TTEC Holdings, Inc. Q1 FY2026 earnings call

Key managerial messages include: Maintained focus on strengthening foundation and investing in AI-enabled innovations. First quarter revenue $496M, EBITDA $46M, free cash flow $21M, reduced credit facility borrowings. AI strategy has three pillars: client transformation, human augmentation, operational excellence. Examples of AI helping clients like telehealth provider and global travel brand. Engage focusing on offshore expansion, refining client mix, embedding AI. Digital evolving professional and managed services to align with client digital transformation, launching AI Gateway, meeting demand for data readiness and systems transparency.

For the Engage segment, first quarter revenue decreased 7.5% over prior year to $394 million, operating income $25 million (6.3% of revenue). Offshore revenue mix increased from 34% to 38% for 12 months ended March 31, 2026, expected to be over 40% by year-end. For Digital segment, first quarter revenue $102 million, down 5.7% y-o-y, operating income $7 million (6.6% of revenue). Recurring revenue declined in legacy CCAS, but professional services excluding legacy grew 15.3% y-o-y. Engage backlog $1.51 billion (94% of 2026 revenue guidance midpoint), last 12-month retention rate 94%. Digital backlog $325 million (76% of 2026 revenue guidance midpoint).

Reiterating full-year guidance. Engage expected to return to improved, profitable y-o-y growth starting second quarter driven by operating and cost management actions. Digital executing on shifting market demands through new partnerships for AI, data, and security, confident in delivering full year 2026 guidance.

Q: George Sutton asked about pipeline scenario and avoiding rip and replace.

A: Pipeline healthy with net new clients and embedded base expansion. Avoiding rip and replace via AI Gateway to quickly integrate with CCaaS systems and major AI offerings.

Q: Maggie Nolan asked on AI-enabled digital engagements.

A: Dependent on client data estates, phase one focuses on augmenting associates, phase two on self-service chatbots, etc., with hybrid capabilities.

Q: Jonathan Lee asked on Engage revenue decline.

A: Little of both rationalization and unplanned volume loss, second half expected stronger, focused on client diversification and offshore growth.