TTEC (TTEC)2024-03-01 19:35Financial Data and Key Metrics Changes - For the full year 2023, revenue was 272 million (11% of revenue), and adjusted EPS was 2.44 billion in 2022 [8][34] - In Q4 2023, revenue decreased to 658 million in the prior year, a decline of 4.9%, with adjusted EBITDA at 87 million (13.1%) in the prior year [34][35] - The full year 2023 operating income was 249 million (10.2%) in the prior year, and EPS decreased to 3.59 [34][38] Business Line Data and Key Metrics Changes - The Digital segment's Q4 revenue was 487 million [35][36] - The Engage segment's Q4 revenue decreased by 5.5% to 24 million (4.8% of revenue), down from 1.98 billion, relatively unchanged from the prior year, with operating income at 184 million (9.3%) [38][39] Market Data and Key Metrics Changes - The Engage backlog for the next 12 months is 10 million, indicating strong demand for larger contracts [24] Company Strategy and Development Direction - The company is focusing on margin optimization and diversification across clients, geographies, and solutions, with a strong emphasis on AI integration to enhance operational efficiency [12][31] - TTEC aims to leverage its partnerships with leading CX technology players to drive growth in the Digital segment, expecting double-digit growth in 2025 and beyond [15][30] - The capital deployment strategy has shifted towards prioritizing debt reduction and sustainable growth initiatives, reflecting a cautious approach in the current economic environment [17][40] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment in the 2024 outlook due to conservative client behavior and budget constraints, anticipating challenges in revenue and margins [19][20] - The macroeconomic environment remains fluid, with over a third of the global economy in recession, impacting client decision-making and revenue visibility [9][10] - Despite short-term challenges, management remains optimistic about long-term growth prospects, particularly in the Digital segment driven by cloud migration and AI adoption [10][28] Other Important Information - The company announced a reduction in its semi-annual dividend to 173 million, with total debt at $999 million, indicating a slight increase in net debt year-over-year [41] Q&A Session Summary Question: Can you provide insight into the macro view and its impact on guidance? - Management noted that clients are operating conservatively, leading to lower growth expectations and elongated sales cycles, but expressed hope for recovery in 2025 [49][56] Question: What is the status of AI programs and their impact? - Management highlighted 50 client programs involving AI, with significant productivity improvements noted, and emphasized the importance of agent augmentation in enhancing client relationships [58][60] Question: Are there any signs of improvement in client engagement? - Management reported strong booking momentum in the Digital segment, with over 50% of opportunities coming from existing clients, indicating potential for faster sales cycles [63][64] Question: How does AI affect the Engage business? - Management views AI as a positive opportunity, emphasizing that while some low-end transactions may be automated, the focus remains on enhancing customer relationships through quality service [71][72]