TTEC Holdings, Inc. Q4 FY2025 earnings call

2025 was pivotal for T-TECH, meeting financial commitments, improving balance sheet, and fortifying AI-enabled CX leadership. Deepened relationships with large clients, strong sales of new 2025 business lines, attracted new clients with AI-forward solutions. Strengthened strategic tech partnerships, increased AI solution penetration, and invested in team earning Great Place to Work certification in 15 countries. Discussed macro environment impact of AI on CX, noting transformation needs long runway, system sprawl, cultural adoption bottlenecks, and tech value reliance on consumer trust. Announced key management appointments: Alfredo Rizzo as CTO and Ramki Desireju as COO of T-TECH Digital. Digital CX and Digital segments made progress, with digital focusing on profitable growth, optimizing contracts, and strategic transformation.

Engaged Segment: 2025 full-year revenue was $1,670,000,000, a decrease of 4.6% y-o-y; operating income was $101,000,000, or 6.1% of revenue, an increase of 18.8% y-o-y with margin expansion of 120 basis points. Fourth-quarter 2025 revenue was $444,000,000, a 1.8% decrease y-o-y; operating income was $36,000,000, or 8.1% of revenue, an increase of 62% y-o-y with margin expansion of 320 basis points. Digital Segment: 2025 full-year revenue was $469,000,000, an increase of 2.2% y-o-y; operating income was $54,000,000, or 11.5% of revenue. Fourth-quarter 2025 revenue was $125,000,000, a 9.2% increase y-o-y; operating income was $12,000,000, or 9.4% of revenue. A $193 million non-cash goodwill impairment charge was recorded in the digital segment due to market dynamics.

2026 full-year guidance: consolidated revenue expected to decrease ~5% to $2,030,000,000; adjusted EBITDA expected to increase 7.6% to $230,000,000; non-GAAP operating income expected to increase 9% to $169,000,000; non-GAAP earnings per share expected to increase 9% to $1.19. Engaged segment expected to see ~4% revenue decline, focusing on profitability growth; Digital segment expected to see 8.4% revenue decline, with growth in digital professional services offsetting some impact.

AI overhang affecting valuations, goodwill impairment risk due to market changes, market shift away from traditional CCAS solutions impacting digital segment revenue mix, regulatory constraints limiting offshore shift for certain onshore business, and potential AI commoditization pressure on pricing.

Q: Ken, you said nearly 100% AI adoption by enterprises by year end 2026. Can you elaborate on ongoing work with customers to deploy AI?

A: Refers to internal tools to empower associates, assist with low-value transactions, moving towards outcome-based pricing.

Q: How do you expect revenue mix to shift between project-based and recurring?

A: Focus on digital to have ~50% recurring revenue, Engage to have more technology-infused turnkey offerings tied to outcomes.

Q: Can you size onshore revenue at risk from offshore mix shift?

A: Majority of onshore revenue in regulated segments (healthcare, public sector) can't be moved offshore due to regulations.

Q: How are you defending against enterprise clients pushing to pass on AI savings?

A: Not currently encountering pressure, but plan to share upside of cost savings from AI-driven low-value transaction automation.

Q: To what extent are you benefiting from consolidation?

A: Expect consolidation to accelerate as clients reduce number of partners, with scale players like T-TECH benefiting from their technology capabilities and geographies