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TTEC Holdings, Inc. (TTEC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $567.4M (-9.4% y/y; +7.2% q/q) with Adjusted EBITDA $50.9M (9.0% margin) and Non-GAAP diluted EPS $0.19; GAAP diluted EPS was $0.10 .
  • Results landed in line with the prior-quarter commentary and near the low end of guidance cadence; Engage profitability improved sequentially in H2, aided by profit optimization and offshore mix, while Digital softness reflected lower on-premise product sales and delayed larger projects .
  • 2025 guidance introduces margin expansion despite a revenue decline: company revenue $2.014B–$2.064B (mid $2.039B), Adjusted EBITDA $215M–$235M (mid $225M, 11.0% margin), and Non-GAAP EPS $0.95–$1.20 (mid $1.08) .
  • Strategic themes: accelerated AI infusion across Engage and Digital, offshore expansion (South Africa, Egypt, EMEA, LatAm), continued dividend suspension to prioritize deleveraging, and a board special committee evaluating a take-private proposal by the CEO .
  • Potential catalysts: confirmation of H2-weighted profitability trajectory, Digital return to growth on managed services, execution on 2025 margin plan, and updates on special committee/take-private process .

What Went Well and What Went Wrong

What Went Well

  • Engage segment delivered sequential profitability improvement; Q4 Engage Non-GAAP operating income rose to $22.3M (4.9% margin), exceeding low-end guidance and trending toward mid-range on stronger public sector volumes .
  • Digital recurring managed services mix increased; in Q4, recurring managed services represented ~64% of Digital revenue vs ~56% prior year, supporting more durable margin potential even as on-premise product revenue declines .
  • Clear 2025 plan to expand margins: Adjusted EBITDA guided to $215M–$235M (11.0% mid), Non-GAAP operating margin 7.6%–8.4% (8.0% mid), underpinned by offshore delivery, operational discipline, and AI-enabled agent productivity gains .
  • “We advanced AI adoption internally for our own associates and with our embedded base clients… and have accelerated the infusion of AI capabilities into every new sales opportunity” — CEO Ken Tuchman .
  • “We are confident our Digital segment will return to growth through our expanded suite of CX technology offerings, laying the foundation for margin improvements in 2025” — CFO Kenny Wagers .

What Went Wrong

  • Top-line pressure persisted: Q4 revenue down 9.4% y/y; Digital professional services revenue softness and customer delays; Engage headwinds from healthcare seasonality and specific client discontinuations .
  • Full-year 2024 results were weak vs prior year: revenue $2.208B (-10.4% y/y), GAAP loss from operations (-$173.5M) driven by a non-cash $196M impairment in Q2 for Engage; full-year Non-GAAP margins compressed .
  • Cash generation deteriorated in 2024 due to factoring facility discontinuation; FY 2024 cash from operations -$58.8M, FCF -$104.0M, and net debt rose to $893.0M; dividend suspended to prioritize deleveraging .

Financial Results

Consolidated Results vs Prior Quarters

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$534.1 $529.4 $567.4
GAAP Diluted EPS ($)($6.23) ($0.40) $0.10
Non-GAAP Diluted EPS ($)$0.14 $0.11 $0.19
Adjusted EBITDA ($USD Millions)$46.2 $50.3 $50.9
Non-GAAP Operating Income ($USD Millions)$29.5 $34.1 $34.9
Non-GAAP Operating Margin (%)5.5% 6.4% 6.2%

Notes: Q4 sequential revenue growth +7.2% per management commentary .

Segment Breakdowns

Segment MetricQ3 2024Q4 2024
Digital Revenue ($USD Millions)$115.7 $115.0
Digital Non-GAAP Operating Income ($USD Millions)$14.4 $12.7
Digital Non-GAAP Operating Margin (%)12.5% 11.0%
Engage Revenue ($USD Millions)$413.8 $452.5
Engage Non-GAAP Operating Income ($USD Millions)$19.7 $22.3
Engage Non-GAAP Operating Margin (%)4.8% 4.9%

KPIs and Balance Sheet

KPIQ3 2024Q4 2024
Cash from Operations ($USD Millions)($91.4) ($1.1)
Free Cash Flow ($USD Millions)($100.2) ($9.8)
Capital Expenditures ($USD Millions)$8.8 $8.7
Cash & Cash Equivalents ($USD Millions)$96.9 $85.0
Debt ($USD Millions)$1,028.4 $978.0
Net Debt ($USD Millions)$931.5 $893.0
Revolving Credit Availability ($USD Millions)$140 $225
Engage LTM Revenue Retention (%)85% 82% (87% adjusted)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue (Company)FY 2024$2,210M — $2,260M (Mid $2,235M) Actual: $2,207.6M Achieved near lower end
Adjusted EBITDA (Company)FY 2024$201M — $217M (Mid $209M) Actual: $202.3M Achieved near lower end
Non-GAAP Operating Income (Company)FY 2024$134M — $150M (Mid $142M) Actual: $136.5M Achieved near lower end
Revenue (Company)FY 2025N/A$2,014M — $2,064M (Mid $2,039M) New
Adjusted EBITDA (Company)FY 2025N/A$215M — $235M (Mid $225M), 10.7%–11.4% margin New
Non-GAAP Operating Income (Company)FY 2025N/A$154M — $174M (Mid $164M), 7.6%–8.4% margin New
Non-GAAP EPS (Company)FY 2025N/A$0.95 — $1.20 (Mid $1.08) New
Non-GAAP Tax RateFY 2025N/A38% — 42% (Mid 40%) New
Net Interest ExpenseFY 2025N/A($75M) — ($79M) (Mid -$77M) New
Diluted Share CountFY 2025N/A48.2M — 48.6M (Mid 48.4M) New
Engage RevenueFY 2025N/A$1,556M — $1,586M (Mid $1,571M) New
Engage Adjusted EBITDAFY 2025N/A$151M — $163M (Mid $157M) New
Digital RevenueFY 2025N/A$458M — $478M (Mid $468M) New
Digital Adjusted EBITDAFY 2025N/A$64M — $72M (Mid $68M) New

Note: Company states non-GAAP guidance is not reconciled to GAAP due to unpredictability of certain items .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
AI initiatives (agent desktop, QA/training, language)Q2: 100+ AI projects; Let Me Know LLM; AI-enhanced translation; practical use cases . Q3: Clients delaying larger projects; 45% of top 100 clients deployed defined AI projects; partner diversification .“More than 3/4 of associates use AI tools; 145–155 Digital AI projects underway; new language translation and accent-neutralization products in beta” .Expanding adoption and productization
Offshore expansionQ2: New geos ramping (South Africa, Egypt); majority of new logos offshore . Q3: Offshore mix +; expect continued expansion in 2025 .Offshore grew ~300bps in 2024 and expected +300bps in 2025; pipeline heavily offshore; Egypt site expansion PR (Maadi Technology Park) .Accelerating
Healthcare seasonality and macro headwindsQ2: Significant healthcare payer budget pressures; lower seasonal volumes . Q3: Q4 peak season expected similar to 2024; ongoing cost focus .Q4 healthcare peak season similar to 2024; demand tempered; focus on rationalizing low-margin engagements .Persistent pressure
Public sector programQ2: External conversion delays pressured profitability; expected normalization by year end . Q3: Sequential Engage profitability improved; upside from two public sector clients .Q4 upside vs guidance from 2 public sector clients; supports H2 profitability .Improving
Digital business mix (on-prem drop vs managed services growth)Q2: On-prem revenue declining with cloud migration; managed services up ~8% y/y . Q3: Managed services ~65% of Digital revenue; professional services down y/y .Q4 managed services ~64% of Digital; excluding on-prem, Digital grew 3.8% y/y; backlog next 12 months $308M .Healthier mix; growth ex on-prem
Deleveraging & dividendQ3: Dividend suspended Nov 4, 2024; priority debt reduction .Dividend remains suspended; revolver availability improved; net debt $893M .Ongoing deleveraging
Take-private processQ3: Board special committee evaluating CEO proposal .Shareholder frustration noted in Q&A; awaiting committee updates .Uncertain; potential overhang

Management Commentary

  • CEO: “2024 was a challenging transitional year… We continued to advance our three top priorities… diversification… broaden[ing] our end-to-end digital CX value proposition… meet or exceed historical growth and margin targets.” .
  • CFO: “Our fourth quarter financial performance was in line with the most recent guidance… and we are particularly pleased with our Engage segment’s profitability improvement in the second half of the year.” .
  • CEO on AI: “More than 3/4 of our associates now have various… AI tools… AI gives us the ability to provide a better overall quality of service… better compliance, better fraud detection…” .
  • CFO on 2025 plan: “We expect 2025 profitability improvement to be more pronounced in the second half… Non-GAAP EPS of $1.08 at the midpoint… operational discipline is delivering margin expansion.” .
  • Strategic move: Change of principal place of business to Austin, TX to access a stronger tech ecosystem; sale of Englewood property for $45.5M used to pay down revolver .

Q&A Highlights

  • AI deployment and ROI: Management detailed broad AI infusion across Engage and Digital, with forthcoming launches of language translation and accent neutralization products; AI supports operating leverage and quality improvements .
  • 2025 revenue phasing: Slightly higher H2 revenue vs H1; healthcare peak season similar to 2024; tailwinds from net new enterprise logos forecasted to grow >225% y/y in H2 .
  • Margin drivers: 2025 margin expansion weighted more toward operational discipline and AI-enabled efficiencies than offshore mix alone; sequential gross margin and EBITDA improvement expected .
  • Offshore cadence: Offshore mix +300bps in 2024 with forecast +300bps in 2025; footprint laid with investments in South Africa, Egypt, Europe, LatAm; expansions matched to revenue ramps .
  • Shareholder sentiment: Analyst cited frustration with special committee communication on take-private; CEO acknowledged and hoped committee would consider feedback .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 revenue and EPS were unavailable at time of analysis due to data access limitations. As a result, we cannot quantify beat/miss versus Street consensus for Q4 2024. Values retrieved from S&P Global were unavailable.
  • Management stated Q4 performance was in line with updated expectations at the lower end of the range communicated last quarter, providing qualitative context on execution vs internal guidance .

Key Takeaways for Investors

  • H2 trajectory intact: Engage profitability improved in H2 2024 and is guided to expand further in 2025 via operational rigor and AI-enabled productivity; monitor H1-to-H2 inflection in margins and revenue phasing .
  • Digital to resume growth: Excluding on-prem declines, Digital already showed growth; managed services mix >60% supports durability; watch backlog conversion and timing of larger delayed projects .
  • Margin expansion despite revenue decline: 2025 plan implies EBITDA margin ~11% and operating margin ~8% at midpoints, underpinned by cost optimization, offshore delivery, and AI leverage; execution on SG&A and program-level economics is critical .
  • Balance sheet focus: Dividend remains suspended; revolver availability improved; net debt $893M; free cash flow normalization excluding factoring impact suggests improved liquidity as EBITDA scales .
  • Special situation overlay: Special committee’s evaluation of CEO’s take-private proposal is a potential stock catalyst/overhang; investor communication remains a focus point .
  • Sector mix risks: Healthcare payer cost pressures and cautious macro continue to constrain volumes; diversification across retail, travel, streaming, BFSI, public sector helps mitigate but does not eliminate exposure .
  • Trade: Near-term, shares may key off confirmation of H2-weighted profitability path and Digital growth resumption; medium-term thesis hinges on executing 2025 margin plan, maintaining backlog quality, and deleveraging cadence .

Other Relevant Q4 Period Press Releases

  • TTEC Egypt expands with new Cairo site; supports offshore growth strategy and multilingual CX delivery .
  • Scheduling and logistics for Q4 earnings release and webcast .