TTEC Q1 2026 Earnings Call Summary

1Key Financial Results and Metrics

Revenue: $496 million, down 7.1% from $534 million in Q1 2025.

Adjusted EBITDA: $46 million (9.2% of revenue), compared to $56 million (10.6% of revenue) in the prior year.

Operating Income: $32 million (6.4% of revenue), down from $41 million (7.8%).

Earnings Per Share (EPS): $0.15, down from $0.28.

Free Cash Flow: $21 million, an increase from $16 million year-over-year.

Debt: $892 million, with a net debt position of $803 million, down $79 million from the previous year.

Engage Segment Revenue: $394 million, a 7.5% decline year-over-year; operating income was $25 million (6.3%).

Digital Segment Revenue: $102 million, down 5.7% year-over-year; operating income was $7 million (6.6%).

2Strategic Updates and Business Highlights

TTEC is focusing on AI-enabled innovations and has seen a shift in client engagement towards integrating AI with business goals.

The company is expanding its offshore operations, increasing the offshore revenue mix from 34% to 38% year-over-year, with a target of over 40% by year-end.

TTEC is rationalizing its client base by exiting lower-margin accounts and prioritizing complex engagements.

The company has implemented AI across various operational areas, including hiring and performance management, which has shown promising early results.

TTEC's Engage segment has a backlog of $1.51 billion, representing 94% of the 2026 revenue guidance midpoint.

3Forward Guidance and Outlook

TTEC is reiterating its full-year guidance, expecting improved profitability and revenue growth in the second half of 2026, driven by operational and cost management actions.

The company anticipates a return to top-line growth in the Engage segment by the end of the year, supported by new client acquisitions and expanding existing client relationships.

4Bad News, Challenges, or Points of Concern

The decline in revenue and profitability was partly due to a delayed receivable from a public sector project, which impacted Q1 EBITDA.

The Engage segment's revenue was affected by the rationalization of underperforming clients, leading to a decline in year-over-year revenue.

The Digital segment is facing challenges due to a shift away from legacy contact center solutions, impacting recurring revenue.

The normalized tax rate increased significantly to 52.9%, primarily due to jurisdictional income mix, which may affect future profitability.

5Notable Q&A Insights

Management expressed confidence in the health of the pipeline, noting larger average deal sizes and a strong demand for AI capabilities, despite market narratives suggesting a slowdown.

TTEC's AI Gateway is positioned as a solution to bridge existing customer experience systems with AI technologies, reducing implementation timelines.

The company is focused on maintaining a hybrid approach to customer interactions, balancing AI and human engagement to enhance customer experiences.

There is a recognition of the complexities involved in modernizing legacy systems, which can significantly extend project timelines, impacting revenue realization.

Management emphasized that while they are rationalizing clients, they are also seeing strong demand for new business, particularly in offshore markets. Overall, TTEC is navigating a transitional period with strategic investments in AI and operational efficiencies, while facing challenges in revenue growth and profitability in the short term.