TTEC (US:TTEC)2025-11-07 14:30Financial 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]