from trust and safety because when we exclude the trust and safety for the reasons that you mentioned and that you will elaborate further after, we would be growing at group level at plus 1.7% for the H1. Then we have a small impact that we already discussed at the end of Q1, linked with our variation of perimeter, essentially the acquisition of ZP last year, that started to be consolidated in February, and then the disposal of our TP Russia subsidiary at the end of the year. If we focus more into the breakdown between core services and specialized services, we see that for core services the growth has been minus 1.3% like for like with a significant sequential improvement in Q2 compared to Q1 from minus 1.7 in Q1 to minus 1% in Q2 and we expect that to continue in the coming quarters. This is mostly driven by AI-powered solutions, some back office, and also our sales collection business, which are value driven. If we now look at the growth of core services standalone without the impact of trust and safety, the growth would have been of plus 2.3%, effectively demonstrating what you said, which is a very good growth of our care business and of our business lines of the future. Specialized services, I think you said most of the important aspects that drive the revenue. Important to note on the technical point that you made about the impact of our synergies. We are effectively starting to build further synergies between specialized services and core services, meaning we transfer from external parties some delivery into our operations. and we recognize the revenues, we allocate the revenues where the operations are delivered. So even though this is revenues coming for LLS towards the client of LLS and part of the business of LLS, the share of revenues that is delivered and supported by the core services, that additional part is reported in core services.