TTEC - NASDAQ

Thank you for standing by. The conference will begin momentarily. Until such time, you will hear music. Thank you, and please continue to stand by. Welcome to TTEC Holdings, Inc. fourth quarter and full year 2024 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 to Bob Belnap, TTEC Holdings, Inc.'s Group Vice President, Corporate Finance. Thank you, sir. 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 results for the period ended December 31, 2024. Participating on today's call are Ken Tuchman, Chairman and Chief Executive Officer of TTEC Holdings, Inc., and Kenny 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 within that document, for complete information about our financial performance, we also encourage you to read our full year 2024 annual report on Form 10-K. 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. 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-K. Before we proceed, I would like to state that our call today will not be addressing Mr. Tuchman's proposal. The special committee of the board formed to evaluate that proposal, together with its independent legal and financial advisors, continue to engage with Mr. Tuchman, and the proposal evaluation is ongoing. The company cannot comment on that process and will not be. 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 Ken.

Good morning, and thank you for joining us today. As previously shared, 2024 was a transitional year for TTEC Holdings, Inc. 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 with 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, revenue and non-GAAP adjusted EBITDA were in line with the guidance commentary that we provided last quarter, representing $2.2 billion and $202 million or 9.2% respectively. With a disciplined focus on these priorities, we made progress on many fronts in 2024. We continued our success winning new clients. These deals are diversified across our solutions 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 base clients in both business segments and have accelerated the infusion of AI capabilities into every new sales opportunity. For the second consecutive year, we were recognized as a great place to work in fifteen geographies where we operate. Although we are pleased with our improvements, in key areas of our business in 2024, we were constructively dissatisfied with our overall financial results for the year. 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, with 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 do not 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. In this environment, the needs of clients' Chief Operating Officers and Chief Information Officers are converging. They are working together to find approaches that go far beyond labor augmentation endpoint solutions. They are 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 Holdings, Inc. With our heritage of digital innovation woven into everything we do, we are 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, are 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 CX technologists, data scientists, and customer journey strategists. 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 are helping clients create experiences that feel seamless and intuitive, even if they are 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 Engage. Over the past six months, we 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 blends strategic thinking with a focus on performance, and they are accelerating our momentum while also delivering measurable client value. In TTEC Engage, our sales momentum is beginning to improve. In 2024, with fifteen 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 are 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 are 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 fifty-five 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 engagements. 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. Utilizing our proprietary software, we connected the two systems and now provide ongoing holistic support through our Surround CX managed services methodology. We have streamlined various systems to enhance connectivity for our clients' patients and caregivers. Throughout this process, we have established a long-term trusted partnership that will continue to grow. In another healthcare example, we are partnering with a Fortune ten global healthcare solutions company to modernize their infrastructure for enhanced voice and digital interactions. Our collaboration began nearly a decade ago with a Cisco deployment. Following a major acquisition in 2024, they recognized the need to centralize and modernize their critical CX interactions. 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. With several client engagements like this in development, 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 and service. As we move into 2025, 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 will hand it over to Kenny.

Thank you, Ken, and good morning. I will start with a review of our full year and fourth quarter 2024 results before providing context into our 2025 full year financial outlook. In 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 2024, compared to the prior year period, revenue was $2.21 billion compared to $2.46 billion, a decrease of 10.4%. Adjusted EBITDA was $202 million or 9.2% of revenue compared to $272 million or 11%. Operating income was $136 million or 6.2% of revenue compared to $200 million or 8.1%. And EPS was $0.71 compared to $2.18. Foreign exchange had a $3 million negative impact on revenue while positively impacting operating income by $7 million, primarily in our Engage segment. Turning to our consolidated fourth quarter 2024 financials, revenue was $567 million, a decrease of 9.4% over the prior year period and an increase of 7.2% over the prior quarter. Adjusted EBITDA was $51 million or 9% of revenue compared to $58 million 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 million or 6.2% of revenue compared to $42 million or 6. 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 the prior year period and $0.11 in the prior quarter. Foreign exchange had a $2 million negative impact on revenue while positively impacting operating income by $4 million, primarily in our Engage segment. At the company level, our fourth quarter financial performance was in line with the guidance expectations communicated last quarter, 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 million compared to $119 million in the prior year and relatively unchanged sequentially. The year-over-year comparison 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% compared to the prior year and representing approximately 64% 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 quarter revenue as communicated with our most recent guidance. We continue to view this as a temporary pause and expect supported by our strong pipeline activity. Digital's fourth quarter 2024 operating income was $13 million or 11% of revenue compared to $18 million or 14.8% in the prior year and $14 million or 12.5% in the prior quarter. On a full-year basis, Digital's 2024 revenue was $459 million compared to $487 million in the prior year period. Operating income was $51 million or 11.2% of revenue compared to $62 million 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 64% 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 confident that Digital will return to growth in 2025. Our ability to solution enterprise-wide digital transformations with our professional services engagements will result in long-term recurring revenue. Our Digital backlog for the next twelve months is at $308 million 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 the prior year as expected. Revenue decreased 10.8% to $452 million in the fourth quarter of 2024 over the prior year period. Compared to the prior quarter, revenue increased $39 million or 9.4%. Operating income was $22 million or 4.9% of revenue compared to $24 million 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 2024 in terms of our profit optimization efforts are evident over the last two quarters and will be more impactful in 2025. On a full-year basis, the Engage 2024 revenue was $1.75 billion compared to $1.98 billion in the prior year. Operating income was $85 million or 4.9% of revenue compared to $138 million or 7% in the prior year period. Approximately half of the full-year revenue decline that discontinued the line of business early in 2024. We continue to service this client across other programs which are anticipated to grow in 2025. 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 opportunities remains strong and our unique solutions continue to resonate in the market. This is evidenced by the twenty new logos signed in 2024, of which fifteen are large enterprise clients with significant growth potential as previously mentioned by Ken. The Engage backlog for the next twelve months is $1.51 billion or 96% of our 2025 revenue guidance at the midpoint of the range, up from 94% in 2024. The Engage last twelve-month revenue retention rate is 82%, compared to 95% in the prior year. Adjusted for the revenue decline related to the large financial services client, Engage's last twelve-month revenue retention rate is at 87%. I will now share other 2024 metrics before discussing our outlook. Cash flow from operations was a negative $59 million in 2024 compared to a positive $145 million in the prior year. As discussed last quarter, the discontinuation of the accounts receivable factoring facility impacted our cash flow by approximately $100 million during the year. Excluding the effect of the factoring facility, 2024 cash flow from operations was a positive $42 million. The remaining impacts are a result of the lower profitability compared to the prior year and a decrease in other working capital. Free cash flow for 2024 was a negative $104 million compared to a positive $77 million in the prior year. Excluding the effect of the accounts receivable factoring facility and including the proceeds from the sale of a significant real estate asset of $46 million, 2024 free cash flow was a positive $43 million. As of December 31, 2024, cash was $85 million with $978 million of debt, primarily representing borrowings under our $1.2 billion revolving credit facility. Net debt increased year over year by $66 million to $893 million, 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 million or 2% of revenue for the full year 2024, compared to $68 million or 2.8% in the prior year. Again, with the majority of the spend related to our engaged geographic expansion. Our full-year normalized tax rate was 40.9% in 2024 compared to 22.7% in the prior year. This increase is primarily due to the 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 context supporting our full-year 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 consistently performing below our targeted financial profile, is putting pressure on the top line. As Ken mentioned, and as we communicated last year, we have put tremendous 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 in our operational delivery, 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 2025 objectives. These actions have laid a strong foundation for the profitability improvements in 2025 and are evidenced by the early pull-through of increased margins. 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. In our Digital business, we expect to return to year-over-year revenue growth through our professional services and recurring managed services, together forecasted to grow by approximately 5% in 2025. 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%. Turning to the midpoint of our 2025 guidance, as outlined in greater detail in our fourth quarter and full-year 2024 earnings press release. GAAP revenue of $2.04 billion, a decrease over the prior year of 7.6%. Adjusted EBITDA of $225 million, 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 million, 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 2.2% and 2.4% of revenue, of which approximately 51% is growth-oriented, a full-year effective tax rate between 38% and 42%. We expect the phasing of our profitability improvement to be more pronounced in the second half. Please reference our commentary in the business outlook section of our fourth quarter and full-year 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, position the company well for improved operational efficiency and profitability in 2025. As always, we remain focused on executing against our top business priorities, serving the best interest of all stakeholders. I will now turn the call back to Bob.

Thanks, Kenny. As we open the call, we ask that you limit your questions. Operator, you may open the line.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star followed by the number one. Please unmute your phone and record your name and company name clearly when prompted. Name and company name are required to introduce your question. And to cancel your request, you may press star two. 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 am just curious if you could give us a sense of how exactly that is working and what sort of impacts that might have on your win rates and your deal structures?

Good morning, George. How are you? It is going great. To tell you the truth, we have got just on the digital side alone over a hundred and fifty-ish, hundred and forty-five, hundred and fifty-five projects that are underway that we are implementing AI on behalf of a bevy of clients. Additionally, on the Engage side, more than I would 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, you know, as we have 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 are 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, make their job allow the information to be faster and more nimble available, and drive overall better compliance, better fraud detection, etcetera. So we are utilizing AI in the areas of the agent desktop, and how we can make our associates more productive. We are using AI throughout our operations, everything from quality assurance to training, learning, our whole learning organization. We are 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. More to come in the next, you know, with the next conference call where we will be able to share many, many different examples as well as the outcomes and the impact that it is having. So I hope that answers your question.

Yeah. Thank you. And just a comment as I leave. You know, I am encouraged to take private process continues, but you know, on behalf of many, many shareholders I have spoken with, there is a big frustration on the timing and kind of a say nothing, do nothing strategy from this committee. I would really like to hear an update. So just want to make sure I express that.

I appreciate that. I absolutely appreciate that. I hope the committee will take that into consideration.

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? 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 are looking at the midpoint of guidance for 2025 is it is all about the sequential quarters for 2025. We see slightly higher revenue in the second half of the year. We are looking at a peak season in 2025 that is relatively equivalent to the peak season that we saw in 2024 from a healthcare standpoint. The underlying trend in the sequential quarters is going to follow our normal seasonality that you have seen in 2024 and 2023. However, the second curve there is the 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 2024. As a matter of fact, those specific enterprise logos are forecasted to grow over 125% year over year. And so it is with that tailwind of those new clients that delayed in 2024 that are now underway in the second half of 2024 and the beginning of 2025. That will provide the underlying growth for the second half in our guidance.

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

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

Yeah, Cassie. Good question. You know, 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 is more of the same, you know, Ken talked a lot about the new industry experience and the leaders that we brought in, specifically on the Engage side of the business. John and his team are doubling down on those operational metrics and operational cost drivers, if you will, to continue to improve the gross margin year over year and quarter over quarter. And so we are really excited about how the desktop AI, you know, Ken mentioned, we have got AI now infused in quality. We have 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 are starting to see that come through for us in our gross margin attainment, you know, in the details of how Engage works around bonus and penalties and the structures of the contracts. And so it is more of the same, but it is that operational discipline that is delivering, you know, the quality service for the customer. As 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 are going to see at the gross margin line and at the EBITDA line.

I think the other area that we know is worth noting that we have been investing is in on the digital side, we have significantly expanded our partner network and have brought in some phenomenal leadership that is leading in various different with the various different partners, etcetera. So that we are 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 is definitely a focus on investing in those practices and growing them. Those are the practices on a percentage basis that are actually 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, you know, there has been a fair amount of injection of really strong operating leadership that has been added throughout the globe that we have been investing in to really get dramatically better efficiencies, and we believe that that will pay its dividends in the future as well. But that is really where the focus is. And then there is, 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 in my script, as well as in the accent neutralization area, etcetera, that we are in beta testing now with clients and are excited to be rolling out in the near future, which will open up other areas for us as well.

Got it. That is really helpful. And then I guess just to follow up on your revenue growth guidance assumptions for 2025, are you guys assuming, you know, a stable macro from current levels, anything from AI-related services, etcetera, that you guys talked about? And I guess, you know, in terms of verticals, you guys had talked previously, you know, sometimes about hyper-growth or healthcare, you know, 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.

Yeah, Cassie. I would say 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, you know, we feel that 2025 is going to be relatively similar to 2024. We think from a TTEC Holdings, Inc. and a micro standpoint that we are 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 is kind of our macro view right now is 2025 a little better than 2024, especially the back half of 2025. And then I would tell you from a vertical standpoint, again, you know, John and a lot of the sales leadership Ken was just mentioning that we brought into the organization in the last eighteen months, they are 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 is again that overall strategy of diversification of geography, diversification of verticals. So we are somewhat bullish on most of our verticals that we are 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 ago. Have a very good forecasted growth rate for us in the second half of the year. Ken, I do not know if you want to add anything.

No. I think the only thing I would just point out is that I do not want, you know, I am not in any way trying to hype 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 are bringing on. Most of our major competitors have acquired their clients through acquisitions. We have been quite successful, we believe, in 2024 with the fifteen new enterprise clients on Engage and the large amount of new clients on Digital, and we are seeing the trend continue into 2025. And that is 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 diversification with our client base, and that is exactly what we are focused on and what we are doing. Obviously, the, you know, the one thing that there is the good news is winning new clients and what that creates for the future. But that said, the part that gets sometimes a little frustrating is the patience that is 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 are winning a lot of net new logos, we do not necessarily immediately receive the benefit that we would like to receive from the win. But ultimately, we do.

That is helpful. Thank you.

Thank you. Our last question is from Jonathan Lee of Guggenheim Security. 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 are getting from increased offshore delivery? Versus, let us say, your cost takeout initiatives, and how do you defend your margins relative to the perceived need to kind of pass on some of these benefits to your customers?

Hey, Jonathan. You know, offshore, again, back to what I just commented on a minute ago. For sure, our diversification strategy customers, verticals on the Engage side of the business, and then geography, onshore, offshore, is what we are executing on in 2024 and in 2025. I would tell you that we improved the onshore-offshore mix. Our offshore grew about 300 basis points in 2024. Our forecast is to continue to grow that offshore mix another 300 plus basis points in 2025. But, again, you know, back to Ken's comments, as that revenue grows, it still 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 expanded geographies over the last eighteen months again, to create good leverage against that investment that we have made to diversify. And so we are 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 are seeing in 2025 EBITDA, specifically for Engage, is more heavily weighted towards the improvements that we are making in our operation up and down with AI, with, you know, just pure good discipline in our operational group. And so I would heavily weight it more towards that than necessarily just the onshore-offshore mix changes.

Got it. And thanks for that. Maybe the last one is how do we get comfortable with your back half for that year? Relative to your typical visibility you have going out to, let us say, thirty to ninety days as it relates to client volumes.

Yeah. 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 have talked about, we have pretty good precision with that forecast of an understanding of when those clients are going to start. Because, again, a lot of this is in the new buildings, the new geographies, South Africa, Egypt, Europe, and LatAm. And so we know when they are starting, and so the ability to forecast that in the sequential quarters 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. You know, Digital obviously is more of a closer-in target. And where Dave and the team sit on the Digital side is book to bill. His new revenue, and what he is 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 the top-line revenue in the Digital.

Gotcha. Thanks for taking our questions again.

Thank you.