Teleperformance Se · EURONEXT:TEP
Teleperformance — 9M 2023 Earnings Presentation
48 slides from Teleperformance's earnings presentation, November 2023
Slide 1: Teleperformance Group overview
Teleperformance Group overview Including: - Quarterly information at September 30, 2023 (January 1, 2023 – September 30, 2023) - Finalization of Majorel acquisition (November 8, 2023) November 2023
Slide 2: Forward-looking statements
All forward-looking statements reflect Teleperformance management’s present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. For a detailed description o
Slide 3: Contents
Contents 01. Teleperformance at a glance 02. Third-quarter 2023 and YTD financial review 03. 2023 outlook 04. Appendix
Slide 4: Introduction
Introduction • Reduce frictions in day-to-day life o Moderate end-customers acquisition costs Mission o Prevent end-customer churn o Rebuild end-customer loyalty How to • High-tech: automation, speed, accuracy deliver this • High-touch: empathy, common sense, intuition mission (both combined) • Unre
Slide 5: The New Teleperformance
The New Teleperformance(1) #1 global leader in the CX outsourcing and digital integrated business services + New geographical split of activities* ➢ ~500,000 people, including 6,500 IT Specialized Services, specialists and 3,000 experts across consulting, analytics, and digital products Americas** ➢
Slide 6: Teleperformance's offering and strategy: The Cube
Teleperformance’s offering and strategy: “The Cube” Deepening expertise along three dimensions Geographies • ~95 countries • 170+ markets Expertise by: • 300+ languages • Global and flexible delivery model (smart & cloud shoring) • Verticals: vertical experts in all main geos Services • CX voice & n
Slide 7: Acquisition of Majorel
Acquisition of Majorel An augmented business services leader • Geographies o Significantly strengthens positions in German and French speaking markets o Scales up APAC markets presence (x2) o Largest player in Africa • Verticals: most significant increased penetration in o Banking and financial serv
Slide 8: A proven industry-leading financial track-record
A proven industry-leading financial track-record c. +6% LFL 9000 Exc. Covid* 8 154 8000 7 115 7000 6000 5 732 5 355 5000 4 180 4 441 4000 3 398 3 649 2 758 c. 16.0% 3000 2 433 15.5% 14.3% 15.1% 13.3% 13.6% 2000 12.8% 11.2% 1000 10.3% 9.3% 9.7% 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Slide 9: Teleperformance is highly rated in all major ESG indices
Teleperformance is highly rated in all major ESG indices Rating: 13.0 Rating: A Low risk profile, positioned 6th Updated controversy report percentile of the global universe. (September 2023) Score: 70% Rating: C Advanced classification, way above Prime Label, awarded to companies with sector averag
Slide 10: New Teleperformance's leadership
New Teleperformance’s leadership A simplified and leaner organization(1) New Executive Committee Focused on: o Excellence in operations Daniel Julien o Innovation Deputy CEO Chairman and CEO Bhupender Singh PresidentofGroup Transformation Deputy CEO Agustin Grisanti Thomas Miranda Collard Scott Klei
Slide 11: Contents
Contents 01. Teleperformance at a glance 02. Third-quarter 2023 and YTD financial review 03. 2023 outlook 04. Appendix
Slide 12: 2023 guidance affirmed at low end of the range
2023 guidance affirmed at low end of the range First 9-month growth LFL*: +6%, in line with annual guidance LFL ex. 2023 2022 Covid LFL** Reported contracts* €/$ exchange rate (9-month average) €1 = US$1.08 €1 = US$1.06 9M (to September 30) 5,949 6,002 +6.0% +2.5% -0.9% Q3 1,989 2,056 +4.0% +3.1% -3
Slide 13: Q3 2023 grows +4% over strong Q3 2022
Q3 2023 grows +4%* over strong Q3 2022 2500 Q3 Revenue (€m) 2,056 1,989 2000 1500 +14% 1000 LFL* +4% LFL* 500 0 Q3 2022 Q3 2023 * Like-for-like growth, at constant exchange rates and scope of consolidation, excluding the impact of the decline in revenue from the Covid contracts 13
Slide 14: €345m of LFL growth through 9 months of 2023
€345m of LFL growth through 9 months of 2023 First 9-month 2023 growth analysis (€m) 6,002 (250) +6% LFL excl. Covid contracts +53 5,949 +345 5,752 (201) LFL growth: +€144m = +2.5% 9M 2022 Currency effect 9M 2022 at Impact of Covid Like-for-like Change in scope* 9M 2023 constant support growth (LFL)
Slide 15: Revenue well-balanced by vertical and region
Revenue well-balanced by vertical and region First 9-month 2023 revenue mix by vertical* First 9-month 2023 revenue split by activity and region Business Services, Specialized North America & Governments, Media, Entertainment Services, APAC, Healthcare, & Gaming, Retail & e-commerce, Financial servi
Slide 16: Source of growth
Source of growth First 9-month 2023 growth analysis by activity and region +140 +53 5,949 (€m) 5,752 (201) +188 (4) +21 Specialized Services -0% LFL +2% LFL +10% LFL* +17% LFL Core services & D.I.B.S. = +4.2% LFL* 9M 2022 at Impact of North LATAM EMEA Specialized Change in 9M 2023 constant Covid Ame
Slide 17: Financial flexibility and optimized capital allocation
Financial flexibility and optimized capital allocation • Debt o Amount: Net debt/EBITDA ratio of ~2.0x based on est. 2023 aggregated figures, expected to quickly deleverage to est. ~1.5x by year-end 2024 o Cost: < 4.5% after acquisition, vs. < 3% before acquisition o Maturity: ~4 years, with no sign
Slide 18: Financial flexibility and optimized capital allocation
Financial flexibility and optimized capital allocation Nearly €600m returned to • M&A strategy shareholders by year-end 2023 o Specialized services/BPO/ITO/Consulting o Mid-size companies with strong management and financials o Base case scenario: resuming in late 2024 Dividends €227m • Cash return
Slide 19: Contents
Contents 01. Teleperformance at a glance 02. Third-quarter 2023 and YTD financial review 03. 2023 outlook 04. Appendices
Slide 20: 2023 outlook
2023 outlook Full-year 2023 guidance confirmed • Like-for-like revenue growth of around +6%* (Q4 peak season), excluding the exchange rate volatility impact related to countries with hyperinflation (est. +50 bps/-50bps annual impact) • EBITA margin target of around 16% maintained • Consolidation of
Slide 21: Final deal closing and next steps
Final deal closing and next steps Acquisition of Majorel October 20, 2023: November 3, 2023: December 2023: Results of the offer Squeeze out and delisting Offer declared Finalization of the acquisition of Majorel unconditionnal Results of the offering post-acceptance period > 99.9% November 1st, 202
Slide 22: Final deal closing and next steps
Final deal closing and next steps Acquisition of Majorel • Acquisition costs: ~€20 million, < 1% of the deal value • New shareholders: Saham and Bertelsmann will own 3.59% each of Teleperformance capital • Lock-up period: 6/9/12 months by third • New Board member: Mr. Moulay Hafid Elalamy, founder o
Slide 23: Final deal closing and next steps: cost synergies
Final deal closing and next steps Cost synergies • Cost synergies analysis performed by the dedicated Teleperformance “Clean team” supported by E&Y during summer 2023, and shared internally following antitrust clearance (October 20, 2023) • Main conclusions: ▪ Amount: Well into the € 100-150 million
Slide 24: Conclusion
Conclusion • In 2023, Teleperformance expects to grow its revenue on a LFL* basis and its margins in a volatile environment • Majorel acquisition positions Teleperformance on a springboard to build the next wave of growth and innovation of the Group • The New Teleperformance 2024-2027 master plan wi
Slide 25: Contents
Contents 01. Teleperformance at a glance 02. Third-quarter 2023 and YTD financial review 03. 2023 outlook 04. Appendices
Slide 26: Appendix
APPENDIX APPENDIX 1: TELEPERFORMANCE AT A GLANCE – Additional information APPENDIX 2: DIGITAL TRANSFORMATION – Additional information on AI / GPT APPENDIX 3: MARKET AND COMPETITIVE ENVIRONMENT
Slide 27: Alternative performance measures
Alternative performance measures Change in like-for-like revenue: Change in revenue at constant exchange rates and scope of consolidation = (current-year revenue - last-year revenue at current-year rates - revenue from acquisitions at current-year rates) / last-year revenue at current-year rates. EB
Slide 28: Hyperinflation
Hyperinflation Principle and impact on Teleperformance growth Principle Restatement of financial statements for companies located in countries impacted by hyperinflation Flow denominated in local currencies, translated in € and adjusted with price evolution under IFRS 29 Methodology Use of the CPI p
Slide 29: Appendix 1: Teleperformance at a glance
APPENDIX 1 Teleperformance at a glance Additional information
Slide 30: Our story
Our story High credibility: 45 years at the forefront of customer experience and business services outsourcing Nearly Revenue* 2018 Acquisition of 2023 500K €10+ Intelenet and employees billion 2012 launch of Digital Full control of Integrated TLSContact Business Services (Luxembourg) 2023 Acquisiti
Slide 31: Our financial track record
Our financial track record Creating value: a proven financial track record (2012-2022) 15.1% 15.5% +25.7% 10 000 14.3% 8,154 25% 1250 8 000 13.3% 13.6% 15% 20% 1000 10.3% 11.2% 13% 6 000 15% 750 9.3% +9.9% 9.1% 9.7% 12.8% 11% 2,347 +7.5% 4 000 +5.7% 10% 500 9% 2 000 +10.6% +11.6% 5% 250 7% +7.9% +7.
Slide 32: Our scalability: a dominant force in every significant market
Our scability: a dominant force in every significant market around the world* Teleperformance leadership / major competitive position in 9 of the Top 10 countries in the world by GDP in 2023 o US o China o Germany o India o UK o France o Italy o Brazil o Canada Main Majorel’s operations Source : IMF
Slide 33: Our high-tech, high-touch capabilities
Our high-tech, high-touch capabilities A shared approach THE BEST TECHNOLOGY BALANCED BY HUMAN EMPATHY • A redundant architecture ensures • A human-centric culture service reliability • Empathetic support when a human • Intelligent automation streamlines touch is needed engagement and processes • Ca
Slide 34: Our worldwide shoring network
Our worldwide shoring network Smart shoring: a unique offering of worldwide broad sourcing mix • Network of 37 offshore/nearshore locations around the world Increasing offshore 48% 65% 52% 35% +17 ppt 2010 2022 % of nearshore/offshore/ multilingual hub revenue % of domestic revenue * in Core Service
Slide 35: Our CSR commitment
Our CSR commitment Strong, profitable and responsible growth Specific, quantified and ambitious objectives for Teleperformance CSR commitments Commitments Objectives Be a preferred employer Maintaining >90% of total employees in the market working in a TP subsidiary certified GPTW® Promote diversity
Slide 36: Appendix 2: Digital transformation
APPENDIX 2 Digital transformation Additional information on AI / GPT
Slide 37: Teleperformance has kept pace with the evolution of AI
Teleperformance has kept pace with the evolution of AI and delivered increasingly complex use cases for clients Generative AI Transformers & Large Language Model Chatbots | Voicebots | Emailbots Natural Language Processing Vastly improved understanding of Simple rule-based automation context, abilit
Slide 38: Digital expertise enhanced with Majorel
Digital expertise enhanced with Majorel Adding value to clients by deploying simple, safe and cost-effective digital solutions across end-to-end customer experience journey, business value chain and employee lifecycle Teleperformance solutions Majorel solutions External partners’ solutions • Web/Mob
Slide 39: Teleperformance's GenAI Architecture
Teleperformance’s GenAI Architecture Application Layer 01 02 03 04 Mail2Summary Call2Summary DSAT Analysis Knowledge Management Finetune Layer CLIENT SPECIFIC LOB SPECIFIC INDUSTRY SPECIFIC LANGUAGE SPECIFIC COUNTRY SPECIFIC Integration Layer API BASED AGNOSTIC BYOM MODULAR GPT-X LLaMA 2 PaLM 2 Bedr
Slide 40: Key takeaways from dozens of AI implementations
Key takeaways from dozens of AI implementations AI blind spot & need for humans.. …creating opportunities for TP Only as good as the data it's trained on Productivity CX powerhouse, decades of domain Experience 'Human in the Loop’ for close supervision Unprecedented scale across channels, languages,
Slide 41: TP GenAI: Real-Time Agent Assist
TP GenAI: Real-Time Agent Assist Greeting & Intent Post call Fulfillment Confirmation Authentication Discovery wrap-up STANDARD TOTAL CALL FLOW 7:04 MIN. 00:29 01:27 03:35 00:46 00:47 TP GenAI Analyzes the intent based on speech and TP GenAI Guides the agent screen context and offers relevant and su
Slide 42: Industry experts' commentary on AI
Industry experts’ commentary on AI ▪ “We have to ensure that AI remains subject to human control… It is a tool that can help people think smarter and faster. The biggest mistake people could make is to think that this is a tool that will enable people to stop thinking” -- Brad Smith, President and V
Slide 43: Appendix 3: Market and competitive environment
APPENDIX 3 Market and competitive environment
Slide 44: Growing and still low outsourced CX market
Market and competitive environment Growing and still low outsourced CX market • Outsourced CX market worth $109-111bn in 2022E, up ~ +11% CAGR since 2020 • Outsourcing rate of 31% in 2022E, benefiting from increasingly complex clients needs • Market slowing down in 2023E impacted by the tough macro
Slide 45: Fast growing non-voice CX market
Market and competitive environment Fast growing non-voice CX market • Market still dominated by voice interactions, but share is declining • Faster growth of non-voice channels, usually seen as more user-friendly particularly by younger generation Breakdown of the CX market by channel in 2021 (%) Br
Slide 46: Consolidation of a still fragmented CX market
Market and competitive environment Consolidation of a still fragmented CX market Market share of the TOP 7 worldwide in the CX market* TOP 7 in revenue (2022) Teleperformance(1) (Revenue in US$m) 10% Concentrix(2) 12,000 9% 10,000 Foundever (ex-Sitel) 8,000 4% 6,000 Telus International TTEC 2% 4,000
Slide 47: Enlarged addressable market with broader competitive environment
Market and competitive environment Enlarged addressable market with broader competitive environment (BPO/ITO/Consulting) … whose transformation leads to reaching to #1 global leader in the outsourced CX market digital integrated business services market #1: New Teleperformance TOP 2: >= US$ 10 bn re
Slide 48: Inspired to be The bes | Teleperformance
Inspired to be The bes | 7 Teleperformance