Financial Data and Key Metrics Changes - In Q3 2025, revenue was $519 million, a decrease of 1.9% from $529 million in the prior year [21] - Adjusted EBITDA was $43 million, or 8.4% of revenue, down from $50 million, or 9.5% [22] - Operating income decreased to $29 million, or 5.6% of revenue, compared to $34 million, or 6.4% [22] - Net debt was reduced by $119 million year-over-year, totaling $813 million [32] Business Segment Data and Key Metrics Changes - In the Engage segment, Q3 revenue decreased by 4% to $397 million, with operating income at $17 million, or 4.3% of revenue [22] - The Digital segment saw a revenue increase of 5.4% to $122 million, but operating income decreased to $12 million, or 9.5% of revenue [26] - Recurring revenue in the Digital segment declined by 9.8% due to the end-of-life status of a premise contact center solution [26] Market Data and Key Metrics Changes - The Engage segment's backlog is $1.66 billion, representing 102% of the 2025 revenue guidance midpoint, up from 99% in the prior year [25] - The Digital backlog is $444 million, or 95% of the 2025 revenue guidance midpoint, an increase from 92% year-over-year [30] Company Strategy and Development Direction - The company is focusing on AI-enabled customer experience (CX) solutions, blending technology with human interaction to drive growth [4][5] - Investments are being made in expanding executive leadership and enhancing AI capabilities to improve operational effectiveness [12][24] - The company aims to transition from traditional contact center solutions to AI-led consulting and journey orchestration [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to historical growth rates and margins despite current financial metrics not reflecting business momentum [19] - The company anticipates solid bottom-line growth in Q4 2025, driven by healthcare business and new client growth [34] - Management highlighted the importance of adapting to market dynamics and leveraging partnerships with hyperscalers for innovation [13][34] Other Important Information - Free cash flow was negative $10 million in Q3 2025, an improvement from negative $100 million in the prior year [30] - The company has approximately 1,700 full-time engineers focused on AI projects, indicating strong capabilities in this area [46] Q&A Session Questions and Answers Question: Can you walk through the significance of your role in the healthcare opportunity and the investments made? - The investments made in Q3 are expected to lead to double-digit growth in the healthcare seasonal business year-over-year, establishing strong client relationships for future growth [38][39] Question: What does the net economic scenario look like when integrating AI into client experiences? - Integrating AI is expected to drive positive economic impacts, allowing for outcome-based pricing that enhances margins by reducing labor costs [41][42] Question: Do you have the sales and delivery headcount needed for the shift into AI consulting? - The company has approximately 1,700 engineers with AI backgrounds and is confident in its capabilities to meet client demands [46][49] Question: How will you further improve free cash flow given the current revenue dynamics? - The focus is on debt reduction, improving working capital, and managing capital expenditures to enhance free cash flow generation [51][53]

Financial Data and Key Metrics Changes - For Q2 2025, revenue was $514 million, a decrease of 3.8% from $534 million in the prior year [28] - Adjusted EBITDA increased to $52 million, representing a 12% year-over-year increase and a margin improvement of 140 basis points to 10.1% [7][28] - Free cash flow was $86 million, up from $35 million in the prior year, reflecting a significant increase in operating cash flow [36] Business Line Data and Key Metrics Changes - In the Engage segment, revenue decreased by 4.3% to $400 million, but operating income increased by 26.3% to $18 million, reflecting a margin improvement [29][30] - The Digital segment saw a revenue decline of 2.3% to $114 million, but operating income increased by 22.8% to $18 million, largely due to a one-time sale of IP software [32][33] Market Data and Key Metrics Changes - The Engage backlog was $1.64 billion, representing 101% of the updated 2025 revenue guidance midpoint, indicating strong future revenue potential [31] - The Digital backlog was $387 million, or 83% of the 2025 revenue guidance midpoint, slightly down from the previous year [35] Company Strategy and Development Direction - The company is focused on expanding AI and analytics capabilities, diversifying its CX technology partner network, and enhancing operational efficiencies [7][12] - There is a strategic shift towards offshore operations, with a focus on acquiring new business in regions with high-quality talent [70][73] Management's Comments on Operating Environment and Future Outlook - Management noted that while there is economic uncertainty, they are confident in the company's ability to navigate challenges and achieve historical growth rates [90] - The company is seeing a cautious but positive trend in client spending, with many clients reallocating business due to market consolidation [56][58] Other Important Information - The company is committed to improving profitability, cash flow generation, and debt reduction, with a net leverage ratio of 3.39 times, down from previous quarters [37][42] - The normalized tax rate increased to 43.4% due to the impact of a valuation allowance recorded against US pretax losses [38] Q&A Session Summary Question: Update on bank discussions regarding revolver renewal - Management is in active discussions and is confident of closure in Q3 [48] Question: Broader application of accent neutralization technology - The technology is operational and opens up new markets by allowing access to highly educated talent with diverse accents [50] Question: Client recognition of the need to move forward with programs - Clients are cautious due to economic uncertainty but are reallocating business and recognizing the need for technology capabilities [56][58] Question: Performance of Engage offshore business - The offshore mix improved, with a focus on expanding in regions like South Africa and Eastern Europe [73] Question: Vertical opportunities for the second half - Opportunities are seen in financial services, healthcare, technology, travel, and streaming media [75][78] Question: Blended pricing and rate cards - Management prefers blended pricing but does not see it as deflationary; rather, technology application leads to increased business allocation [84][86] Question: Risks around customers shifting work offshore - The labor market in the US is tight, leading clients to consider offshore options for quality and quantity [88][90]

Financial Data and Key Metrics Changes - In Q1 2025, the company's revenue was $534 million, a decrease of 7.4% from $577 million in the prior year, but exceeded the forecasted plan [16] - Adjusted EBITDA increased to $56 million, representing 10.6% of revenue, compared to $55 million or 9.5% in the prior year [16] - Operating income rose to $41 million, or 7.8% of revenue, up from $38 million or 6.6% in the prior year [16] - Earnings per share decreased to $0.28 from $0.27 in the prior year [16] - Free cash flow improved to $16 million from a negative $29 million in the prior year [22] Business Segment Data and Key Metrics Changes - In the Digital segment, Q1 revenue was $108 million, down 3.6% year-over-year, but grew 2.8% excluding one-time product sales [17] - Recurring managed service offerings in Digital increased by 2.7%, representing approximately 66% of total revenue [17] - In the Engage segment, revenue decreased by 8.3% to $426 million, but operating income remained flat at $29 million, with a 70 basis point improvement as a percentage of revenue [20] - The Engage backlog was $1.59 billion, or 101% of the 2025 revenue guidance, up from 94% in the same period of 2024 [21] Market Data and Key Metrics Changes - The last twelve month revenue retention rate for Engage was 88%, down from 94% in the prior year, but adjusted for a large client loss, it was 93% [22] - Digital's first quarter operating income was $12 million, or 11.2% of revenue, compared to $9 million or 8.3% in the prior year [18] Company Strategy and Development Direction - The company is focused on three priorities: increasing diversification across clients and solutions, transforming experiences through digital innovation, and strengthening financial performance [4] - The strategy includes co-investing and collaborating with hyperscalers to build AI-enabled capabilities [4][9] - The company aims to enhance operational excellence and agility while managing costs effectively [26] Management's Comments on Operating Environment and Future Outlook - Management noted that clients are adopting a cautious approach due to economic uncertainties, impacting their investment decisions [2][31] - Despite the cautious environment, the company is encouraged by new client acquisitions and growth in existing client relationships [2][5] - The outlook for the second half of 2025 remains cautious due to potential macroeconomic impacts on client demand [25][26] Other Important Information - The company has made significant investments in proprietary technology and has a strong track record in customer experience (CX) technology [3][12] - The normalized tax rate increased to 37.9% in Q1 2025 from 32.7% in the prior year, primarily due to a valuation allowance against US pretax losses [25] Q&A Session Summary Question: Client adoption challenges - Management indicated that clients are excited about new technologies but are hesitant due to reliability concerns and economic uncertainties impacting their CapEx spending [31][32] Question: Differentiation from peers - The company believes it can differentiate itself through extensive experience and strong relationships with hyperscalers, focusing on digital CX transformation [39][41] Question: Cost optimization efforts - Management confirmed ongoing cost optimization efforts and emphasized the importance of balancing cost savings with investments in technology and AI [46][72] Question: Demand environment and contract sizes - Management noted that while there is a strong pipeline, contract sizes are starting smaller, reflecting caution in the market [78][79] Question: Pricing pressures - Management acknowledged competitive pricing pressures but expressed confidence in maintaining discipline in pricing strategies [82][84]