What TTEC’s Stock Decline Says About Perception of CX Outsourcers

TTEC Holdings’ five-year decline is continuing after the customer-experience outsourcer reported another quarter of decreasing revenue while its founder abandoned plans to take the company private.

In the second quarter, TTEC’s revenue fell 3.8% from a year earlier, totaling $514 million, according to its latest earnings release. Adjusted EBITDA increased to $52 million, but this boost mainly came from cost-cutting and one-time items rather than genuine growth. The company’s stock price has risen from a pandemic-inflated high of more than $100 to its current trading price of $3.15.

TTEC provides technology and services for customer experience through its product, TTEC Engage, which focuses on using AI to support initiatives of customer acquisition and growth.

TTEC’s woes are hardly out of the norm for business process outsourcing companies since the COVID-19 pandemic ended. Concentrix, which had its initial public offering in December 2020, quickly rose in price but has since dropped 50% of its value. TaskUS had its IPO in June 2021, quickly rising from $30 to $70 a share, and has since declined to $12.

Teleperformance, which has traded publicly for decades, shows a precipitous rise in stock price leading into the COVID-19 pandemic, followed by a similar fall back to price levels seen 10 years ago.

Some analysts have argued the quick drop in price since 2022 for most BPO-centered companies are simply a reversion to the mean, while bargain hunters are beginning to take notice.

In TTEC’s case, a recent move by CEO Kenneth Tuchman to withdraw his bid to take TTEC private appears to have created more downward pressure on the stock price.

On a recent earning’s call, Tuchman emphasized his commitment to the company, its employees, customers, partners and investors. This decision ends months of uncertainty about the company’s direction following his preliminary proposal in 2024. Tuchman noted stepping back allows management to focus on executing TTEC’s future strategy.

TTEC’s core Engage segment, its main outsourced customer-service business, generated $400 million in quarterly revenue, down 4.3 percent from last year. The company’s Digital consulting and technology division fell 2.3% to $114 million.

Executives acknowledged that Digital’s margin benefited from a one-time $4 million software sale recorded at full margin, according to a Seeking Alpha transcript.

Chief Financial Officer Kenny Wagers reported that the Engage segment performed slightly better than internal projections, thanks to growth among existing clients and some new business.

Still, TTEC’s 12-month revenue retention stood at 88%, or 94% after adjusting for lost clients in financial services and the public sector. He noted that the second quarter marked a turning point, with adjusted retention hitting 97 percent, a return to what he called historical levels of engaged revenue growth.

Wagers also mentioned that most of the company’s new sales focus is on offshoring. TTEC is expanding in South Africa, Egypt, Eastern Europe, and Latin America, where clients increasingly seek both lower costs and skilled labor.

Offshore work now accounts for roughly 37 to 39% of the Engage segment. However, foreign-exchange pressures are affecting profits, with Wagers estimating a 6 percent negative impact on the full-year Engage EBITDA guidance.

Tuchman said many clients remain hesitant to spend due to uncertainty about AI.

“There have been so many negative articles on poorly executed AI that it absolutely is creating fear, doubt, and uncertainty,” he noted. Large enterprises, he added, “are basically making smaller commitments until they have a bit more clarity on their future.”

Instead of pushing AI tools to replace human workers, Tuchman explained that clients are focusing on using automation to improve employees’ performance.

“The first stage of really taking advantage of AI is to make our people better,” he said, “rather than simply creating chatbots or voice bots that completely replace what they do.”

He highlighted new AI tools already in use across TTEC’s programs, including AI-based accent-neutralization technology aimed at improving clarity in global customer interactions.

“Because it’s AI-based, the more we use it, the better it gets,” he said.

Other tools include an AI-assisted curriculum wizard for faster training and a performance-management platform that Tuchman stated has delivered double-digit improvements in handle time, quality, attrition, and employee engagement.

TTEC ended the quarter with $83 million in cash and $886 million in debt, resulting in a net-leverage ratio of 3.39 times. The company is negotiating to renew its $1.2 billion revolving credit facility, with closing expected in the third quarter.

For 2025, management anticipates around $2.09 billion in total revenue, a 5.4% decline from 2024. Executives cautioned of weaker third-quarter results as the company invests in seasonal healthcare programs but expect a rebound by year’s end.

“We’re confident we can deliver within our full-year guidance range,” Wagers said, “but remain cautious as we navigate the volatile global economic environment.”

Tuchman ended the call on a positive note.

“Every organization today faces a mandate to transform now,” he said. “We’re ready and well positioned to help our clients lead the way.”