Welcome to TTEC Holdings, Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. I would like to remind all parties that you will be in a listen-only mode until the question-and-answer session. This call is being recorded at the request of TTEC Holdings, Inc. I would now like to turn the call over to Bob Belknapp, TTEC Holdings, Inc.'s Group Vice President, Corporate Finance. Thank you, sir, and you may begin.

Good morning, and thank you for joining us today. TTEC Holdings, Inc. is hosting this call to discuss its fourth quarter and full year 2025 results for the period ended 12/31/2025. Participating on today's call are Kenneth D. Tuchman, Chairman and Chief Executive of TTEC Holdings, Inc., and Kenneth R. Wagers, Chief Financial Officer of TTEC Holdings, Inc. Yesterday, TTEC Holdings, Inc. issued a press release announcing its financial results. While this call will reflect items discussed in that document, for complete information about our financial performance, we also encourage you to read our Annual Report on Form 10-K for the period ended 12/31/2025. Before we begin, I want to remind you that matters discussed on today's call may include forward-looking statements related to our operating performance, financial goals, and business outlook, which are based on management's current beliefs and assumptions. Please note that these forward-looking statements reflect our opinions as of the date of this call; we undertake no obligation to update this information as a result of new developments that may occur. Forward-looking statements are subject to various risks, uncertainties, and other factors that could cause our actual results to differ materially from those expected and described today. For a more detailed description of our risk factors, please review our 2025 Annual Report on Form 10-K. A replay of this conference call will be available on our website under the Investor Relations section. I will now turn the call over to Kenneth.

Good morning, and thank you for joining us today. 2025 was a pivotal year for TTEC Holdings, Inc., one in which we met our financial commitments, improved our balance sheet, and fortified our position as the leader in AI-enabled CX. For the full year 2025, revenue was $2,136,000,000, exceeding the high end of our guidance. Adjusted EBITDA was $214,000,000, reflecting year-over-year growth of 5.6%. We generated $83,000,000 in cash flow and reduced our credit facility borrowings by $70,000,000. This reflects our continued focus on strengthening our balance sheet. Before moving on to our business overview, I would like to point out that our operating improvements and disciplined budget management were offset by a one-time noncash goodwill impairment in the fourth quarter on a portion of our TTEC Digital segment. This was due to the decline in our market capitalization and the annual fair value assessment. While impactful from a GAAP perspective, the impairment was a noncash expense and has no impact on our broader ability to execute our strategy, or the value of our CX technology solutions. Now on to some highlights from the year. We deepened our relationships with our largest clients, capturing an increased share of wallet as they expanded their use of our end-to-end consulting, technology, and managed services portfolio. Sales of new lines of business launched in 2025 to our base were strong in both our Engage and Digital segments, increasing year over year. Across the business, we attracted a substantial number of new clients with our AI-forward and vertical solutions approach. Several of these clients are new to having a CX partner, a shift driven by a data and AI landscape that has become too complex for clients to navigate alone. We grew our strategic technology partnerships as we collaborated on new client sales opportunities…

Thank you, Kenneth, and good morning. I will start with a review of our fourth quarter and full year 2025 financial results before providing context into our 2026 full year financial outlook. In my discussion of the fourth quarter and full year financial results, reference to revenue is on a GAAP basis, while EBITDA, operating income, and earnings per share are on a non-GAAP adjusted basis. A full reconciliation of our GAAP to non-GAAP results is included in the tables attached to our earnings press release. On a consolidated basis for fourth quarter 2025 compared to the prior-year period, revenue was $570,000,000, a slight increase over the prior-year period of $567,000,000. Adjusted EBITDA was $62,000,000, or 10.9% of revenue, compared to $51,000,000 or 9%. Operating income was $48,000,000, or 8.4% of revenue, compared to $35,000,000 or 6.2%. And earnings per share was $0.47 compared to $0.19. Foreign exchange had a $4,000,000 positive impact on revenue and a $1,000,000 negative impact on operating income in the quarter compared to the prior-year period, primarily in our Engage segment. Now turning to our consolidated full year 2025 financial results. Revenue was $2,140,000,000 compared to the prior year of $2,210,000,000, a decrease of 3.2%. Adjusted EBITDA was $214,000,000, or 10% of revenue, an increase of 5.6% or 80 basis points over the prior year of $202,000,000 or 9.2%. Operating income was $155,000,000, or 7.3% of revenue, compared to $136,000,000 or 6.2% in the prior year. Earnings per share was $1.10 compared to $0.71 in the prior-year period. Foreign exchange had a $3,000,000 positive impact on revenue, and a $4,000,000 positive impact on operating income over the prior year, primarily in our Engage segment. At the company and segment level, our full year financial performance was in line with the guidance expectations previously communicated, with…

Thanks, Kenneth. As we open the call, we ask that you limit your questions to one at a time. Operator, you may open the line.

You would like to ask a question, please press star and then the number one. Please unmute your phone and record your name clearly when prompted. Your name and company name are required to introduce your question. To cancel your request, please press star and then the number two. Our first question comes from the line of George Frederick Sutton of Craig-Hallum. Sir, your line is open.

Thank you. Ken, you said something interesting that you thought nearly 100% AI adoption by the enterprises you are working with by year-end 2026. And I am just curious if we could look at sitting here at the beginning of 2026 versus the beginning of 2027 and what kind of ongoing work do we have with those customers relative to helping them deploy the AI.

Good morning, George. Well, first of all, understand that when we use the term AI, it is so ambiguous. When we make that statement, what we are referring to in general is the AI that we are utilizing to enable our associates to do their job, AI that we are utilizing in our talent acquisition and recruiting, AI that we are using in quality assurance, AI that we are using overall to empower all of our AI that we are utilizing internally, to make ourselves more efficient, etcetera. So, ultimately, our goal is that every single client of ours is taking advantage of everything from accent neutralization technology to our language translation technology where we can translate in real time from any language to any language, etcetera. Where I think you are probably going is AI as we utilize it, not just only to assist the associate to be better, faster, and more proficient, but also the ability to provide certain aspects of interactions that are self-service. And so we are very diligently working with clients that are open to and interested in helping them with their low-value transactions versus interactions that add no real value in cross-selling, upselling, building trust, building loyalty, maintaining retention, increasing wallet share, etcetera, and automating those with what we call an agent or human in the loop that can come in at any point in time to assist should there be a need to assist, or if it moves to something that is more complex or more higher value, etcetera. And so we are very focused in this area. We have been working with these technologies, as you know, for frankly, before AI was there was even a hype cycle on AI. And now it is really just a matter of which clients are actually ready and willing to start to adopt some of the capabilities where we can provide this on the front end from a self-service standpoint, which leads us more to futuristically our goal of outcome-based pricing. So we will achieve 100% by the year end, which means that at minimum, our clients are taking advantage of all of the internal tools that we utilize to make our people better and to drive higher quality, more accuracy, etcetera.

Understand. Thank you for the perspective.

Thank you, George. Thank you.

Thank you. Our next question will be coming from Margaret Nolan of William Blair. Your line is open.

Thank you. Maybe to ask that a little bit differently, how do you expect the mix of revenue to shift between project-based and recurring revenue over the next couple of years?

That is a really good question, Margaret. I am not sure that I actually can give you a number with any level of precision. I guess are you asking me, is that another way of saying, what percentage of the business will be that we currently classify as Digital versus Engage? Or are you asking me, as it relates to the Engage business, what percentage of that business will be more AI focused? So maybe if you could just give me a little bit more direction on your question.

Yeah. The original thought was sort of there is probably likely a mix shift between Digital and Engage, but the second question is extremely interesting as well. So any and all of the above.

Well, look. Our focus on Digital is for the business to drive, on average, a 50% recurring revenue, and we are currently achieving that, maybe even a bit more than that. And so if that partially answers your question, that is certainly the focus. As far as I am not I just want to make sure that I am still tracking your question. As it relates to Engage, and how we see the future of where that business goes, we absolutely see the future over time where more and more technology is infused in Engage and where we are pricing our services as much more of a turnkey offering that is tied to solutions and definitive outcomes. The reality, Margaret, and I know I am guilty of maybe over pontificating, so I apologize, but the reality is that what we find because of the size of the clients that we deal with, which tend to be in kind of that Fortune 500 category, is that when you get past all the AI hype that it is going to eventually brush your teeth and do everything else, what our clients are realizing is that with the amount of systems that they have, and the overall amount of silos that they have and the amount of systems that do not actually even talk to each other, that there are only certain things that they can take advantage of with AI in order for it to be impactful. And so what we are doing is we are focusing on what we can provide them with technology that takes advantage of AI right now with their current situation while we are also trying to demonstrate to them how we can help them build a modern data estate so that they can ultimately take advantage of far more AI. And, again, I am not here to give a lecture or whatever, but what the Street is absolutely positively missing is that the time that it is going to take for these large companies to synergize, so to speak, or create synchronicity of their data, it is not going to be measured in months. It is going to be measured in years. And that is not according to Kenneth Tuchman. That is according to the CIOs of virtually every major client that we have. So that is my way of saying that we are going to attack the parts of their systems that we can and that they will allow us to have access to. But the reality is that the hope that the HAL 9000 is going to take the human out of the loop is, I think, more distant than many people might be estimating. So I am sorry if I dragged that out too much, but hopefully, I am answering your question.

Thanks, Ken.

Thank you.

Thank you. Our next question will be coming from Jonathan Lee of Guggenheim Partners. Your line is open.

Great. Thanks for taking my questions. First question for me, you highlighted revenue headwinds from offshore mix shift. Can you help us size how much more of your current onshore revenue might still be at risk from that mix shift dynamic?

Well, first of all, we do not view it necessarily as a negative. We view it as a positive, and it is actually a focus of ours and an imperative to work with our clients and work with our especially our new clients in shifting to offshore. So, currently, 80% of our entire net new sales pipeline is all targeted offshore. As it relates to the embedded base that we currently have that is onshore, I would say that it is actually a fairly limited number, and it is not because we would not like it to be a higher number. But remember, we do a fair amount of public sector and federal work, healthcare work, and financial service work, and a lot of that work requires highly skilled licensed employees and it is not legal for them to operate outside of the United States. So what I would say is that it is really giving us other lines of business that we can focus on to move offshore. And there are certainly some clients that we currently have that are considering certain aspects of the business to potentially go offshore. But it is somewhat limited, just due to the nature of the segments that are currently onshore and the regulatory aspect.

Ken, thanks for that color. But I think we were trying to size the current onshore revenue that might still be at risk, not necessarily the net new portion of the work that you had highlighted earlier.

Well, I am sorry, I thought I answered that. What I am saying is you mean at risk to go offshore? Or what?

At risk to go offshore. Not necessarily the net new portion of the work that you had highlighted earlier.

Yeah. And what I am saying is that the majority of the revenue that we have onshore, we legally, we do not have the ability or the client does not have the ability to move offshore under the current regulations, which have existed for many, many years. So I thought I answered that. So the answer is, I cannot give you an exact number, but what I can tell you is that the healthcare clients, which is a significant portion of our business, and the federal and public sector business, the part that we do that is regulated, cannot and will not be moved offshore unless the laws were to change. And my guess is that is not happening.

Got it. Thanks, Ken. Just as a follow-up, you know, understand that you are obviously investing in AI. Can you help us understand how you are defending against enterprise clients that may be pushing you to pass on the AI efficiency savings to them.

Well, you know, thus far, that is actually not even that is not so far, we are not actually encountering that. That is not to say that over time as AI more or less commoditizes that we will not feel that. But right now, clients are in such need of advisory work on how to take advantage of AI and just our unique ability to integrate to their systems. Because for over 25 years, we have done deep systems integration into all of our client CCaaS systems, etcetera, that that has just not been a focus. But I think more importantly, maybe another way of putting it is we absolutely plan, as we start to demonstrate to clients how we can take low-value transactions, transactions that typically we do not even handle today, it is not part of our focus of our business, and how we can help them automate them, and how we can get rid of their IVR and install agentic capabilities on the front end to determine the purpose of the call, to gather information, etcetera. Our goal is absolutely to share some of the upside, or the benefit, of the cost. And frankly, I would expect the whole industry to be doing that because it is a way for us to garner net new business by us showing the industry or the client base that we can have an impact on their cost to serve, and that is a huge focus of ours: how can we demonstrate to them that we can deliver the highest possible call quality at a lower cost to serve. And so if you are asking me, are they pressuring us for that? No. If you are asking me, are we volunteering that as it relates to when we are showing them…

Thanks, Ken.

Thank you.

Thank you. Our last question is from Vincent Alexander Colicchio of Barrington Research. Your line is open.

Yeah. Ken, to what extent are you benefiting from consolidation, or do you expect to benefit from consolidation, given your expanded footprint and the increasing complexity of technology?

So do you mean consolidation of clients consolidating the number of partners that they have? Because if that is the question, going on for the last eight or 24 months, and we think that that is going to that is currently taking place. We think that is going to over time accelerate as clients realize that the concept of having 10 vendors makes very little sense, especially when of the 10 providers out there, most of them do not have deep technological capabilities. And we believe that the majority of all new business out there is going to require somebody that has the ability to provide various different aspects of technology to help them become more modernized. So if that is the question, do I think there is going to be more consolidation? I do. And I think that the marketplace is already really bifurcated to what I would call third-tier type, second-tier type companies out there that can only compete on price and lack capability, and the scale players that have the right geographies that clients are looking for, but also have, more importantly, the right technology to apply.

You did answer the correct question, and, you know, I am assuming that some of the companies that lack scale cannot keep pace in terms of their technology capabilities, and I think you answered that.

Is there anything else I can add to that? Or

No. You answered the question.

Alright. Well, thank you.

Thank you for your questions. That is all the time we have today. This concludes TTEC Holdings, Inc.'s fourth quarter and full year 2025 earnings conference call. You may disconnect at this time.