TTEC Holdings (TTEC) Q3 2026 Earnings Call Transcript

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DATE

Tue, Nov. 10, 2026

CALL PARTICIPANTS

• Group Vice President, Corporate Finance - Robert Belknapp
• Chairman and Chief Executive Officer - Kenneth Tuchman
• Chief Financial Officer - Kenneth Wagers

TAKEAWAYS

• Revenue -- $492.2 million, a 5.2% decrease from $519.1 million last year reflecting volume declines in the Engage segment and a $2.1 million negative foreign exchange impact.
• Adjusted EBITDA -- $51.5 million, an 18.7% increase from $43.4 million driven by cost optimization and a shift to offshore delivery locations.
• Non-GAAP EPS -- $0.22, an 84% increase from $0.12 in the prior year due to higher pretax income and a lower effective tax rate.
• Free Cash Flow -- $27.9 million, compared to a negative $9.6 million in the prior-year period following a $13 million positive change in working capital.
• Engage Segment Revenue -- $370.1 million, a 6.8% decrease from $397.2 million as the company rationalizes underperforming programs.
• Engage Margin -- 6.7% for non-GAAP operating income, representing a 230 basis point increase over the prior year.
• Digital Segment Revenue -- $122.1 million, a 0.2% increase from $121.9 million last year.
• Digital High-Growth Revenue -- 28% growth in professional services for high-growth practices compared to the third quarter of 2025.
• Digital Segment Operating Income -- $12.5 million, a 7.9% increase from $11.6 million driven by hyperscaler partner expansion.
• Offshore Delivery Mix -- 42% of revenue year to date, an increase from 36% in 2025 due to scaled operations in India, Egypt, and Europe.
• New Logo Signings -- 56% increase in average deal size for new enterprise clients in the Engage segment during 2026 year to date.
• Digital Client Acquisition -- 24 significant new clients added, representing a 20% increase over the third quarter of 2025.
• Hyperscaler Pipeline -- 73% of the total Digital pipeline, up from 62% in the prior-year period.
• Net Debt -- $743.6 million, a decrease of $69 million compared to the prior-year period.
• Capital Expenditures -- $9.1 million, down from $13.8 million last year, with 68% of current spend focused on product development and real estate expansion.
• Revenue Retention Rate -- 92% for the Engage segment over the last 12 months, an improvement from 89% in the prior year.
• Engage Backlog -- $1.52 billion, representing 99% of the full-year revenue guidance midpoint.
• Digital Backlog -- $424 million, representing 99% of the full-year revenue guidance midpoint.
• Net Leverage Ratio -- 3.63x at the end of the third quarter, defined under the company credit facility.
• Full Year Revenue Guidance -- $1,940 million to $1,990 million for consolidated operations.
• Full Year Adjusted EBITDA Guidance -- $205 million to $225 million, with margins expected between 10.6% and 11.3%.
• Digital Revenue Guidance -- $420 million to $440 million for the full year 2026.
• Interest Expense Guidance -- $70 million to $72 million for the full year.
• Non-GAAP Tax Rate Guidance -- 48% to 50% for the full year 2026.

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RISKS

• Tuchman stated, "They're currently hard to predict," regarding open questions about artificial intelligence model accuracy, governance, and compute costs.
• Wagers warned that "the U.S. valuation allowance recorded against the U.S. pretax losses will continue to impact the normalized tax rate in future quarters," reflecting the inability to offset foreign taxable income with domestic losses.

SUMMARY

TTEC Holdings, Inc. (NASDAQ:TTEC) reported third-quarter results that indicated progress in restructuring and margin expansion. Management stated that revenue declines in the Engage segment are leveling off while the Digital segment continues to expand its partnership network with three major hyperscalers. The company announced the extension of its credit facility through November 2028 and is exploring strategic alternatives for the TTEC Digital business. Tuchman indicated that the integration of artificial intelligence tools is intended to enhance operational efficiency and associate performance while maintaining human oversight for complex interactions.

• Tuchman noted that full customer experience transformation is slowed by data cleanup and governance issues, stating, "While clients see real promise in AI, they're also clear that getting its full value will take time and discipline."
• The company is shifting its delivery footprint toward right-shore locations, with nearshore and offshore delivery expanding to 42% of revenue year to date.
• Tuchman indicated that the winning model for the industry pairs automation for simple tasks with human care for complex needs.
• The Engage segment pipeline has surpassed new client signings year over year and is on track to exceed the total from the previous year.
• TTEC Digital earned a spot in the Microsoft Inner Circle for the 11th consecutive year and achieved ServiceNow Elite status.
• The company added technology centers of excellence in North America, Colombia, India, and Poland to scale specialized engineering talent.
• The TTEC ADDI language translation platform, covering 40 languages and dialects, is seeing rapid pipeline growth.

INDUSTRY GLOSSARY

• Agentic Agents: Autonomous AI systems capable of performing tasks or making decisions with minimal human intervention.
• CCaaS: Contact Center as a Service; a cloud-based customer experience solution that allows companies to manage multichannel customer interactions.
• CRM: Customer Relationship Management; technology for managing a company's relationships and interactions with customers and potential customers.
• CX: Customer Experience; the overall perception a customer has of a brand based on their interactions.
• Hyperscalers: Large-scale cloud service providers, such as Amazon Web Services, Microsoft Azure, and Google Cloud, that provide massive computing and storage infrastructure.
• IVR: Interactive Voice Response; an automated telephony system that interacts with callers and gathers information through voice or keypad inputs.
• Right-shoring: The process of moving business operations to the most cost-effective and efficient location, whether onshore, nearshore, or offshore.

Full Conference Call Transcript

Operator: Welcome to TTEC's Third Quarter 2026 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. I would now like to turn the call over to Bob Belknapp, TTEC Group Vice President, Corporate Finance. Thank you, sir. You may begin.

Robert Belknapp: Good morning, and thank you for joining us today. TTEC is hosting this call to discuss its third quarter 2026 results for the period ended September 30, 2026. Participating on today's call are Ken Tuchman, Chairman and Chief Executive Officer of TTEC; Kenny Wagers, Chief Financial Officer of TTEC. Yesterday, TTEC issued a press release announcing its financial results. While this call will reflect items discussed in that document, for complete information about our financial performance, we also encourage you to read our Form 10-Q for the period ended on September 30, 2026 in the latest 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 opinions as of the date of this call, and we undertake no obligation to update 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 2025 annual report on Form 10-K.

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.

Kenneth Tuchman: Good morning, and thank you for joining us today. Our third quarter results reflect disciplined execution across our global teams and demonstrate steady progress against the plan we laid out earlier this year. A central driver of this progress is how we're working alongside our clients to evolve our capabilities and innovate new market opportunities. We are thoughtfully integrating AI into CX, deploying automation for speed and scale, while empowering our people with tools and insight when judgment and empathy matter most. By executing on the fundamentals today and preparing clients for what's next, we're building lasting partnerships and strengthening our business for the long term. Now let's turn to our key metrics for the third quarter.

Revenue was $492 million. EBITDA was $51 million or 10.5% of revenue. Free cash flow was $28 million, and net debt decreased $23 million. Across both TTEC Engage and TTEC Digital, we executed directly against the commitments we laid out earlier this year. Before a review of the segments, I'd like to share key takeaways from our recent Client Advisory Board meeting. Twice a year, we meet with a group of our largest and most strategic clients. Last month's conversation pointed to a broader trend across the CX market. While clients see real promise in AI, they're also clear that getting its full value will take time and discipline.

The groundwork required is significant, redesigning workflows, retraining frontline teams, connecting legacy systems and cleaning up data. On top of that, companies are working through open questions about model accuracy, governance and compute cost. They're currently hard to predict. Recent research from MIT Sloan, Wharton, Stanford and others points in the same direction. These factors can slow near-term returns, which is why a deliberate, well-planned approach is essential. Around the table, everyone agreed on one point. AI in CX succeeds or fails on customer trust. Brands need to meet customers where they are with interactions that are reliable and add value rather than destroy it.

The winning model will pair automation for simple task with real human care when a customer needs it most. While full CX transformation won't happen overnight, we're working closely with our clients to deliver tangible front lines today. We are empowering our associates with predictable proven tools that elevate performance and augment their human skills. Specifically, these AI-enabled solutions are already driving efficiencies across recruiting, onboarding, training, quality assurance, language translation, workforce management and engagement. In a market moving this fast our clients made it clear. They need a trusted partner with the agility and expertise to turn complexity into sustained customer loyalty and operational excellence. This is the intersection where we thrive.

The market isn't looking for stand-alone tech or commoditized delivery. It's looking for integrated outcomes. This dynamic validates our strategy plays to our deepest strengths and positions us for enduring, profitable growth. Now to an update on TTEC Engage and TTEC Digital. Last quarter, I laid out four specific focus areas for each of the business segments. Today, we're demonstrating measurable progress on each. Beginning with TTEC Engage, first, we're improving pipeline quality and sales execution. Year-over-year, we're seeing larger deal sizes across our embedded base as clients consolidate spend with proven partners who are providing top-tier performance. We're also winning engagements across multiple lines of business with new enterprise clients that have increasingly complex needs.

We have already surpassed new client signings year-over-year and are on track to well exceed last year's total. And our Digital-first CX technology and services portfolio is driving overall pipeline growth with clients seeking high-value outcomes from an end-to-end solution. Second, we're optimizing program economics. We're working directly with clients to restructure underperforming programs through automation, operating model redesign and right shore delivery. As previously communicated, this discipline is driving a deliberate shift in our delivery footprint. Nearshore and offshore delivery expanded from 36% of revenue in 2025 to 42% year-to-date in 2026, accelerated by our scaled presence in India, Egypt and Continental Europe.

Third, as I mentioned earlier, we're creating tangible impact by putting proven purpose-built AI tools directly into the hands of our frontline teams to augment their day-to-day activities. Our progress is driving better performance and improved retention for our associates, reliable outcomes for our clients and effortless personalized experiences for their customers. For example, our AI quality platform is delivering actionable insights that go well beyond frontline coaching, equipping clients with real-time intelligence on customer trends, product improvements and opportunities for service innovation. TTEC Perform, our AI-enabled performance management platform, is reducing new associate ramp time by as much as half through data-driven learning programs.

And we're seeing strong growing demand for TTEC ADDI, our first-to-market AI language translation platform that enables associates to support customers in their preferred language in real-time. Covering 40 languages and dialects, we've deployed ADDI across multiple clients, and our pipeline is growing rapidly. And fourth, our ongoing focus on optimizing operations is driving meaningful margin expansion. This quarter, our Engage EBITDA margin grew to 9.8% versus 7.4% for the same period last year. Taken together, these actions are building on our strong operational foundation and position us to sustain momentum through Q4 and into 2027.

Now moving to TTEC Digital, where we continue to shift our CX technology and services mix towards the areas of highest client demand. designing, building and operating CX solutions grounded in data, AI and security. We're scaling this shift across our four strategic TTEC Digital priorities. First, we're deepening our relationships with high-growth CX technology partners. Powered by our Elite CX consulting, analytics and engineering talent; our professional services revenue in the high-growth practices grew 28% compared with the third quarter of last year. That same technical excellence continues to deliver recognition with key partners. Most recently, we earned a spot in Microsoft's Inner Circle for the 11th consecutive year.

We achieved ServiceNow's Elite status and were recognized as a NiCE Star partner, distinctions reserved for top-tier partners that demonstrate both world-class execution and market-leading sales results. Second, we're expanding strategically in EMEA and APAC. Revenue across these regions increased 24% year-over-year, propelled by deeper alignments across all 3 major hyperscalers and capped by several 7-figure wins with premier enterprise brands in EMEA. Third, we're increasing sales coverage to capture more high-margin demand. This quarter, we added 24 significant new clients a 20% increase over Q3 of 2025. In addition, our pipeline shift is taking hold. Hyperscaler partners and high-growth practices now account for 73% of our total pipeline, up from 62% a year ago.

And fourth, we're optimizing performance to enhance utilization and a delivery model that puts the right work in the right shore. With new technology centers of excellence in North America, Colombia, India and Poland; we are scaling specialized engineering talent across every major AI and CX technology platform. Before I close, I'd like to provide a brief update on corporate initiatives. As we announced last quarter, we're exploring strategic alternatives for TTEC Digital with our investment bank, PJT Partners serving as our financial adviser. The process is progressing and we've had a high level of interest and constructive conversations thus far. We will share an update when we have something definitive to report.

Additionally, we're pleased with the progress that we've made on the extension of our credit facility to Q4 2028, which gives us additional financial flexibility to execute on our plan, Kenny will share in more detail. Last quarter, I said judge us by our results, not our words. This quarter we delivered. We promised to focus, perform and strengthen our core; and these numbers show we did. As we look ahead, we recognize that there's more work to do to return our business to its historical margins and growth rate. The progress is measurable and improving.

With an expanding pipeline, clear line of sight into new bookings and a healthy backlog; we're well positioned to finish 2026 with momentum and carry it to 2027. Thank you again to our Board for their stewardship our team members for their dedication and our clients and partners for their trust. And with that, I'll turn the call over to Kenny.

Kenneth Wagers: Thank you, Ken, and good morning. I will start with a review of our third quarter 2026 financial results before discussing our reiterated full year 2026 financial outlook. In my discussion of third quarter 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. Turning to our results. On a consolidated basis for the third quarter of 2026 compared to the prior-year period, revenue was $492 million compared to $519 million, a decrease of 5.2%.

Adjusted EBITDA was $51 million or 10.5% of revenue, an increase of 18.7% or 210 basis points compared to $43 million or 8.4%. Operating income was $37 million or 7.6% of revenue, an increase of 29.2% or 200 basis points compared to $29 million or 5.6%. And EPS was $0.22, an increase of 84% compared to $0.12. Foreign exchange had a $2.1 million negative impact on revenue and a $1.5 million positive impact on operating income compared to the prior-year period, primarily in our Engage segment. Turning to our third quarter 2026 segment results. In our Engage segment, third quarter revenue decreased 6.8% over the prior-year period to $370 million.

Operating income was $25 million or 6.7% of revenue, reflecting an increase of 43.5% or 230 basis points over the prior year of $17 million or 4.3% of revenue. As outlined in our previous 2026 quarterly earnings commentary, our Engage priorities are primarily focused on key drivers to improve profitability, which we delivered upon in our third quarter results. We are executing on a more optimal onshore, offshore delivery mix, rationalizing and improving client programs that are below target margins, improving operational efficiencies through the balance of AI tools and human agents and other corporate cost optimization initiatives. We expect these actions to continue to be reflected in our performance with Engage margins further improving in the fourth quarter.

The Engage backlog is $1.52 billion or 99% of our full year 2026 revenue guidance at the midpoint of the range, down from 102% for the same period of 2025. The Engage last 12-month revenue retention rate is 92%, an improvement from 89% for the same period last year. In our Digital segment, third quarter revenue was $122 million, relatively unchanged over the prior year. Operating income was $13 million or 10.3% of revenue compared to $12 million or 9.5% of revenue for the same period last year, reflecting growth of 7.9% or 80 basis points. We continue to strengthen our relationships with our hyperscaler partners, demonstrated by the strong year-over-year and quarter-over-quarter growth in these practices.

We are driving momentum through expanded sales coverage strategic growth in the EMEA and APAC regions and optimizing our delivery footprint. The top line growth in these practices is over 28% in the third quarter compared to the prior year, and the operating income is even more impactful at 46% growth. Our Digital pipeline remains strong and continues to shift to our hyperscaler partners and higher growth practices. We are executing on the market remix we have discussed throughout this year and are excited about the momentum we are carrying into the fourth quarter and 2027.

Our Digital backlog is $424 million or 99% of our 2026 revenue guidance at the midpoint of the range, up from 95% for the same period last year. Before I discuss our other third quarter financial metrics, I want to address our credit facility maturity date extension to November 2028. Our profitability improvement and strong year-to-date free cash flow of $88 million and net debt reduction of $81 million were important factors in building lender support across the bank syndicate. TTEC's executive leadership team and Board of Directors value the support and collaboration from our long-standing banking partners. I will now share other third quarter 2026 metrics before discussing our reiterated outlook.

Free cash flow was $28 million in the third quarter of 2026 compared to a negative $10 million in the prior year. The year-over-year increase is due to $37 million of higher cash flow from operations and a $5 million decrease in capital expenditures. Cash flow from operations benefited from a $13 million positive change in working capital as we continue to focus on cash management. In the third quarter of 2026, capital expenditures were $9 million or 1.8% of revenue compared to $14 million or 2.7% in the prior year. Approximately 68% of the current quarter spend relates to growth in product development, real estate expansion and client technology investments.

As of September 30, 2026, cash was $91 million with $835 million of debt, primarily representing borrowings under our credit facility. The net debt position of $744 million represents a year-over-year decrease of $69 million, reflecting our ongoing commitment to cash flow generation and debt reduction. We ended the third quarter 2026 with a net leverage ratio as defined under the credit facility of 3.63x. Our normalized tax rate was 46.5% in the third quarter of 2026 compared to 53.7% in the prior year. The lower tax rate is largely driven by higher overall pretax income, resulting in each dollar of tax expense having a lesser impact on the rate versus the prior year.

The tax rate is primarily due to the jurisdictional mix of pretax income where foreign taxable income cannot be offset by U.S. tax losses. The impact of the U.S. valuation allowance recorded against the U.S. pretax losses will continue to impact the normalized tax rate in future quarters. Turning to our 2026 outlook. I will now provide some context with regards to our reiterated full year financial guidance. In our Engage segment, we continue to see a growing pipeline and a diversified number of new enterprise clients that are looking to solve multifaceted needs through the right combination of AI-enabled technology and human interaction.

This is providing larger initial deal sizes with our 2026 year-to-date average new logo signings growing 56% over the prior year. We are also seeing larger deal sizes across our embedded base as clients are consolidating business with partners that have proven CX technology and service capabilities, an expansive global delivery footprint and demonstrated value-added outcomes. This is starting to reflect in our top line as the Engage revenue decline is leveling off from the first half of 2026, with the trend expected to continue throughout the second half of the year. We also remain extremely focused on our strategic initiatives to improve profitability and continue the positive trend reflected in our third quarter results.

Together, these factors are expected to deliver fourth quarter profitability growth compared to strong fourth quarter 2025 results and established a solid foundation for both top and bottom line improvement in 2027. As a result, we are reiterating our full year 2026 guidance with respect to Engage, However, we are forecasting adjusted EBITDA and operating income to come in between the low and midrange of guidance. 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.

Our pipeline continues to shift and grow in these new and expanding market opportunities, and we are now reaching meaningful scale in several of our growth practices. We will continue to strategically invest in sales resources while also managing profitability through the right shoring of delivery resources and optimizing utilization. The Digital segment has remained on track with our initial 2026 guidance. and we are confident we will deliver full year results in line with expectations. Please reference our commentary in the Business Outlook section of our third quarter 2026 earnings press release to obtain our expectations for our reiterated 2026 full year guidance at the consolidated and segment level.

In closing, our priorities to drive profitable growth, cash flow improvement and debt reduction are unwavering. And our third quarter results demonstrate we are delivering. These objectives are at the forefront of every decision we make. We are confident we are on the path to return to historical top line growth and margins and remain grateful to our employees, clients, business partners and other stakeholders for their support. I will now turn the call back to Bob.

Robert Belknapp: [Operator Instructions]

Operator: [Operator Instructions] Our first question is from George Sutton with Craig-Hallum.

George Sutton: Thank you, and nice results. I don't think I've said that for a while, so nice to say. Ken, you talked about the integrated outcome that your clients are looking for and they're looking for you to bring to them. I wondered if we could look at that in the context of the larger deal sizes up 56%. That's a significant number. Just can you walk through what's driving that larger deal size? And is it that integrated outcome that you're looking for?

Kenneth Tuchman: I think -- George, I think it's a combination of things. I think, number one, we definitely feel like the market is consolidating right now. That, unto itself is creating opportunity for us. And number two, virtually every single client is trying to find their magnetic north with the right mix of technology. And because we have so much experience and are doing so many AI projects, et cetera, it's really giving us a lot of [ at bats ] to be able to demonstrate to these large clients the art of the possible.

Many of our large clients are getting frustrated with their own internal IT departments and how long it's taking them to basically just modernize some of their capabilities. And so we're winning pilot programs where we're doing bits and pieces of the larger clients' technology, and that's then giving us credibility because of the speed at which we're able to do it and opening up more doors for more overall business. So I think it's a combination of clients don't want to be left flat-footed. They want to feel like they have a modern digital door, so to speak, to the customer.

And they also like the fact that we -- because we were more or less Switzerland and we represent so many of these technologies, we're really able to consult them on what's the best fit for them and what in fact is, frankly, in the hype cycle and isn't capable of doing what they're trying to achieve. So I think it's really just a combination of, like I say, the marketplace is consolidating. And I think we're viewed as a boutique firm that has a tremendous amount of agility and that is executing from an operation level in the top tier, and that's what clients are looking for right now. There is no lack of business out there right now.

There's a fair amount of opportunity that's out there to be had.

George Sutton: Great. One other thing on the pipeline, it's obviously made up increasingly of hyperscalers, and I think what you define as the faster-growing companies. Can you just sort of walk through how the pipeline has progressed and migrated towards these hyperscalers and just give us a sense of what kind of opportunities you're looking at with them?

Kenneth Tuchman: Yes. So when you say hyperscalers, you're more or less speaking about our Digital segment. And as you know, George, the business has pivoted dramatically from being a company that was well-known, best-in-class for basically being the largest representative of CCaaS technologies to now we've pivoted dramatically to data analytics into AI. And to get those capabilities at the best possible not only capability, but cost, we're finding that working directly with the Amazons of the world, the Googles of the world, the Microsofts of the world, which are obviously the three key hyperscalers, that's where the largest opportunities are. That's where the largest enterprise opportunities are, the largest government opportunities are.

And so we're right in there co-selling with them as all these large organizations are looking to modernize their capability and take advantage of what a lot of this new technology is capable of doing. So that's really where the focus is and where we're putting gas on the fire on the Digital side of the business. It goes without saying, we still have a tremendous amount of legacy CCaaS business. We're still modernizing a ton of companies with hundreds of projects with their CCaaS and introducing everything from your basic voice bots, chatbots, building out analytical reporting platforms, et cetera, to doing some really cool things with their CRM, their desktops, et cetera.

And so we're going to continue to keep focusing in that area. We've also increased the overall partnerships just with many, many different technology companies. We've gone into data security and now have a deep partnership with the likes of the Splunks of the world et cetera, because we believe that one of the single biggest opportunities futuristically is going to be cybersecurity as it relates to this age of AI.

And so every single one of our clients, one of their hesitations of how deep they go with AI is how can you help us with security, how can you help us with observability and actually understanding what these AI agents are doing, so that you don't create or they don't create a potential problem. So I hope I'm answering your question. I'm sorry for waxing on.

Operator: [Operator Instructions] Our next question is from Vincent Colicchio with Barrington Research.

Vincent Colicchio: Yes. Ken, could you talk about what portion of your current AI-related opportunity at Engage involves selling additional services versus replacing existing contact center services?

Kenneth Tuchman: I'd say it's actually -- in many ways, it's actually quite small. We are we are not seeing clients -- if I'm understanding your question, Vincent, if you're asking me what percentage of the work that we're doing in the AI area is designed to eliminate a human agent in its entirety, I would say that it's relatively small. If you're -- another way of putting it, though, which sounds maybe a bit like a contradiction, is we are ripping down a lot of IVRs and we're replacing them with conversational voice bots.

And that is absolutely having an impact on what I'll call the very low priority and easier interactions that, frankly, we as TTEC have not been focused on from a human standpoint and have been happy to help our clients with because we don't think that those interactions add any trust, add any value, create opportunities for upsells, cross-sells, building loyalty, et cetera. So that aspect of it is a significant portion.

But the reality is full-blown and agentic agents that are taking command and control of the entire interaction, our clients, as just from our last CAB meeting, et cetera, not only are they not asking us to do that, their companies aren't allowing them to do it and are just saying that they don't feel that they feel comfortable just due to the obvious things that you read about in the press, whether it be hallucinations, et cetera. I'm not suggesting that over time that this stuff isn't going to get better and better because I think it will.

But I think that there's still a very big question with some of the legislation that's coming down of being able to, one, forcing one to disclose that you are speaking to AI and not to human; and two, having the right to immediately be able to punch through and speak to a human being. And I'm sure you're aware of the state of California has now passed the law, which goes into effect January 1. There's probably 4 other states that now have very similar legislation. And I believe that with what just took place politically that this is going to become a national or a federal thing.

On top of that, the EU has already rigorous proposals for the same thing. So this is my way of saying to you that as much as we are huge supporters of AI, we believe that AI right now in this current stage is primarily best used for supporting our associates, making them better, making them faster, making them more efficient, getting them up to proficiency. And that's exactly where we're investing our dollars versus trying to take the human voice away. And of course, if our clients want us to do that, we're happy to do it, and it's very profitable for us to do.

We're just not -- we're not seeing clients that are ready to do that at this point in time.

Vincent Colicchio: All that color was helpful. Follow-up. You used to talk about high potential new logos. It sounds like your pipeline at Engage is quite robust. Do you still break it out that way? And do you have that data?

Kenneth Tuchman: What I would tell you is that we're seeing real opportunity in the health care sector, the travel sector and the retail sector. And retail has have been an area that we have not been as traditionally focused on. And so maybe that's more our doing than anything else. But we're pretty excited about the opportunities that we're seeing in those areas. And then it goes without saying, we're obviously very focused on all the other traditional ones, whether it be public sector, whether it be financial services, et cetera. We're trying to deemphasize what I would call the commodity sectors.

Operator: At this time, there are no more questions in queue. Thank you. This concludes TTEC's Third Quarter 2026 Earnings Conference Call. You may disconnect at this time.

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