TTEC Holdings, Inc. ((TTEC)) has held its Q1 earnings call. Read on for the main highlights of the call.
TTEC Holdings, Inc. recently held its first-quarter earnings call, revealing a mixed sentiment characterized by strategic advancements in AI and digital solutions, juxtaposed with challenges from revenue declines and cautious client spending. While the company has made notable strides in profitability and digital offerings, it continues to face market uncertainties and a higher tax rate.
EBITDA Margin Improvement
TTEC reported an improvement in its EBITDA margin, with EBITDA reaching $56 million, up from $55 million in the previous year. This increase was driven by improved EBITDA margins of 10.6%, compared to 9.5% in the prior year, showcasing the company’s efforts in enhancing profitability.
Expansion in AI and Digital Solutions
The company is making significant progress in AI and digital solutions, collaborating with hyperscalers and developing proprietary AI-enabled capabilities. This has led to new client signings and an expanded market reach, positioning TTEC as a leader in digital transformation.
Growth in Digital Managed Services
TTEC’s digital managed service offerings saw a 2.7% increase compared to the prior year, now representing approximately 66% of digital’s total first-quarter revenue, up from 62% in the same period last year. This growth underscores the company’s focus on expanding its digital footprint.
Improved Operational Efficiency
Operational efficiencies and cost optimization initiatives have resulted in meaningful profitability improvements, particularly in the TTEC Engage segment. These efforts are part of TTEC’s broader strategy to enhance financial performance.
Recognition for AI Solutions
TTEC received multiple Stevie Awards for excellence in sales and service, including recognition for its AI-enabled solutions such as TTEC Perform and TTEC Addi. These accolades highlight the company’s innovation and leadership in AI solutions.
Revenue Decline
The company experienced a 7.4% revenue decline compared to the prior year, with revenue dropping from $577 million to $534 million. This decline was attributed to expected decreases and foreign exchange impacts.
Cautious Client Approach
Many clients are adopting a cautious approach due to economic uncertainties and trade policy challenges, affecting the size and scope of new contracts. This cautiousness reflects the broader market sentiment and its impact on TTEC’s business.
Engage Segment Revenue Decrease
Revenue for the Engage segment decreased by 8.3% to $426 million over the prior year period. This decline is part of the broader revenue challenges the company is facing.
Higher Tax Rate
The normalized tax rate increased to 37.9% in the first quarter of 2025, up from 32.7% in the prior year, impacting net income. This higher tax rate poses an additional challenge for TTEC’s financial performance.
Forward-Looking Guidance
During the earnings call, TTEC provided guidance for the fiscal year, acknowledging a 7.4% revenue decline but highlighting an increase in adjusted EBITDA to $56 million. The company remains committed to diversifying across clients, geographies, and solutions, enhancing digital innovation, and optimizing costs. Despite macroeconomic uncertainties, TTEC is focused on maintaining strong partnerships and expanding offshore.
In summary, TTEC’s earnings call reflected a mix of strategic advancements and ongoing challenges. While the company is making significant progress in AI and digital solutions, it faces hurdles such as revenue declines and a higher tax rate. The company’s commitment to diversification and digital innovation remains strong, positioning it for potential growth despite economic uncertainties.