TTEC

“IP & Software: Custom software engineering through TTEC Digital’s IP and Software division”

“In 2024, TTEC launched TTEC Perform. This AI-powered platform provides employees with data-driven insights and personalized coaching to enhance their performance and development.”

“Now, on the topic of innovation, I'm especially proud of the team working on our own generative knowledge management solution called Let Me Know that is built on Google's Vertex AI technology.”

“We use our investment in research and development to create, commercialize, and deploy innovative business strategies and high-value technology solutions.”

“The anticipated level of 2025 expenditures are primarily driven by facilities refreshes and maintenance, site optimizations, IT network modernization and PC refreshes, digital product development and ongoing site expansions/new sites but not at the same level as the prior year.”

“The emerging AI technologies require us to invest in new expertise, new service offerings, and to implement controls to execute our AI strategy. These investments may not achieve the desired revenue growth and greater profitability quickly enough to offset the emerging technologies’ impact.”

“Those businesses and the improvements that we call them shop floor improvements internally in the company that build on the AI technology that we're building for our agents internally to use, and then the commercial AI that we're also selling to the client. So it's that technology partnered with our agents that's really driving the margin improvement in our embedded base that far is the big driver of our margin improvement in the second half of the year.”

“The increase in capital expenditures was primarily due to accelerated purchases of computer equipment and accessories to avoid imminent price increases scheduled for the second half of 2026. In the second quarter of 2026, capital expenditures were $13 million, or 2.8% of revenue, compared to $7 million, or 1.4% in the prior year. Approximately 63% of the current quarter spend relates to growth in product development, real estate expansion, and client technology investments.”

“Across both business segments, we have hundreds of AI-enabled projects underway, with many more in development.”

“Curious, in the AI situations where you're improving agent productivity, are there currently discussions about sharing in the economic improvement with your clients?”

“Lots of discussions. Lots of discussions. I mean, in some cases, in some cases, we're bringing the technology just as part of our services so we can provide good quality services and be able to reduce attrition in some of the things that help us and help the client.”

“The segment’s technology-enabled delivery model covers the entire solution lifecycle including associate recruitment, onboarding, training, delivery, workforce management and quality assurance.”

“In 2024, TTEC launched TTEC Perform. This AI-powered platform provides employees with data-driven insights and personalized coaching to enhance their performance and development.”

“We're using AI on the front line as a companion for our associates, with real-time language translation, intuitive generative knowledge support, and post-call summarization. Our team leaders are using AI as a coach to help them provide individualized training and curriculum enhancements.”

“Now, on the topic of innovation, I'm especially proud of the team working on our own generative knowledge management solution called Let Me Know that is built on Google's Vertex AI technology.”

“Cost of services primarily includes employee related and technology costs.”

“Second, we're partnering with clients to address financially underperforming programs through automation, offshore delivery, and operating model redesign while maintaining a high level of service quality. In the event, however, a mutually beneficial path isn't possible, we're assisting clients with a professional transition. Third, on the front lines, we're successfully deploying AI and automation in focused, practical ways to improve productivity, simplify workflows, and expand capacity across our operations.”

“Those businesses and the improvements that we call them shop floor improvements internally in the company that build on the AI technology that we're building for our agents internally to use, and then the commercial AI that we're also selling to the client. So it's that technology partnered with our agents that's really driving the margin improvement in our embedded base that far is the big driver of our margin improvement in the second half of the year.”

“At the same time, we are working with clients to optimize or transition low-margin programs, deploying practical front-line AI and automation to boost productivity, and simplifying our overall cost structure through targeted operational efficiencies and best shore delivery models.”

“TTEC Digital is one of the largest CX technology and service providers and is focused on the intersection of Contact Center as a Service (“CCaaS”), Customer Relationship Management (“CRM”), and Artificial Intelligence (AI) and Analytics.”

“AI design and delivery capabilities are woven across all five pillars of our offerings.”

“IP & Software: Custom software engineering through TTEC Digital’s IP and Software division”

“The decrease in revenue for the TTEC Digital segment was driven by lower one-time on-premise related revenue and professional services revenue. It was partially offset by an increase of 9.1% in recurring revenue.”

“In TTEC Digital, our focus is on helping clients modernize their CX technology platforms to take full advantage of the new AI-enabled capabilities. Clients are choosing us because we're CX specialists who operate at the intersection of contact center technology, CRM, analytics, and AI.”

“Across both business segments, we have hundreds of AI-enabled projects underway, with many more in development.”

“The emerging AI technologies require us to invest in new expertise, new service offerings, and to implement controls to execute our AI strategy. These investments may not achieve the desired revenue growth and greater profitability quickly enough to offset the emerging technologies’ impact.”

“Now moving to TTEC Digital, where we continue to successfully shift our CX technology and services mix towards the areas of highest client demand: designing, building, and operating CX solutions rooted in data, AI, observability, and security.”

“Excluding our two legacy CCaaS practices, professional services grew 13% year-over-year, adding to the 15.3% growth we communicated in our first quarter results. This growth reflects the ongoing momentum we are seeing in our expanded CX technology partnership network that now includes more than a dozen strategic partners.”

“However, the average deal sizes are smaller and take longer to close as customers evaluate their investments in these transformations.”

“With AI valuations being crazy, et cetera, it seems like it's a good time to check and see if there's something that would be in the benefit of all the shareholders.”

“In TTEC Digital, we are gaining market traction as we successfully expand our CX technology and services to solutions in high demand – data, AI, observability and security.”

“In our Digital segment, we continue to execute on the market remix through our expanded partnership network, focusing on CX platform transformations through data, AI, observability, and security.”

“As AI-enabled chatbot and automation tools evolve, lower-tier services currently performed by our employees are being replaced by these tools. Unless we are successful in adopting offerings to leverage these tools and in adding new services to profit from these and other AI-enabled tools, they will significantly disrupt our business, reduce operating volumes, and materially impact our financial results.”

“evolving technologies that enable effective self-service may cause clients to bring the previously outsourced services in-house or to eliminate some of the previously outsourced service volumes by encouraging customer independence through self-service”

“Since we started this business 40 years ago, I was told that every innovation was going to eliminate or have an impact on the industry. First, it was voicemail, then email, then interactive voice response.”

“Simple repetitive tasks like making a basic reservation, checking on delivery status, and setting up appointments are already being automated.”

“The decrease in revenue for the TTEC Engage segment is explained by a long tenured client exiting a large line of business supported by TTEC, lower demand from select large onshore enterprise clients due to clients’ continued conservative management of discretionary spending influenced by a challenging macro-economic environment and delays attributable to launching new and larger awarded contracts.”

“Reduction in demand for our services and increased competition from other providers, technologies and in-house alternatives could create pricing pressures and excess capacity in the market that would have an adverse effect on our business, financial condition, and results of operations.”

“Second, we're partnering with clients to address financially underperforming programs through automation, offshore delivery, and operating model redesign while maintaining a high level of service quality. In the event, however, a mutually beneficial path isn't possible, we're assisting clients with a professional transition. Third, on the front lines, we're successfully deploying AI and automation in focused, practical ways to improve productivity, simplify workflows, and expand capacity across our operations.”

“However, we are seeing an elongated sales cycle as deals are becoming more complex in evaluating the mix of technology and human interaction. The new business we have closed is producing positive results, but often starts at smaller volumes to validate outcomes before scaling to significant growth.”

“This was primarily driven by planned revenue declines associated with our rationalization of a small number of underperforming clients, as well as a seasonal Public Sector client engagement that accounted for approximately 24% of the year-over-year revenue reduction.”

“As we said, that is literally tied to two clients, the majority of which is one large Public Sector client that is having a problem with a third party that we're not affiliated with as it relates to the technology that they're offering and the infrastructure that they're offering.”

“The decrease in revenue for the TTEC Engage segment is primarily due to client attrition and the absence of revenue from a short-term contract that was completed during the prior year period.”

“As of June 30, 2026, the total production workstations for our TTEC Engage segment was 26,800 with an overall capacity utilization of 70% versus 71% in the prior year period. The decrease was primarily driven by reduced client forecasts, partially offset by targeted seat reductions in the United States and Philippines along with country exits in Honduras and Rwanda.”

“Reduction in demand for our services and increased competition from other providers, technologies and in-house alternatives could create pricing pressures and excess capacity in the market that would have an adverse effect on our business, financial condition, and results of operations.”

“Such upfront payments are critical to acquisition of new business and are often used as an incentive to negotiate favorable rates from the clients and are accounted for as upfront discounts for future services.”

“If one of our clients is acquired (by a new owner or by another of our clients) our business volumes and revenue may materially decrease due to the termination or phase out of an existing client contract, volume discounts, or other contract concessions which could have an adverse effect on our business, financial condition, and results of operations.”

“Curious, in the AI situations where you're improving agent productivity, are there currently discussions about sharing in the economic improvement with your clients?”

“Lots of discussions. Lots of discussions. I mean, in some cases, in some cases, we're bringing the technology just as part of our services so we can provide good quality services and be able to reduce attrition in some of the things that help us and help the client.”