TTEC Holdings, Inc. Price & Performance (TTEC)

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 opinion as of the date of this call, and we undertake no obligation to revise 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 2024 Annual Report on Form 10 ks. Before we proceed, I would like to state that our call today will not be The Special Committee of the Board formed to evaluate that proposal together with its independent legal and financial advisors, continue to engage with Mr. Tuckman and the proposal valuation is ongoing. The company cannot comment on that process and will not be A replay of this conference call will be available on our Web site under the Investor Relations section. I will now turn the call over to Ken.

Good morning and thank you for joining us today. As previously shared, 2024 was a transitional year for TTEC TTEC, Across the company, we continued to advance on three major priorities: Our diversification strategy with a broadened geographic delivery footprint and client portfolio, our expanded digital CX value proposition [indiscernible] differentiated technology enabled solutions and our overall goal of achieving and exceeding our historical growth and run rate margins in the near term. For the full year 2024 TTEC, revenue and non GAAP adjusted EBITDA were in line with the guidance commentary that we provided last quarter. [indiscernible] and $2.00 $2,000,000 or 9.2% respectively. With a disciplined focus on these priorities, we made progress on many fronts 2024 TTEC.

We continued our success winning new clients These deals are diversified across our solution and core industries of financial services and healthcare as well as emerging verticals including retail, travel and streaming services. We established and strengthened additional relationships with over a dozen CX technology partners through collaborative product development, joint engineering efforts and shared go to market strategies. We advanced AI adoption internally for our own associates and with our embedded based clients in both business segments and have accelerated the infusion of AI capabilities into every new sales opportunity.

And for the second consecutive year we were recognized as a great place to work in 15 geographies where we operate. Although we are pleased with our improvements, in key areas of our business in 2024 TTEC, we were constructively dissatisfied with our overall financial results for the year. [indiscernible] While our forecasted margin improvements reflect our progress, top line revenue is impacted by two client business decisions unrelated to our performance. The relationships with both clients remain strong [indiscernible] ample opportunity for growth. Additionally, our top line was also being impacted by a muted open enrollment healthcare season. And our continued focus on rationalizing client engagements that don't meet our target financial profile. Kenny will share details on those topics, in his comments shortly. Moving on to the discussion about the industry. The AI revolution is creating exciting opportunities for us Innovative technologies are flooding the market with entirely new ways to advance the customer journey and the associate experience. This environment, the needs of clients chief operating officers and Chief Information Officers are converging. They're working together to find approaches go far beyond labor augmentation endpoint solutions. They're looking for the integration of CX technology and services that seamlessly work together end to end to increase operating efficiencies, improve customer experiences and strengthen the top and bottom line.

This capability is right in our sweet spot and remains a differentiator for TTEC TTEC. With our heritage of digital innovation woven into everything we do, we're uniquely prepared to take advantage of this moment It took us many years to build the capabilities and perfect the solutions that are resonating with clients today. We believe these capabilities and solutions if carefully inspected, our highly differentiated relative to what our competitors claim to have. We have done the hard work to complete thousands of technology implementations for leading brands across the globe develop collaborative partnerships with all the dominant CX technology leaders and build a deep and enviable bench of full stack Tx technologists data scientist, and customer journey strategist. As the digital customer experience transformation company, clients are looking to us as they navigate the complex CX ecosystem Across our two business segments, TTEC Engage and TTEC Digital. We offer the breadth and depth of CX expertise unmatched in the industry. At this pivotal time, in the market, we're helping clients create experiences that feel seamless and intuitive And even if they're being delivered by a combination of human interaction, and modern technology. Now let's move on to an update on our two business segments.

Starting with TTEC TTEC. Over the past six months, strengthened our TTEC Engage management team with several strategic hires to capitalize on numerous opportunities in the market. We brought in experienced client focused professionals worldwide including our new President, three vertical industry executives and operational leaders in The Americas and EMEA. Each of these leaders blend strategic thinking with a focus on performance. And they're accelerating our momentum while also delivering measurable client value. In TTEC Engage, our sales momentum is beginning to improve. In 2024 TTEC, with 15 new enterprise client wins, our go to market engine exceeded its new client acquisition goal. Though many of these new relationships start with a single line of business, they offer significant potential for future expansion. With new solutions and additional business units. Increasingly, these deals are being delivered offshore as evidenced by our growth in our new geographies year over year. We continue to leverage technology at scale in TTEC Engage to amplify the skills and the talent of our frontline teams. Internally, we're using AI enabled solutions and data driven insight across the entire associate lifecycle to recruit, train engage and empower our people. In addition, we are implementing solutions that directly improve the customer journey including self-service knowledge management, accent neutralization capabilities and our proprietary voice translation applications.

While it is still early days, we're encouraged by the potential of these technologies to increase quality efficiencies and customer satisfaction. Several wins this quarter underline the value of our digital first expertise. For example, a recent success with a popular travel platform stemmed from their dissatisfaction with their CX partners' lack of innovation They chose us for our proven ability to enhance quality and operational efficiency through human enabled AI powered solutions. This new program will utilize the full extent of our operating model including learning, knowledge optimization, voice translation, and conversational analytics. Now on to TTEC Digital. This year, we closed 55 new clients, including many larger enterprise sized companies that provide significant runway for future expansion. As clients technology needs shift from cloud migration services to more complex enterprise wide digital transformation we are dramatically expanding our total addressable market. These multifaceted engagements typically start with shorter cycle professional services, and grow into longer term recurring managed service engagement. Let me share a few examples. We started our relationship with a regional healthcare provider by implementing their new CRM system. During the project, we recognized the need for a customized modern CCaaS platform by utilizing our proprietary software we connected to two systems and now provide ongoing holistic support through our Surround CX managed services methodology, We've streamlined various systems to enhance connectivity for our clients' patients and caregivers Throughout this process, trusted partnership that will continue to grow.

In another healthcare example, we're partnering with a Fortune 10 global healthcare solutions company to modernize their infrastructure for enhanced voice and digital interaction. Our collaboration began nearly a decade ago with a Cisco deployment Following a major acquisition in 2024 TTEC, they recognized the need to centralize and modernize their critical CX interaction. Together, we developed a robust technology roadmap that will transition them from a rigid legacy IVR system to an intuitive conversational AI platform. Simplifying interactions, streamlining routing, reducing cost, while improving healthcare outcomes across their network. We have several client engagements like this in development and I look forward to sharing both the customer experience and the business impact of these initiatives in the months to come. In closing, our goal remains the same, to be the undisputed leader in the future of CX, where human expertise integrates seamlessly with advanced technologies. As the digital customer experience transformation company, we will continue to deliver an end to end portfolio of outcome based CX technology in services. As we move into 2025 TTEC, we remain focused on growing our business by diversifying our client base, solutions and geographic footprint improving our operating leverage and profitability and continuing to strengthen the intensity of our performance based culture.

We are confident that our priorities will drive our vision forward and position the company for success in 2025 and beyond. On behalf of our global team, Board of Directors and leadership, thank you for your continued support. Now, I'll hand it over to Kenny. Thank you, Ken, and good morning. I will start with a review of our full year and fourth quarter twenty twenty four results before providing context into our 2025 full year financial outlook. My discussion on 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 full year 2020 Revenue was $2,210,000,000 compared to $2,460,000,000 a decrease of 10.4%. Adjusted EBITDA was $2.00 $2,000,000 or 9.2% of revenue compared to $272,000,000 or 11%. Operating income was $136,000,000 or 6.2% of revenue compared to $200,000,000 or 8.1%. And EPS was $0.71 compared to $2.18 Foreign exchange had a $3,000,000 negative impact on revenue, while positively impacting operating income by $7,000,000 primarily in our Engage segment.

Turning to our consolidated fourth quarter TTEC twenty four financial [indiscernible] Revenue was $567,000,000 a decrease of 9.4% over the prior year period and an increase of 7.2% over the prior quarter. Adjusted EBITDA was 51,000,000 or 9% of revenue compared to $58,000,000 or 9.2% of revenue in the prior year. Sequentially, adjusted EBITDA was relatively unchanged but declined by 50 basis points as a percentage of revenue. Operating income was $35,000,000 or 6.2% of revenue compared to $42,000,000 or 6.7% in the prior year. Operating income increased 2.5% over the prior quarter but declined by 20 basis points as a percentage of revenue. And EPS was $0.19 compared to $0.37 in in the prior year period and $0.11 in the prior quarter. Foreign exchange had a $2,000,000 negative impact on revenue [indiscernible] while positively impacting operating income by $4,000,000 primarily in our Engage segment. At the company level, our fourth quarter financial performance was in line with the guidance at the lower end of the guidance range. Now turning to our fourth quarter and full year 2024 segment results.

In our Digital segment, fourth quarter revenue was $115,000,000 compared to $119,000,000 in the prior year and relatively unchanged sequentially.

The year over year compare continues to be impacted by one time on premise product sales, which are decreasing as clients migrate to cloud based CX delivery solutions. Excluding these one time product sales, digital's revenue grew 3.8% in the quarter compared to the prior year. We continue to deliver growth in our recurring managed services offerings, increasing 10.2 TTEC% of Digital's total fourth quarter revenue compared to 56% in the prior year. In our CX professional services offerings, revenue declined 8.5% year over year. As shared previously, select clients have delayed the timing of investing in larger engagements. Which impacted the fourth quarter revenue as communicated with our most recent guidance. We continue to view this as a temporary pause and expect to return supported by our strong pipeline activity. Digital's fourth quarter twenty twenty four operating income was $13,000,000 or 11% of revenue compared to eight increase of $13,000,000 or 14.8% in the prior year, an and $14,000,000 or 12.5% in the prior quarter. On a full year basis, Digital's 2024 revenue was $459,000,000 compared to $487,000,000 in the prior year period. Operating income was $51,000,000 or 11.2% of revenue compared to $62,000,000 or 12.8% in the prior year.

Excluding the one time on premise product sales, digital revenue grew slightly at 1%. Recurring managed services grew 9.1% and represented TTEC of Digital's full year revenue compared to 55% in the prior year. The year over year decline in the professional services offerings of 12% combined with investments in leadership and talent resulted in lower profitability. Despite the second half headwinds in 2024, we are comp Our ability to solution enterprise wide digital transformation with our professional services engagements will result in long term Our digital backlog for the next twelve months is at $3.00 $8,000,000 or 66% of our 2025 revenue guidance at the midpoint of the range, slightly down from 69% in the prior year. Moving on to our Engage segment, fourth quarter seasonal volumes came in above our most recent guidance, but were down compared to prior year as expected.

Revenue decreased 10.8% to $452,000,000 in the fourth quarter of twenty twenty four, over the prior year period. Compared to the prior quarter, revenue increased $39,000,000 or 9.4%.

Operating income was $22,000,000 or 4.9% of revenue compared to $24,000,000 dollars or 4.8% of revenue in the prior year. Sequentially, operating income increased 13.3% with an approximate 20 basis points improvement as a percentage of revenue. Engage fourth quarter revenue and operating income exceeded our low end of guidance coming in closer to the mid range provided. The overage was primarily driven by upside related to two specific clients in our public sector vertical. We are pleased with our Engage segment's fourth quarter financial results and the profitability improvement in the second half of the year. The actions we have taken and communicated throughout the second half of twenty twenty four in terms of our profit optimization efforts are evident over the last two quarters and will be more impactful in 2025 TTEC. On a full year basis, the Engage TTEC Operating income was $85,000,000 or 4.9% of revenue compared to $138,000,000 or 7% in the prior year period. Approximately half of the full year revenue decline was due to the previous [indiscernible] that discontinued a line of business early in 2024 TTEC.

We continue to service this client across other programs are anticipated to grow in 2025 TTEC. The remaining revenue impact is primarily attributable to a decrease in healthcare volumes, including the reduction in seasonal work previously mentioned. Partially offset by volume increases in our public sector vertical. Despite the top line growth headwinds, the quality of Engage our unique solutions continue to resonate in the market. This is evidenced by the 20 new logos signed in 2024 of which 15 are large enterprise clients with significant growth potential as previously mentioned by Ken. The Engage backlog for the next twelve months is 1,510,000,000.00 or 96% of our 2025 revenue guidance at the midpoint of the range. Up from 94% in 2024 TTEC. The Engage last twelve month revenue retention rate is 82% TTEC, Adjusted for the revenue decline related to the large financial services client, Gage's last twelve month revenue retention rate, at 87% TTEC. I will now share other 2024 metrics before discussing our outlook. Cash flow from operations was a negative $59,000,000 in 2024 compared to a positive $145,000,000 in the prior factoring facility impacted our cash flow by approximately 100,000,000 during the year. Excluding the effect of the factoring facility, 2024 cash flow from operations was a positive $42,000,000 The remaining impacts are a result of the lower profitability compared to the prior year a decrease in other working capital.

Free cash flow for 2024 was a negative $104,000,000 compared to a positive $77,000,000 in the prior year. Excluding the effect of the accounts receivable factoring estate asset of $46,000,000 2024 free cash flow was a positive $43,000,000 As of 12/31/2024, cash was 85,000,000 with $978,000,000 of debt, primarily representing borrowings under our $1,200,000,000 revolving credit facility. Net debt increased year over year by $66,000,000 to $893,000,000 impacted by the factoring facility discontinuation. The net leverage ratio as defined under the credit facility was 3.99 times at year end a half turn reduction from the prior quarter. Capital expenditures were $45,000,000 or 2% of revenue for the full year 2024 TTEC. Compared to $68,000,000 or 2.8% in the prior year. Again with the majority of the spend related to our engaged geographic expansion. Impact of The U. S. Valuation allowance recorded against The U. S. Pre tax losses and profitable foreign jurisdictions which drove a higher tax expense. Transitioning to our 2025 outlook, I will now provide some financial guidance. Relating to Engage, we expect a decline in revenue of approximately 10%. Primarily due to the impact of a public sector client and the previously mentioned financial services client discontinuing certain lines of business.

This combined with the anticipated foreign exchange translation headwinds our focus on expanding our offshore revenue, and the rationalization of client engagements that are consistent is putting pressure on the top line. As Ken mentioned, focus on our profit optimization efforts within the Engage segment. These include: expanding our geographic delivery footprint to meet clients' needs for lower cost delivery and solutions. Cost optimization initiatives driving efficiency and our operational delivery and aligning our corporate costs to our revenue. Improving our operational agility and margin performance through detailed operational metrics and recruiting new talent in key leadership roles that combined with our tenured leadership will execute on our twenty twenty five objectives. These actions have laid a strong foundation for the profitability improvements in 2025 TTEC is evidenced by the early pull through of increased margins since the We emphasize that last year was a transitional year with these actions being our priority and we have confidence that they will deliver the bottom line benefits in 2025 TTEC. In our digital business, we expect to return to year over year revenue growth through our and recurring managed services, together forecasted to grow by approximately 5% in 2025 TTEC. This is driven by our end to end digital CX value proposition with differentiated technology enabled solutions delivered through our growing diversified offerings.

This growth offsets the decline in our one time on premise product revenue of approximately 45% TTEC. Turning to the midpoint of our 2025 guidance. As outlined and full year 2024 earnings press release. GAAP revenue of $2,040,000,000 a decrease over the prior year of 7.6%. Adjusted EBITDA of $225,000,000 an increase of 11.2% over the prior year and 11% of revenue compared to 9.2% in the prior year. Non GAAP operating income of $164,000,000 an increase of 20% over the prior year and 8% of revenue compared to 6.2% in the prior year. Non GAAP earnings per share of $1.08 an increase of 52.5% over the prior year. Other relevant guidance metrics include Capital expenditures between 2.22.4% of revenue of which approximately 51% is growth oriented, a full year effective tax rate between 3842% TTEC. We expect the phasing of our profitability improvement to be more pronounced in the second half of twenty twenty five on slightly higher revenue. Please reference our commentary in the business outlook 2024 earnings press release to obtain our expectations for full year 2025 performance at the consolidated and segment level. In closing, we are confident in the actions we took in 2024 and continue to execute on in the New Year.

These combined with our demonstrated forty plus years of delivering value driven CX technology and service solutions, positioned the company well for improved operational efficiency and profitability in 2025 TTEC. As always, we remain focused on executing against our top business priorities and serving the best interest of all stakeholders. I will now turn the call back to Bob. Thanks, Kenny. As we open the call, ask that you limit your questions to one at a time.

Thank you. We will now begin the question and answer name and company name clearly when prompted. You Our first question comes from the line of George Sutton of Great Hallum. Your line is now open, sir. Thank you. Ken, you mentioned that all of your deals are being infused with AI?

I'm just curious if you can give us a sense of how exactly that is working What sort of impacts that might have on your win rates and your deal structures? Good morning, George. How are you? It's going great. To tell you the truth, we are we've got just on the digital side alone over 150 ish 45, 155 projects that are underway that we're implementing AI on behalf of a a bevy of clients. Additionally, on the Engage side, more than I'd say more than three quarters of our associates now have various different tools that are taking advantage of AI. We have a significant amount of additional technology that will be coming on in the second quarter that will be hitting the majority of the desktop if not all the desktops on the Engage side. And as we've stated in the past, we view AI as our friend.

We believe that AI gives us the ability to provide a better overall quality of service And I think you're going to see that once you get past this hype cycle, that AI is going to be something that truly can enhance the associate experience, make their job easier, allow for the information to be faster and more nimble available and drive overall better compliance, better fraud detection, etcetera. So we're utilizing AI in the areas of the agent desktop, and how we can make our associates more productive We're using AI throughout our operations everything from quality assurance to training [indiscernible] our whole learning organization We're using it in recruiting etcetera. So long winded answer, but I would say that we are well on track with our goals of how to take advantage of AI. And more to come in the next with the next conference call where we'll be able to share many, many different examples as well as the outcomes and the impact that it's having So I hope that answers your question.

Yes. Thank you. And just a comment as I leave.

I'm encouraged to take private process continues, but on behalf of many, many shareholders I've spoken with, there's a big frustration on the timing and kind of the say nothing, do nothing strategy from this committee really like to hear an update. So just want to make sure I express that. I appreciate that.

I absolutely appreciate appreciate that. We'll I hope the committee will take that into consideration. All right. Thank you. Next question comes from the line of Maggie Nolan of William Blair. Your line is now open. Thank you. I wanted to make sure that I fully understand the 2025 revenue guidance. Can you comment on, are there any revenues related to the clients that had previously delayed large projects that impacted 2024 TTEC? As well as your assumptions for seasonal revenue versus 2024 for the 2025 revenue guidance?

Hey Maggie, good morning. Absolutely. What I would say is 2024 the way we're looking at the midpoint of guidance for 2025 is it's all about the sequential quarters for 2025. TTEC see slightly higher revenue in the second half of the year We're looking at a peak season in 2025 that is relatively equivalent TTEC the peak season that we saw in 2024 TTEC. From a healthcare [indiscernible] the underlying trend in the sequential quarters is going to follow our normal seasonality that you've seen in 2024 TTEC '23 However, the second curve there is tailwinds that we do have to your question. About the new logos, the enterprise logos that we talked about that we won in the second half, but focused on the second half of twenty twenty four. As a matter of fact, those specific enterprise logos are forecasted to grow over 225% year over year. And so it's with that tailwind of those new clients that delayed in 2024 that are now underway in the second half of twenty twenty four and the beginning of twenty twenty five. That will provide the underlying growth for the second half.

In our guidance.

Thank you.

Thank you. Our next question comes from the line of Kashi Chan of Bank of America. Your line is now open.

Hey guys, thanks for taking my question. I guess TTEC to ask on the margin front for 2025 TTEC, obviously, you're continuing to make reinvestments there. So So where is the offsets that you're getting from operating leverage and just talk a little bit more about the investments you're making in '25 how those are different from 2024 TTEC what kind of ROI you're expecting from that going forward? Thanks.

Yes, Cassie. Good question. Question. We talked a lot last year about the actions that we took in Q2, Q3 and Q4 around adjusting the cost structure of the company to meet where our revenue is at.

For 2025, it's more of the same. Ken talked a lot about the new industry experience and the leaders that we've brought in as specifically on the engaged side of the business, [indiscernible] and his team are doubling down on those operational metrics and operational cost drivers, if you will, to improve continue to improve the gross margin year over year and quarter over quarter. And so what we're really excited about how the debt we've got AI now infused in quality. We've got it in training. And so that AI is creating the operating leverage for our agents to be more efficient to give a better service and to give a better quality. And we're starting to see that come through for us in our gross margin attainment, in the details of how Engage works around bonus and penalties and the structures of the contracts. And so it's more of the same, but it's that operational discipline that's delivering the quality service for the customer, but then also accretes to us from a profitability and a margin and an operating leverage expansion. Standpoint. And again, I think the key for 2025 is the sequential improvement that you're going to see at the gross margin line and at the EBITDA line.

I think the other area that we it's worth noting that we've been investing is in is on the digital side, we've significantly expanded our partner network and have brought in some phenomenal leadership that's leading in various different with the various different partners, etcetera. So that we're picking up traction across the entire CX continuum not just the CCaaS area, but all the desktop solutions that people are focused on all the core AI partnerships etcetera. So there's definitely a focus of investing in those practices and growing them. Those are the practices on a percentage basis that are growing at the fastest rate. Albeit on a small number. So you would expect it to grow you would expect the percentage to be higher. And then there's been a fair amount of injection of really strong operating leadership that's been added throughout the globe that we've been investing in to really get dramatically better efficiencies and that's we believe that that will pay its dividends in the future as well. But But that's really where the focus is. And then there's I just I would say the last thing is that we have some exciting products that are coming out in the language translation area that I mentioned my script, as well as in the accent neutralization area, etcetera, that we are in beta testing now with clients and our excited to be rolling out in the near future, which will open up other areas for us as well.

Got it. That's really helpful. And then I guess just TTEC follow-up on your revenue growth guidance assumptions for 2025 TTEC, Are you guys assuming a stable macro from current levels, anything from AI related services, etcetera, that you guys talked about? And I guess in terms of verticals, guys TTEC talked previously sometimes about hyper growth or healthcare. Financial services, public sector, I guess anything in terms of how we should think about growth from those verticals? That are embedded in your 2025 guidance? Thank you.

Yes, Cassie. I would what everything I read was GDP last year 2024 is about 2.3%. I think GDP is supposed to be 1.9% or 2%. So from a macro standpoint, We feel that $25,000,000 is going to be relatively similar to 2024. We think from a TTEC and a micro standpoint that we're obviously going to outperform that. Based on everything that Ken just said, what we said in our prepared remarks that we think we have some very good tailwinds both in the digital and in the Engage business. And so for us, that's kind of our macro view right now is 25% TTEC little better than 24% especially the back half of 25% TTEC.

And then I would tell you from a vertical standpoint, again, John and a lot of the sales leadership Ken was just mentioning that we brought into the organization in the last eighteen months, They're really experts in the verticals that we brought them in. And so we really like the technology, the retail vertical Those are performing well for us. We talked about PubSec. Performed well for us in Q4 as well. And so for us, it's again that the overall strategy of diversified diversification of diversification of the lines of businesses inside of those verticals we're somewhat bullish on most of our verticals. That we're going after and have won again those big clients that we won last year from an enterprise standpoint that I just mentioned a few minutes have a very good forecasted growth rate. For us in the second half of the year. Dan, I don't know if you want to No, I think the only thing I would just point out is that I don't want I'm not in any way trying to the future I just think that from a realistic standpoint, what makes me have more confidence on a go forward basis is just the amount of net new clients that we're bringing on Most of our major competitors have acquired their clients through acquisitions.

We have been quite successful We believe in 2024 with the fifth new enterprise clients on Engage and large amount of new clients on digital. And we're seeing the trend continue into '25 And that's one of my top priorities because obviously we would like to have less concentration of revenue amongst any one particular client And the best way to do that is by having more diversified and that is exactly what we're focused on and what we're doing. Obviously, the one thing that that the good news is winning new clients and what that creates the future, But that said, the part that gets sometimes a little frustrating is the patients that's required as you ramp these clients. We previously said over the years that Typically, clients take twelve to eighteen months to get to full ramp. And so even though we're winning a lot of net new logos, we don't necessarily immediately receive the benefit that we would like to receive from the wind. But ultimately, we do.

That's helpful. Thank you. Thank you. Our last question is from Jonathan Lee of Guggenheim Securities. Your line is now open. Hey, this is Jonathan on behalf of Jonathan and thanks for taking our question. Just a very quick one.

How do we think about the type of margin uplift you're getting from increased offshore delivery? Versus let's say your cost takeout initiatives? And how do you defend your margins with a perceived need to kind of pass on some of these benefits to your customers? Hey, Jonathan.

Offshore, again, back to what I just commented on a minute ago for sure, our diversification strategy customers, verticals on the engaged side of the business and then geography onshoreoffshore is what we are executing on in 2024 and in 2025 TTEC. I would tell you that we improved the on shoreoffshore mix. Our offshore grew about 300 basis points. In 2024 TTEC. Our forecast is to continue to grow that offshore mix another 300 plus basis points in 2025 But again, back to Ken's comments, as that revenue grows, it still it takes time to onboard the majority of our pipeline right now in Engage is offshore as we again utilize the assets that we put in place in those again to create good leverage against that investment that we made to diversify And so we're very happy with that. But I would answer your question that you should think more that the expansion of the margin the expansion of the profitability, the double digit growth that you're seeing in 2025 EBITDA, specifically for Engage, is more heavily weighted towards the improvements that we're making in our operation up and down with AI, with just pure good operational groups.

And so I would heavily weight it more towards that.

Than necessarily just the onshoreoffshore mix changes. Just yet.

Got it. And thanks for that.

Maybe the last one is, how do we get comfortable with your back half for TTEC year? Relative to your typical visibility you have going out to let's say thirty to ninety days as it relates to client volumes? [indiscernible] Again, it comes down in Engage, it comes down to the cycle, right? It comes down to the onboarding cycle. And so as we look at our pipeline, as we look at our closed won and as we forecast out, all these client wins that we've talked about we have pretty good precision with that forecast [indiscernible] Because again, a lot of this is in the new buildings and new geographies, how Africa, Egypt, Europe and LatAm. And so we know when they're starting. And so the ability to forecast that in the sequential quarters is has a relatively high confidence level. And so we feel again back to my earlier comment that the second half revenue is going to be slightly higher than the first half revenue. But the profitability pull through on that revenue and on the base business is definitely going to be back half weighted. Digital obviously is more of a closer in target. And where Dave and the team sits on the digital side is book to bill, his new revenue and what he's looking at the confidence level that we have in the pipeline at the start of the year compared to prior years.

We feel very good about that forecasted topline revenue in the digital business.

Got you.

Thanks for taking our questions again.

Thank you.

Thank you for your questions. That is all the time we have today. This concludes the TTEC fourth quarter and full year twenty twenty four earnings conference call. You may disconnect now. [indiscernible] [indiscernible] [indiscernible]