TTEC

Executive Summary Founded in 1982, TTEC is a global customer experience (“CX”) technology and services outsourcing partner for marquee and disruptive brands and public sector clients. The Company designs, builds, and operates AI-enabled customer experiences across live interaction channels and provides data-driven, AI-enabled digital solutions to help clients improve customer satisfaction and loyalty, increase customer revenue and profitability, and optimize overall cost to serve. As of June 30, 2026, TTEC served approximately 735 clients across targeted industry verticals including financial services, healthcare, public sector, communications, technology, media, entertainment, travel and hospitality, automotive and retail. TTEC operates and reports its financial results of operations through two business segments: • TTEC Digital is one of the largest CX technology and service providers and is focused on the intersection of Contact Center as a Service (“CCaaS”), Customer Relationship Management (“CRM”), and Artificial Intelligence (AI) and Analytics. A professional services organization comprised of software engineers, systems architects, data scientists and CX strategists, this segment creates and implements strategic CX transformation roadmaps; sells, operates, and provides managed services for cloud platforms and premise-based CX technologies including Amazon Web Services (“AWS”), Cisco, Genesys, Google, and Microsoft; and creates proprietary IP to support industry specific and custom client needs. TTEC Digital serves clients across enterprise and small and medium-sized business segments and has a dedicated unit with government technology certifications serving the public sector. • TTEC Engage provides the digital first, AI-enabled CX operational and managed services to support large, complex enterprise clients’ end-to-end customer interactions at scale across the world. Tailored to meet industry-specific business needs, this segment delivers data-driven omnichannel customer care, customer acquisition, growth, and retention services, tech support, fraud mitigation and back-office solutions. The segment’s digital first delivery model covers the entire solution lifecycle including associate recruitment, onboarding, training, delivery, workforce management and quality assurance. TTEC pursues its CX market leadership through strategic collaboration across TTEC Digital and TTEC Engage. Together, TTEC’s ability to deliver comprehensive and transformational customer experience solutions to its clients is a marketplace differentiation, including integrated AI-enabled, CX technology and service solutions, go-to-market strategies, and innovative offerings. During 2026, the TTEC global operating platform delivered onshore, nearshore, and offshore services in 22 countries on six continents -- the United States, Australia, Brazil, Bulgaria, Canada, Colombia, Costa Rica, Egypt, Germany, Greece, India, Ireland, Malaysia, Mexico, the Netherlands, New Zealand, the Philippines, Poland, South Africa, Spain, Thailand, and the United Kingdom, with contributions from approximately 44,900 customer care associates, consultants, technologists, and CX professionals. Our revenue for second quarter 2026 was $455.5 million, of which approximately $104.0 million, or 23%, was generated from our TTEC Digital segment and $351.5 million, or 77%, was generated from our TTEC Engage segment. To advance our competitive position in a rapidly changing market and to provide our clients with modernized CX technology and service solutions, we continue to invest in innovation and service offerings for both mainstream and high-growth disruptive businesses, diversifying and strengthening our core customer care services with technology-enabled, outcomes-focused services, data analytics, insights, and consulting. We also invest to broaden our CX product and service capabilities, increase our global client base and industry expertise, expand our geographic footprint to the needs of our global clientele, and further scale our integrated solutions within and between our TTEC Digital and TTEC Engage segments. 28 Table of Contents Financial Highlights In the second quarter of 2026, our revenue decreased $58.1 million, or 11.3%, to $455.5 million over the same period in 2025 including a decrease of $0.3 million, or 0.1%, due to foreign currency fluctuations. The decrease in revenue was comprised of $9.7 million, or 8.5%, decrease for TTEC Digital and a decrease of $48.4 million, or 12.1%, for TTEC Engage. Our second quarter 2026 income (loss) from operations decreased $7.9 million to $11.0 million or 2.4% of revenue, compared to $18.9 million, or 3.7% of revenue in the second quarter of 2025. The TTEC Digital operating margin decreased 3.6% over the same period last year primarily due to lower margins in our recurring and professional services business. The TTEC Engage operating margin decreased 0.7% over the same period last year primarily due to a decline in revenue that exceeded the reduction in operating expenses. Income (loss) from operations in the second quarter of 2026 and 2025 included $4.3 million and $1.9 million, respectively, of restructuring charges and asset impairments. Our offshore customer experience centers spanning 13 countries serve clients based in the U.S. and in other countries with 22,000 workstations, representing 83% of our global delivery capability. Revenue for our TTEC Engage segment provided in these offshore locations represented 43% of our revenue for the second quarter of 2026, as compared to 37% of our revenue for the corresponding period in 2025. Our seat utilization is defined as the total number of utilized workstations compared to the total number of available production workstations. As of June 30, 2026, the total production workstations for our TTEC Engage segment was 26,800 with an overall capacity utilization of 70% versus 71% in the prior year period. The decrease was primarily driven by reduced client forecasts, partially offset by targeted seat reductions in the United States and Philippines along with country exits in Honduras and Rwanda. We plan to continue to selectively retain and grow capacity and expand into new offshore markets, while maintaining appropriate capacity onshore. As we grow our offshore delivery capabilities and our exposure to foreign currency fluctuation increases, we plan to continue to actively manage this risk via a multi-currency hedging program designed to minimize operating margin volatility. Recent Developments Change in the Principal Place of Business. In February 2025, the Company moved its principal place of business and principal executive offices to Austin, Texas. TTEC made the decision to relocate its principal place of business from Colorado to Austin, Texas after careful consideration of how it can best support its strategic goals, serve its global clients, and position itself for future success. Texas has been an important part of TTEC’s operations for decades, and this move provides the Company with additional access to a business-friendly environment, a strong economy, a skilled workforce, and a dynamic technology and innovation hub. Redomestication to Texas. At the Company’s Annual Meeting of Stockholders held on May 21, 2026, (the “Annual Stockholders Meeting”), the stockholders approved the redomestication of the Company from Delaware to Texas by conversion (the “Redomestication”). The TTEC Board determined that the Redomestication was in the best interests of the Company and its stockholders. The Board’s decision to recommend that the Company’s stockholders vote to approve the Redomestication was the result of extensive deliberations and consideration, including evaluation by the Company’s fully independent Nominating and Governance Committee and discussions with management and legal counsel. The Company and its Board believe that the Redomestication is in the best interests of the Company and its stockholders because of the Company's strong operational nexus to the state of Texas and because the Company believes that the move reduces the potential for opportunistic and frivolous litigation and operational costs for the Company, while preserving and potentially even enhancing shareholder rights and providing operational flexibility. 29 Table of Contents The Redomestication became effective on May 28, 2026 (the “effective Time”), at which time the Company converted from a corporation organized under the laws of the State of Delaware to a corporation organized under the laws of the State of Texas. In connection with the Redomestication, the Company’s stockholders are subject to the Texas Certificate of Formation and Texas Bylaws in place of the Company’s prior Delaware charter and Bylaws. Certain rights of the Company’s stockholders were changed as a result of the Redomestication, as more fully described in the Company’s Current Report on Form 8-K filed with the SEC on May 27, 2026 and in the Company’s definitive proxy statement on Schedule 14A for the Annual Stockholders Meeting filed with the SEC on April 10, 2026. Exploration of Strategic Alternatives for TTEC Digital On August 10, 2026, TTEC announced that its Board of Directors authorized management to evaluate potential strategic alternatives for its TTEC Digital business to best position it to realize its full growth potential and maximize shareholder value. While the Board is prepared to consider a range of alternatives, it will prioritize transactions that sustain and enhance the continued commercial collaboration and innovation between TTEC Engage and TTEC Digital. PJT Partners is serving as an independent financial advisor to TTEC in connection with the review of strategic alternatives. The Board has not set a deadline or definitive timeline for the completion of this review, and the Company does not intend to disclose developments unless or until a definitive agreement is executed or the Board determines that further disclosure is appropriate or required. There can be no assurance that this process will result in any particular transaction or outcome. Smaller Reporting Company Status We are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Although, as a smaller reporting company, we are eligible to provide scaled disclosures in our filings with the SEC, the Company elected not to avail itself of this relief in this Quarterly Report on Form 10-Q and will continue to provide the same level of disclosures as in its most recent fiscal periods. The Company may re-evaluate this decision at a later date. Recently Issued Accounting Pronouncements Refer to Part I, Item I. Financial Statements, Note 1 to the Consolidated Financial Statements for a discussion of recently adopted and issued accounting pronouncements. Critical Accounting Policies and Estimates Management’s Discussion and Analysis of our Financial Condition and Results of Operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses as well as the disclosure of contingent assets and liabilities. We regularly review our estimates and assumptions. These estimates and assumptions, which are based upon historical experience and on various other factors believed to be reasonable under the circumstances, form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Reported amounts and disclosures may have been different had management used different estimates and assumptions or if different conditions had occurred in the periods presented. For further information, please refer to the discussion of all critical accounting policies in Note 1 of the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2025. 30 Table of Contents Results of Operations Three months ended June 30, 2026 compared to three months ended June 30, 2025 The tables included in the following sections are presented to facilitate an understanding of Management’s Discussion and Analysis of Financial Condition and Results of Operations and present certain information by segment for the three months ended June 30, 2026 and 2025 (amounts in thousands). All intercompany transactions between the reported segments for the periods presented have been eliminated. TTEC Digital ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ Change ​ ​ ​ % Change ​ Revenue ​ $ 104,032 ​ $ 113,746 ​ $ (9,714) (8.5) % ​ Operating Income ​ 6,704 ​ 11,409 ​ (4,705) (41.2) % ​ Operating Margin ​ 6.4 % 10.0 % ​ ​ ​ ​ ​ ​ ​ The decrease in revenue for the TTEC Digital segment was driven by lower recurring revenue and a one-time asset sale in the prior year period. The operating income decrease was primarily related to lower margins in our recurring and professional services business. Included in operating income was amortization expense related to acquired intangibles of $3.6 million and $3.7 million for the quarters ended June 30, 2026 and 2025, respectively. TTEC Engage ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ Change ​ ​ ​ % Change ​ Revenue ​ $ 351,463 ​ $ 399,825 ​ $ (48,362) (12.1) % ​ Operating Income ​ 4,305 ​ 7,467 ​ (3,162) (42.3) % ​ Operating Margin ​ 1.2 % 1.9 % ​ ​ ​ ​ ​ ​ ​ The decrease in revenue for the TTEC Engage segment is primarily due to client attrition and the absence of revenue from a short-term contract that was completed during the prior year period. TTEC Engage’s operating income decreased as a percentage of revenue was primarily related to lower revenue, which exceeded the benefit of reduced operating expenses. Included in operating income was amortization expense related to acquired intangibles of $4.0 million and $4.1 million for the quarters ended June 30, 2026 and 2025, respectively. Interest Income (Expense) For the three months ended June 30, 2026 interest income decreased to $0.1 million from $3.2 million in the same period in 2025 due to lower interest income on an aged VAT receivable received during the prior year period. Interest expense decreased to $16.7 million during 2026 from $18.2 million during 2025 due to lower utilization and lower rates. Other Income (Expense) For the three months ended June 30, 2026 Other income (expense), net increased to income of $1.2 million from expense of $0.3 million during the prior year quarter. Included in the three months ended June 30, 2026 was a $1.0 million gain due to changes in foreign currency rates. Included in the three months ended June 30, 2025 was a $2.7 million gain related to a recovery of an aged VAT receivable. 31 Table of Contents Income Taxes The effective tax rate for the three months ended June 30, 2026 was 195.5%. This compares to an effective tax rate of 288.7% for the comparable period of 2025. The effective tax rate for the three months ended June 30, 2026 is primarily driven by the distribution of income between the U.S. and international tax jurisdictions, earnings in international jurisdictions currently under an income tax holiday, foreign currency gains and losses, and the impact of valuation allowances in the United States and several other jurisdictions. Six months ended June 30, 2026 compared to six months ended June 30, 2025 The tables included in the following sections are presented to facilitate an understanding of Management’s Discussion and Analysis of Financial Condition and Results of Operations and present certain information by segment for the six months ended June 30, 2026 and 2025 (in thousands). All intercompany transactions between the reported segments for the periods presented have been eliminated. TTEC Digital ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ Change ​ ​ ​ % Change ​ Revenue ​ $ 205,897 ​ $ 221,786 ​ $ (15,889) (7.2) % ​ Operating Income ​ 8,063 ​ 17,273 ​ (9,210) (53.3) % ​ Operating Margin ​ 3.9 % 7.8 % ​ ​ ​ ​ ​ ​ ​ The decrease in revenue for the TTEC Digital segment was driven by lower recurring revenue and one-time on-premise related revenue. The operating income decrease is primarily attributable to lower margins in our recurring and professional services revenue. Included in operating income was amortization expense related to acquired intangibles of $7.3 million and $7.3 million for the six months ended June 30, 2026 and 2025, respectively. TTEC Engage ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ Change ​ ​ ​ % Change ​ Revenue ​ $ 745,773 ​ $ 826,013 ​ $ (80,240) (9.7) % ​ Operating Income (loss) ​ 21,441 ​ 25,792 ​ (4,351) (16.9) % ​ Operating Margin ​ 2.9 % 3.1 % ​ ​ ​ ​ ​ ​ ​ The decrease in revenue for the TTEC Engage segment is primarily due to client attrition and the absence of revenue from a short-term contract that was completed during the prior year period. The change in operating income (loss) was primarily related to lower revenue which exceeded the benefit of reduced operating expenses. Included in operating income was amortization expense related to acquired intangibles of $8.1 million and $8.1 million for the six months ended June 30, 2026 and 2025, respectively. Interest Income (Expense) For the six months ended June 30, 2026 interest income decreased to $0.5 million from $7.8 million in the same period in 2025 due to $7.3 million of interest income on an aged VAT receivable during the six months period ended June 30, 2025. Interest expense decreased to $33.7 million during 2026 from $38.0 million during 2025 due to lower utilization and lower rates. Other Income (Expense) For the six months ended June 30, 2026 Other income (expense), net decreased to net income of $1.8 million from net income of $3.3 million during the prior year period. Included in the six months ended June 30, 2026 was a $1.3 million gain due to change in foreign currency rates. Included in the six months ended June 30, 2025 was a $6.6 million gain related to a recovery of an aged VAT receivable. 32 Table of Contents Income Taxes The effective tax rate for the six months ended June 30, 2026 was 920.4%. This compared to an effective tax rate of 121.6% for the comparable period of 2025. The effective tax rate for the six months ended June 30, 2026 is primarily driven by the distribution of income between the U.S. and international tax jurisdictions, earnings in international jurisdictions currently under an income tax holiday, foreign currency gains and losses, and the impact of valuation allowances in the United States and several other jurisdictions. Liquidity and Capital Resources Our principal sources of liquidity are our cash generated from operations, our cash and cash equivalents, and borrowings under our Credit Facility. During the six months ended June 30, 2026, we generated operating cash flows of $78.9 million. We believe that our cash generated from operations, existing cash and cash equivalents, and available credit will be sufficient to meet expected operating and capital expenditure requirements for the next 12 months. However, if our access to capital is restricted or our borrowing costs increase, our operations and financial condition could be adversely impacted. On August 7, 2026, we entered into the Eleventh Amendment to our Credit Agreement, which reduced our revolving credit facility commitment to $975.0 million, increased the SOFR credit margin from 3.00% to 3.25% through September 30, 2026, and from 6.00% to 6.25% thereafter, expanded the collateral and guarantee package (including certain assets of certain foreign subsidiaries and equity interests therein), and imposed additional restrictions on indebtedness, liens, investments, dispositions, acquisitions, and restricted payments. At the same time, the Eleventh Amendment eased certain of our financial covenants, increasing the maximum permitted net leverage ratio to up to 4.25 in fiscal 2026 and up to 4.00 in fiscal 2027 and reducing the minimum required interest coverage ratio to 2.00 in fiscal 2027, which we believe provides additional covenant compliance headroom necessary to operate the business. The Company’s actual net leverage ratio of 3.85 as of June 30, 2026 exceeded the 3.75 maximum net leverage ratio then applicable to the quarter under the Tenth Amendment. To secure compliance with net leverage ratio for the quarter ended June 30, 2026, on July 15, 2026, prior to finalizing our financial statements for the quarter, we obtained a waiver, of the maximum net leverage ratio covenant for the quarter. We are also in discussions with our lender group regarding a potential extension of the maturity of the Credit Facility beyond 2027. We believe these amended terms, together with the covenant relief described above, will support our liquidity and covenant compliance over the next twelve months. We manage a centralized global treasury function in the United States with a focus on safeguarding and optimizing the use of our global cash and cash equivalents. Our cash is held in the U.S. in U.S. dollars, and outside of the U.S. in U.S. dollars and foreign currencies. We expect to use our cash to fund working capital, global operations, dividends, acquisitions, and other strategic activities. While there are no assurances, we believe our global cash is well protected given our cash management practices, banking partners and utilization of diversified bank deposit accounts and other high-quality investments. We have global operations that expose us to foreign currency exchange rate fluctuations that may positively or negatively impact our liquidity. To mitigate these risks, we enter into foreign exchange forward and option contracts through our cash flow hedging program. Please refer to Part I, Item 3. Quantitative and Qualitative Disclosures About Market Risk, Foreign Currency Risk, for further discussion. We are also exposed to interest rate fluctuations associated with our variable rate debt. The following discussion highlights our cash flow activities during the six months ended June 30, 2026 and 2025. Cash and Cash Equivalents We consider all liquid investments purchased within three months of their original maturity to be cash equivalents. Our cash and cash equivalents totaled $93.9 million and $82.9 million as of June 30, 2026 and December 31, 2025, respectively. We reinvest our cash flows to grow our client base, expand our infrastructure, invest in research and development, make strategic acquisitions and to pay dividends. 33 Table of Contents Cash Flows from Operating Activities For the six months ended June 30, 2026 and 2025, net cash flows provided by operating activities was $78.9 million and $114.3 million, respectively. The decrease is primarily due to a $21.6 million decrease in net cash income from operations and a $13.8 million decrease in net working capital. Cash Flows from Investing Activities For the six months ended June 30, 2026 and 2025, net cash flows used in investing activities was $17.6 million and $12.4 million, respectively. The increase was primarily due to a $6.5 million increase in capital expenditures. Cash Flows from Financing Activities For the six months ended June 30, 2026 and 2025, net cash flows used in financing activities was $51.4 million and $98.9 million, respectively. The change in net cash flows from 2025 to 2026 was primarily due to a $42.5 million net change in the line of credit. Free Cash Flow Free cash flow (see “Presentation of Non-GAAP Measurements” below for the definition of free cash flow) decreased for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to a decrease in net working capital and cash from operations. Free cash flow was $59.8 million and $101.7 million for the six months ended June 30, 2026 and 2025, respectively. Presentation of Non-GAAP Measurements Free Cash Flow Free cash flow is a non-GAAP liquidity measurement. We believe that free cash flow is useful to our investors because it measures, during a given period, the amount of cash generated that is available for debt obligations and investments other than purchases of property, plant and equipment. Free cash flow is not a measure determined by GAAP and should not be considered a substitute for “income from operations,” “net income,” “net cash provided by operating activities,” or any other measure determined in accordance with GAAP. We believe this non-GAAP liquidity measure is useful, in addition to the most directly comparable GAAP measure of “net cash provided by operating activities,” because free cash flow includes investments in operational assets. Free cash flow does not represent residual cash available for discretionary expenditures, since it includes cash required for debt service. Free cash flow also includes cash that may be necessary for acquisitions, investments and other needs that may arise. The following table reconciles net cash provided by operating activities to free cash flow for our consolidated results (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, ​ Six Months Ended June 30, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ 2026 ​ ​ ​ 2025 ​ Net cash provided by operating activities ​ $ 51,341 ​ $ 92,709 ​ $ 78,876 ​ $ 114,301 ​ Less: Purchases of property, plant and equipment ​ 12,640 ​ 7,181 ​ 19,040 ​ 12,587 ​ Free cash flow ​ $ 38,701 ​ $ 85,528 ​ $ 59,836 ​ $ 101,714 ​ ​ Obligations and Future Capital Requirements There were no material changes to the Company’s contractual obligations and future capital requirements outside the normal course of business from the date of our 2025 Form 10-K filing on February 26, 2026 through the filing of this report. Future Capital Requirements We expect total capital expenditures in 2026 to be between 1.9% and 2.1% of revenue. Approximately 60% of these expected capital expenditures are to support growth in our business and 40% relate to the maintenance for existing assets. The anticipated level of 2026 capital expenditures are primarily driven by facility refreshes and maintenance, site optimizations, IT network modernization and PC refreshes, digital product development and ongoing site expansions/new sites but not at the same level as the prior year. 34 Table of Contents The amount of capital required over the next 12 months will depend on our levels of investment in infrastructure necessary to maintain, upgrade or replace existing assets. Our working capital and capital expenditure requirements could also increase materially in the event of acquisitions or joint ventures, among other factors. These factors could require that we raise additional capital through future debt or equity financing. We can provide no assurance that we will be able to raise additional capital upon commercially reasonable terms acceptable to us. Client Concentration During the six months ended June 30, 2026 and 2025, one of our clients represented more than 10% of our total revenue. Our five largest clients, collectively, accounted for 34.7% and 32.2% of our consolidated revenue for the three months ended June 30, 2026 and 2025, respectively, and 34.0% and 31.3% of our consolidated revenue for the six months ended June 30, 2026 and 2025, respectively. We have had long-term relationships with our top five TTEC Engage clients, ranging from 6 to 26 years, with all of these clients having completed multiple contract renewals with us. The relative contribution of any single client to consolidated earnings is not always proportional to the relative revenue contribution on a consolidated basis and varies greatly based upon specific contract terms. In addition, clients may adjust business volumes served by us based on their business requirements. We believe the risk of this concentration is mitigated, in part, by the long-term contracts we have with our largest clients. Although certain client contracts may be terminated for convenience by either party, we believe this risk is mitigated, in part, by the service level disruptions and transition/migration costs that would arise for our clients if they terminated our contract for convenience. Some of the contracts with our five largest clients expire between 2026 and 2029, but many of our largest clients have multiple contracts with us with different expiration dates for different lines of work. We have historically renewed most of our contracts with our largest clients, but there can be no assurance that future contracts will be renewed or, if renewed, will be on terms as favorable as the existing contracts.