Earnings call: Teleperformance reports robust growth amidst AI integration

Teleperformance (TEP.PA) has reported a solid financial performance in 2023, with a revenue growth of 5.1% and improved operating margins. During the earnings call, CEO Daniel Julien emphasized the company's strategic use of artificial intelligence (AI) as an enhancer of human capabilities rather than a replacement.

The acquisition of Majorel was highlighted as a strategic move that strengthens Teleperformance's market position and offers expansion opportunities. The company also noted significant investments in data security and AI technologies, including the development of 60 proprietary AI solutions and deployment of 25,000 bots. Teleperformance plans to focus on specialized services, maintain investment-grade ratings, and return a portion of net free cash flow to shareholders.

Key Takeaways

• Teleperformance reported a 5.1% growth in revenue for 2023 and a margin of 15.5%.
• AI is used to enhance human work, with over 600 experts developing 60 proprietary AI solutions.
• The company has deployed 25,000 bots for transactional interactions.
• The acquisition of Majorel is expected to provide market strength and expansion opportunities.
• Teleperformance plans to increase its workforce in India from 90,000 to 150,000.
• The company faces headwinds such as currency effects, inflation, and COVID-related contracts but still reports strong financial performance.
• A net debt-to-EBITDA ratio of 2.18x and a commitment to investment-grade ratings are maintained.
• Up to two-thirds of net free cash flow will be returned to shareholders through dividends and share buybacks.

Company Outlook

• Teleperformance aims for long-term growth despite uncertain market conditions.
• The company plans to build out the new Teleperformance organization and accelerate AI deployment.
• There is a focus on specialized services and sales, with a guidance for 2% to 4% like-for-like revenue growth in 2024.

Bearish Highlights

• The company experienced a churn rate of approximately 7% to 8% due to automation and offshoring.
• A slower growth rate is forecasted for the next few years, particularly in developing economies.
• Majorel experienced slower growth in Q4 and margins were impacted by exceptional costs.

Bullish Highlights

• Teleperformance has seen consistent growth and increased profitability over the years.
• The company's EBITDA margins have been increasing since 2012.
• €1 billion of new business was added in the previous year.

Misses

• Sales faced headwinds including a €600 million loss due to currency effects, inflation, and COVID contracts.
• The average unit price has not tracked the inflation rate, impacting profitability.

Q&A Highlights

• Julien addressed AI's role, stating that it is used as an enhancer for human employees and is not expected to replace them in complex roles.
• The company's strategy includes developing niche, high-value services and focusing on AI-augmented capabilities.
• Teleperformance serves eight out of its top 10 clients, who are large digital companies, signifying confidence in human-centric service models.
• The company discussed the importance of scale in the industry and does not believe in defensive M&A deals.

Teleperformance continues to navigate the evolving landscape of AI integration and global market challenges with a strategic approach that balances technological advancements with human expertise. The company's commitment to enhancing customer experiences through AI while maintaining a strong human workforce positions it favorably for future growth.

Full transcript - None (TLPFF) Q4 2023:

Daniel Julien: Good morning, ladies and gentlemen and thank you for being here for our presentation of our 2023 Annual Results. But before to start the formal presentation, I would like to address the elephant in the room now. And the elephant in the room is AI and new Gen AI, an enhancer for the human employees who do a job or is it the beginning of the great replacement. And what I can tell you over the business that we are doing is that it’s mostly an enhancer, more accuracy, more productivity, and it gives us the ability to manage end-to-end more complex solutions. So that’s why we embrace it. In few cases, but it’s the minority of the cases, it replace the human employee and this is typically for more simple transactional factual interaction. Let’s not forget that we are hired to help companies to reduce the friction that they have with their customers and to maintain the loyalty to the brand. And when a customer contact us, in most of the case, it’s because there is a friction, there is a frustration. And of course, we need to give the accurate answer. And of course, the AI and the Gen AI are of a great help and even adding more possibilities to address more complex situation. But at the end of the day, there is a need for contextualization, common sense and decision. Gen AI has a lot of qualities. And by the way, I use it absolutely every day, and I think it’s fantastic. But when it comes to common sense, decision and empathy, this is the real of the human being people. By the way, for you, if suddenly Gen AI try to show you empathy, then natural attitude of the people is just to get [indiscernible]. Empathy is human and uniquely human. Having said that, Teleperformance over the decades has always served the different technology waves. We have been a transformer of the customer experience and Teleperformance transformed itself. And this is what we are doing right now. We are going to give you as many examples – tangible example as we can. And now except if I forget something – so now I just would like to tell you also without breaching any confidentiality agreement that out of our top 10 clients and long-term clients in the world, 8 of them are large digital companies, either from Silicon Valley or from China. So which means that it doesn’t seem that this company who are big leaders in AI promotion think that AI is going to replace us. Finally, I hope that you are going to have a different perception at the end of this presentation of what does Teleperformance? What is the future? And yes, I know that the stock price of Teleperformance has been very much impacted. For us, we work on the long term. We build – we have built and we continue to build a company that leads the market. It’s a strong company, generating a strong cash flow, and there is some kind of mismatch between the current situation in the stock exchange and the reality of the company. Now please let me start with a more formal presentation. And I think that now I still need to be manual. So yes, 2021, 2022 were great years of tailwinds. There was the COVID, people were confined and they had nothing to do, but to be with their computer and to play with their screen, either on the social media or with the e-commerce and this was a timing of great optimists even in Silicon Valley. 2023, end of the confinement period, what did you all do? I go out, we go to the restaurant, we take the plane and so on. What does it mean? You reserve the time of interaction with the brand because you are not bored and you have something else to do, another priority. And clearly, there has been for many of our clients who have not lost share of volumes, shares of market or market shares, there has been less interaction in ‘23 than in ‘22, ‘21. They have been at peak. Then this new situation created a slowdown in the growth of the digital commerce. You will remember a very famous verse of Silicon Valley that said that 2023 was a year of efficiency, which has been somehow scaled back in the launch of new product, new service, new investment and also strict disciplined management of budgets. So basically, it has been a year of maximum efficiency where our clients were looking for the best possible labor arbitrage combined with the best possible automation, and I will come back to that later. Of course, there has been the Gen AI release that has created a hype in the media. It has a clear importance. And by the way, we have many products, TP proprietary products that integrate Gen AI, and you will see that with Bhupender later. But it has not significantly impacted our growth dynamic. What – significantly our growth dynamic has been much more the shortcut from servicing a market from a domestic delivery place to servicing a market to offshore. Usually, you would go through domestic, then nearshore, then eventually offshore when you need to really, really squeeze your cost. Our business in India in 2023 grew by plus 17%. And of course, when our business in India grew by plus 17%, it means that in other more expensive geographies, our business doesn’t grow the same way. So on the top line, it has a kind of definition effect to the growth because the price per unit is not the same. But on the bottom line, there is more room for margin. And by the way, we maintained or even improved our operating margin. Then clearly, the rest is obvious, except that we all live also right now with huge investment and a huge focus on data security because fraud is growing exponentially, all the government of the world would say that, whether it’s our U.S. Government or the EU Government. And by the way, this creates opportunities, additional opportunities for Teleperformance Services. The numbers, you all saw the PR, I’m not going to be long on that. I know it was disappointing versus our first expectation when we had the tailwinds. But at the end of the day, like-for-like, we had a growth of 5.1% in revenue, except the COVID onetime business, and in 2021, ‘22. We increased our operating margin by 40 basis points. We increased our free cash flow to €812 million because this company is in great shape, and we increased our cash conversion from 40% to 46%. I don’t think that we should be ashamed of these numbers. Then in 2023, we made the acquisition of Majorel that was not always very well understood because we always said, we want to make acquisition in specialized niche business, high value, and we always want to do that. We do not find them every morning, the good one. Why did we buy Majorel? For really two simple reason, during difficult time, the large clients are consolidating their numbers of vendors and to have the number one position on the global market is a clear competitive advantage. Number two, it’s always a topic of the shoemaker who always has the worst shoes. Teleperformance was weak in the French market, sorry. And Teleperformance was a small actor on the German market. In both markets, Majorel was the leader. So suddenly, the market number three in the world for outsourcing and the market number four in the world in outsourcing, we did not have any more gap. This strengthened our position. And I will give a little bit more explanation later. But what is our starting point for 2024. We are now more than €10 billion pro forma euro company, more than €2 billion EBITDA, more than €1.5 billion EBITA. Yes, Majorel stand-alone had EBITA margin lower than the one of Teleperformance, but the result of the process of the synergy in 2 years is going to give back the gap, to fill the gap. That was the rationale for the Majorel acquisition I’m not going to spend too much time. Yes, there was also some very good complement. We tend to be very present in the banking and the fintech in the U.S. and in LatAm, not in Europe, they were present there. It’s a great booster for us, insurance. Majorel has a well-tailored end-to-end claim management process. And I can tell you, a claim management process, whether it’s in auto or in habitation is not exactly something that is solved by Gen AI. Gen AI can come in the process to optimize, but you have multiple interlocutors, you have timing to solve. You have multiple point of contacts. We love it. And they serve some of the largest insurance companies of the world. And of course, we are going to expand that in the other geographies. And I could continue. Now this is what I was telling you about the synergies. If you look at 2024, it seems to be a warship. We are going to get €50 million in making our synergy work, but is going to cost us €0 million. It’s not a warship because it cost us €50 million in 1 year. But the green €50 million are here for multiyears. And then in ‘25, it should cost us €50 million also and the full synergy should be at €150 million. And here again, this come repeatedly, so for the next 10 years, it should make €1.5 billion. Now I want to tell you why I’m so confident in Teleperformance future. First, we have our strategy that we started in the mid-2010 of developing niche, high-value services that grow double-digit, top line and bottom line. And in 2023, it was also the case, and in 2024, it will also be the case. What are these specialized services. I love to speak about this one, LanguageLine Solutions. When we acquired it in 2016, many people told us, what is the sense to buy an online interpretation company when there is, excuse me, to mention a brand, when there is Google (NASDAQ:GOOGL) translate. It’s totally different. And why is it totally different? In the U.S., where LanguageLine is mostly present, there is a regulation. And this regulation wants every critical service, whether it’s finance, health care, police, justice, to be able to speak to the individual in its native language. And I can tell you that LanguageLine Solutions continue to grow beautifully well, while integrating, of course, the support of AI. There is [indiscernible] that got a big drop during COVID, that was the only company that got a drop in the group during the COVID. But now we took advantage of that time to refine its process and it’s now growing double digits and very profitable, elseadvocate to help the employees of the large U.S. companies to have additional benefit, which is a help to navigate and to advocate on their behalf within the very complex health care system in the U.S. You have to be American to understand what I mean. PSG, AllianceOne, I will let Scott Klein who is the President of the Specialized Service and the very talented President of the Specialized Services to present in details this line of business, but Scott Klein, if you could show yourself that you exist. That’s just an example. What does it mean? Yes, it’s a growth curve of LanguageLine Solution that had no future in 2016, from 2016 to 2024 plus 13% CAGR. Now the other strong basis for Teleperformance future and believe me, we love AI, we embrace AI and it’s the AI augmented human. And again, it’s – and I know that there is a permanent debate between will AI enhance the humanity or are we going to the theory of the great replacement. We know the strike on Hollywood, we know so many things. How do we address that? First, we decided to have a general architect to manage our effort. It’s Joao Cardoso, who is part of Teleperformance for 23 years. He is an engineer in computer science and with a specialization in formal language and in AI. And he is taking the leadership of all what we do in AI over the world. By the way, this individual has contributed a lot to the value of Teleperformance in the past because he was the architect behind Teleperformance Cloud Campus who helped us to convert Teleperformance from brick and mortar to work from home and virtually hiring, virtually training, virtually coaching, virtually and so on and so, at the time of the COVID in 2020 when from end of March to early July, April, May, sorry, 2 months. We made the conversion of more than 220,000 people. We have 600 solution architects who are analysts and developers in our Center of Excellence for AI, of course, in India, where you have a lot of talented resources, and Bhupender Singh who is my Co-CEO will explain that. He knows pretty well India. He was graduated from the Indian Institute of Technology and the Indian Institute of Management and he knows few things about deep learning. In Europe, we had a team already in Netherlands that had developed many solutions at integrating AI. And by the way, there is a product that was present in the press a few days ago that created a kind of drama in the stock exchange to our big surprise because it’s a product that we use for years, but I’m going to show you that later. We have a little bit more than 7,000 IT people for the network management, the help desk and many support, that would make already a nice IT company. We have 60 AI proprietary solutions for the core service. We have 600 clients out of the 1,500. So today that we serve – today have at least one element of TP AI solution, and I’m going to show you what. And guess what? For the replacement, for the symbol transactional interaction, of course, we deploy the bots, and we have 25,000 bots. That more or less are an equivalent of 150,000 people. That’s a replacement, simple, factual, transactional, no need for empathy. What is the level of my account? How much do I know you? But I paid 2 weeks ago, and you continue to relaunch me or whatever. Just factual. For us, of course, AI is in the vast majority of our business, human augmentation. Human augmentation in accuracy, we have instantaneous access to multiple source of data and synthesis of that, which is very, very efficient. So we gain in productivity. With the online analytics, we have some gain of predictability, which help us to make better proposal and so to enhance our results. AI can help in some kind of personalization by indicating moods and giving some clues to the human. And of course, in a world that becomes more virtual every day and where the fraud becomes a daily issue, not only for the companies, but for the government and for everything, we use a lot AI in data security to reduce the fraud, and which is something super important for our clients. I think that the real future of the business process outsourcing is the level of data security we are able to provide, that’s a real topic. And because a lot of people speak about AI and do not give any details. I don’t want to make marketing with all the name of the AI we have. We put some of them. We say exactly what they do, and you have exactly the details in this slide, which is Slide number 15. Thank you very much. I need to change my glasses. You will see there a product that is called TP product in data security. It’s a patented solution, and it gives us signals on what’s happening in the floor each time on the process adherence and each time there is some kind of outliers, it gives warning. And then it helps us to anticipate and manage. This product – the base of this product was from Israel, by the way, we started it more than 10 years ago. Of course, large iteration [indiscernible] with integrating more and more of the possibilities. Bhupender is going to explain that much more. Now another strong basis for our future is we decided to start to commercialize our group’s unique expertise because nobody has the expertise we have in customer experience management to the in-house market that remains a large, large part of the business. By creating TP Infinity, where we have right now, we start modestly with 650 consultants. I hope in a few years from now, there will be a few thousand consultants in strategy, technology, creative design, analytics and selling our best practice as a service, like a cloud as a service in best practice, whether it is workforce management, whether it’s a QA, it means quality assistance and so on. Another strong basis for Teleperformance future is India. We do more or less 50% of our business in the beautiful English language. And in difficult times, let’s not forget that the next 2, 3 years are going to be difficult at the macroeconomic level. If you look at the forecast of the World Bank or the IMF, you see that 2024 should be even more difficult than 2023 and 2025 is not going to be so great. If I’m not mistaken, we – of course, we have delivery service all over the world. But the main markets that we serve are the rich market, the U.S. and Europe. And when U.S. should continue to grow by something like 1.5% in GDP, Europe is probably going to grow by 0.8%. And if I add U.K., it can even lower a little bit this number. So in that difficult times, people go directly for the max efficiency versus the [indiscernible]. And so to be strong in India is important. Today, we have 90,000 people in India. We plan in a few years from now to pass to 150,000. And here is where we were in India, we were at €374 million in 2020, we are at close to €600 million in ‘23, and we hope to be above €1 billion by 2027, continuing our CAGR of plus 17%. And of course, we make all the investment for that. We are present in, I don’t know, how many cities, Bhupender knows detail much better than I know. And finally, because even if personally, I would prefer to live 800 years and there is an AI group, they could try to explain us that we are going to live way beyond 100 by 2040. But age is age. And so it’s important to prepare. First, the succession planning; and second, to answer to some demand of our shareholders and of the market, we are going to – when we will be ready to split the function of Chairman and CEO. We want to do that smoothly, methodically and in such a way that it’s going to be totally flawless. So Bhupender and I are working together, we speak exactly, even if he lives in London and if I live somewhere else, I never know where I live, we speak exactly every day, we review everything that happened within the company, what is important, how we consider it, what decision we should take. And you see ESG, ExCom and the ExCom, we added Joao that I mentioned and the Chief Marketing Officer. So the ExCom today has 30% woman in representation, which is a little bit better than before. And that’s it for me. Thank you very much.

Olivier Rigaudy: Good morning to all. I’m going to present to you the figure for 2023. I’m not going to come back on what Daniel said about the macroeconomic context that we lived in 2023. I just wanted to point out one thing, which was the exceptional FX volatility that happened this year – last year, sorry. If I may say we are used to live in an exceptional – an expected volatility of FX. But the pattern has been dramatically different than what we lived in the past, meaning that not only the dollar was going down and up, but we had also some currency in which we are significantly present in the country and significantly we are present seeking to Colombia and seeking to Mexico where the currency climbs up and where – in other countries where we are also significantly present, meaning Turkey, Egypt or Tunisia are not – or Argentina where [indiscernible] dramatically. I will come back to that in a minute. What was the answer of TP, to continue to grow and to create value for? Of course, stability, diversification and credibility were key to secure growth. We’ll see that in a minute. But what we decided very, very early in the year was to tighten the belt. So we have tightened the belt on the cost. We made some streamlining on people and some site optimization, very early in the year, even if it has an impact, which is deferred in the year. It drives us towards the best EBITDA margin that the group ever achieved. And certainly, we start to be very, very careful on cash because we believe that cash is absolutely key, whether it’s CapEx, DSO or other tax issue. So at the end of the day, we are going to – we are happy to report the best free cash flow that we ever reported. So let’s move now to the figure precisely. Any of the figures that are presented, you have the full year 2023, which include, as you can remember, 2 months of Majorel. And of course, we put on the side to compare 2022 figures, which was published last year. I thought it was interesting to isolate TP by itself without the Majorel figure for the last – for the full year of 2023. So you have on the right side of the slide, TP stand-alone with no impact of Majorel in its book. So you see that finally, 2 things. The 5.1% growth that was just mentioned by Daniel on which I will come back in a minute, as the margin that we were able to deliver, which is 15.5% for the published reported figure, including 2 months of Majorel, but if you take TP stand-alone, it’s 15.8% and even 15.9%, if you take in account the €13 million that we spent to streamline the organization all along the year with TP to prepare the future. So to a certain extent, we have been able to improve dramatically our margin in 2023 versus 2022 at a base that was never achieved at TP group level. I just wanted to remind you that the growth of Majorel because you are going to ask me the question will be – has been for 2023, 5.5%, so close to TP. And the margin was – we’ll see that has been different. As you have seen, we have presented to you through Daniel’s presentation the full year of Majorel, where as the margin is significantly below the margin of TP. Let’s move now to the evolution of the sales. Probably, it’s one of the years that has been the most difficult that we ever lived. Daniel touched about, I would say, headwind, you see the headwind there. In sales, we had €600 million of headwinds, of which, €350 million took currency effect, €32 million of inflation, and of course, €223 million from COVID contract. I’ll come back on the inflation in a minute. So we had €600 million. We started the year by losing €600 million in sales versus last year. Of course, this currency effect came from the dollar, from the Argentinian peso, the Indian rupee, the Egyptian pound, and Turkish lira. But the inflation has an impact which was huge in Q4 as we started to fill it sufficiently in advance. Just to give you an idea, the inflation in Argentina was 211% all along the year, while the FX decline was 388%. So this difference lead us to a €32 million impact on our sales that has been posted in Q4. This is the connection between inflation and FX shows that the monetary devaluation do not compensate the inflation – the FX decrease. So beyond that, you have a growth of €388 million, which is 5.1% growth, which is – and again, I don’t know whether it’s appropriate to make it clear again in this global environment of today, but it’s probably the best performance that the market and the big competitor achieved all along the year in 2023. And of course, you have the scope perimeter effect, which is €400 million, mostly Majorel, €343 million, but also PSGs that what was bought last year in November, I’m sure you remember that, where we lead to €8.3 billion that are the published figure of today. Let’s have a look to the source of growth. Not surprisingly, the growth is distributed differently across the sector. In fact, if you take the U.S. market, which is made of North American, APAC and to a large extent, LatAm, you have a U.S. market which is flat, which is not surprising. I’m not even speaking about – I would say, the deflation that was mentioned by Daniel about the fact that people are going to India. But the world market was flat. One in Europe, we have been able to drive a growth of €200 million and of course, the growth from specialized service of €180 million. Probably, I just wanted to stay a minute there because what makes the difference from TP from the competition is that it’s given over, I would say, distribution in terms of countries in vertical, we are able to capture the growth that is still happening. Of course, people who are totally focused on U.S., totally focused on a contract, totally focused on a client, had time to get growth. While TP, okay, it’s not immune to the macroeconomic environment, that is able to swallow much more the potential slowdown of the growth in every country or in every market. This is true, of course, by vertical. And you see that the distribution of our sales by vertical, but also by region. We know that probably APAC is going to push also much more the growth in the future as specialized service will do also in the future. So we will come back to that later.

indiscernible42: 14: Just a point I wanted to make, global figures are the same, €1,261 million versus 1,262 million is because of the FX impact, you have an FX impact in 2022 – in 2023 versus 2022, that is massive €50 million of the profit would have disappeared in 2022 with 2023 rates because we have some business in Egypt, in India and in Turkey, but we have been able to improve the margin in terms of percentage versus last year. We put aside Majorel, the 2 months of Majorel, which are not different reporting lines. This is just for 2 months. And next year, it will be, of course, I would say, split around all the region. But these 2 months were not really fantastic, as you can see, 8.5%. This is due to some decisions that have been taken, some costs that have been taken out from those business, especially for some restructuring part and for some, I would say, cost of the deal. Clearly, what he said is also that you will see that we have been able to maintain at least the margin in all the regions, while specialized service has significantly improved notably in the second part of the year. If you remember that the first part of the year was hit by some specific impact, and now we are back to normal. Quick word about the other stuff, a few things to tell. Just to tell that amortization of intangible assets and performance share plan are non-cash, I would say, accounting charges are going to – that are going to impact us. And the other are mainly of the cost linked to the deal of Majorel, which is €24 million that is going to vanish next year. Just a point on the earning performance. With no surprise, the financial result is less good than last year, not surprised to. Most of it is coming from the financial – net financial charge between €50 million and €60 million, which is made of two things. One is, of course, the level of the debt that has increased, specifically with €2 billion that came on our balance sheet starting early November, and of course, an impact on the rate, which hit a variable part of debt all along the year despite what has been decided to cover it. Just wanted to highlight the income tax, not only it went down in terms of value, but also in terms of freight, it’s not by chance, it’s a mix of work that has been done all along the year and to reduce the income tax for the group. I do believe this is the most important stuff of what we have done this year. We have been able to dramatically improve the cash flow. All along the year, we knew that we had to work on that, we have been able to improve our working cap dramatically by putting a strict attention to client cycle, whether it’s DSO on build, and we will continue to do so all along the year. We did the same for the CapEx. We have been very, very picky in the CapEx decision, and we will continue to do that because we do believe this is absolutely key for us to continue on that road. And Daniel mentioned the 46% cash conversion rate. I just wanted to finish on this figure. Our company that is absolutely in disarray, we have been able to show the improvement of the CapEx over the last year – the cash flow of the last year. Of course, there are ups and down, but they are much more ups than down, as you can see. And we do believe that we are going to continue this trend for the next year. But that’s – at least it gives a trend of what is making this company special versus yours. Where we are in terms of debt, €4.3 billion, including €832 million of lease. Of course, debt has increased of €2.16 billion by the acquisition of Majorel and its minority interest that we bought back from Majorel subsidiary in 2023. And we sent back to the shareholders close to €600 million – sorry, mid of, of course, dividend and share buyback. I’ll come back in a minute to that. What we are absolutely convinced of is to continue to control our debt. We have a net debt-to-EBITDA ratio which is 2.18x on a pro forma basis and we are absolutely convinced that this is going to be the name of the game in the coming year. Not going to be very long on the balance sheet, but where we are in terms of debt because I know that there are plenty of people that are interested by the debt and how we manage the debt. Our financial debt, excluding the lease is €3.7 billion. The cost of this debt is below 3.5, and the average maturity is 3.75 years. We are mostly fixed. And what is more important for us – for you to understand is that this debt is absolutely secured. We have €880 million cash at the end of the year on balance sheet, I just wanted to mention it again. And what is clear, and there are some bankers in the room, but we have access to liquidity. We have a dramatic access to liquidity and no issue whether it’s a bond, whether it’s a commercial paper or whether it’s a bank. We have €1.5 billion undrawn credit line that are available at any time to cover the business. Lastly, dividend and share buyback, okay? We maintained the dividend. We proposed to maintain the dividend. But what we did is we sent back to the shareholders close to €600 million versus cash flow, €812 million just to give you some meaning of figures that we are speaking of. So not a bad figure at all. I just wanted to finish my presentation with the capital allocation strategies that we are going to follow in the next years. The first thing is to finance development. We are going to be – continue to be picky on CapEx, probably below 3% – CapEx below 3% and in the range of what we have done this year. M&A still on the possibility, but still clearly not the first one. We are going, as mentioned by Daniel, for specialized service in priority, a midsized company, if it happened probably in the second part of the year, and if it happened with very, very clear pricing discipline. There is one message which is simple. We want to maintain our investment-grade rating. And I’m sorry to take this word, but we will do whatever it takes to make it happen. So we will be below 2x in 2024. This is clear, and we will continue to have this rating. No doubt on that. And once that is done, we’ll return to shareholder. We believe that we should – it will be through dividend and also share buyback, and we believe that the return to shareholders should be up to two-third of the net free cash flow of 2024. That is the message I wanted to do, and I leave the floor to Bhupender.

Bhupender Singh: Thank you, Olivier. I’ll start with the topic of AI because possibly, that’s the only topic that everyone wants to hear about today. At Teleperformance, for the past few years, we’ve had a fairly holistic approach to AI. And we’ve been embedding AI in our products, in our processes that we use in our daily life. And these are across three categories. One, we have been using AI to improve the operational outcomes for our clients. So to reduce costs, 15% to 30% efficiencies and to improve outcomes. The outcomes could be quality improvement, accuracy improvement, improvement in the sales conversions. And wherever we have deployed it, we’ve seen 10% to 25% improvement. The second category where we have been deploying AI is to improve our operational support functions. So things like operational supervision, workforce management, QAs. And again, we’ve seen improvement of 10% to 25% in quality and 15% to 30% reduction in costs. And finally, for reducing the cost and improving the outcomes of our internal support functions, be it HR, IT, finance. So as we mentioned before also, we’ve been investing dozens of millions of euros for the past few years in our transformative TAP capabilities. And today, we’ve got over 600 experts working on AI projects. Yes. This is a typo here. It should be 600 experts working on AI projects. And within those projects, about 250 are in Gen AI and another 150 are in the pipeline. And the kind of companies that we do these Gen AI projects for are – some of those are mentioned in the right side. So one of the largest entertainment companies in the world, it is U.S. headquartered, but it is a global company for a large U.S. e-commerce platform company, a big hospitality company from Scandinavia, one of the biggest card companies in America, Western European National Airline, another airline, which is a subsidiary of one of the largest aviation groups in Europe, a large tobacco company and one of the largest telecom company, again, had quoted in the U.S. So I just wanted to give a sense that these Gen AI projects are not only for some small companies, but it is for some of the largest companies that we are supporting in. Apart from that, what we are doing is we’re also embedding AI in some of our core processes. So we’ve got to process standards, which are industry-leading; TOPS, which stand for Teleperformance Operational Processes and Standards and BEST (NYSE:BEST), which stands for Baseline Enterprise Standards of Teleperformance. So we’re incorporating AI in those. We’re also embedding AI and now upgrading those to Gen AI in some of our products. Daniel touched upon a few of those, and I’ll come to the top five later on. And then apart from building our own products, we are getting into partnerships with leading companies like Microsoft (NASDAQ:MSFT), ServiceNow (NYSE:NOW), Genesis, and there are a few more in the works, where we are using their products both for our own purposes and also as integrator for our clients. Coming to some of our core products. We’ve got more than 60 AI-enabled products. The top five are mentioned here. So we’ve got TP Client, which is our proprietary CRM platform, which is deployed in currently 228 clients. TP Protect, which is our compliance and security product, which detects and then send triggers for any abnormal behaviors, that’s deployed in 669 clients. You got StoryfAI which is a real-time interpretation, which can handle up to 100 languages, which is deployed in 78 clients. TP Recommender is a Gen AI enabled prescriptive analytics product which is largely used in sales and collection set up, and that’s deployed in 59 clients. And TP Interact is another Gen AI enabled analytics product, which is used for three different things. One for automation of quality interactions. Historically, in our industry, typically, quality was monitored manually for about sample size of 2% to 5% of interactions. With TP Interact, we can monitor 100% of the interactions. Second, it is used for giving a real-time coaching and feedback to our agents. Immediately after interaction ends, it summarizes what the agent did well and what he or she could have done better. And with Gen AI enablement, it also now can track customer sentiment and it gives SKUs to our agents as to how to modify their tone, their verbiage, their offer to be able to service the customer better. Apart from our own products, we are also again partnering with other platforms. So I’ve just mentioned two here, but there are others that we have already and there are some more that are in the works. So Twilio (NYSE:TWLO) is a CX automation platform, which can look at an interaction and can divert it into a self-serve or auto fulfillment channel, depending upon the complexity of that interaction that’s deployed in 144 clients today, and Centrical is a productivity enhancement and gamification platform that’s deployed in 60 clients today. Moving on to the topic of financials. And like any industry, there are multiple factors that impact the profitability and the top line growth dynamics of an industry. I’ve listed down four interdependent factors that have been impacting the profitability and growth dynamics in our industry over the past 15 years or so. So I’ll first explain this conceptually and then I’ll put some numbers behind these. So the first and foremost is the macroeconomic environment. In more stable periods where there is high GDP growth rate, where the cost of capital is low and the inflation is moderate, obviously, our clients are looking for growth, and they’re expanding in new products, new markets, new geographies. And that creates high volume of activities for the industry, which also in turn means there is less pricing competition. Unfortunately, the reverse is true, in tougher times, what happens is companies start scaling back to conserve cash, which means lower volume of activities and hence, more pricing pressure. If you look at the second factor around – on that point also, I do want to highlight that while TP is somewhat more resilient because of its diversification across lines of business, across geographies, across verticals, across clients, but we live in the same world, and so we are not totally immune from it. The second factor and it is interrelated to the macroeconomic environment is offshoring and near-shoring. And it is interrelated because during tougher times, clients are looking for more expense takeout and hence, they prefer offshore and nearshore than to onshore. Thirdly, technology, automation, AI. That also has similar effect as offshoring in the near-term because technology typically drives productivity. And because in our industry, most of the commercials are still input based, in the near-term, it is deflationary on the top line. But it does drive our profitability for the companies that are able to enable their products with the right technology and also in the medium-term, it creates more business opportunities. And the new services could be at two levels. It could be at an industry level. So the classic example is trust and safety, and the industry did not exist till about a decade back. And today, it’s in the $7 billion to $8 billion range. Or it could be at a company level where those services existed, but a company – a particular company may not have had enough share in that line of business, and I’ll mention couple of examples of that later on for Teleperformance. Now let’s look at some numbers around that. So this chart shows the growth rate and profitability for Teleperformance over the last 15 years. And it’s divided in three periods. The first period is 2008 to 2012, which is, as you would remember, the global financial crisis and then the gradual recovery and our numbers somewhat tracked that trend. It is important to point out here that during this period, TP was not as large and as resilient that it is today. It was much smaller and more concentrated on the CX business. Then from 2012 until about 2018, the world saw a fairly steady 2.5% to 3% GDP growth rate in the developed market. The cost of capital was low, the inflation, again, was moderate in the developing countries. And during that period, if you look at it, we grew by 7% to 9% like-for-like. This is also the period where we had the RPA hype starting in about 2013 and reaching its peak around 2015, 2016. Despite that, we grew by 7% to 9%. Now the 7% to 9% actually is a combination of two numbers. Our actual gross growth rate during this period – gross growth rate, meaning new business coming from either totally new clients or coming from existing clients in new lines of businesses or new markets. So the gross growth rate was around 14% to 15%. But then we had a churn of 5% to 7% on account of increased offshoring and automation. And hence, we get the 7% to 9%. Then 2018 onwards, a few things happened. One, we had an exposure in the number of interactions, mainly driven by the digital commerce companies because they were expanding rapidly and they were driving interactions. And then obviously, with COVID, there was a further boost to that. And we also had increased the adoption. There was a company level thing also during this period that TP aggressively got into additional lines of business, whether it was trust and safety, more specialized services, more sales activities. So because of combination of all those sectors, during this period, our gross growth rate moved up from the earlier 14%, 15% to more like 16%, 17%. And during this period, the churn, again, driven by automation and offshoring was in the range of about 7%, 8%. And hence, you see the like-for-like growth rate in the range of 9% to 12% during this period. And during this entire period, if you look at it since 2012, our EBITDA margins have been going up. And again, what is important to point out here is the margins have been going up despite our average unit price not tracking the inflation rate. So our margins went up, but the average price that we were charging to our clients did not grow by the inflation rate. In fact, they grew at almost about 60% of the inflation rate. So that’s the value that we have been adding to our clients. We have been helping them to manage their cost structure below the inflation rate. And that’s why this industry has been growing fundamentally over the last decades. Come to 2023, what happened? Now obviously, both Olivier and Daniel have touched upon it significantly. So I won’t kind of go through all the factors once more. But even in 2023, the gross new business that we had was 13%, just over 13%. We did add €1 billion of new business in our business last year. But then we also had the churn, the same churn that we’ve been talking about around 8% or so from offshoring and automation. And before the question is asked, and I know it is counterintuitive. It actually was more driven by offshoring than automation. We did not – yes, there was automation, but did not see a significant uptake in automation rate versus what we had seen in the previous 5 years. But yes, we did see a significant uptick in offshoring during last year. And hence, that 13% gross, 8% churn, net of about 5% growth rate. That was past, what about future. And if you look at the forecast for the next few years, the forecast in the developing economies is not as strong as what it was in the previous 5 years. ‘24 is expected to be only 1.4% in the advanced economy. So further drop from what had happened last year. And then it does pick up afterwards, ‘25 onwards as per the forecast, but it is still not going back to the ‘22 and ‘21 levels. So what we are doing is we are adjusting our strategies and the financial forecast accordingly. So in terms of the priorities for us, we continue to build out our new Teleperformance organization, taking the best of talent from Majorel or TP and then adding especially in digital capabilities, vertical capabilities and new lines of business from outside. Second, we will continue to accelerate our AI deployment. We actually see this as an offensive move rather than a defensive move because it does create new business opportunities for us. And also, it creates a ground for us to capture higher share. We’ll continue to focus on the alternate lines of business, so specialized services, sales, back office. And I won’t touch upon all, but I will touch upon sales because for some reason, people misinterpret this as telemarketing. Yes, there is a bit of that. But what we are referring to sales here is actually B2B account and relationship management. So for example, ad sales relates to helping small and medium businesses, restaurants, independent hotels or, let’s say, neighborhood salons and other things to onboard digital and media platforms, all the big media, social media platforms or digital commerce companies, onboard them and then spend money on them tracking the ROI. So that’s what we do for many of the – almost the biggest platforms in the world. We do that for them. The consumer goods supply chain management also is, again, virtual relationship management. Historically, the consumer goods companies have been managing their vast hundreds and thousands of retailers through either wholesalers or through armies of their own sales officers. The pandemic taught us that these could also be managed remotely. So what we are now doing is actually working with number of consumer goods companies to manage their end retailers some of the bigger retailers like let’s say, supermarkets, the Tesco’s, the Sainsbury’s, the Waitrose, etcetera, client companies can manage directly. But when you’re talking about thousands of retailers, the small grocery stores, etcetera, they require management. Typically, historically, it was either wholesaler where you ended up sharing 10% to 12% of our gross – of your margin pool or you had your own army, which was a fixed cost. By doing it with us, it’s both more efficient and also you have consistency in service with the recording of every interaction that gets done with them. TP Infinity. We touched upon it earlier. Historically, this was more as a capability for us to help us deliver and sell our core business. Now we are carving it out as a separate business line. And we’ll continue to optimize expenses, leveraging shared services and technologies to be make sure that we maintain high margins and also create headroom for further investments. And finally, the guidance for ‘24. So in this environment, we’ve taken a conservative approach, and we are giving a like-for-like revenue growth on a pro forma basis, which means assuming full 12 months of Majorel in ‘23, 2% to 4%. And here, I would like to peel one more layer. Stand-alone TP, which is excluding Majorel, even in ‘24, the growth rate is north of 5%, very similar to the like-for-like growth rate that we saw in ‘23. This is because while there is an overall slowdown in business services kind of sector, you’ve seen the guidance from almost every company, whether they are direct competitors or indirect competitors, there is a slowdown. But TP, because of its diversified geographies, lines of businesses, verticals and clients, is much more resilient and hence is able to still grow by that rate. Unlike TP, many mid and smaller-sized companies in our sector who are exposed to either some particular vertical or client or geography are not able to actually deliver that kind of growth. And hence, you would have seen from the guidance of many of the companies that have come out in the last couple of weeks, it’s a much slower growth rate or actually deceleration kind of in the year. Majorel like many of these smaller and medium-sized companies related to TP, also had a greater concentration of global Internet accounts. And as we know, this is a sector where we have seen the biggest budget cuts, and hence, they have seen a significant deceleration in the growth rate in the second half of last year, and that is continuing in this year, too. Having said that, it is still a good acquisition for TP for the long term because it reinforces the leadership position of Teleperformance in a consolidating market. It establishes fairly strong and profitable position in Germany and France markets, which are number three and number four outsourcing markets. It doubles the footprint in Asia Pac, which is the fastest-growing outsourcing market. It does add some niche capabilities in claims management, in document management, in luxury goods marketing. And so from a long-term perspective, it does work well. There’s other factor that is also there in Majorel. Their account management and operational management team is excellent. And – but it did not have that established new business engine. And so it will take us somewhere around 12 to 18 months to expand our new business engine so that the combined growth rate can go back to 5% plus levels. Talking about profitability, we’ll continue to improve that. This year also, we are targeting 10 to 20 basis point improvement on a pro forma basis, and this is excluding the cost of integration and synergies. With the improved profitability, we will see an increase in net cash free flow – net free cash flow. And with a more controlled and disciplined capital allocation. This free cash flow will also result in a stronger balance sheet, where by the year-end, we should have debt levels below 2x EBITDA. And with that, thank you.

Daniel Julien: I think it’s time now for the Q&A session. So please feel free.

Q - Antonin Baudry: Yes. Antonin Baudry, HSBC. My first question is about top line growth, short-term and midterm. First, short-term, will it be possible to have more color about the top line growth that you expect in Q1 2024, on the exit rate that you expect at the end of the year to have more granularity on your 2% to 4% that you expect for 2024? The second question is about the mid-term guidance of revenue growth, you did not give us details or quantified targets in the mid-term. Should we expect at some point the company to come back with a quantification of mid-term guidance in the occasion of Capital Markets Day, for example, later in the year, or does it mean that you do not know finally what will be your revenue growth in the mid-term? Thank you.

Olivier Rigaudy: Just on the first half, as you saw at the end of the year, specifically December has not been as strong as what we wanted. We know that and that leads to the figures that we have reported. Anyway, we knew that for Q1 and to a lesser extent, Q2, we have, I would say, base of comparisons that are still high, if I remember properly 8.3% – 8.6% in Q1 last year and 5.3%, 5.7% in the second part of the year. So, of course, we are going to have a second part of the year, how we build the budget. We have the first part of the year that will be, I would say, not so much growing, growing marginally and the second part of the year growing dramatically, despite the fact that specialized service that is here through Scott is going to deliver a significant growth and accelerating this growth all along the year. So, we have been careful in fixing the guidance for 2024. I am sure you – we can probably have plenty of default. But what we heard – what we learned from 2023 is just to be careful on the guidance and just to be careful on the margin, and I will come back on the margin later on. But this is what we want to do. But we know for a fact and from what – that the first half will be, I would say, much more flat in the second part of the year, exactly like what you heard from competition – from extended competition. And this is exactly what we are going to leave. The second part?

Daniel Julien: Yes. The second part, we have a certitude, which is to grow faster than our market. And the growth of the market is defined very well by companies, I mean resource companies. Everest is a good benchmark. And we are sure that we are going to continue to grow faster than the market. Now, what is going to be the growth of the market or what is going to be the future in six months, in nine months, if there is no specific disaster, we are able to say it. What it will be in 3 years from now, we are not able to see it. And again, it’s not AI that prevents us to say it. It’s the social political environment that is extraordinarily volatile. And I think that the governments of the world would like to be able to say it. But if I remember well, the minister of the economy of a government that I know pretty well because I am born there, in France, just to review downwards is forecast for 2024. So, right now, you will understand that we are careful on the long-term. When the sky will be a little bit less foggy, we will give you numbers. Right now, our certitude is to make better than the others.

Suhasini Varanasi: Hi. Good morning. Suhasini from Goldman Sachs. A couple from me, please. I think in conversations with investors, one of the questions that always comes up, it’s probably for Bhupender, about the implementation of third-generation AI in your software stack and with customers. Of the pilots that you have done with your customers, have any converted and have you implemented it? And in relation to that, can you help us understand, if let’s say, you had 100 interactions that you were servicing a customer, for example, and the mix was maybe 50 voice and 50 chatbots, plus chats with human beings. How does that mix basically change after you implement the generative AI? And if you had, let’s say, some level of deflation, do you then go back to the customer and say, okay, now we are able to give you the cost savings, maybe can we take a bit more from you in terms of incremental outsourcing or maybe take a bit of share from other players in the end market, is that how your conversations go? And therefore, your pie doesn’t shrink or maybe it grows? That’s the first question.

Daniel Julien: That’s – thank you for the question because it was the answer. But Bhupender, please?

Bhupender Singh: Yes, I was about to say. Thank you, Suhasini. You can be in our business. You can be our salesperson. But many parts to your question. First, the Gen AI projects have any been implemented, yes, tens and not in hundreds as yet, but yes, in tens they have been implemented. They are live today. Second part in terms of, I think what you are saying is what’s the percentage of automation ultimately, that’s what you are kind of asking. Remember, this is – at least TP, I am not talking about the entire industry, but at least TP, we have been on this journey for the past few years, and we have been working systematically with our clients to automate the lower end, simpler transactions. So, the number that I gave to you, 5% to 7% deflation on account of offshoring and automation, we have been doing that consistently for at least I am aware since...

Daniel Julien: Before 2013.

Bhupender Singh: Yes, 2013, ‘14, just using RP, etcetera. But even before that, there were other kind of things, the call deflections and other things that were happening earlier also. So, we have been doing that for quite some time. So, what is getting left behind incrementally is difficult to automate. And hence, the impact of AI and automation associated with it is also less pronounced on TP than maybe some other company who may not have had those kind of things. You talked about chat, chat is actually only about 5% of our overall business because elements like chat probably are more prone to automation, this thing. And so – but coming back, I gave you the numbers. At the moment, replacement is not that substantial. What we are seeing is significant productivity improvement, which could go up to 20%, 25%. But replacement is truly very low end of activities, which for us was already automated to some extent.

Daniel Julien: I would like to add something – I would like to have some color to this answer. Let’s take in the financial industry, the KYC or the fraud prevention that are typical line of services that we provide to our large clients. Of course, the vast majority is already treated by the AI. What comes to us is a minority. But this minority is growing every year, and it’s exactly the same with the content moderation. The content moderation, I mean if we speak about – okay, everybody knows who has a big social platform, they are all our clients, by the way. So, they have done such a good job with the AI that right now, they are able to prevent offensive material to come online. In 98% of the case, we manage only 2% of the case. But today, this is more than €700 million at Teleperformance and our main competitor there, and it’s strange because nobody asked them question, is Accenture (NYSE:ACN).

Suhasini Varanasi: Yes. Perfect. The second one is on the 2024 guidance, please. I appreciate you gave the color that in terms of what maybe changed in 2023 for you versus your previous expectations. And there, the churn was driven more by offshoring. So, if you think about, let’s say, your views on 2024, do you still see the bigger risk coming from incremental offshoring, has that stabilized, or are you still worried that there is more to come? Thank you.

Bhupender Singh: I think that is continuing. We are still in a tougher economic environment period. So, the year of efficiency of most of the big tech companies continues. And hence, they are looking for budget cuts, expense management and hence, offshoring continues. See, the math for us is not that complicated. If I use the same numbers that I gave to you earlier, instead of growing by 13%, we will probably only grow by 11% top line with 7% to 8% of churn because of combination of offshoring and automation. And why are we growing by 11% and not by 13% that we grew last year, that’s because we have not been able to expand. You can’t expand your business development engine kind of overnight. It does take 12 months to 18 months to actually to get that cranking. And our base has – the base that has increased by about 25%. So, that’s what has happened. So, once we build our business development engine to cater to the expanded base, we will go back to that. We expect to go back to 13%, 14% top line growth rate, and there will be churn, which we have been seeing for more than 10 years now.

Daniel Julien: By the way, the fact that it’s going to continue, we see that also as positive. The world is not so binary, because right now, we grow, we grew last year by plus 17% in India, and we are going to continue to grow a lot there. And of course, top line is deflationary. But bottom line, it’s – it increased the ratios. And for sure, there is something very important that Bhupender started to mention, is the fact and that you mentioned, by the way yourself, is the fact that by providing the best possible labor arbitrage plus the best possible AI, we become the best partners of our clients’ expectation. And this is the way we secure the partnership, and we grow our share of wallet. There was a question.

Karl Green: Yes. Thank you very much. It’s Karl Green from RBC. I have got three questions. I will probably take them in turn. The first question is really around what’s happening at Majorel. I think in the fourth quarter, you indicated in the statement that the margins came out at about 8.5%, which was a long way below what they averaged for the year. And I think also there was the comment that H2 growth has slowed as well because of customer mix. So, can you indicate what the fourth quarter pro forma organic growth was for Majorel, please? And then just thinking about the comment for 2024, I think you said that Teleperformance standalone can probably still grow at around 5%, which therefore implies a lot lower growth for Majorel. So, just to understand how much of a drag Majorel is going to be? And that question also then flows on to the margin as well. If it was 8.5% margin in the fourth quarter, what kind of margin ex-synergies should we be thinking about for Majorel because that seems to be the real weak spot in terms of the down-stepping in guidance? Sorry, that’s sort of lots of questions in one there, but that would be really helpful. Thank you.

Olivier Rigaudy: Just a question about the 8.5% of the two months of Majorel, which are exceptional because you have roughly €10 million of costs that have been embedded in these two months that are exceptional, meaning some reorganization in some specific countries that were decided before. Some people that decided to leave, plus some cost of the deal that was embedded in their margins that we were unable to highlight differently. So, we are probably much more – we are not probably, we are, if you take Q4 of Majorel, they are not so different of what they have – what they are for the full year that has been displayed in the presentation. It’s clear that the growth of Majorel in Q4 has been reduced significantly versus the trend and I was telling you that the final growth of Majorel for the full year was 5.5% like-for-like estimated. And we know that December has been difficult in Majorel, slightly negative. That is what I can tell you. In 2024, again, I am going to be clear on that, we are not going to follow Majorel and TP. We call it TP Blue and TP Pink, so far. We are trying to mix them together. And this is, and why because what we want to do is to do it quick, fast and good. What does it mean, it means that you are launching a lot of different, let’s say, topic in the meantime. And tomorrow, Majorel will be totally part of what is clear is that growth embedded with – from the budget from TP was higher than Majorel. It’s going to be mixed along, and we are going to not be able to follow specifically Majorel by itself in 2024 as a separate company. That’s what I can tell you. You saw that the margin of Majorel is dilutive to TP, and this is where we are. We have decided to accelerate as much as we can the synergies. That means that the €50 million that Daniel mentioned earlier on, is a run rate figure, that means that the decisions that have been made so far should lead to a run rate of €50 million of margin for the full year. We probably – but the cost is there, the cost you are going to incur, the €50 million cost, of course, we are going to easily discount. But the run rate of the synergy will be €50 million, hopefully better, but the costs will have an impact on the full year, of course. And we will be probably lower in terms of impact of – positive impact of the synergy in 2024. That’s what I can tell you, probably half of it.

Daniel Julien: I can add four points. First – if you want five. First, Majorel is a company that was known for excellent delivery and had tailwinds, thanks to a strong presence in social media. And an excellently badging deal that they made with Booking (NASDAQ:BKNG).com, it has been public. So, it’s not something new. By the way the clients of Majorel love Majorel. And we shared some of our clients and sometimes it’s Majorel people who take the lead of these clients just to show that there is a clear inter penetration. But Majorel was – did not have an engine that Teleperformance specifically has, which is our spearhead, our arrow, which is our strong business development team in all the regions. So, we – and of course as now we have Majorel and there is tailwind, we need to boost structure that we have. It’s a question – but it takes time. It’s a question to hire right person to make sure that they are well on boarded, and – okay, it’s a question of months, maybe 12 months, maybe 18 months. But it’s not a structural issue. Then when you merge two companies in the same business, you always have at the margin, some kind of erosion, because suddenly a client that loves you say, hey, common, now you represent 60% of my share of wallet, I cannot. I need to balance a little bit the risk. So, I love you, but you are going to have only 50%. And so there is a little bit of this leakage marginal in the first year. And four, the point number four is, with the synergy, we compensate the gap in margin. And so the deal with Majorel is not going to be dilutive to Teleperformance margin after 2025.

Karl Green: Okay. Thank you very much. So, just going back, Olivier, so the synergy numbers, that run rate for the exit of each year. So, we won’t see the – in theory, the full €150 million until fiscal ‘26, is that…?

Olivier Rigaudy: Exactly.

Karl Green: Okay. Thank you. And then my second – sorry, my second and third question is much simpler. Bhupe, just on the churn definition, is that completely synonymous therefore with deflation, or do you include a degree of customer loss within that churn number, I sense it’s synonymous?

Bhupender Singh: There is some degree of customer loss, but that’s minimal. It’s not kind of huge. It’s mainly driven by revenue deflation from automation offshoring.

Karl Green: And then the final question, I suppose to all thee of you is, I would just really like to understand the logic as to why you don’t report an underlying earnings definition and how that would be in your shareholders’ interest to actually report that? And underlying – most companies of your size report an underlying earnings definition and an underlying net income definition, which adjusts for lumpy one-off finance charges and associated tax and other lumps and bumps. Given that creates volatility at the bottom line, do you think it would be in shareholders’ interest to move to that basis?

Daniel Julien: I will ask our Chief Financial Officer.

Olivier Rigaudy: No, we might do that. So, I didn’t thought it was absolutely key for you to get the stuff, but okay.

Karl Green: I don’t think it matters for the sell side, I think investors would find it very useful.

Daniel Julien: Okay. Thank you for the suggestion.

Ben Wild: Hi. I have three questions from me as well. Ben Wild from Deutsche Bank. Firstly, just thinking about scale in the industry and as the generative AI solutions that you have talked about today become commoditized and more widely available from third-party providers, is there a risk that some of the smaller players in the industry are more agile in being able to divert capacity towards niche growth verticals? And more broadly, why is scale important? Why is being the market leader important in this industry in that context? The second question, if I could just take them all at once. In terms of offshoring, obviously, a huge dynamic in ‘23, can you explain, historically, you have achieved very significant gross margin premium on offshore volumes? Can you explain how you can justify those premium margins with your clients, especially in the current environment where there is a huge focus on cost and potentially going forward when clients will be looking to automate some of their volumes? And then the third question, I think one of your peers was talking in the last few days at a conference about potentially 30% to 40% of volumes in the industry being at risk of automation going forward. Can you comment – when you think about market growth over the mid-term, can you commit to market growth being positive?

Daniel Julien: We are going to try to answer together. First, the small players and more agile, it always happens. You always have a new start-up that can be super agile and so on. But this is not the time for that. I mean we serve very large clients who need and want to consolidate with less partners. When we ask directly the question to our clients even before to make our 2024 budget to say, okay, how do you see ‘24, how is it going to be, and we get answers that are not extraordinarily enthusiastic about the business. But typically, we get the answer. In any case, you are going to have the same level of business because we want to consolidate with global partners. We want to be sure that we have the consistency. We have to be sure that we don’t need to speak to 50 different people with 30 different managers who manage the vendors. So, we are much more in the era of consolidation. And our largest clients, you know, they are clients for – right now, the average is 14 years seniority. But its 14-year seniority only because we onboard new clients every year. We have many – among our top 10 clients, we have many clients that are with us for more than 20 years. So, I mean it’s not because suddenly you have an agile guy that is going to come and to say, hey, me, me, me, that is going to change something. On top of that, we are not exactly blind. We have something that we call TP Lighthouse which is a special unit based in India that scans the market every single day, and we know what’s happening all around the world every single day.

Bhupender Singh: It’s not necessarily that large players cannot be agile.

Daniel Julien: Then what the client likes is that we have the largest footprint in the industry. And so not every size fit everybody. Some clients are going to prefer to deal with us in Colombia because they are in the U.S., it will be three hours from Houston or from Atlanta or – and they will feel more comfortable, more proximity. They will not be 12 hours jet lag. I can tell you, I go way often to the Philippines, and I live in Miami, it’s 26 hours trip. Our clients like the fact that Philippines, India, Latin America, Egypt, wherever in the world, we have a solution that we can customize for them. Then are we at risk of de-growth, we don’t think so. We don’t think so. But when you read, there is a book that is very famous right now, which is The Beginning of The End, written by a smart economist and sociologist in the U.S., which shows that maybe the world of the 50 glorious or the 60 glorious in which the Western World has been, maybe is challenged today. From us, from our point of view, we continue to see ourselves in a growth situation. Now, I don’t know if tomorrow, there is not going to have a political threat that is going to cut the world trade. I don’t know if tomorrow, there is going to be the Houthis who are going to cut the submarine Internet cable that make the world communicating. For that, we have a lot of protection because everything is double that TP. So, if it’s that’s what route, one route is another one. And then we have the cloud. But I am sorry, but all of us, we have entered in a very difficult-to-predict world long-term. I think that we are solid. I think that we are going to do the best in our class. And what I call our class is not just customer experience contact center, it’s BPO. It’s – there is something strange by the way, in the perception that I see from the market, which is – it seems that a class of actors are deeply impacted by a kind of distress in the future. When another class of actors do exactly the same job or at least for 50% of their business are not at all impacted, but this is probably the common sense of the algorithm.

Ben Wild: If I could just follow-up on the first question, given your comments about vendor consolidation, it sounds like there is likely to be an ongoing M&A thematic in the industry among your peers. If there is another mega deal in the sector, would you be forced to consider to go out and do another deal yourself to remain the largest player?

Bhupender Singh: We don’t believe in doing defensive deals.

Daniel Julien: And Majorel deal was an offensive one. A lot of people did not understand that it was an offensive one because it helped to fill a gap in France and Germany that were the market number three and number four.

Olivier Rigaudy: We have to stop because we would be late, if not, speaking.

Daniel Julien: I think that we have a break now, and then there is a second part where you are going to listen about Bhupender Singh, Miranda Collard, who is our Global Chief Client Officer, who is here with us today and Scott Klein about the business deep inside. Thank you. Thank you very much.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.