TTEC (US:TTEC)2025-05-08 20:30Revenue Performance - TTEC's revenue for Q1 2025 was $534.2 million, a decrease of $42.4 million or 7.4% compared to Q1 2024, with TTEC Digital contributing $108.0 million (20.2%) and TTEC Engage contributing $426.2 million (79.8%) to the total revenue [146][150]. - TTEC Digital segment revenue decreased by $4.0 million or 3.6%, while TTEC Engage segment revenue decreased by $38.4 million or 8.3% due to client exits and conservative cost management by enterprise clients [150][163]. Operating Income and Margins - Operating income for Q1 2025 increased by $1.5 million or 6.6% to $24.2 million, with an operating margin of 4.5%, up from 3.9% in Q1 2024 [151]. - TTEC Digital's operating margin increased to 5.4% in Q1 2025 from 2.9% in the prior year, attributed to lower employee-related costs and improved utilization [162]. - TTEC Engage's operating income decreased by $1.1 million or 5.7% to $18.3 million, with an operating margin of 4.3% [164]. Tax and Interest - The effective tax rate for Q1 2025 was 74.2%, down from 82.3% in Q1 2024, with a normalized tax rate of 37.9% after Non-GAAP adjustments [168]. - Interest income rose to $4.6 million in Q1 2025 from $1.0 million in Q1 2024, while interest expense decreased to $19.8 million from $21.1 million [165]. Cash Flow and Capital Expenditures - Cash flows from operating activities improved to $21.6 million in Q1 2025, compared to a cash outflow of $15.6 million in Q1 2024, driven by increased net cash income and working capital [169][174]. - Free cash flow for the three months ended March 31, 2025 was $16.2 million, a significant improvement from $(29.1) million in the same period of 2024 [177]. - Net cash flows used in investing activities decreased to $5.3 million for the three months ended March 31, 2025, down from $13.4 million in 2024, primarily due to an $8.0 million decrease in capital expenditures [175]. - Total capital expenditures in 2025 are expected to be between 2.2% and 2.4% of revenue, with approximately 51% allocated for business growth and 49% for maintenance of existing assets [181]. Client Concentration and Relationships - The five largest clients accounted for 31.2% of consolidated revenue for the three months ended March 31, 2025, down from 35.7% in 2024, indicating a decrease in client concentration risk [183]. - The company has long-term relationships with its top five clients, with contracts ranging from 7 to 25 years, which helps mitigate client concentration risks [183]. Future Capital Requirements - The company expects to maintain its capital requirements over the next 12 months, but may need to raise additional capital through debt or equity financing depending on future acquisitions or joint ventures [182]. - There were no material changes to the company's contractual obligations and future capital requirements from the date of the 2024 Form 10-K filing through the filing of this report [180]. Offshore Delivery and Risk Management - TTEC plans to continue expanding its offshore delivery capabilities while managing foreign currency risks through a multi-currency hedging program [155][171].