TTEC (US:TTEC)2025-11-06 21:25Financial Performance - TTEC's Q3 2025 revenue was $519.1 million, a decrease of $10.3 million or 1.9% compared to Q3 2024, with TTEC Digital contributing $121.9 million (23%) and TTEC Engage $397.2 million (77%) to total revenue [160]. - TTEC Digital segment revenue increased by $6.2 million or 5.4% to $121.9 million in Q3 2025, while TTEC Engage segment revenue decreased by $16.5 million or 4.0% to $397.2 million [164]. - Operating income for TTEC Digital decreased to $4.9 million (4.0% margin) in Q3 2025 from $7.5 million (6.5% margin) in Q3 2024, primarily due to lower margins in recurring business [175]. - TTEC Engage's operating income increased to $7.5 million (1.9% margin) in Q3 2025 from $5.4 million (1.3% margin) in Q3 2024, attributed to lower impairment expenses [177]. - For the nine months ended September 30, 2025, TTEC Digital revenue was $343.7 million, a slight decrease of $0.4 million or 0.1%, while operating income increased by $5.4 million or 32.0% to $22.1 million [182]. - TTEC Engage revenue for the nine months ended September 30, 2025 was $1.2 billion, a decrease of $72.8 million or 5.6%, with operating income improving to $33.3 million from a loss of $205.6 million [184]. Interest and Other Income - Interest income for Q3 2025 increased to $0.5 million from $0.3 million in Q3 2024, while interest expense decreased to $16.6 million from $21.7 million due to lower utilization and rates [178]. - Other income for Q3 2025 was $3.8 million, a significant increase from an expense of $1.0 million in Q3 2024, including a $1.7 million gain from an aged VAT receivable recovery [179]. Taxation - The effective tax rate for Q3 2025 was 21,930.3%, compared to (98.1)% in Q3 2024, influenced by income distribution across jurisdictions and foreign currency gains [180]. - The effective tax rate for the nine months ended September 30, 2025, was 189.9%, compared to (26.4)% for the same period in 2024 [188]. Cash Flow and Capital Expenditures - Operating cash flows for the nine months ended September 30, 2025, were $118.5 million, a significant increase from $(57.7) million in 2024 [189][195]. - Cash and cash equivalents decreased to $73.5 million as of September 30, 2025, down from $85.0 million at the end of 2024 [194]. - Free cash flow for the nine months ended September 30, 2025, was $92.1 million, compared to $(94.2) million for the same period in 2024 [198]. - Net cash flows used in investing activities decreased to $21.9 million for the nine months ended September 30, 2025, from $36.3 million in 2024 [196]. - Net cash flows provided by/(used in) financing activities were $(102.9) million for the nine months ended September 30, 2025, compared to $14.8 million in 2024, primarily due to a $(122.5) million net change in the line of credit [197]. - Total capital expenditures in 2025 are expected to be between 1.8% and 2.0% of revenue, with 55% allocated for business growth and 45% for maintenance [202]. - The company anticipates that the amount of capital required over the next 12 months will depend on investment levels in infrastructure and potential acquisitions [203]. Client Relationships - The company has long-term relationships with its top five clients, which accounted for 31.8% of consolidated revenue for the three months ended September 30, 2025 [204]. - Some contracts with the five largest clients expire between 2026 and 2029, but the company has historically renewed most contracts [205]. - One client represented more than 10% of total revenue during the nine months ended September 30, 2025 and 2024 [204]. - The five largest clients accounted for 31.8% and 31.5% of consolidated revenue for the three months ended September 30, 2025 and 2024, respectively [204]. - For the nine months ended September 30, 2025 and 2024, the five largest clients represented 31.0% and 32.6% of consolidated revenue, respectively [204]. - Long-term relationships with top five clients range from 6 to 23 years, with multiple contract renewals completed [204]. - Contracts with the five largest clients expire between 2026 and 2029, with many clients having multiple contracts with different expiration dates [205]. - Historical renewal rate of contracts with largest clients is high, but future renewals are not guaranteed [205].