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What changed in TTEC Holdings, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of TTEC Holdings, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+392 added−412 removedSource: 10-K (2024-02-29) vs 10-K (2023-02-28)

Top changes in TTEC Holdings, Inc.'s 2023 10-K

392 paragraphs added · 412 removed · 272 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

37 edited+42 added−69 removed12 unchanged
Biggest changeSee "Risk Factors — Uncertainty and inconsistency in privacy and data protection laws relevant to our business, failure to comply with contractual obligations related to privacy, and high cost of compliance may impact our ability to deliver services and our results of operations.” 6 Table of Contents Work From Home Regulations .
Biggest changeSee "Risk Factors — Uncertainty and inconsistency in relevant privacy and data protection laws, the high cost of compliance with such laws, and the failure to comply with related contractual obligations may impact our ability to deliver services and our results of operations.” Work From Home Regulations: Regulations specific to work from home, which vary among jurisdictions and range from requirements to reimburse costs associated with remote work, to special health and safety mandates, and special government reporting requirements apply to part of our workforce.
Diversity Equity & Inclusion (DEI): TTEC believes that our differences are one of our greatest strengths; and that diversity of our employees enables us to innovate how we serve our clients and their diverse customers on six continents.
Diversity Equity & Inclusion (DEI ) : TTEC believes that our differences are one of our greatest strengths, and that the diversity of our employees enables us to innovate how we serve our clients and their diverse customers on six continents.
We are subject to data protection and privacy regulations in many of the countries where we operate, including the European General Data Protection Regulation ("GDPR"), the California Consumer Protection Act ("CCPA") and other similar U.S. state-level data protection legislation, and the Philippine Data Privacy Act (“Republic Act No. 10173”).
Data Privacy: We are subject to data protection and privacy regulations in many of the countries where we operate, including the European General Data Protection Regulation ("GDPR"), the California Consumer Protection Act ("CCPA") and other similar U.S. state-level data protection legislation, the Philippine Data Privacy Act (“Republic Act No. 10173”) and other country data protection laws.
We have extensive expertise in the healthcare, automotive, national/federal and state and local government, financial services, communications, technology, travel and logistics, media and entertainment, e-tail/retail, and transportation industries. We serve more than 775 diverse clients globally, including many of the world’s iconic brands, Fortune 1000 companies, public sector agencies, and disruptive hypergrowth companies.
We have extensive expertise in the healthcare, automotive, national/federal and state and local government, financial services, communications, technology, travel and logistics, media and entertainment, e-tail/retail, and transportation industries. We serve more than 750 diverse clients globally, including many of the world’s iconic brands, Fortune 1000 companies, public sector clients, and disruptive hypergrowth companies.
TTEC’s success depends on protecting our employees, visitors, clients and facilities, and our goal is to provide everyone that works for us and with us, a safe and healthy work environment.
TTEC’s success depends on protecting our employees, visitors, clients and facilities, and our goal is to provide everyone who works for us and with us, a safe and healthy work environment.
Our trade name, logos, and names of our proprietary solution offerings are protected by their historic use and, in addition, by trademarks and service marks registered in 32 jurisdictions.
Our trade name, logos, and names of our proprietary solution offerings are protected by their historic use and, in addition, by trademarks and service marks registered in 33 jurisdictions.
In jurisdictions where we do business, TTEC has processes in place to monitor regulatory requirements and take reasonable steps to assure compliance. Data Privacy .
In jurisdictions where we do business, TTEC has processes in place to monitor regulatory requirements and take reasonable steps to assure compliance.
See "Risk Factors — Risks Related to Our International Operations. ” Work we do for some of our clients is subject to special licensing requirements, e.g., insurance producer and gaming licenses. The granting of these licenses can be discretionary on the part of regulatory authorities.
See "Risk Factors — Risks Related to Our Operations Outside of the United States. ” Work we do for some of our clients is subject to special licensing requirements, e.g., insurance producer and gaming licenses. The granting of these licenses can be discretionary on the part of regulatory authorities.
As of December 31, 2022, we had 11 patent applications pending; and also hold 96 U.S. and non-U.S. patents in 9 jurisdictions that we leverage in our operations and as marketplace differentiation for our service offerings.
As of December 31, 2023, we had 5 patent applications pending in 5 jurisdictions; and also held 102 U.S. and non-U.S. patents in 9 jurisdictions that we leverage in our operations and as marketplace differentiation for our service offerings.
During 2022, the TTEC global operating platform delivered onshore, nearshore and offshore services in 21 countries on six continents -- the United States, Australia, Belgium, Brazil, Bulgaria, Canada, Colombia, Costa Rica, Germany, Greece, India, Ireland, Mexico, the Netherlands, New Zealand, the Philippines, Poland, Singapore, South Africa, Thailand, and the United Kingdom – with the help of 69,400 consultants, technologists, and CX professionals.
During 2023, the combined TTEC Digital and TTEC Engage global operating platform delivered onshore, nearshore and offshore services in 22 countries on six continents -- the United States, Australia, Belgium, Brazil, Bulgaria, Canada, Colombia, Costa Rica, Egypt, Germany, Greece, Honduras, India, Ireland, Mexico, the Netherlands, New Zealand, the Philippines, Poland, South Africa, Thailand, and the United Kingdom – with the help of over 60,000 customer care associates, consultants, technologists, and CX professionals.
TTEC employees are required to complete health and safety training when they join the Company and are encouraged to report any concerns they have about health and safety in their work environment. In 2022 the majority of our global workforce remained working in a remote environment.
TTEC employees are required to complete health and safety training when they join the Company and are encouraged to report any concerns they have about health and safety in their work environment.
TTEC maintains a cyber security and data privacy program designed to protect our clients’, their customers’, and our employees’ confidential personal and sensitive information. We have invested in our cyber security capabilities to identify, detect, respond to and recover from cyber threats and attacks.
TTEC maintains a cybersecurity and data privacy program designed to protect our clients’, their customers’, and our employees’ confidential personal and sensitive information. We have invested in our cybersecurity capabilities to identify, detect, respond to and recover from cyber threats and attacks. These investments help us reduce our vulnerabilities to cyber incidents and minimize their impacts on our operations.
As we were not always able to replicate in the work from home environment the physical controls we have in place at our delivery centers, we agreed with our clients to implement certain additional controls.
In the work from home environment, we are not always able to replicate the physical controls we have in place at our delivery centers; therefore, we agree with our clients to implement certain additional controls appropriate to the work from home environment to achieve compliance similar to our delivery centers’ environment.
In our TTEC Engage segment, most of our contracts can be terminated for convenience by either party, but our relationships with our top five clients have ranged from 16 to 23 years including multiple programs and contract renewals for most of these clients.
In our TTEC Engage segment, most of our contracts can be terminated for convenience by either party, but our relationships with our top five clients have ranged from 17 to 24 years including multiple programs and contract renewals for most of these clients. In 2023, we had a 95% revenue retention rate for TTEC Engage, versus 97% in 2022.
In our TTEC Engage segment, we primarily compete with in-house customer management operations as well as other companies that provide customer care services including: Teleperformance, Telus International, Concentrix, TaskUs, Intouch CX, Webhelp, Accenture, Genpact, and Exl, among others. Regulations Relevant to Our Business TTEC is subject to various domestic and international laws and regulations, permitting and licensing regimes (collectively, “Regulations”).
For TTEC Engage, we primarily compete with in-house customer management captive business units and other companies that provide customer experience services, including Teleperformance, Foundever, Telus International, Concentrix, TaskUs, Intouch CX, Conduent, Genpact, Alorica, Ibex and EXL, among others. 4 Table of Contents Regulations Relevant to Our Business TTEC is subject to various domestic and international laws and regulations, permitting and licensing regimes (collectively, “Regulations”).
We leverage U.S. and foreign patent, trade secret, copyright, and trademark laws as well as confidentiality, proprietary information, non-disclosure agreements, and key staff non-competition agreements to protect our proprietary technology.
We deliver value to our clients through, and our success in part depends on, certain proprietary technologies and methodologies. We leverage U.S. and foreign patent, trade secret, copyright, and trademark laws as well as confidentiality, proprietary information, non-disclosure agreements, and key staff non-competition agreements to protect our proprietary technology.
To this end we were highly acquisitive in the last several years, including our acquisition in April 2022 of certain public sector assets of Faneuil, Inc. that included healthcare exchange and transportation services contracts. The acquisition expanded our capabilities in the growing public sector market by adding the building and operating of technology-enabled citizen engagement solutions to our offerings.
To this end we were acquisitive in the last several years, including our acquisition in April 2022 of certain public sector assets of Faneuil, Inc. that included healthcare exchange and transportation services contracts.
Our public sector work is secured and delivered in compliance with various jurisdiction-specific government procurement regulations, like the Federal Acquisition Regulations (known as “FAR”) and government agency specific supplemental regulations that we comply with when we bid and deliver work for the U.S. federal government.
These Regulations govern working conditions, paid time off, workplace safety, wage and hour standards, and hiring and employment practices. 5 Table of Contents Our public sector work is secured and delivered in compliance with various jurisdiction-specific government procurement regulations, like the Federal Acquisition Regulations (known as “FAR”) and government agency specific supplemental regulations that we comply with when we bid and deliver work for the U.S. federal government.
In 2022, we had a 97% revenue retention rate for the TTEC Engage segment, versus 109% in 2021. Certain of our communications clients provide us with telecommunication services through arm’s length negotiated transactions. These clients currently represent approximately 5% of our total annual revenue. Expenditures under these supplier contracts represent less than 1% of our total operating costs.
Certain of our communications clients provide us with telecommunication services through arm’s length negotiated transactions. These clients currently represent approximately 6% of our total annual revenue. Expenditures under these supplier contracts represent less than 1% of our total operating costs.
Research and innovation have been a major factor in our success and we believe that they will continue to contribute to our growth in the future.
Research and innovation have been a major factor in our success and we believe that they will continue to contribute to our growth in the future. We use our investment in research and development to create, commercialize, and deploy innovative business strategies and high-value technology solutions.
See "Risk Factors — Our results of operations may be impacted by changes in laws, our failure to comply with laws and regulations relevant to our business . ” Research, Innovation, Intellectual Property and Proprietary Technology We recognize the value of innovation in our business and are committed to developing leading-edge technologies and proprietary solutions.
See "Risk Factors — Risks Related to Our Operations Outside of the United States. ” Research, Innovation, Intellectual Property and Proprietary Technology We recognize the value of innovation in our business and are committed to developing leading-edge technologies and proprietary solutions.
ITEM 1. BUSINES S Our Business TTEC Holdings, Inc. (“TTEC”, “the Company”, “we”, “our” or “us”; pronounced “T-TEC”) is a leading global customer experience (“CX”) as a service (“CXaaS”) partner for many of the world’s most iconic companies, disruptive hypergrowth brands, and large public sector agencies.
ITEM 1. BUSINES S Our Business Founded in 1983, TTEC Holdings, Inc. (“TTEC”, “the Company”, “we”, “our”, or “us”; pronounced “T-TEC”) is a global customer experience (“CX”) outsourcing partner for marquis and disruptive brands and public sector clients.
Our revenue for fiscal 2022 was $2.444 billion, approximately $472 million, or 19%, which came from our TTEC Digital segment and $1.972 billion, or 81%, which came from our TTEC Engage segment.
Our revenue for fiscal 2023 was $2.463 billion, approximately $487 million, or 20%, which came from our TTEC Digital segment and $1.976 billion, or 80%, which came from our TTEC Engage segment.
We engage independent auditors to conduct general controls and business process (SOC1 and SOC2) assessments for technology solutions we use in our banking, financial services, and insurance (“BFSI”) and healthcare verticals. We also engage third parties to conduct vulnerability assessment and penetration testing of our technology environments.
They also support compliance with our contractual obligations and the laws and regulations governing our activities. We engage independent auditors to conduct general controls and business process (SOC1 and SOC2) assessments for technology solutions we use in our banking, financial services, and insurance (“BFSI”) and healthcare verticals.
Our turnover reduction efforts focus on market pay, trained management teams, development programs, career mobility, communication and the work environment and company culture that make an employee feel engaged, rewarded, appreciated, informed, and fulfilled in the organization. In 2022, we saw great improvement in employee retention due to diligent focus on these efforts.
Retention and Turnover: Employee experience and retention remain a top priority for TTEC and are a key driver of financial results of our operations. Our turnover reduction efforts focus on market pay, trained management teams, development programs, career mobility, communication and the work environment and company culture that make employees feel engaged, rewarded, appreciated, informed, and fulfilled in our organization.
Human Capital Resources Headcount Information : As of December 31, 2022, TTEC had 69,400 employees, approximately 2,800 of whom are CX professionals serving TTEC Digital clients and approximately 66,600 of whom serve TTEC Engage clients.
Our People As of December 31, 2023, TTEC had over 60,000 employees, approximately 2,400 of whom are CX professionals serving TTEC Digital clients and approximately 57,600 of whom serve TTEC Engage clients.
Approximately 47% of our employees are based in the Asia-Pacific region, 42% in North America (with 40% in the United States), 7% in Central and South America, and 4% in the Europe, Middle East and Africa (EMEA) region.
Approximately 49% of our employees are based in the Asia-Pacific region, 38% in North America (with 37% in the United States), 8% in Central and South America, and 5% in the Europe, Middle East and Africa (EMEA) region. Approximately 61% of our employees were in a work-at-home environment and 39% worked onsite.
Further, TTEC provides employees with a comprehensive benefits program that includes health insurance and important wellness programs, including mental health initiatives, as well as other programs that support employees’ physical, emotional, and financial health. Workplace Safety: The health and safety of our employees is one of our top priorities.
We offer a comprehensive benefits program that includes health insurance and important wellness programs, including mental health support, and other offerings that support the physical, emotional and financial health of people.
These organizations are in customer intensive industries or sectors, whose complexities and customer focus require a partner that can quickly design and build integrated technology and data-enabled services, often on a global scale. In 2022, our top five and 10 clients represented 35% and 47% of total revenue, respectively.
Clients We develop long-term relationships with clients globally, including many of the worlds’ iconic brands, Fortune 1000 companies, public sector agencies, and hypergrowth companies. These organizations are in customer intensive industries or sectors, whose complexities and customer focus require a partner that can quickly design and build integrated technology and data-enabled services, often on a global scale.
We help clients improve their customer satisfaction while lowering their total cost to serve by combining innovative digital solutions with service capabilities that deliver a frictionless CX across numerous real-time digital and live interaction channels and different phases of the customer lifecycle.
The Company designs, builds, and operates technology-enabled customer experiences across digital and live interaction channels to help clients increase customer loyalty, revenue, and profitability. By combining digital solutions with data-driven service capabilities, we help clients improve their customer satisfaction while lowering their total cost to serve.
We evaluate all mid-level managers and above roles, determine top talent and successors and invest in their development to meet our growth goals.
Talent planning and development for executive roles is accomplished through a talent review and succession planning process which includes consulting, training, data analytics, calibration, and development recommendations. We evaluate all mid-level managers and above roles, determine top talent and successors, invest in managers’ and their successors’ development, and align their compensation to meet our growth goals.
Development and Training: Our 2022 Human Experience (HX) people strategy is focused on the attraction, development and retention of our employees through meaningful engagement and purposeful development. To support advancement of our employees and prepare them for demands of rapidly changing workplace and client requirements we offer career development focused programs, technologies, and resources.
That is why our People Strategy empowers our employees to not only keep pace with the rapidly changing workplace, but also thrive in it. 6 Table of Contents Talent Development: To support the advancement of our employees and prepare them for the demands of rapidly changing workplace and client requirements, we offer career development-focused programs, technologies, and resources.
Our competitors vary by geography and business segment, and range from large multinational corporations to smaller, narrowly focused enterprises. Across our lines of business, principal competitive factors include: client relationships, technology and process innovation, integrated solutions, digital and virtual delivery capabilities, operational performance and efficiencies, pricing, brand recognition, and financial strength.
Across our lines of business, principal competitive factors include: client relationships, technology and process innovation, integrated solutions, digital and virtual delivery capabilities, operational performance and efficiencies, pricing, brand recognition, and financial strength. Our strategy in maintaining market leadership is to invest, innovate, and provide integrated value-driven services, all centered around customer engagement management.
Our strategy in maintaining market leadership is to invest, innovate, and provide integrated value-driven services, all centered around customer engagement management. Today, we are executing on a more expansive, holistic strategy by transforming our business into higher-value offerings through organic investments and strategic acquisitions.
Today, we are executing on a more expansive, holistic strategy by transforming our business into higher-value offerings through organic investments and strategic acquisitions. As we execute, we are differentiating ourselves in the marketplace and entering new markets that introduce us to an expanded competitive landscape.
See "Risk Factors — Our client services delivered by employees working from home are now a standard and this change in the operating model may subject us to new untested risks. ” Other Regulations. TTEC is a labor-intensive business that is subject to complex labor and employment laws established by the U.S.
See "Risk Factors — Services delivered by employees working from home represent a large portion of our delivery for some of our clients and this change in the operating model may subject us to new untested risks which we cannot always mitigate” .
Our 2022 comprehensive executive talent development strategy can be easily customized and launched by segment and/or department and enables leaders and teams to plan and build talent capability. Talent planning and development for executive roles is accomplished through a talent review and succession planning process which includes consulting, training, data analytics, calibration, and development recommendations.
The enhanced platform has improved performance and employee retention. Leadership Development : Our comprehensive talent development strategy can be easily customized and launched by segment and/or department and enables leaders and teams to plan and build talent capability.
Department of Labor, state and local regulatory bodies, and similar regulators in jurisdictions outside of the U.S. These Regulations govern working conditions, paid time off, workplace safety, wage and hour standards, and hiring and employment practices.
Other Regulations: TTEC is a labor-intensive business that is subject to complex labor and employment laws established by the U.S. Department of Labor, state and local regulatory bodies, and similar regulators in jurisdictions outside of the U.S.
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TTEC designs, builds, orchestrates, and delivers seamless digitally-enabled customer experiences that increase brand value, customer loyalty, revenue, and profitability through personalized, outcome-based interactions.
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As of December 31, 2023, TTEC served over 750 clients across targeted industry verticals including financial services, healthcare, public sector, telecom, technology, media, travel and hospitality, automotive and retail.
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The Company operates and reports its financial results of operations through two business segments: TTEC Digital and TTEC Engage. ● TTEC Digital is one of the largest pure-play CX technology service providers with expertise in CX strategy, digitization, analytics, process optimization, system integration, cloud-based technology solutions, and transformation enabled by our proprietary CX applications and technology partnerships.
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TTEC operates through two business segments. • TTEC Digita l is one of the largest CX technology providers and is focused exclusively on the intersection of Contact Center As a Service (CCaaS), Customer Relationship Management (CRM), and Artificial Intelligence (AI) and Analytics.
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TTEC Digital designs, builds, and operates robust digital experiences for clients and their customers through the contextual integration and orchestration of customer relationship management (“CRM”), data, analytics, CXaaS technology, and intelligent automation to ensure high-quality, scalable CX outcomes. ● TTEC Engage provides the digitally enabled CX managed services to support our clients’ end-to-end customer interaction delivery at scale.
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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, Cisco, Genesys, Google, and Microsoft; and creates proprietary IP to support industry specific and custom client needs.
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The segment delivers omnichannel customer care, technology support, order fulfillment, customer acquisition, growth, and retention services with industry specialization and distinctive CX capabilities for hypergrowth brands. TTEC Engage also delivers digitally enabled back office and industry specific specialty services including artificial intelligence (“AI”) operations, and fraud management services.
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TTEC Digital serves clients across Enterprise and Small & Medium Sized (SMB) business segments and has a dedicated unit with government technology certifications serving the public sector. • TTEC Engage provides the digitally enabled CX operational and managed services to support large, complex enterprise clients’ end-to-end customer interactions at scale.
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TTEC Digital and TTEC Engage strategically come together under our unified offering, Humanify ® CXaaS, which drives measurable customer results for clients through the delivery of personalized and seamless omnichannel experiences.
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Tailored to meet industry specific and business needs, this segment delivers data-driven omnichannel customer care, customer acquisition, growth, and retention services, tech support, trust and safety and back-office solutions. The segment’s technology-enabled delivery model covers the entire associate lifecycle including recruitment, onboarding, training, delivery, workforce management and quality assurance.
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Our Humanify ® cloud platform provides a fully integrated ecosystem of CX offerings, including messaging, AI, machine learning, robotic process automation, analytics, cybersecurity, CRM, knowledge management, journey orchestration, and traditional voice solutions.
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TTEC demonstrates its market leadership through strategic collaboration across TTEC Digital and TTEC Engage when there is client demand and fit for our integrated solutions. This partnership is central to our ability to deliver comprehensive and transformational customer experience solutions to our clients, including integrated delivery, go-to-market and innovation for truly differentiated, market leading CX solutions.
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Our end-to-end CXaaS platform differentiates us from competitors by combining design, strategic consulting, technology, data analytics, process optimization, system integration, and operational excellence along with our decades of industry know-how. This unified offering is value-oriented, outcome-based and delivered to large enterprises, hypergrowth companies and public sector agencies on a global scale.
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Our Industry – Key Emerging Themes The CX landscape is undergoing a dynamic transformation, fueled by technological advancements and evolving customer expectations. AI-powered CX: As brands endeavor to integrate artificial intelligence into customer experience, many stumble by failing to apply AI strategically for true personalization and insightful automation.
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Our Industry – Key Emerging Themes ● Accelerated Digital and Virtual Transformation – Before the onset of the COVID-19 pandemic, leading organizations were already transforming to a more digitized, virtualized future.
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Cloud Migration and Security Are Board Level Imperatives: In the arena of customer experience, the migration to cloud-based platforms is rapidly becoming a fulcrum for transformation, offering unprecedented scalability, flexibility, and cost efficiency. Industry Consolidation Driven by a Highly Fragmented Market: The CX market is highly fragmented with no single provider dominating the market.
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The pandemic and related impacts on access to products and services, and how organizations manage their customer interactions, exposed significant customer interaction technology and delivery deficiencies for many organizations across the world that were not digitized or agile enough to adequately support their customers.
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Enterprise-Level Vendor Consolidation: Multinational corporations are increasingly favoring a consolidation of vendors within the CX domain.
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Organizations’ front-line operations and customer support infrastructure were too brick-and-mortar focused with limited non-voice digital customer interaction alternatives. Organizations are recognizing the growing importance of increased virtual delivery solutions and expanded and enhanced digital omnichannel capabilities.
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Cybersecurity as a Critical Differentiator : Clients expect their service providers to make investments in sophisticated information security controls to protect CX operating environments where attempts at unauthorized access are common and where expansion of solutions that rely on staff who work remotely increases risks to the stability of service delivery.
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This development is expected to create accelerated demand for our demonstrated suite of CX product and service offerings to enable and support this transformation. ● Direct-to-Consumer (“DTC”) Revolution - The DTC revolution has created a new generation of disruptive brands with few barriers to entry.
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Impact Sourcing Boosts Communities and Fuels CX Diversity: The practice of Impact Sourcing, hiring and training talent in underserved communities, is swiftly gaining traction in the domain of customer experience, particularly among discerning Fortune 1000 companies.
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These emerging brands thrive on emotional connection and authentic customer relationships relying on trusted influencers and personalized service to win the hearts and minds of a growing customer base, one that requires an on-demand, curated buying experience.
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Evolving Customer Expectations and Delivery Models: In today's customer experience landscape, evolving customer expectations present a distinct market opportunity for brands that can adeptly navigate and capitalize on evolving customer demands.
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We believe DTC can enhance the value we provide to our clients as we design, build and operate our clients’ digital customer experience. ● Evolution of Customer Behavior and CX Imperative - Yesterday's customer service experience is being replaced by today's direct experience, where brands deliver a personalized end-to-end journey.
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Our Growth Strategy As a leader and innovator in the global customer experience technology services and business process outsourcing (BPO) landscape, our strategy is directed towards sustainable growth in revenue and profitability. Our approach is to leverage our operational excellence in customer engagement with high-margin, technology-infused platforms and managed services.
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As customers become more connected and share their experiences across a variety of social channels, the quality of the experience has a greater impact on brand loyalty and business performance.
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Our strategic imperatives include: • Deepening Client Relationships • Targeting Industry Leaders as Clients • Enhancing Global Sales and Marketing Synergies • Geographic Market Expansion • Strategic Acquisitions • Investment in Tech-Driven Innovation • Leveraging our Technology Partner Ecosystem • Delivering with Purpose through Impact Sourcing 2 Table of Contents By integrating these strategic pillars, we are setting a course to not only lead in the CX BPO sector but also to drive responsible and inclusive growth that benefits all stakeholders.
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Customers are increasingly shaping their attitudes, behaviors, and willingness to recommend or stay with a brand based on the totality of their experience, including not only the superiority of the product or service, but also the quality of their ongoing service and support interactions.
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Our Integrated Service Offerings and Business Segments TTEC Digital and the CX Technology Services Industry TTEC Digital buyers are seeking solutions in several areas including cost optimization, migration from outdated legacy platforms to more agile cloud environments, lack of CX talent and expertise and a need for a practical way forward with AI.
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Given the strong correlation between high customer satisfaction and improved profitability, companies are increasingly focused on selecting partners who can deliver an integrated, insights-driven strategy, service, and technology solution that increases the lifetime value of a customer. ● CX Technology is Migrating to the Cloud - Cloud investment is expected to continue to grow significantly.
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TTEC Digital takes a technology agnostic approach to these challenges and focuses on designing and delivering solutions specific to each client’s specifications. TTEC Digital enters into strategic partnerships with the leading CX software vendors including Genesys, Microsoft, Cisco, AWS and Google which positions TTEC Digital to support the majority of CX platform requirements.
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The adoption of cloud technology to deliver omnichannel and other customer experience technology solutions is still in its infancy.
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TTEC Digital’s solutions are built to respond to market needs for both enterprise and small and medium-sized business clients.
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Our clients are embracing cloud-based CX technology solutions in a manner similar to how they seek cost-effective architecture and rapid deployment across other parts of their operations. 2 Table of Contents ● Enterprises are Consolidating Partners - Companies are consolidating their customer engagement wallet with a few select partners who can deliver measurable business outcomes by offering an integrated, technology-enabled solution.
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AI design and delivery capabilities are woven across all four pillars. • Managed Services: Cloud application and premise support • CX Consulting: Transformation strategy and design • CX Analytics: Data science, engineering, and visualization • IP & Software: Custom software engineering through TTEC Digital’s IP and Software division The segment has a three-pronged go to market strategy that includes growing existing client relationships, partner channel motions and general market development.
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Companies will continue to consolidate their business partner relationships, favoring companies like TTEC that have demonstrated expertise in increasing brand value by delivering holistic, integrated customer-centric solutions spanning the entire customer experience journey, instead of inefficiently linking together a series of multiple point solutions. ● Delivery Shifting from Brick-and-Mortar to Work From Home – COVID-19 accelerated the shift of customer experience delivery from brick-and-mortar to work from home.
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In 2023, TTEC Digital expanded its Hyderabad Innovation Studio in India with the goal of continuing to expand its offshore delivery capabilities, and currently approximately 40% of the staff are located in one of several offshore locations.
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While a portion of work from home delivery has shifted back to brick-and-mortar post-pandemic, we expect a high portion of delivery will remain in work from home locations.
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TTEC Engage and the CX BPO Services Industry The TTEC Engage segment’s solutions are built to respond to the following market needs for clients. • Customer Support • Tech Support • Revenue Generation and Growth Services • Trust & Safety • AI Operations, including data annotation and labeling • Back-office Support TTEC Engage goes to market through a vertical approach with customized solutions that include industry specific talent, technology, certifications, and capabilities.
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Our Strategy We aim to grow our revenue and profitability by focusing on our core customer engagement operational capabilities, linking them to higher margin, insights and technology-enabled platforms and managed services to drive a superior experience for our clients’ customers.
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For example, in the Banking, Financial Services and Insurance (BFSI) vertical, we support several lines of business with customized offerings for retail banking, online banking, credit card, property and casualty and loans. In healthcare, the segment supports care, technical support, revenue generation and back-office capabilities to meet the needs of payer, provider, clinical and pharma clients.
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To that end we continually strive to: ● Build deeper, more strategic relationships with existing global clients to drive enduring, transformational change within their organizations; ● Pursue new clients who lead their respective industries and who are committed to value driven customer engagement as a differentiator; ● Invest in our global sales and marketing leadership team at both the segment level to improve collaboration and speed-to-market, and consultative sales level to deliver more integrated, strategic, and transformational solutions; ● Expand into new geographic markets that give us access to new customers, partners, and delivery center capabilities; ● Execute strategic acquisitions that further complement and expand our integrated solutions; ● Invest in technology-enabled platforms and innovation through technology advancements, broader and globally protected intellectual property, and process optimization; and ● Work within our technology partner ecosystem to deliver best-in-class solutions with expanding intellectual property through value-add applications, integrations, services, and solutions.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

124 edited+57 added−34 removed57 unchanged
Biggest changeConducting business abroad is subject to a variety of risks, including: • inconsistent regulations, licensing requirements, prescriptive labor rule, corrupt business practices, restrictive export control and immigration laws, which may result in inadvertent violation of laws that we may not be able to immediately detect or correct; and may increase our cost of operations as we endeavor to comply with laws that differ from one country to another; • uncertainty of tax regulations in countries where we do business may affect our costs of operation; • longer payment cycles, especially during economic downturn, could impact our cash flows and results of operations; 21 Table of Contents • political and economic instability and unexpected changes in regulatory regimes could adversely affect our ability to deliver services overseas and our ability to repatriate cash.
Biggest changeConducting business outside of the United States and in many global locations at the same time is subject to a variety of risks, including: • inconsistent regulations, licensing requirements, prescriptive labor rules, corrupt business practices, restrictive export control and immigration laws, which may result in inadvertent violation of laws that we may not be able to immediately detect or correct; and which may increase our cost of operations as we endeavor to comply with laws that differ from one country to another; • uncertainty of tax regulations in countries where we do business may affect our costs of operation; • longer payment cycles, especially during economic downturn, could impact our cash flows and results of operations; • political and economic instability, and unexpected changes in regulatory regimes could adversely affect our ability to deliver services and our ability to repatriate cash; • currency exchange rate fluctuations and restrictions on currency movement or negative tax consequences triggered by such movement could adversely affect our results of operations, if we are forced to maintain assets in currencies other than U.S. dollars, while our financial results are reported in U.S. dollars; and if we are forced to maintain assets in currencies other than those that we use for payment of our operating expenses; • infrastructure challenges and lack of sophisticated disaster and pandemic preparedness in some countries where we do business may impact our service delivery; and • armed conflicts, terrorist attacks or civil unrest in some of the regions where we do business, and the resulting need for enhanced security measures may impact our ability to deliver services, threaten the safety of our employees, and increase our costs of operations.
The natural disasters in locations where we have employees and operations, like the Philippines, Mexico, and the east, west and gulf coasts of the United States can also have significant negative impacts on our ability to deliver services and our reputation for stable service delivery.
Natural disasters in locations where we have employees and operations, like the Philippines, Mexico, and the east, west and gulf coasts of the United States, can also have significant negative impacts on our ability to deliver services and our reputation for stable service delivery.
Our cost management strategies include optimizing the alignment between the demand for our services and our resource capacity, including our delivery centers’ utilization; investment in our work from home environment; the costs of service delivery; the cost of sales in general and administrative costs as a percentage of revenues; offshoring of certain corporate functions; and the use of automation for standard tasks.
Our cost management strategies include optimizing the alignment between the demand for our services and our resource capacity, including our delivery centers’ utilization; investment in our work from home environment; the costs of service delivery; the cost of sales and general and administrative costs as a percentage of revenues; offshoring of certain corporate functions; and the use of automation for standard tasks.
Our ongoing cost management measures must be balanced against the need for investment to support our growth, technology transformation in our business, and increasing cybersecurity threats. The cost management measures are also being impacted by the inflationary pressures in the economies where we do business.
Our ongoing cost management measures must be balanced against the need for investment to support our growth, technology transformation in our business, and increasing cybersecurity threats. The cost management measures are also being impacted by inflationary pressures in the economies where we do business.
If we are unable to negotiate reasonable contractual terms with our clients where liabilities for our services are reasonably allocated to events we can impact, control or mitigate, we may have to decline business opportunities or incur significant liability that would have impact on our results of operations.
If we are unable to negotiate reasonable contractual terms with our clients where liabilities for our services are reasonably allocated to events that we can impact, control or mitigate, we may have to decline business opportunities or incur significant liability that would have impact on our results of operations.
Our business continuity and disaster recovery plans, while extensive, may not be effective, particularly if catastrophic events occur; and business interruption insurance that we procure to address some of these risks may not be always available or may not be affordable.
Our business continuity and disaster recovery plans, while extensive, may not always be effective, particularly if catastrophic events occur; and business interruption insurance that we procure to address some of these risks may not always be available or may not be affordable.
Our results of operations directly impact our stock value, but many developments affecting the CX solutions industry, in general, and not directly related to us or controlled by us, may also have material impact on our stock value.
Our results of operations directly impact the value of our stock, but many developments affecting the CX solutions industry in general, and not directly related to us or controlled by us, may also have material impact on our stock value.
The interest of Mr. Tuchman may not always coincide with the interest of our other stockholders, and Mr. Tuchman may seek to cause the Company to take actions that might involve risks to our business or adversely affect us or our other stockholders. For example, Mr.
Tuchman may not always coincide with the interest of our other stockholders, and Mr. Tuchman may seek to cause the Company to take actions that might involve risks to our business or adversely affect us or our other stockholders. For example, Mr.
Uncertainty and inconsistency in privacy and data protection laws relevant to our business, failure to comply with contractual obligations related to data privacy, and high cost of compliance may impact our ability to deliver services and our results of operations During the last several years, there has been a significant increase in data protection and privacy regulations and enforcement activity in many jurisdictions where we and our clients do business.
Uncertainty and inconsistency in relevant privacy and data protection laws, the high cost of compliance with such laws, and the failure to comply with related contractual obligations may impact our ability to deliver services and our results of operations During the last several years, there has been a significant increase in data protection and privacy regulations and enforcement activity in many jurisdictions where we and our clients do business.
The cost increases of our services due to growing labor costs and social pressures on our clients to utilize their own staff for services, instead of laying off employees, while outsourcing work, may cause clients to bring the previously outsourced services in-house. Current geopolitical tensions could escalate, which could have unpredictable consequences on our business.
The cost increases of our services due to growing labor costs and social pressures on our clients to utilize their own staff for services, instead of laying off employees, while outsourcing work, may cause clients to bring the previously outsourced services in-house. Current geopolitical tensions could continue to escalate, which could have unpredictable consequences on our business.
Our agreements with third-party technology and software providers often have limitations of liability that do not fully protect us against liability to our clients that we may incur due to the technology failures. Any of these events or combination of several may adversely affect our reputation and financial results .
Our agreements with third-party technology and software providers often have limitations of liability that do not fully protect us against liability to our clients that we may incur due to the technology failures. Any of these events or a combination of several may adversely affect our reputation and financial results.
Our Chairman and Chief Executive Officer controls a majority of our stock and has control over all matters requiring action by our stockholders; and his interest may conflict with the interests of our other stockholders Kenneth D. Tuchman, our Chairman and Chief Executive Officer, directly and beneficially owns approximately 59% of TTEC’s common stock. As a result, Mr.
Our Chairman and Chief Executive Officer controls a majority of our stock and has control over all matters requiring action by our stockholders; and his interest may conflict with the interests of our other stockholders Kenneth D. Tuchman, our Chairman and Chief Executive Officer, directly and beneficially owns approximately 59% of our common stock. As a result, Mr.
Techniques used by cyber criminals to obtain unauthorized access, disable or degrade services, or sabotage systems evolve frequently and may not immediately be detected, and we may be unable to implement adequate preventative measures. For example, in 2021, TTEC experienced two significant cybersecurity incidents.
Techniques used by cyber criminals to obtain unauthorized access, disable or degrade services, or sabotage systems evolve frequently and may not immediately be detected, and we may be unable to implement adequate preventative measures. For example, in 2021, we experienced two significant cybersecurity incidents.
If and to the extent we do not negotiate long-term contract terms that provide for fee adjustments to reflect increases in our cost of service delivery, our business, financial conditions, and results of operation could be materially impacted. We provide service level commitments to certain customers.
If and to the extent we do not negotiate long-term contract terms that provide for fee adjustments to reflect increases in our cost of service, our business, financial conditions, and results of operation could be materially impacted. We provide service level commitments to certain customers.
We have recorded goodwill and intangible impairments in the past, and there can be no assurance that we will not incur impairment charges in the future that could have material adverse effects on our financial condition or results of operations.
We have recorded goodwill and intangible impairments in the past, and there can be no assurance that we will not incur impairment charges in the future, which could have material adverse effects on our financial condition or results of operations.
Costs and complexity of compliance with existing and future regulations that could apply to our business may adversely affect our profitability; and if we fail to comply with these mandates, we could be subject to contractual, civil and criminal liability, monetary damages and fines.
Costs and complexity of compliance with existing and future regulations that could apply to our business may adversely affect our profitability; and if we fail to comply with these mandates, we could be subject to contractual, civil and even criminal liability, monetary damages and fines.
Cyberattacks, cyber fraud, or unauthorized data access could harm us or our clients and result in liability, which could adversely affect our business and results of operations Cyberattacks . Our business involves the use, storage, and transmission of clients’, their customers’, and our employees’ information.
Cyberattacks, cyber fraud, or unauthorized data access could harm us or our clients and result in liability, and could adversely affect our business and results of operations Cyberattacks . Our business involves the use, storage, and transmission of clients’, their customers’, and our employees’ information.
Tuchman’s control of TTEC could delay or prevent a change of control, merger, consolidation, or sale of all or substantially all our assets that our other stockholders support, or conversely, Mr. Tuchman’s control could result in the consummation of a transaction that our other stockholders do not support. As a controlling stockholder, Mr.
Tuchman’s control of TTEC could delay or prevent a change in control, merger, consolidation, or sale of all or substantially all our assets that our other stockholders support, or conversely, Mr. Tuchman’s control could result in the consummation of a transaction that not all of our other stockholders support. As a controlling stockholder, Mr.
Even if we are successful in identifying and executing these transactions, they may subject our business to risks that could impact our results of operation, including: • Inability to integrate acquired companies effectively and realize anticipated acquisition benefits; • Diversion of management’s attention to the integration of the acquired businesses at the expense of delivering results for the legacy business; • Inability to appropriately scale critical resources to support the business of the expanded enterprise; • Inability to retain key employees of the acquired businesses and/or inability of such key employees to be effective as part of TTEC operations; • Impact of liabilities, compliance failures, or ethical issues of the acquired businesses undiscovered or underestimated as part of the acquisition due diligence; 15 Table of Contents • Failure to realize anticipated growth opportunities from a combined business, because existing and potential clients may be unwilling to consolidate business with a single service provider or to stay with the acquirer post acquisition; • Impacts of cash on hand and debt incurred to finance acquisitions, thus reducing liquidity for other significant strategic objectives; • Inadequate or ineffective internal controls, disclosure controls, corruption prevention policies, human resources and other key policies and practices of the acquired companies; and • Reduced revenue and income and resultant stock price impact due to divestiture transactions.
Even if we are successful in identifying and executing these transactions, they may subject our business to risks that could impact our results of operation, including: • Inability to integrate acquired companies effectively and realize anticipated acquisition benefits; • Diversion of management’s attention to the integration of the acquired businesses at the expense of delivering results for the legacy business; • Inability to appropriately scale critical resources to support the business of the expanded enterprise; • Inability to retain key employees of the acquired businesses and/or inability of such key employees to be effective as part of our operations; • Impact of liabilities, compliance failures, or ethical issues of the acquired businesses undiscovered or underestimated as part of the acquisition due diligence; • Failure to realize anticipated growth opportunities from a combined business, because existing and potential clients may be unwilling to consolidate business with a single service provider or to stay with the acquirer post-acquisition; • Impacts of cash on hand and debt incurred to finance acquisitions, thus reducing liquidity for other significant strategic objectives; • Inadequate or ineffective internal controls, disclosure controls, corruption prevention policies, human resources and other key policies and practices of the acquired companies; and • Reduced revenue and income and resultant stock price impact due to divestiture transactions.
If we do not meet these contractual commitments, we could be subject to credits, refunds or contract terminations, which could adversely affect our revenue and harm our reputation.
If we do not meet these contractual commitments, we could be subject to penalties, credits, refunds or contract terminations, which could adversely affect our revenue and harm our reputation.
If we are unable to implement a cost-effective contracting structure and other changes in how we do business to mitigate these changes, our effective tax rate and our results of operations would be impacted. Our ability to use our net operating losses or federal tax credits to offset future taxable income may be subject to certain limitations.
If we are unable to implement a cost-effective contracting structure and other changes in how we do business to mitigate these changes, our effective tax rate and our results of operations would be impacted. Our ability to use our net operating losses or U.S. federal tax credits to offset future taxable income may be subject to certain limitations.
These licensing requirements vary among jurisdictions where we provide services; and the ongoing compliance requirements to maintain and renew these licenses also varies among regulators and change often.
These licensing requirements vary among jurisdictions where we provide services; and the ongoing compliance requirements to maintain and renew these licenses also varies and change often.
For example, the European Union’s General Data Protection Regulation (GDPR) imposes data protection requirements for controllers and processers of personally identifiable information collected in Europe, while the California Consumer Privacy Protection Act (CCPA), and other similar acts in other states imposed similar regulations protecting state residents with a different reach.
For example, the European Union’s General Data Protection Regulation (GDPR) imposes data protection requirements for controllers and processers of personally identifiable information collected in Europe, while the California Consumer Privacy Protection Act (CCPA), and other similar acts in other U.S. states imposed similar regulations protecting state residents with a different reach.
As we continue to hire more employees in the United States, and expand our operations to California, where the number of wage and hour class action lawsuits is larger than in many other states combined and where verdicts in these lawsuits are very large, our results of operations may be material impacted by these lawsuits.
As we continue to hire more employees in the United States, and grow our operations in California, where the number of wage and hour class action lawsuits is larger than in many other states combined and where verdicts in these lawsuits are very large, our results of operations may be material impacted by these lawsuits.
If we cannot recruit and retain qualified employees to respond to client demands at the right price point, our business will be adversely affected Our business is labor intensive and our ability to recruit and train employees with the right skills, at the right price point, and in the timeframe required by our client commitments is critical to achieving our growth objectives.
If we cannot recruit and retain qualified employees to respond to client demands at the right price point, our business will be adversely affected Our business is labor intensive and our ability to recruit, train, and retain employees with the right skills, at the right price point, and in the timeframe required by our client and project schedule commitments is critical to achieving our growth objectives.
Such unauthorized access or disclosure could subject, and in the past has subjected, TTEC to significant liability under relevant laws, our contracts, and our licenses to perform certain regulated services; and could harm our reputation, resulting in material impacts to our operations, loss of future revenue and business opportunities.
Such unauthorized access or disclosure could subject, and in the past has subjected us to significant liability under relevant laws, our contracts, and our licenses to perform certain regulated services; and could harm our reputation, resulting in material impacts to our operations, loss of future revenue and business opportunities.
Employees who work from home rely on residential communication and internet providers that may not be as resilient as commercial providers and may be more susceptible to service interruptions and cyberattacks, which may also make TTEC information technology systems, when interfacing with these residential environments, vulnerable.
Employees who work from home rely on residential communication and internet providers that may not be as resilient as commercial providers and may be more susceptible to service interruptions and cyberattacks, which may also make our information technology systems vulnerable, when interfacing with these residential environments.
A large portion of our revenue in TTEC Digital business is generated from technology partners whose products’ reliability and risk allocation practices may adversely impact our business A large portion of our TTEC Digital revenue is tied to our partnerships with providers of customer management technology solution.
A large portion of our revenue in our TTEC Digital business is generated from technology partners whose products’ reliability and risk allocation practices may adversely impact our business A large portion of our TTEC Digital revenue is tied to our partnerships with providers of customer management technology solutions.
These provisions, among other things: • authorize the issuance of "blank check" preferred stock that our board of directors could use to implement a stockholder rights plan; • provide that special meetings of our stockholders may be called only by our Chairman, TTEC President or our board of directors; • establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings; • permit the board of directors to establish the number of directors on our board; and • provide that the board of directors is expressly authorized to make, alter or repeal our amended and restated bylaws.
These provisions, among other things: • authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; • provide that special meetings of our stockholders may be called only by our Chairman, TTEC President or our board of directors; • establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings; • permit the board of directors to establish the number of directors on our board; and • provide that the board of directors is expressly authorized to make, alter or repeal our amended and restated bylaws.
These estimates reflect our best judgment, at the time, regarding the nature of the engagement and our expected costs to provide the contracted services, but these judgments could differ from actual results, especially with conflicting inflationary and recessionary pressures. 19 Table of Contents Not all our contracts allow for escalation of fees as our cost of operations increase.
These estimates reflect our best judgment, at the time, regarding the nature of the engagement and our expected costs to provide the contracted services, but these judgments could differ from actual results, especially with conflicting inflationary and recessionary pressures. Not all our contracts allow for escalation of fees as our cost of operations increase.
Our inability to timely secure licensing required to perform services may significantly impact our results of operations Some of the services we provide for our healthcare, financial services, gaming and other highly regulated clients require for some of our legal entities, directors and officers of these entities, and employees who perform the services to be licensed by authorities that oversee these regulated activities.
Our inability to timely secure or maintain licensing required to perform certain regulated services may significantly impact our results of operations Some of the services we provide for our healthcare, financial services, gaming, and other highly regulated clients require for some of our legal entities, directors and officers of these entities, and employees who perform the services to be licensed by authorities that oversee these regulated activities.
While we believe that we take reasonable security measures to prevent the unauthorized access to our information technology systems and to our clients’ systems, and to protect the privacy of personal and proprietary information that we access and store, our security controls over our systems have not prevented in the past and may not prevent in the future improper 16 Table of Contents access to these systems or unauthorized disclosure of this information.
While we believe that we take reasonable security measures to prevent the unauthorized access to our information technology systems and to our clients’ systems, and to protect the privacy of personal and proprietary information that we access and store, our security controls over our systems have not prevented in the past and may not prevent in the future improper access to these systems or unauthorized disclosure of this information.
Delaware law and provisions in our certificate of incorporation and bylaws might discourage, delay or prevent a change of control of our Company or changes in our management and, therefore, depress the price of our common stock Our restated certificate of incorporation and amended and restated bylaws contain provisions that could depress the market price of our common stock by acting to discourage, delay or prevent a change in control of our Company or changes in our management that the stockholders of our Company may deem advantageous.
Delaware law and provisions in our certificate of incorporation and bylaws might discourage, delay or prevent a change in control of our Company, potentially depressing the price of our common stock Our restated certificate of incorporation and amended and restated bylaws contain provisions that could depress the market price of our common stock by acting to discourage, delay or prevent a change in control of our Company or changes in our management that the stockholders of our Company may deem advantageous.
These risks may further increase as our business model now relies on a higher percentage of work delivered from home, in addition to our traditional delivery center model. The risks may also increase, as we expand geographically into new locations, where cyber security is difficult to assure.
These risks may further increase as our business model now relies on a higher percentage of work delivered from home, in addition to our traditional delivery center model. The risks may also increase, as we expand geographically into new locations, where cybersecurity is difficult to assure.
If we are unable to manage our work from home environment effectively to 11 Table of Contents address these and other risks unique to remote service delivery, or if we cannot maintain client confidence in our work from home environment, our reputation and results of operations may be impacted.
If we are unable to manage our work from home environment effectively to address these and other risks unique to remote service delivery, or if we cannot maintain client confidence in our work from home environment, our reputation and results of operations may be impacted.
Finally, widespread outbreak of infectious diseases, like the COVID-19 pandemic, would impact our global operations, our delivery capabilities and our clients’ demand for services.
Finally, widespread outbreaks of infectious diseases, like the COVID-19 pandemic, would impact our global operations, our delivery capabilities and our clients’ demand for services.
If one of our clients is acquired (including by another of our clients) our business volumes and revenue may materially decrease due to the termination or phase out of an existing client contract, volume discounts, or other contract concessions which could have an adverse effect on our business, financial condition, and results of operations.
If one of our clients is acquired (by a new owner or by another of our clients) our business volumes and revenue may materially decrease due to the termination or phase out of an existing client contract, volume discounts, or other contract concessions which could have an adverse effect on our business, financial condition, and results of operations.
He can elect all of the members of our board of directors, effect stockholder actions by written consent in lieu of stockholder meetings, and determine the outcome of all matters submitted to a vote of our stockholders, including matters involving mergers or other business combinations, the acquisition or disposition of assets, the occurrence of indebtedness, the issuance of any additional shares of common stock or other equity securities and the payment of dividends on our common stock.
He can elect all of the members of our board of directors, effect stockholder actions by written consent in lieu of stockholder meetings, and determine the outcome of all matters submitted to a vote of our stockholders, including matters involving mergers or other business combinations, the acquisition or disposition of assets, the occurrence of indebtedness, the issuance of any additional shares of common stock or other equity securities and the payment of dividends on our common stock. 25 Table of Contents The interest of Mr.
If we are unable to manage our public sector business development effectively and are not successful in winning and renewing that work, despite the investments we make, our public sector work can adversely impact our results of operations.
If we are unable to manage our public sector business development effectively and are not successful in winning and renewing that work, despite the investments we make, our public sector work could adversely impact our profitability and results of operations.
While we have multiple engagements with our largest clients and all contracts are unlikely to terminate at the same time, the contracts with our five largest clients expire between 2023 and 2025; and there can be no assurance that these contracts will continue to be renewed at all or be renewed on favorable terms.
While we have multiple engagements with our largest clients and all contracts are unlikely to terminate at the same time, the contracts with our five largest clients expire between 2024 and 2027; and there can be no assurance that these contracts will continue to be renewed at all or be renewed on favorable terms.
Although neither of these incidents resulted in material impact on our results of operations in 2021, there can be no assurances that future cyber security incidents, which are unavoidable, would not have material impact on our results of operations.
Although neither of these incidents resulted in material impact on our results of operations in 2021, there can be no assurances that future cybersecurity incidents, which are unavoidable, would not have material impact on our results of operations.
If we are not successful in winning work after the initial prolonged sales cycle, or in maintaining the contractual relationship for a period of time necessary to offset new project investment costs and appropriate return on that investment, the investments may have a material adverse effect on our results of operations.
If we are not successful in winning work after a prolonged sales cycle, or in maintaining the contractual relationship for a period of time necessary to offset new project investment costs and appropriate return on that investment, the investments we make into onboarding new clients may have a material adverse effect on our results of operations.
If we are not successful in creating value from these investments, there could be a negative impact on our operating results and financial condition. Our market is highly competitive, and we may not be able to compete effectively Our performance is largely dependent on our ability to compete successfully in markets we currently serve, while expanding into new, profitable markets.
If we are not successful in creating value from these investments, there could be a negative impact on our operating results and financial condition. 8 Table of Contents Our market is highly competitive, and we may not be able to compete effectively Our business performance is dependent on our ability to compete successfully in markets we currently serve, while expanding into new, profitable markets.
Many of the services we provide are performed in the clients’ and not in TTEC information technology environments and security incidents that clients experience may have many causes and many contributory factors, most of which are unrelated to TTEC’s activities or situations that we cannot control.
Many of the services we provide are performed in the clients’ and not in our information technology environments and security incidents that clients experience may have many causes and many contributory factors, most of which are unrelated to our activities or involve situations that we cannot control or mitigate.
These information technology systems are complex and may, from time to time, get damaged or be subject to performance interruptions from power outages, telecommunications failures, computer viruses and malicious attacks, cybersecurity breaches, or catastrophic events.
These information technology systems are complex and may, from time to time, get damaged or be subject to performance interruptions from power outages, telecommunications failures, cybersecurity failures and malicious attacks, or other catastrophic events.
Intellectual property infringement may adversely impact our ability to innovate and compete Our intellectual property may not always receive favorable treatment from the United States Patent and Trademark Office, the European Patent Office, or similar foreign intellectual property adjudication and registration agencies; and our “patent pending” intellectual property may not receive a patent or may be subject to prior art limitations.
Challenges in protecting our intellectual property and its infringement by others may adversely impact our ability to innovate and compete Our intellectual property may not always receive favorable treatment from the United States Patent and Trademark Office, the European Patent Office, or similar foreign intellectual property adjudication and registration agencies; and our “patent pending” intellectual property may not receive a patent or may be subject to prior art limitations.
RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK Exclusive forum for dispute resolution in our bylaws could limit our stockholders’ ability to obtain a favorable judicial forum for their disputes Our bylaws designate Delaware’s state courts as the exclusive forum for most disputes between us and our stockholders, including U.S. federal claims and derivative actions.
Exclusive forum for dispute resolution in our bylaws could limit our stockholders’ ability to obtain a favorable judicial forum for their disputes Our bylaws designate Delaware’s state courts as the exclusive forum for most disputes between us and our stockholders, including U.S. federal claims and derivative actions.
If the Company’s information technology systems fail to function properly, the Company could incur substantial repair, recovery or replacement costs and experience data loss, all or any of which could result in material impediments to our ability to conduct business and would damage the market’s perception of the reliability and stability of the Company and its service offerings.
If the Company’s information technology systems fail to function properly, the Company could incur substantial repair, recovery or replacement costs and experience data loss and significant liability for disruption of clients’ operations, all or any of which could result in material impediments to our ability to conduct business and would damage the market’s perception of the reliability and stability of the Company and our service offerings.
TTEC’s and our directors’, officers’, and employees’ ability to secure and maintain these licenses and to do so timely cannot always be assured, and depends on many factors some of which we cannot control.
Our ability to secure and maintain these licenses and to do so timely cannot always be assured and depends on many factors, some of which we cannot control.
If we cannot adapt our service offerings to changes in technology and market expectations, our ability to grow may be affected Our growth and profitability depend on our ability to develop and adopt new solutions that expand our existing service offerings by leveraging new technologies and cost efficiencies in our operations, while meeting rapidly evolving client expectations.
If we cannot adapt our service offerings to changes in technology and market expectations, including effective use of artificial intelligence (AI) in our solutions, our ability to grow may be affected Our growth and profitability depend on our ability to develop and adopt new solutions that expand our existing service offerings by leveraging new technologies and cost efficiencies in our operations, while meeting rapidly evolving client expectations.
Failure to comply with all privacy and data protection laws that are relevant to different parts of our business have resulted in, and may result in additional legal claims, significant fines, sanctions, or penalties, and loss of licenses; and may make it difficult for us to secure business or efficiently serve our clients.
Failure to comply with all privacy, data protection and cybersecurity laws and regulations that are relevant to different parts of our business have resulted in, and may result in future legal claims, significant fines, sanctions, or penalties, or loss of licenses; and may increase our cost of operations, make it difficult for us to secure business or efficiently serve our clients.
The growing trend of clients seeking to transfer cybersecurity and data risks to service providers could significantly impact our operations and profitability As cybersecurity incidents and data breaches are becoming more common and often impossible to avoid, clients are looking to their service providers to cover their cost of these incidents.
The trend of clients seeking to transfer growing cybersecurity, data privacy and emerging technologies related risks to service providers could significantly impact our operations and profitability As cybersecurity incidents and data breaches are becoming more common and often impossible to avoid, clients are looking to their service providers, like us, to cover their cost of these incidents.
In addition, an information system disruption could result in TTEC failing to meet our contractual performance standards and obligations, which could subject the Company to liability, penalties and contract termination.
In addition, an information system disruption could result in us failing to meet our contractual performance standards and obligations, which could subject us to liability, penalties, and contract termination.
Over the years, TTEC established strong operational and administrative controls over our business that focused on our physical locations; and although these controls are evolving to reflect the facilities and remote delivery mix, they may not always provide effective safeguards for a large-scale work from home delivery model.
Over the years, we have established strong operational and administrative controls over our business that focused on our physical locations; and although these controls are evolving to reflect our growing mix of delivery centers and remote delivery, they may not always provide effective safeguards for a large-scale work from home delivery model.
Clients, who buy these third-party solutions and related services from the Company, hold us responsible for the stability and reliability of these platforms, as well as for any losses or damages arising from system outages and cyber security incidents, involving these third-party 12 Table of Contents solutions.
Clients, who buy these third-party solutions and related services from the Company, hold us responsible for the stability and reliability of these platforms, as well as for any losses or damages arising from system outages and cybersecurity incidents, involving these third-party solutions.
Our profitability could suffer if our cost-management strategies are unsuccessful Our ability to improve or maintain our profitability is dependent on our continuous management of our costs.
Risks Related to Our Financial Operations Our profitability could suffer if our cost-management strategies are unsuccessful Our ability to improve or maintain our profitability is dependent on our continuous management of our costs.
Many of our long-term contracts do not allow for escalation of fees, as our operating costs increase; and those that do allow for escalations do not always provide for rate increases comparable to cost increases that we are experiencing now and likely to experience in the future.
Inflation is also causing notable increases in our other critical operating costs. Many of our long-term contracts do not allow for escalation of fees, as our operating costs increase; and those that do allow for escalations do not always provide for rate increases comparable to cost increases that we are experiencing now and likely to experience in the future.
Well publicized security breaches have led to enhanced government and regulatory scrutiny of the measures being taken by companies to protect against cyberattacks and resulted in heightened cybersecurity requirements, including additional regulatory expectations for licensed service providers, and the oversight of vendors activities.
Well publicized security breaches have led to enhanced government and regulatory scrutiny of the measures being taken by companies to protect against cyberattacks and have resulted in heightened cybersecurity requirements, including additional regulatory expectations and the oversight of vendor activity for licensed service providers, and service providers to public sector clients.
The recent consolidation trend in our industry resulted in new competitors with greater scale and broader geographic footprint. They may have access to greater financial resources, have proprietary technology solutions, or efficiencies that may be attractive to our clients and impact our business.
The recent consolidation trend in our industry resulted in new competitors with greater scale and broader geographic footprint. They have access to greater financial resources, may have proprietary technology solutions, may be able to absorb more risk in their contract terms, or offer greater efficiencies that may be attractive to our clients and impact our business.
If we are unable to compete successfully and provide our clients with differentiated services at competitive prices, we could lose market share, which would materially adversely affect our business.
If we are unable to respond to these market factors and compete successfully by providing clients with differentiated services at competitive prices, we could lose market share, which would materially adversely affect our business.
RISK RELATED TO OUR BUSINESS OPERATIONS AND OUR STRATEGY If our business strategy is not successful, our business and financial prospects will be affected Our growth strategy is based on integrating our contact center outsourcing expertise with our CXaaS platform that unites innovative and disruptive technologies, CX consulting, data analytics, client growth solutions, and customer experience focused system design and integration enabled through industry focused client relationships, scaled delivery footprint, CX partner ecosystem, and strategic M&A.
Risks Related to Our Business, Our Strategy and Our Industry If our business strategy is not successful, our business and financial prospects will be affected Our growth strategy is based on delivering our contact center outsourcing expertise with our innovative and disruptive AI-enabled technologies, CX consulting, data analytics, client growth solutions, and customer experience focused system design and integration enabled through industry specific client relationships, scaled global delivery footprint, CX partner ecosystem, and strategic M&A.
We compete with large multinational and offshore low-cost service providers that offer similar services, often at highly competitive prices and aggressive contract terms; niche solution providers that compete with us in specific geographies, industry segments or service areas; companies that utilize new, disruptive technologies or delivery models, including artificial intelligence (AI) powered solutions; and in-house customer care and experience functions of large companies.
We compete with larger multinational and offshore low-cost service providers that offer similar services, often at highly competitive prices and aggressive contract terms; niche solution providers that compete with us in specific geographies, industry segments or service areas; companies that utilize new, disruptive technologies or delivery models, including AI-powered solutions; and in-house operations of existing and potential clients.
A large portion of our revenue is generated from a limited number of clients and the loss of one or more of these clients could adversely affect our business We rely on strategic, long-term relationships with large, global companies in targeted industries and certain government agencies.
A large portion of our revenue in our TTEC Engage business is generated from a limited number of clients and the loss of one or more of these clients or significant reduction in their business volumes with us could adversely affect our business Our TTEC Engage business relies on strategic, long-term relationships with large, global companies in targeted industries and certain government agencies.
The loss of all or part of major clients’ business could have a material adverse effect on our financial condition, and results of operations, if the loss of revenue is not replaced with profitable business from other clients. We serve clients in industries that have historically experienced a significant level of consolidation.
The loss of all or part of major clients’ business could have a material adverse effect on our financial condition, and results of operations, if the loss of revenue is not replaced with profitable business from other clients.
Wage and hour class action lawsuits can expose us to costly litigation and damage our reputation The customer care business process outsourcing industry in the United States is a target of plaintiffs’ law firms that specialize in wage and hour class action lawsuits against large employers by soliciting potential plaintiffs (current and former employees) with billboard and social media advertising.
It could also impact our reputation and cause us to lose clients, which could adversely affect our financial condition and results of operations. 20 Table of Contents Wage and hour class action lawsuits can expose us to costly litigation and damage our reputation The customer care business process outsourcing industry in the United States is a target of plaintiffs’ law firms that specialize in wage and hour class action lawsuits against large employers by soliciting potential plaintiffs (current and former employees) with billboard and social media advertising.
Unauthorized disclosure of sensitive or confidential client, their customers’, and our employees’ data, whether through breach of our systems or otherwise, has exposed us in the past and could expose us in the future to costly litigation, regulatory enforcement, and could cause us to lose clients.
Unauthorized disclosure of sensitive or confidential client, their customers’, and our employees’ data, whether through third party breach of our systems or due to negligence or intentional acts of insiders, has exposed us in the past and could expose us in the future to costly litigation and regulatory enforcement.
Our growth strategy includes the expansion of our offerings to public sector clients. The procurement process for government entities is often more challenging than contracting in the private sector and is different from our standard Engage and Digital business practices, including upfront investment to position for opportunities and respond to requests for proposal.
Our growth strategy includes further expansion of our offerings to public sector clients. The procurement process for government entities can often be more challenging and longer than contracting in the private sector, including upfront investment to position for opportunities and respond to requests for proposal.
The pricing and other terms of our client contracts, particularly on our long-term service agreements, are based on estimates and assumptions we make at contract inception.
We may not always offset increased costs with increased fees under long-term contracts. The pricing and other terms of our client contracts, particularly on our long-term service agreements, are based on estimates and assumptions we make at contract inception.
This concentrated control could also discourage investors from acquiring our common stock or initiating change of control transactions, which could depress the trading price of our common stock. 24 Table of Contents Our status as a “controlled company” could make our common stock less attractive to investors or otherwise harm our stock price Because we qualify as a “controlled company” under the listing rules of the NASDAQ Stock Market, we are not required to have a majority of our board of directors be independent, nor are we required to have an independent compensation committee or an independent nominating committee of the board.
Our status as a “controlled company” could make our common stock less attractive to investors or otherwise harm our stock price Because we qualify as a “controlled company” under the listing rules of the NASDAQ Stock Market, we are not required to have a majority of our board of directors be independent, nor are we required to have an independent compensation committee or an independent nominating committee of the board.
Moreover, those that do allow for such escalations do not always allow increases at rates comparable to the increases that we experience due to rising minimum wage costs, related payroll cost increases, increased costs of work from home environment not offset by reduction in physical footprint due to long term lease commitments, and the increasing costs of evolving regulatory requirements.
Moreover, those that do allow for such escalations do not always allow increases at rates comparable to the increases that we experience due to rising minimum wage mandates, related payroll cost increases, increased technology costs of work from home environments, and the increasing costs of evolving regulatory requirements.
Pricing of our services in our Digital business is contingent on our ability to accurately forecast the level of effort and cost necessary to deliver our services, which is data dependent and can be inaccurate.
Pricing of our services in our Digital business is contingent on our ability to accurately forecast the level of effort necessary to deliver our services, which is sometimes dependent on information that can be inaccurate or developments outside of our control.
For example, the New York Department of Financial Services that regulates some of our licensed activity issues their own cyber security mandates, in addition to those issued by the state of New York; while the U.S. federal government may impose new federal data privacy and regulation mandates which would overlap with and may supersede certain state requirements.
For example, the New York Department of Financial Services, which regulates some of our licensed activity, issues its own cybersecurity mandates in addition to those issued by the state of New York and other states that oversee our activities; while the U.S. federal government is considering new national data privacy mandates which would overlap with, contradict or supersede certain state requirements.
We have incurred and may in the future incur impairments to goodwill, long-lived assets or strategic investments As a result of past acquisitions, as of December 31, 2022, we have approximately $807.8 million of goodwill and $233.9 million of intangible assets included on our Consolidated Balance Sheet.
We have incurred, and may in the future incur, impairments to goodwill, long-lived assets or strategic investments, which impacts our financial results of operations As a result of past acquisitions, as of December 31, 2023, we have approximately $809.0 million of goodwill and $198.4 million of intangible assets included on our Consolidated Balance Sheet.
If our utilization rates are below expectations or if unexpected real estate demands exceed our capacity and we are unable to right size our real estate commitments quickly, our high-fixed costs of operation or our loss of business because we cannot support capacity may cause our financial conditions and results of operations to be adversely affected.
If we are unable to dynamically adjust to changes in clients’ demand forecasts, if our facilities and staff utilization rates are below expectations or if unexpected shifts in demand make it difficult to right size our real estate and staffing commitments quickly, our high-fixed costs of operation or the loss of business because we cannot support capacity may cause our financial conditions and results of operations to be adversely affected.
RISKS RELATED TO OUR CONTRACTING PRACTICES, LEGAL AND REGULATORY MATTERS Our financial results may be impacted by changes in laws/regulations and our failure to comply with laws/regulations relevant to our business Our business is subject to extensive, and at times conflicting, regulations by the United States federal, state, local, foreign national, and provincial authorities relating to confidential client and customer data, data privacy, customer communications, and telemarketing practices; licensed healthcare, financial services, collections, insurance, and gaming/gambling support activities; trade restrictions and sanctions, tariffs, import/export controls; taxation; labor regulations, healthcare and wellness rules, wages, breaks and severance regulations; health and safety regulations; disclosure obligations; and immigration laws, among other areas.
Risks Related to Contracting Practices, Legal and Regulatory Matters that Impact Our Business Our financial results may be impacted by changes in laws/regulations, and our failure to comply with laws/regulations relevant to our business Our business is subject to extensive, and at times conflicting, regulations by the U.S. federal, state, local, foreign national, and provincial authorities relating to confidential client and customer data, data privacy, customer communications, and telemarketing practices; licensed healthcare, financial services, collections, insurance, and gaming/gambling support activities; trade restrictions and sanctions, tariffs, import/export controls; taxation; labor regulations, mandatory healthcare and wellness regulations, wages, breaks and severance regulations; health and safety regulations; disclosure obligations; and immigration laws, among other areas. 19 Table of Contents As we provide services to clients’ customers residing in countries where we do not have in-country operations or if we use telecommunication channels and airways in countries where we do not have physical presence, we may also be subject to laws and regulations of these countries.
Service delivery from home, in certain lines of our business, may also expose TTEC, our clients, and their customers to a heightened risk of fraud, because our ability to detect inappropriate behavior early could be impaired by remote service delivery.
Remote service delivery, in certain lines of our business, may also expose us, our clients, and their customers to a heightened risk of fraud, because early detection of inappropriate behavior could be impaired, when employees work outside of our delivery centers.
For example, the Company’s business could be negatively affected by the escalation in the Russian-Ukrainian conflict, as it can impact our European operations and our European clients’ demand for our services; continuing tensions with China could impact our delivery centers in the Asian Pacific region and especially in the Philippines; while ongoing tensions between India and Pakistan can impact our operations in the Indian provinces near the Pakistani border.
For example, our business could be negatively affected by further escalation in the Russian-Ukrainian conflict, as it can impact our European operations and our European clients’ demand for our services; the regional escalation of the Gaza Israeli conflict and other escalations in the Middle East, including Iranian strikes on U.S. targets, may impact our operations in Africa; continuing tensions with China could impact our delivery centers in the Asia-Pacific region, especially in the Philippines; while ongoing tensions between India and Pakistan can impact our operations in the Indian provinces near the Pakistani border.
When we are successful in securing a new client engagement, it is generally followed by a long implementation period when clients must give notice to incumbent service providers or transfer in-house operations to us.
When we are successful in securing a new client engagement, it often starts with small volumes and the prospect of growing over time. New client engagements are generally followed by a long implementation period when clients must give notice to incumbent service providers or transfer in-house operations to us.
Some of the services we provide are subject to stringent regulatory requirements, and our inability to continuously observe how our associates deliver services, when working from home, may impact our compliance.
Some of the services we provide are subject to stringent regulatory requirements, and our inability to continuously monitor how our employees deliver services, when working remotely, may impact our compliance in certain lines of business.
Accordingly, because of our “controlled company” status, our other stockholders may not have the same protections that are available to stockholders of companies that are subject to all of the corporate governance rules for NASDAQ-listed companies. Our status as a “controlled company” could make our common stock less attractive to some investors or otherwise harm our stock price. ​
Accordingly, because of our “controlled company” status, our other stockholders may not have the same protections that are available to stockholders of companies that are subject to all of the corporate governance rules for NASDAQ-listed companies.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of December 31, 2022, our customer engagement centers were located in the following countries: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ Multi-Client ​ Dedicated ​ Managed ​ Delivery ​ ​ Centers ​ Centers ​ Centers ​ Centers Australia — ​ 3 ​ — 3 ​ Brazil 1 ​ — ​ — 1 ​ Bulgaria 2 ​ — ​ — 2 ​ Canada 1 ​ — ​ 1 2 ​ Colombia ​ — ​ — ​ 2 ​ 2 ​ Greece ​ — ​ — ​ 1 ​ 1 ​ Germany — ​ — ​ 1 1 ​ India 2 ​ — ​ — 2 ​ Mexico 2 ​ — ​ — 2 ​ Philippines 15 ​ — ​ — 15 ​ Poland ​ 1 ​ — ​ — ​ 1 ​ South Africa — ​ — ​ 2 2 ​ Thailand ​ — ​ — ​ 1 ​ 1 ​ United Kingdom 1 ​ — ​ 2 3 ​ United States of America 23 ​ 3 ​ 9 35 ​ Total 48 6 19 73 ​ ​ 25 Table of Contents The leases for our customer engagement centers have remaining terms ranging from one to 11 years and generally contain renewal options.
Biggest changeAs of December 31, 2023, our customer engagement centers were located in the following countries: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ Multi-Client ​ Dedicated ​ Managed ​ Delivery ​ ​ Centers ​ Centers ​ Centers ​ Centers Australia — ​ 2 ​ — 2 ​ Brazil 1 ​ — ​ — 1 ​ Bulgaria 2 ​ — ​ — 2 ​ Canada 1 ​ — ​ 1 2 ​ Colombia ​ — ​ — ​ 2 ​ 2 ​ Egypt ​ — ​ — ​ 1 ​ 1 ​ Greece ​ 1 ​ — ​ — ​ 1 ​ Germany — ​ — ​ 1 1 ​ Honduras ​ 1 ​ — ​ — ​ 1 ​ India 2 ​ — ​ — 2 ​ Mexico 2 ​ — ​ — 2 ​ Philippines 15 ​ — ​ — 15 ​ Poland ​ 1 ​ — ​ — ​ 1 ​ South Africa 1 ​ — ​ 1 2 ​ Thailand ​ — ​ — ​ 1 ​ 1 ​ United Kingdom 1 ​ — ​ 3 4 ​ United States of America 21 ​ 3 ​ 6 30 ​ Total 49 5 16 70 ​ ​ The leases for our customer engagement centers have remaining terms ranging from one to 10 years and generally contain renewal options.
As of December 31, 2022 we operated 73 customer engagement centers that are classified as follows: ● Multi-Client Center — We lease space for these centers and serve multiple clients in each facility; ● Dedicated Center — We lease space for these centers and dedicate the entire facility to one client; and ● Managed Center — These facilities are leased or owned by our clients and we staff and manage these sites on behalf of our clients in accordance with facility management contracts.
As of December 31, 2023, we operated 70 customer engagement centers that are classified as follows: ● Multi-Client Center — We lease space for these centers and serve multiple clients in each facility; ● Dedicated Center — We lease space for these centers and dedicate the entire facility to one client; and ● Managed Center — These facilities are leased or owned by our clients and we staff and manage these sites on behalf of our clients in accordance with facility management contracts.
ITEM 2. PROPERTIES Our corporate headquarters are located in Englewood, Colorado. In addition to our headquarters and the customer engagement centers used by our Engage segment discussed below, we also maintain sales and consulting offices in several countries around the world which serve our Digital segment.
ITEM 2. PROPERTIES Our corporate headquarters are located in Greenwood Village, Colorado. In addition to our headquarters and the customer engagement centers used by our TTEC Engage segment discussed below, we also maintain sales and consulting offices in several countries around the world which serve our TTEC Digital segment.
We believe that our existing customer engagement centers are suitable and adequate for our current operations, and we have plans to build additional centers to accommodate future business. ​
We believe that our existing customer engagement centers are suitable and adequate for our current operations, and we have plans to build additional centers to accommodate future business. ​ 28 Table of Contents
Added
Our old headquarters building in Englewood, Colorado, which we own, is currently not occupied.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeStock price performance shown on the graph below is not necessarily indicative of future price performance. 27 Table of Contents COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among TTEC Holdings, Inc., The NASDAQ Composite Index, The Russell 2000 Index, And Peer Groups ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2017 2018 2019 2020 2021 2022 TTEC Holdings, Inc. ​ $ 100 ​ $ 72 ​ $ 102 ​ $ 196 ​ $ 245 ​ $ 122 ​ NASDAQ Composite ​ $ 100 ​ $ 97 ​ $ 133 ​ $ 192 ​ $ 235 ​ $ 159 ​ Russell 2000 ​ $ 100 ​ $ 89 ​ $ 112 ​ $ 134 ​ $ 154 ​ $ 122 ​ 2021 Peer Group ​ $ 100 ​ $ 94 ​ $ 130 ​ $ 165 ​ $ 244 ​ $ 159 ​ 2022 Peer Group ​ $ 100 ​ $ 94 ​ $ 130 ​ $ 168 ​ $ 253 ​ $ 163 ​ ​ ​ ​ ​ ​ ITEM 6. ​ 28 Table of Contents
Biggest changeCOMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among TTEC Holdings, Inc., The NASDAQ Composite Index, The Russell 2000 Index, And Peer Groups ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2018 2019 2020 2021 2022 2023 TTEC Holdings, Inc. ​ $ 100 ​ $ 141 ​ $ 278 ​ $ 349 ​ $ 173 ​ $ 88 ​ NASDAQ Composite ​ $ 100 ​ $ 137 ​ $ 198 ​ $ 242 ​ $ 163 ​ $ 236 ​ Russell 2000 ​ $ 100 ​ $ 126 ​ $ 151 ​ $ 173 ​ $ 138 ​ $ 161 ​ Peer Group ​ $ 100 ​ $ 138 ​ $ 178 ​ $ 268 ​ $ 173 ​ $ 218 ​ ​ ​ ​ ​ ​ ​ ITEM 6. ​ 30 Table of Contents
The Company paid the initial dividend in 2015 and has continued to pay a semi-annual dividend in October and April of each year in amounts ranging between $0.18 per common share in 2015 and $0.52 per common share in October 2022.
The Company paid the initial dividend in 2015 and has continued to pay a semi-annual dividend in October and April of each year in amounts ranging between $0.18 per common share in 2015 and $0.52 per common share in October 2023.
In addition, our credit facility restricts our ability to pay dividends in the event we are in default or do not satisfy certain covenants. Stock Repurchase Program We continue to have the opportunity to return capital to our shareholders via an ongoing stock repurchase program (originally authorized by the Board of Directors in 2001).
In addition, our credit facility restricts our ability to pay dividends in the event we are in default or do not satisfy certain covenants. Stock Repurchase Program We continue to have the opportunity to return capital to our shareholders via a stock repurchase program (originally authorized by the Board of Directors in 2001).
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ​ Our common stock is traded on the NASDAQ Global Select Market under the symbol “TTEC.” As of December 31, 2022, we had 217 holders of record of our common stock and during 2022 we declared and paid a $0.50 per share semi-annual dividend and a $0.52 per share semi-annual dividend on our common stock.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ​ Our common stock is traded on the NASDAQ Global Select Market under the symbol “TTEC.” As of December 31, 2023, we had 212 holders of record of our common stock and during 2023 we declared and paid two $0.52 per share semi-annual dividends on our common stock.
On February 23, 2023, the Board of Directors authorized a $0.52 dividend per common share, payable on April 20, 2023, to shareholders of record as of March 31, 2023. While it is our intention to continue to pay semi-annual dividends in 2023 and beyond, any decision to pay future cash dividends will be made by our Board of Directors.
On February 27, 2024, the Board of Directors authorized a $0.06 dividend per common share, payable on April 30, 2024, to shareholders of record as of April 3, 2024. While it is our intention to continue to pay semi-annual dividends in 2024 and beyond, any decision to pay future cash dividends will be made by our Board of Directors.
During 2021 we declared and paid a $0.43 per share semi-annual dividend and a $0.47 per share semi-annual dividend on our common stock.
During 2022 we declared and paid a $0.50 per share semi-annual dividend and a $0.52 per share semi-annual dividend on our common stock.
As of December 31, 2022, the cumulative authorized repurchase allowance was $762.3 million, of which we have used $735.8 million to purchase 46.1 million shares. As of December 31, 2022, the remaining amount authorized for repurchases under the program was approximately $26.6 million. During 2021 and 2022, we did not purchase any shares under the program.
As of December 31, 2023, the cumulative authorized repurchase allowance was $762.3 million, of which we have used $735.8 million to purchase 46.1 million shares. The Board most recently authorized additional funds under the repurchase program in 2017 and of the total amount authorized, approximately $26.6 million continues to be authorized for repurchase as of December 31, 2023.
The stock repurchase program does not have an expiration date. 26 Table of Contents Stock Performance Graph The graph depicted below compares the performance of TTEC common stock with the performance of the NASDAQ Composite Index; the Russell 2000 Index; and customized peer group over the period beginning on December 31, 2017 and ending on December 31, 2022.
Stock Performance Graph The graph depicted below compares the performance of TTEC common stock with the performance of the NASDAQ Composite Index; the Russell 2000 Index; and customized peer group over the period beginning on December 31, 2018 and ending on December 31, 2023. We have chosen the Peer Group comprised of Accenture Plc (NASDAQ: ACN), Cognizant Technology Solutions Corp.
We have chosen the 2022 Peer Group comprised of Accenture Plc (NASDAQ: ACN), Cognizant Technology Solutions Corp. (NASDAQ: CTSH), Concentrix (NASDAQ: CNXC), Globant S.A. (NYSE: GLOB), Teleperformance (NYSE Euronext: RCF) and Telus International (NYSE: TIXT).
(NASDAQ: CTSH), Concentrix (NASDAQ: CNXC), Globant S.A. (NYSE: GLOB), Teleperformance (NYSE Euronext: RCF) and Telus International (NYSE: TIXT).
The graph assumes that $100 was invested on December 31, 2017 in our common stock and in each comparison index, and that all dividends were reinvested. We declared per share dividends on our common stock of $2.88 during 2020, $0.90 during 2021 and $1.02 during 2022.
We believe that the companies in the Peer Group are relevant to our current business model, market capitalization and our two segments Digital and Engage. 29 Table of Contents The graph assumes that $100 was invested on December 31, 2018 in our common stock and in each comparison index, and that all dividends were reinvested.
Removed
From January 1, 2023 through February 22, 2023, we did not purchase any additional shares and we do not currently have plans to make repurchases during 2023.
Added
During 2022 and 2023, and year to date in 2024, we did not purchase any shares under the program. Although the stock repurchase program does not have an expiration date, we would seek a re-authorization of repurchases from the Board of Directors, if we decide to make repurchases during 2024.
Removed
We believe that the companies in the 2022 Peer Group are relevant to our current business model, market capitalization and our two segments Digital and Engage. The 2021 Peer Group included Accenture Plc (NASDAQ: ACN), Cognizant Technology Solutions Corp. (NASDAQ: CTSH), Genpact (NASDAQ: G), LivePerson Inc. (NASDAQ: LPSN), and Teleperformance (NYSE Euronext: RCF).
Added
We declared per share dividends on our common stock of $0.90 during 2021, $1.02 during 2022 and $1.04 during 2023. Stock price performance shown on the graph below is not necessarily indicative of future price performance.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeTTEC Engage ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ ​ ​ ​ 2022 2021 $ Change % Change ​ Revenue ​ $ 1,972,184 ​ $ 1,858,958 ​ $ 113,226 6.1 % ​ Operating Income ​ 134,814 ​ 181,755 ​ (46,941) (25.8) % ​ Operating Margin ​ 6.8 % 9.8 % ​ ​ ​ ​ ​ ​ ​ The increase in revenue for the TTEC Engage segment was due to a net increase of $325.8 million in client programs including the acquisition of Faneuil, offset by a decrease for program completions of $173.1 million and a $39.5 million decrease due to foreign currency fluctuations.
Biggest changeTTEC Engage ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ ​ ​ ​ 2023 2022 $ Change % Change ​ Revenue ​ $ 1,975,935 ​ $ 1,980,037 ​ $ (4,102) (0.2) % ​ Operating Income ​ 88,175 ​ 133,648 ​ (45,473) (34.0) % ​ Operating Margin ​ 4.5 % 6.7 % ​ ​ ​ ​ ​ ​ ​ The decrease in revenue for TTEC Engage was due to a net increase of $106.4 million in client programs, including the acquisition of Faneuil and a $4.9 million increase due to foreign currency fluctuations offset by a decrease for program completions of $115.4 million, more concentrated in our hypergrowth clients. 37 Table of Contents The operating income decrease is primarily attributable to decreased revenue, incremental growth-oriented investments (ex: geographic expansion), higher employee healthcare costs of $7.0 million due to an increase in high claims, ramp costs for new programs, training costs related to existing programs, increased litigation expenditures, and $13.2 million of restructuring and impairment charges.
(“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.
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.
Our capital expenditures requirements could also increase materially in the event of an acquisition or joint venture. In addition, as of December 31, 2022, we were authorized to purchase an additional $26.6 million of common stock under our stock repurchase program (see Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities).
Our capital expenditures requirements could also increase materially in the event of an acquisition or joint venture. In addition, as of December 31, 2023, we were authorized to purchase an additional $26.6 million of common stock under our stock repurchase program (see Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities).
During 2022, we completed a Step 1 goodwill analysis and determined that for all three reporting units the estimated fair value exceeds the carrying value. The calculation of fair value is based on estimates including revenue projections, EBITDA margin projections, estimated tax rates, estimated capital expenditures and discount rates.
During 2023, we completed a Step 1 goodwill analysis and determined that for all three reporting units the estimated fair value exceeds the carrying value. The calculation of fair value is based on estimates including revenue projections, EBITDA margin projections, estimated tax rates, estimated capital expenditures and discount rates.
RESULTS OF OPERATIONS Year Ended December 31, 2022 Compared to December 31, 2021 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 years ended December 31, 2022 and 2021 (amounts in thousands).
RESULTS OF OPERATIONS Year Ended December 31, 2023 Compared to December 31, 2022 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 years ended December 31, 2023 and 2022 (amounts in thousands).
When circumstances warrant, we assess the likelihood that our net deferred tax assets will more likely than not be recovered from future projected taxable income. We continually review the likelihood that deferred tax assets will be realized in future tax periods under the “more-likely-than-not” criteria.
When circumstances warrant, we assess the likelihood that our net deferred tax assets will more likely than not be recovered from future projected taxable income. We continuously review the likelihood that deferred tax assets will be realized in future tax periods under the “more-likely-than-not” criteria.
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. 41 Table of Contents Cybersecurity Investments and Governance We have made and continue to make significant financial investments in technologies and processes to mitigate cyber risks.
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. 42 Table of Contents Cybersecurity Investments We have made and continue to make significant financial investments in technologies and processes to mitigate cyber risks.
Goodwill and Indefinite-Lived Intangible Assets We evaluate goodwill and indefinite-lived intangible assets for possible impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. We use a two-step process to assess the realizability of goodwill.
Goodwill and Indefinite-Lived Intangible Assets We evaluate goodwill and indefinite-lived intangible assets for possible impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. 35 Table of Contents We use a two-step process to assess the realizability of goodwill.
During the fourth quarter of 2021, the Credit Facility was amended including an increase to $1.5 billion of total commitments (see discussion below in the Debt Instruments and Related Covenants).
During 2021, the Credit Facility was amended including an increase to $1.5 billion of total commitments (see discussion below in the Debt Instruments and Related Covenants).
As of December 31, 2022, and 2021, based on the current level of availability based on the covenant calculations, the remaining borrowing capacity was approximately $335 million and $565 million, respectively. Client Concentration During 2022, only one of our clients represented more than 10% of our total annual revenue.
As of December 31, 2023, and 2022, based on the current level of availability based on the covenant calculations, the remaining borrowing capacity was approximately $90 million and $335 million, respectively. Client Concentration During 2023, only one of our clients represented more than 10% of our total annual revenue.
After consideration for the current level of availability based on the covenant calculations, our remaining borrowing capacity was approximately $335 million as of December 31, 2022. As of December 31, 2022, we were in compliance with all covenants and conditions under our Credit Facility.
After consideration for the current level of availability based on the covenant calculations, our remaining borrowing capacity was approximately $90 million as of December 31, 2023. As of December 31, 2023, we were in compliance with all covenants and conditions under our Credit Facility.
Upon the occurrence of an event of default, the lenders may accelerate the maturity of all amounts outstanding under the Credit Facility. As of December 31, 2022 and 2021, we had borrowings of $960.0 million and $791.0 million, respectively, under the Credit Facility.
Upon the occurrence of an event of default, the lenders may accelerate the maturity of all amounts outstanding under the Credit Facility. As of December 31, 2023 and 2022, we had borrowings of $995.0 million and $960.0 million, respectively, under the Credit Facility.
Other Expenses The main components of other expenses are expenditures not directly related to our operating activities, such as foreign exchange losses and increases in our contingent consideration.
Other Income The main components of other income are miscellaneous income not directly related to our operating activities, such as foreign exchange gains and reductions in our contingent consideration. Other Expenses The main components of other expenses are expenditures not directly related to our operating activities, such as foreign exchange losses and increases in our contingent consideration.
The incident resulted in certain government enforcement actions, regulatory investigations, fines, penalties, and private legal actions, which although significant, are typical under these circumstances and did not materially impact our results of operations.
During 2021, 2022 and 2023, the incident also resulted in certain government enforcement actions, regulatory investigations, fines, penalties, and private legal actions, which although significant, are typical under these circumstances and did not materially impact our results of operations.
We reinvest our cash flows to grow our client base, expand our infrastructure, for investment in research and development, for strategic acquisitions, and to pay dividends. Cash Flows from Operating Activities For the years 2022 and 2021 we reported net cash flows provided by operating activities of $137.0 million and $251.3 million, respectively.
We reinvest our cash flows to grow our client base, expand our infrastructure, for investment in research and development, for strategic acquisitions, and to pay dividends. Cash Flows from Operating Activities For the years 2023 and 2022 we reported net cash flows provided by operating activities of $144.8 million and $137.0 million, respectively.
Some of the contracts with our five largest clients expire between 2023 and 2025, but many of our largest clients have multiple contracts with us with different expiration dates for different lines of work.
Some of the contracts with our five largest clients expire between 2024 and 2027, but many of our largest clients have multiple contracts with us with different expiration dates for different lines of work.
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.
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.
Revenue for our TTEC Engage segment provided in these offshore locations represented 27% of our 2022 revenue, as compared to 29% of our 2021 revenue. Our seat utilization is defined as the total number of utilized workstations compared to the total number of available production workstations.
Revenue for TTEC Engage provided in these offshore locations represented 30% of our 2023 revenue, as compared to 29% of our 2022 revenue. Our seat utilization is defined as the total number of utilized workstations compared to the total number of available production workstations.
Capital and Financing Availability Our strong balance sheet, cash flow from operations and access to debt and capital markets have historically provided us the financial flexibility to effectively fund our organic growth, capital expenditures, strategic acquisitions, incremental investments, and capital distributions. We return capital to our shareholders through our dividend program.
See Part I, Item 1C Cybersecurity. Capital and Financing Availability Our balance sheet, cash flow from operations and access to debt and capital markets have historically provided us the financial flexibility to effectively fund our organic growth, capital expenditures, strategic acquisitions, incremental investments, and capital distributions. We return capital to our shareholders through our dividend program.
During 2022, 2021 and 2020, borrowings accrued interest at an average rate of approximately 3.1%, 1.3%, and 1.6% per annum, respectively, excluding unused commitment fees. Our daily average borrowings during 2022, 2021 and 2020 were $1,037.4 million, $797.2 million and $550.9 million, respectively.
During 2023, 2022 and 2021, borrowings accrued interest at an average rate of approximately 6.7%, 3.1%, and 1.3% per annum, respectively, excluding unused commitment fees. Our daily average borrowings during 2023, 2022 and 2021 were $1,072.4 million, $1,037.4 million and $797.2 million, respectively.
Our five largest clients accounted for 35% and 38% of our annual revenue for each of the two years ended December 31, 2022 and 2021, respectively. We have long-term relationships with our top five Engage clients, ranging from 16 to 23 years, with all of these clients having completed multiple contract renewals with us.
Our five largest clients accounted for 36% and 35% of our annual revenue for each of the two years ended December 31, 2023 2022, respectively. We have long-term relationships with our top five Engage clients, ranging from 17 to 24 years, with all of these clients having completed multiple contract renewals with us.
Included in the operating income was amortization expense related to acquired intangibles of $17.2 million and $13.2 million for the years ended December 31, 2022 and 2021, respectively. Interest Income (Expense) Interest income increased to $1.8 million in 2022 from $0.8 million in 2021.
Included in the operating income was amortization expense related to acquired intangibles of $18.2 million and $17.2 million for the years ended December 31, 2023 and 2022, respectively. Interest Income (Expense) Interest income increased to $5.2 million in 2023 from $1.8 million in 2022.
Other actual and potential consequences of the incident included and may include negative publicity, loss of client trust, reputational damage, litigation, contractual claims, financial judgement or settlements in excess of insurance, and disputes with insurance carriers concerning coverage.
Other actual and potential consequences of the incident included and may include negative publicity, loss of client trust, reputational damage, litigation, contractual claims, financial judgement or settlements in excess of insurance, and disputes with insurance carriers concerning coverage. See, Part I, Item 1A Risk Factors.
These clients currently represent approximately 5% of our total annual revenue. We believe these contracts are negotiated on an arm’s-length basis and may be negotiated at different times and with different legal entities. Future Capital Requirements We expect total capital expenditures in 2023 to be between 3.3% and 3.5% of revenue.
These clients currently represent approximately 6% of our total annual revenue. We believe these contracts are negotiated on an arm’s-length basis and may be negotiated at different times and with different legal entities. Future Capital Requirements We expect total capital expenditures in 2024 to be between 2.7% and 2.9% of revenue.
The temporary operational disruptions that occurred due to these incidents did not have a long-term impact on our results of operations. TTEC has made and continues to make significant investments to enhance our information technology environment, our operational governance of our information technology system and our data governance practices during the fourth quarter of 2021 and 2022.
The temporary operational disruptions that occurred due to these incidents did not have a long-term impact on our results of operations. During 2022 and 2023, TTEC has made and will continue to make in 2024, significant investments to enhance our information technology environment, our operational governance of our information technology system, and our data governance practices.
As of December 31, 2022 and 2021, we had borrowings of $960.0 million and $791.0 million, respectively, under our Credit Facility, and our average daily utilization was $1,037.4 million and $797.2 million for the years ended December 31, 2022 and 2021, respectively.
As of December 31, 2023 and 2022, we had borrowings of $995.0 million and $960.0 million, respectively, under our Credit Facility, and our average daily utilization was $1,072.4 million and $1,037.4 million for the years ended December 31, 2023 and 2022, respectively.
Income from operations in 2022 and 2021 included a total of $19.4 million and $15.1 million of restructuring and asset impairments, respectively. Our offshore customer experience centers spanning six countries serve clients based in the U.S. and in other countries with 19,900 workstations representing 61% of our global delivery capabilities.
Income from operations in 2023 and 2022 included a total of $19.8 million and $19.4 million of restructuring and asset impairments, respectively. Our offshore customer experience centers spanning six countries serve clients based in the U.S. and in other countries with 21,500 workstations representing 69% of our global delivery capabilities.
The operating income as a percentage of revenue decreased to 7.2% in 2022 as compared to 8.6% in 2021. Included in the operating income was amortization related to acquired intangibles of $19.9 million and $18.8 million for the years ended December 31, 2022 and 2021, respectively.
The operating income as a percentage of revenue decreased to 6.1% in 2023 as compared to 7.5% in 2022. Included in the operating income was amortization related to acquired intangibles of $17.4 million and $19.9 million for the years ended December 31, 2023 and 2022, respectively.
Included in the year ended December 31, 2022 was a gain of $4.1 million due to insurance recovery related to property damages and a net $1.8 million expense related to the fair value adjustments of contingent consideration accruals and receivables for one acquisition.
Included in the year ended December 31, 2023 was a net $7.5 million expense related to the fair value of contingent consideration accruals and receivables for one acquisition partially offset by a gain of $4.5 million due to insurance recovery related to property damages.
We primarily utilize our Credit Facility to fund working capital, general operations, dividends, and other strategic activities, such as the acquisitions described in Part II. Item 8. Financial Statements and Supplementary Data, Note 2 to the Consolidated Financial Statements.
Quantitative and Qualitative Disclosures About Market Risk, Foreign Currency Risk, for further discussion. We primarily utilize our Credit Facility to fund working capital, general operations, dividends, and other strategic activities, such as the acquisitions described in Part II. Item 8. Financial Statements and Supplementary Data, Note 2 to the Consolidated Financial Statements.
The effective tax rate for 2021 was impacted by earnings in international jurisdictions currently under an income tax holiday, a $0.8 million benefit related to changes in tax contingent liabilities, a $1.3 million benefit related to provision to return adjustments, a $3.5 million benefit related to the cybersecurity incident, $13.9 million of expense related to changes in valuation allowances, a $3.8 million benefit related to restructuring charges, $4.1 million of expense related to international legal entity reorganization, a $9.6 million benefit related to equity based compensation, an $8.3 million benefit related to the amortization of purchased intangibles, and $0.1 million of other benefits.
The effective tax rate for 2023 was impacted by earnings in international jurisdictions currently under an income tax holiday, $1.8 million of expense related to changes in tax contingent liabilities, $11.6 million of expense related to changes in valuation allowances and related deferred tax liabilities, a $1.9 million benefit related to acquisitions, a $5.1 million benefit related to restructuring charges, a $4.2 million benefit related to equity based compensation, a $9.3 million benefit related to the amortization of purchased intangibles, and $0.7 million of other tax benefits.
Interest expense increased to $36.1 million during 2022 from $12.4 million during 2021, primarily due to higher utilization of the line of credit and higher interest rates. Other Income (Expense), Net For the year ended December 31, 2022 Other income (expense), net increased to net income of $10.2 million from net income of $2.3 million during the prior year.
Interest expense increased to $78.3 million during 2023 from $36.1 million during 2022, primarily due to higher interest rates. Other Income (Expense), Net For the year ended December 31, 2023 Other income (expense), net decreased to a net expense of $4.1 million from net income of $10.2 million during the prior year.
Financial Statements and Supplementary Data, Note 1 to the Consolidated Financial Statements. Changes in Accounting Principle See discussion of adopted accounting standards in Part II, Item 8. Financial Statements and Supplementary Data, Note 1 to the Consolidated Financial Statements. ​
Recently Issued Accounting Pronouncements We discuss the potential impact of recent accounting pronouncements in Part II, Item 8. Financial Statements and Supplementary Data, Note 1 to the Consolidated Financial Statements. Changes in Accounting Principle See discussion of adopted accounting standards in Part II, Item 8. Financial Statements and Supplementary Data, Note 1 to the Consolidated Financial Statements. ​
During 2022, the TTEC global operating platform delivered onshore, nearshore, and offshore services in 21 countries on six continents -- the United States, Australia, Belgium, Brazil, Bulgaria, Canada, Colombia, Costa Rica, Germany, Greece, India, Ireland, Mexico, the Netherlands, New Zealand, the Philippines, Poland, Singapore, South Africa, Thailand, and the United Kingdom with the help of 69,400 consultants, technologists, and CX professionals.
During 2023, the combined TTEC Digital and TTEC Engage global operating platform delivered onshore, nearshore, and offshore services in 22 countries on six continents -- the United States, Australia, Belgium, Brazil, Bulgaria, Canada, Colombia, Costa Rica, Egypt, Germany, Greece, Honduras, India, Ireland, Mexico, the Netherlands, New Zealand, the Philippines, Poland, South Africa, Thailand, and the United Kingdom with the help of over 60,000 customer care associates, consultants, technologists, and CX professionals.
Performance obligation is the unit of accounting for revenue recognition under the provisions of ASC Topic 606, “Revenue from Contracts with Customers” and all related amendments (“ASC 606”). A contract’s transaction price is allocated to each distinct performance obligation in recognizing revenue.
Performance obligation is the unit of accounting for revenue recognition under the provisions of ASC Topic 606, “Revenue from Contracts with Customers” and all related amendments (“ASC 606”).
Without these items our effective tax rate for the year ended December 31, 2021 would have been 21.3%. Year Ended December 31, 2021 compared to December 31, 2020 For a discussion of our results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020, please see Part II. Item 7.
Without these items our effective tax rate for the year ended December 31, 2022 would have been 22.9%. 38 Table of Contents Year Ended December 31, 2022 compared to December 31, 2021 For a discussion of our results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021, please see Part II.
Since inception in 2015, the Company has continued to pay a semi-annual dividend in October and April of each year in gradually increasing amounts from $0.18 per common share in 2015 to $0.52 per common share in October 2022. In December 2020, the Board of Directors authorized a special one-time dividend of $2.14 per common share.
Since inception in 2015, the Company has continued to pay a semi-annual dividend in October and April of each year in gradually increasing amounts from $0.18 per common share in 2015 to $0.52 per common share in October 2023.
In connection with these incidents, we also exercised reasonable efforts to identify data that may have been exfiltrated and found no credible evidence that exfiltrated data was publicly released.
In connection with these incidents, we also exercised reasonable efforts to identify data that may have been exfiltrated and found no credible evidence that exfiltrated data was publicly released, nevertheless, we provided appropriate regulatory and individual notices about the incident and its potential impacts.
To this end we were highly acquisitive in the last several years, including our acquisition in April 2022 of certain public sector assets of Faneuil, Inc. that included healthcare exchange and transportation services contracts. The acquisition expanded our capabilities in the growing public sector market by adding the building and operating of technology-enabled citizen engagement solutions to our offerings.
To this end we were acquisitive in the last several years, including our acquisition in April 2022 of certain public sector assets of Faneuil, Inc. that included healthcare exchange and transportation services contracts.
The net decrease in cash used in investing activities from 2021 to 2022 was due to a decrease related to acquisitions of $339.3 million offset by a $23.7 million increase in capital expenditures. Cash Flows from Financing Activities For the years 2022 and 2021, we reported net cash flows provided by financing activities of $89.0 million and $319.6 million, respectively.
The net decrease in cash used in investing activities from 2022 to 2023 was due to a $142.4 million decrease in acquisitions and a $16.2 million decrease in capital expenditures. Cash Flows from Financing Activities For the years 2023 and 2022, we reported net cash flows (used in)/provided by financing activities of $(68.2) million and $89.0 million, respectively.
The business process outsourcing (“BPO”) inbound and outbound service fees are based on either a per minute, per hour, per FTE, per transaction or per call basis, which represents the majority of our contracts.
A contract’s transaction price is allocated to each distinct performance obligation in recognizing revenue. 33 Table of Contents The business process outsourcing (“BPO”) inbound and outbound service fees are based on either a per minute, per hour, per FTE, per transaction or per call basis, which represents the majority of our contracts.
Restructuring Charges, Net Restructuring charges, net primarily include costs incurred in conjunction with reductions in force or decisions to exit facilities, including termination benefits and lease liabilities, net of expected sublease rentals. Impairment Losses Impairment losses include costs related to impairment of right-of-use assets, leasehold improvement assets, internally developed software, and certain computer equipment.
Restructuring Charges, Net Restructuring charges, net primarily include costs incurred in conjunction with reductions in force or decisions to exit facilities, including termination benefits and lease liabilities, net of expected sublease rentals.
Free cash flow also includes cash that may be necessary for acquisitions, investments and other needs that may arise. 39 Table of Contents The following table reconciles net cash provided by operating activities to free cash flow for our consolidated results (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 ​ Net cash provided by operating activities ​ ​ $ 137,048 ​ $ 251,296 ​ Less: Purchases of property, plant and equipment ​ ​ 84,012 ​ 60,358 ​ Free cash flow ​ ​ $ 53,036 ​ $ 190,938 ​ ​ Obligations and Future Capital Requirements At December 31, 2022, our future contractual obligations were related primarily to debt, leases and income taxes.
The following table reconciles net cash provided by operating activities to free cash flow for our consolidated results (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 ​ Net cash provided by operating activities ​ ​ $ 144,766 ​ $ 137,048 ​ Less: Purchases of property, plant and equipment ​ ​ 67,839 ​ 84,012 ​ Free cash flow ​ ​ $ 76,927 ​ $ 53,036 ​ ​ 40 Table of Contents Obligations and Future Capital Requirements At December 31, 2023, our future contractual obligations were related primarily to debt, leases and income taxes.
Consequently, significant changes in our actual quarterly or forecasted results may impact the effective tax rate for the current or future periods. 34 Table of Contents Business Combinations We account for business combinations under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations, which requires an allocation of the consideration we paid to the identifiable assets, intangible assets and liabilities based on the estimated fair values as of the closing date of the acquisition.
Business Combinations We account for business combinations under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations, which requires an allocation of the consideration we paid to the identifiable assets, intangible assets and liabilities based on the estimated fair values as of the closing date of the acquisition.
Each quarter, management reviews all litigation and claims on a case-by-case basis and assigns probability of loss and range of loss. 35 Table of Contents Other Components of Results of Operations Cost of Services Cost of services principally include costs incurred in connection with our customer experience services and technology services, including direct labor and related taxes and benefits, telecommunications, technology costs, sales and use tax and certain fixed costs associated with the customer engagement centers.
Other Components of Results of Operations Cost of Services Cost of services principally include costs incurred in connection with our customer experience services and technology services, including direct labor and related taxes and benefits, telecommunications, technology costs, sales and use tax and certain fixed costs associated with the customer engagement centers.
Included in the year ended December 31, 2021 was a net $1.2 million expense related to the fair value adjustments of contingent consideration for two acquisitions. Income Taxes The reported effective tax rate for 2022 was 18.8% as compared to 23.9% for 2021.
Included in the year ended December 31, 2022 was a gain of $4.1 million due to insurance recovery related to property damages and a net $1.8 million expense related to the fair value adjustments of contingent consideration accruals and receivables for one acquisition. Income Taxes The reported effective tax rate for 2023 was 55.2% as compared to 18.8% for 2022.
To improve our competitive position in a rapidly changing market and to lead our clients with emerging CX methodologies, 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. 29 Table of Contents We also invest to broaden our product and service capabilities, increase our global client base and industry expertise, tailor our geographic footprint to the needs of our clients, and further scale our end-to-end integrated solutions platform.
To improve our competitive position in a rapidly changing market and to lead our clients with emerging CX methodologies, 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.
Without these items our effective tax rate for the year ended December 31, 2022 would have been 22.9%. 37 Table of Contents For the year ended December 31, 2021, our effective tax rate was 23.9%.
Without these items our effective tax rate for the year ended December 31, 2023 would have been 22.7%. For the year ended December 31, 2022, our effective tax rate was 18.8%.
Our investment in cybersecurity is not expected to decrease in the foreseeable future, and despite our on-going efforts to improve our cybersecurity, there can be no assurance that a sophisticated cyber-attack could timely be detected or thwarted. Recently Issued Accounting Pronouncements We discuss the potential impact of recent accounting pronouncements in Part II, Item 8.
Our investment in cybersecurity is not expected to decrease in the foreseeable future, and despite our on-going efforts to improve our cybersecurity, there can be no assurance that a sophisticated cyber-attack could timely be detected or thwarted. For additional information about our cybersecurity risk management and governance see, Part I, Item 1C. Cybersecurity.
Our revenue for fiscal 2022 was $2.444 billion, approximately $472 million, or 19%, which came from our TTEC Digital segment and $1.972 billion, or 81%, which came from our TTEC Engage segment.
Our revenue for fiscal 2023 was $2.463 billion, approximately $487 million, or 20%, which came from our TTEC Digital segment and $1.976 billion, or 80%, which came from our TTEC Engage segment.
Variable consideration is estimated at contract inception at its most likely value and updated at the end of each reporting period as additional performance data becomes available.
Variable consideration is estimated at contract inception at its most likely value and updated at the end of each reporting period as additional performance data becomes available. Revenue related to such variable consideration is recognized only to the extent that a significant reversal of any incremental revenue is not considered probable.
We estimate our annual effective tax rate each quarter based on a combination of actual and forecasted results of subsequent quarters.
We estimate our annual effective tax rate each quarter based on a combination of actual and forecasted results of subsequent quarters. Consequently, significant changes in our actual quarterly or forecasted results may impact the effective tax rate for the current or future periods.
Letter of credit fees are one eighth of 1% of the stated amount of the letter of credit on the date of issuance, renewal or amendment, plus an annual fee equal to the borrowing margin for Eurodollar loans.
Alternative currency loans (not denominated in U.S. Dollars) bear interest at rates applicable to their respective currencies. Letter of credit fees are one eighth of 1% of the stated amount of the letter of credit on the date of issuance, renewal or amendment, plus an annual fee equal to the borrowing margin for SOFR loans.
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 with commercially reasonable terms acceptable to us. 38 Table of Contents The following discussion highlights our cash flow activities during the years ended December 31, 2022 and 2021.
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 with commercially reasonable terms acceptable to us.
The decrease of $114.2 million from 2021 to 2022 was primarily due to a $17.4 million decrease in net cash income from operations and a $96.9 million reduction in net working capital. Cash Flows from Investing Activities For the years 2022 and 2021, we reported net cash flows used in investing activities of $226.2 million and $542.0 million, respectively.
The increase of $7.7 million from 2022 to 2023 was due to a $101.5 million decrease in net cash income from operations offset by a $109.2 million increase in net working capital. Cash Flows from Investing Activities For the years 2023 and 2022, we reported net cash flows used in investing activities of $67.6 million and $226.2 million, respectively.
The change in net cash flows from 2021 to 2022 was primarily due to a $237.0 million net change in the line of credit and a $5.9 million increase in dividends to shareholders, offset by a $4.2 million decrease in tax payments related to restricted stock units, a $3.6 million decrease in payment of debt issuance costs, and a $3.4 million decrease in payments on other debt.
The change in net cash flows from 2022 to 2023 was primarily due to a $134.0 million net change in the line of credit and an increase of $28.1 million related to payments of contingent consideration offset by a $4.1 million decrease in tax payments related to restricted stock units.
The Credit Facility matures on November 23, 2026. We primarily use our Credit Facility to fund working capital, general operations, dividends, acquisitions and other strategic activities. 40 Table of Contents The maximum commitment under the Credit Facility is $1.5 billion in the aggregate, if certain conditions are satisfied.
The Credit Facility matures on November 23, 2026. We primarily use our Credit Facility to fund working capital, general operations, dividends, acquisitions and other strategic activities.
We believe the risk of this concentration is mitigated, in part, by the long-term contracts we have with our largest clients.
For instance, in early 2024, one of our top five clients notified us that it is exiting one of the lines of business that we support. We believe the risk of this concentration is mitigated, in part, by the long-term contracts we have with our largest clients.
Cash and Cash Equivalents We consider all liquid investments purchased within 90 days of their original maturity to be cash equivalents. Our cash and cash equivalents totaled $153.4 million and $158.2 million as of December 31, 2022 and 2021, respectively. We diversify the holdings of such cash and cash equivalents considering the financial condition and stability of the counterparty institutions.
Our cash and cash equivalents totaled $172.7 million and $153.4 million as of December 31, 2023 and 2022, respectively. We diversify the holdings of such cash and cash equivalents considering the financial condition and stability of the counterparty institutions.
Free Cash Flow Free cash flow (see “Presentation of Non-GAAP Measurements” below for the definition of free cash flow) was $53.0 million and $190.9 million for the years 2022 and 2021, respectively. The decrease from 2021 to 2022 was primarily due to a decrease in the net cash from operations and an increase in capital expenditures.
Free Cash Flow Free cash flow (see “Presentation of Non-GAAP Measurements” below for the definition of free cash flow) was $76.9 million and $53.0 million for the years 2023 and 2022, respectively.
Cybersecurity Incident In 2021, TTEC experienced two significant cybersecurity incidents. One involved a global supply chain compromise that impacted thousands of companies worldwide, including a TTEC Digital subsidiary and its managed services clients. Another involved a ransomware attack that temporarily disrupted the TTEC Engage business.
We serve more than 750 diverse clients globally, including many of the world’s iconic brands, Fortune 1000 companies, public sector clients, and disruptive hypergrowth companies. Cybersecurity Incident In 2021, TTEC experienced two significant cybersecurity incidents. One involved a global supply chain compromise that impacted thousands of companies worldwide, including a TTEC Digital subsidiary and its managed services clients.
The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects to recover those costs.
Direct and incremental costs to obtain or fulfill a contract are capitalized, and the capitalized costs are amortized over the corresponding period of benefit, determined on a contract by contract basis. The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects to recover those costs.
The TTEC Digital operating income declined with an 4.8%, or $1.7 million, decrease over last year primarily due to increased revenue and program gross margins offset by a continued investment in sales and marketing, product engineering, and geographic expansion.
The change in operating income is attributable to a number of different factors across the segments. The TTEC Digital segment’s operating income declined 14.5%, or $5.0 million over last year primarily due to continued investments in CX leadership, sales and marketing, product engineering, and geographic expansion offset by an increase in revenue and program gross margins.
Contingencies We record a liability for pending litigation and claims where losses are both probable and reasonably estimable.
Contingencies We record a liability for pending litigation and claims where losses are both probable and reasonably estimable. Each quarter, management reviews all litigation and claims on a case-by-case basis and assigns probability of loss and range of loss.
We also completed an acquisition early in the second quarter of 2021 of a provider of Genesys and Microsoft cloud contact center services, which followed an acquisition in the second half of 2020 of a preferred Amazon Connect cloud contact center service and implementation provider.
We also completed an acquisition early in the second quarter of 2021 of a provider of Genesys and Microsoft cloud contact center services, which followed an acquisition in the second half of 2020 of a preferred Amazon Connect cloud contact center service and implementation provider. 31 Table of Contents We have extensive expertise in the healthcare, automotive, national/federal and state and local government, financial services, communications, technology, travel, logistics, media and entertainment, e-tail/retail, and transportation industries.
Income Taxes Accounting for income taxes requires recognition of deferred tax assets and liabilities for the expected future income tax consequences of transactions that have been included in the Consolidated Financial Statements or tax returns.
Such capitalized contract acquisition costs are periodically reviewed for impairment taking into consideration ongoing future cash flows expected from the contract and estimated remaining useful life of the contract. 34 Table of Contents Income Taxes Accounting for income taxes requires recognition of deferred tax assets and liabilities for the expected future income tax consequences of transactions that have been included in the Consolidated Financial Statements or tax returns.
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2021. 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 (as defined below).
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 (as defined below). During the year ended December 31, 2023, we generated positive operating cash flows of $144.8 million.
As we grow our offshore delivery capabilities and our exposure to foreign currency fluctuation increases, we will continue to actively manage this risk via a multi-currency hedging program designed to minimize operating margin volatility. 32 Table of Contents Critical Accounting Policies and Estimates Management’s Discussion and Analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the U.S.
Critical Accounting Policies and Estimates Management’s Discussion and Analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”).
Approximately 65% of these expected capital expenditures are to support growth in our business and 35% relate to the maintenance of existing assets. The anticipated level of 2023 capital expenditures is primarily driven by new client contracts and the corresponding requirements for additional customer engagement center capacity as well as enhancements to our technological infrastructure.
Approximately 55% of these expected capital expenditures are to support growth in our business and 45% relate to the maintenance of existing assets. The anticipated level of 2024 capital expenditures is primarily driven by site expansions, new builds in emerging geographies, enhancements and modernization to our technological infrastructure and ongoing digital integration and product development.
The Credit Agreement permits accounts receivable factoring up to the greater of $100 million or 25 percent of the average book value of all accounts receivable over the most recent twelve month period.
The Credit Agreement permits accounts receivable factoring up to the greater of $100 million or 25 percent of the average book value of all accounts receivable over the most recent twelve month period. 41 Table of Contents Base rate loans bear interest at a rate equal to the highest of (a) the prime rate, (b) the federal funds rate plus 0.50%, or (c) SOFR in effect on such day plus 1.0%.
Revenue related to such variable consideration is recognized only to the extent that a significant reversal of any incremental revenue is not considered probable. 33 Table of Contents Contract modifications are routine in the performance of the customer contracts. Contracts are often modified to account for customer mandated changes in the contract specifications or requirements, including service level changes.
Contract modifications are routine in the performance of the customer contracts. Contracts are often modified to account for customer mandated changes in the contract specifications or requirements, including service level changes. In most instances, contract modifications relate to goods or services that are incremental and distinctly identifiable, and, therefore, are accounted for prospectively.
Our 2022 Financial Results In 2022, our revenue increased 7.5% over 2021 to $2,443.7 million, including a decrease of 1.9% or $42.4 million due to foreign currency fluctuations. The increase in revenue was comprised of a $57.4 million, or 13.9%, increase for TTEC Digital and a $113.2 million, or 6.1%, increase for TTEC Engage.
The increase in revenue was comprised of a $23.2 million, or 5.0%, increase for TTEC Digital and a $4.1 million, or 0.2%, decrease for TTEC Engage. 32 Table of Contents Our 2023 income from operations decreased $50.5 million to $118.0 million, or 4.8% of revenue, from $168.5 million which was 6.9% of revenue for 2022.
Based on our clients’ preferences, we provide our services on an integrated cross-business segment and/or on a discrete basis. Additional information with respect to our segments and geographic footprint is included in Part II, Item 8. Financial Statements and Supplementary Data, Note 3 to the Consolidated Financial Statements.
On February 27, 2024, the Board of Directors authorized a semi-annual dividend of $0.06 per common share, payable on April 30, 2024 to shareholders of record as of April 3, 2024. Additional information with respect to our segments and geographic footprint is included in Part II, Item 8. Financial Statements and Supplementary Data, Note 3 to the Consolidated Financial Statements.
As of December 31, 2022, the total production workstations for our TTEC Engage segment was 32,825 and the overall capacity utilization in our centers was 78% versus 63% in the prior year period. The significant improvement was driven by the Company’s site optimization strategy as more and more clients are adopting the @Home operational platform on a permanent basis.
As of December 31, 2023, the total production workstations for TTEC Engage was 31,325 and the overall capacity utilization in our centers was 76% versus 78% in the prior year period. The decline was primarily driven by expansion into new geographies offshore not yet fully ramped, partially offset by improvements in the U.S. due to the Company’s site optimization strategy.
Prior year operating income for the same period was impacted by the cybersecurity incident which reduced the operating income by $13.4 million. As a result, the operating income as a percentage of revenue decreased to 6.8% in 2022 as compared to 9.8% in the prior period.
These were partially offset by the acquisition of Faneuil, a reduction in total facility costs and a net reimbursement from insurance of $7.3 million from the cybersecurity incident. As a result, the operating income as a percentage of revenue decreased to 4.5% in 2023 as compared to 6.7% in the prior period.
We plan to continue to selectively retain and grow capacity and expand into new offshore markets, while maintaining appropriate capacity onshore.
We 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 will continue to actively manage this risk via a multi-currency hedging program designed to minimize operating margin volatility.
Eurodollar loans bear interest at LIBOR plus a margin of 1.0% to 1.75% based on our net leverage ratio. Alternate currency loans bear interest at rates applicable to their respective currencies.
Base rate loans shall be based on the base rate, plus the applicable credit margin which ranges from 0% to 1% based on the Company’s net leverage ratio. SOFR loans bear interest at a rate equal to the applicable spread adjusted SOFR plus applicable credit margin which ranges from 1.0% to 2% based on the Company’s net leverage ratio.
Interest Expense Interest expense includes interest expense, amortization of debt issuance costs associated with our Credit Facility, and the accretion of deferred payments associated with our acquisitions. Other Income The main components of other income are miscellaneous income not directly related to our operating activities, such as foreign exchange gains and reductions in our contingent consideration.
Impairment Losses Impairment losses include costs related to impairment of right-of-use assets, leasehold improvement assets, internally developed software, and certain computer equipment. 36 Table of Contents Interest Expense Interest expense includes interest expense, amortization of debt issuance costs associated with our Credit Facility, and the accretion of deferred payments associated with our acquisitions.
We help clients improve their customer satisfaction while lowering their total cost to serve by combining innovative digital solutions with service capabilities that deliver a frictionless CX across numerous real-time digital and live interaction channels and different phases of the customer lifecycle.
By combining digital solutions with data-driven service capabilities, we help clients improve their customer satisfaction while lowering their total cost to serve. As of December 31, 2023, TTEC served over 750 clients across targeted industry verticals including financial services, healthcare, public sector, telecom, technology, media, travel and hospitality, automotive and retail.
The TTEC Engage operating income decreased 25.8%, or $46.9 million, compared to the prior year primarily related to the acquisition of Faneuil and other revenue increases offset by the ramp of several new programs, change in revenue mix away from COVID-surge programs, increased sales and marketing expenses, increased amortization of acquisition related intangible assets, impairments of internally developed software and real estate leases, and accelerated amortization of software.
TTEC Engage’s operating income decreased 34.0%, or $45.5 million, compared to the prior year primarily related to incremental growth-oriented investments, higher employee healthcare costs, ramp costs for new programs, training costs related to existing programs, litigation expenditures and restructuring expenses, offset partially by the acquisition of Faneuil, other revenue increases and reimbursement from insurance related to the cybersecurity incident.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of the date of this report, we have not experienced, nor do we anticipate, any issue related to derivative counterparty defaults. 42 Table of Contents Interest Rate Risk The interest rate on our Credit Agreement is variable based upon the Prime Rate and LIBOR and, therefore, is affected by changes in market interest rates.
Biggest changeInterest Rate Risk The interest rate on our Credit Agreement is variable based upon the Prime Rate and SOFR and, therefore, is affected by changes in market interest rates. As of December 31, 2023, we had $995.0 million of outstanding borrowings under the Credit Agreement.
Australian Dollar (2.5) % (0.2) % (4.2) % ​ In order to mitigate the risk of these non-functional foreign currencies weakening against the functional currencies of the servicing subsidiaries, which thereby decreases the economic benefit of performing work in these countries, we may hedge a portion, though not 100%, of the projected foreign currency exposure related to client programs served from these foreign countries through our cash flow hedging program.
Australian Dollar 1.0 % (2.5) % (0.2) % ​ In order to mitigate the risk of these non-functional foreign currencies weakening against the functional currencies of the servicing subsidiaries, which thereby decreases the economic benefit of performing work in these countries, we may hedge a portion, though not 100%, of the projected foreign currency exposure related to client programs served from these foreign countries through our cash flow hedging program.
We do not currently engage in hedging activities related to these types of foreign currency risks because we believe them to be insignificant as we endeavor to settle these accounts on a timely basis. For the years ended 2022 and 2021, approximately 14% and 14%, respectively, of revenue was derived from contracts denominated in currencies other than the U.S. Dollar.
We do not currently engage in hedging activities related to these types of foreign currency risks because we believe them to be insignificant as we endeavor to settle these accounts on a timely basis. For the years ended 2023 and 2022, approximately 14% and 14%, respectively, of revenue was derived from contracts denominated in currencies other than the U.S. Dollar.
Dollar 4.8 % (2.9) % (5.2) % Australian Dollar vs. U.S. Dollar (6.5) % (6.1) % 9.0 % Euro vs. U.S. Dollar (5.9) % (8.1) % 8.6 % Indian Rupee vs. U.S. Dollar ​ (11.3) % (1.8) % (2.5) % Philippine Peso vs.
Dollar 12.9 % 4.8 % (2.9) % Australian Dollar vs. U.S. Dollar (0.0) % (6.5) % (6.1) % Euro vs. U.S. Dollar 3.0 % (5.9) % (8.1) % Indian Rupee vs. U.S. Dollar ​ (0.5) % (11.3) % (1.8) % Philippine Peso vs.
The following summarizes relative (weakening) strengthening of local currencies that are relevant to our business: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 2020 Canadian Dollar vs. U.S. Dollar (6.6) % 0.3 % 2.1 % Philippine Peso vs. U.S. Dollar (9.2) % (6.4) % 5.2 % Mexican Peso vs. U.S.
The following summarizes relative (weakening) strengthening of local currencies that are relevant to our business: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 2021 Canadian Dollar vs. U.S. Dollar 2.2 % (6.6) % 0.3 % Philippine Peso vs. U.S. Dollar 1.0 % (9.2) % (6.4) % Mexican Peso vs. U.S.
If the Prime Rate or LIBOR increased by 100 basis points, there would be $1.0 million of additional interest expense per $100.0 million of outstanding borrowing under the Credit Agreement. Foreign Currency Risk Our subsidiaries in the Philippines, Mexico, India, Bulgaria and Poland use the local currency as their functional currency for paying labor and other operating costs.
If the Prime Rate or SOFR increased by 100 basis points, there would be $1.0 million of additional interest expense per $100.0 million of outstanding borrowing under the Credit Agreement. 43 Table of Contents Foreign Currency Risk Our subsidiaries in the Philippines, Mexico, India, Bulgaria and Poland use the local currency as their functional currency for paying labor and other operating costs.
We recorded net (losses)/gains of $(2.9) million, $4.9 million, and $2.6 million for settled cash flow hedge contracts for the years ended December 31, 2022, 2021, and 2020, respectively. These gains(losses) were reflected in Revenue in the accompanying Consolidated Statements of Comprehensive Income (Loss).
We recorded net gains/(losses) of $4.0 million, $(2.9) million, and $4.9 million for settled cash flow hedge contracts for the years ended December 31, 2023, 2022, and 2021, respectively. These gains/(losses) were reflected in Revenue in the accompanying Consolidated Statements of Comprehensive Income (Loss).
For the years ended December 31, 2022, 2021 and 2020, revenue associated with this foreign exchange risk was 20%, 17% and 17% of our consolidated revenue, respectively.
For the years ended December 31, 2023, 2022 and 2021, revenue associated with this foreign exchange risk was 19%, 20% and 17% of our consolidated revenue, respectively.
Our results of operations and revenue could be adversely affected if the U.S. Dollar strengthens significantly against foreign currencies. 44 Table of Contents Fair Value of Debt and Equity Securities We did not have any investments in marketable debt or equity securities as of December 31, 2022 or 2021. ​ ITEM 8.
Our results of operations and revenue could be adversely affected if the U.S. Dollar strengthens significantly against foreign currencies. Fair Value of Debt and Equity Securities We did not have any investments in marketable debt or equity securities as of December 31, 2023 or 2022. ​
The fair value of our cash flow hedges increased by $200 thousand from December 31, 2021 to December 31, 2022. The increase in fair value from December 31, 2021 primarily reflects changes in the currency translation between the U.S. dollar and Mexican Peso and U.S. dollar and Philippines Peso.
The fair value of our cash flow hedges increased by $8.4 million from December 31, 2022 to December 31, 2023. The increase in fair value from December 31, 2022 primarily reflects changes in the currency translation between the U.S. dollar and Mexican Peso and U.S. dollar and Philippines Peso.
Not every exposure is or can be hedged and, where hedges are put in place based on expected foreign exchange exposure, they are based on forecasts for which actual results may differ from the original estimate.
Not every exposure is or can be hedged and, where hedges are put in place based on expected foreign exchange exposure, they are based on forecasts for which actual results may differ from the original estimate. Failure to successfully hedge or anticipate currency risks properly could adversely affect our consolidated operating results.
To mitigate against credit and non-performance risk, it is our policy to only enter into derivative contracts and other financial instruments with investment grade counterparty financial institutions and, correspondingly, our derivative valuations reflect the creditworthiness of our counterparties.
To mitigate against credit and non-performance risk, it is our policy to only enter into derivative contracts and other financial instruments with investment grade counterparty financial institutions and, correspondingly, our derivative valuations reflect the creditworthiness of our counterparties. As of the date of this report, we have not experienced, nor do we anticipate, any issue related to derivative counterparty defaults.
As of December 31, 2022, we had $960.0 million of outstanding borrowings under the Credit Agreement. Based upon average daily outstanding borrowings during the years ended December 31, 2022 and 2021, interest accrued at a rate of approximately 3.1% and 1.3% per annum, respectively.
Based upon average daily outstanding borrowings during the years ended December 31, 2023 and 2022, interest accrued at a rate of approximately 6.7% and 3.1% per annum, respectively.
The fair value of our cash flow hedges at December 31, 2022 was an asset(liability) (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maturing in the ​ ​ December 31, 2022 Next 12 Months Canadian Dollar ​ $ (300) ​ $ (300) ​ Philippine Peso ​ (4,458) ​ (4,048) ​ Mexican Peso ​ 4,873 ​ 3,219 ​ ​ ​ $ 115 ​ $ (1,129) ​ ​ Our cash flow hedges are valued using models based on market observable inputs, including both forward and spot foreign exchange rates, implied volatility, and counterparty credit risk.
The fair value of our cash flow hedges at December 31, 2023 was a net asset (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maturing in the ​ ​ December 31, 2023 Next 12 Months Canadian Dollar ​ $ 32 ​ $ 32 ​ Philippine Peso ​ 1,921 ​ 528 ​ Mexican Peso ​ 6,578 ​ 5,753 ​ ​ ​ $ 8,531 ​ $ 6,313 ​ ​ Our cash flow hedges are valued using models based on market observable inputs, including both forward and spot foreign exchange rates, implied volatility, and counterparty credit risk.
Dollar ​ ​ ​ ​ ​ ​ ​ ​ Notional ​ Notional ​ ​ ​ ​ ​ ​ As of December 31, 2021 ​ Amount ​ Amount ​ ​ ​ ​ ​ ​ Canadian Dollar 9,000 ​ $ 7,022 ​ ​ ​ ​ ​ ​ ​ Philippine Peso 8,472,000 ​ ​ 164,295 (1) ​ ​ ​ ​ ​ ​ ​ Mexican Peso 1,422,500 ​ 63,002 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 234,319 ​ ​ ​ ​ ​ ​ ​ ​ (1) Includes contracts to purchase Philippine pesos in exchange for New Zealand dollars and Australian dollars, which are translated into equivalent U.S. dollars on December 31, 2022 and December 31, 2021.
Dollar ​ ​ ​ ​ ​ ​ ​ ​ Notional ​ Notional ​ ​ ​ ​ ​ ​ As of December 31, 2022 ​ Amount ​ Amount ​ ​ ​ ​ ​ ​ Canadian Dollar 12,000 ​ $ 9,177 ​ ​ ​ ​ ​ ​ ​ Philippine Peso 8,617,000 ​ ​ 157,855 (1) ​ ​ ​ ​ ​ ​ ​ Mexican Peso 1,024,500 ​ 44,690 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 211,722 ​ ​ ​ ​ ​ ​ ​ ​ (1) Includes contracts to purchase Philippine pesos in exchange for New Zealand dollars and Australian dollars, which are translated into equivalent U.S. dollars on December 31, 2023 and December 31, 2022.
Dollar ​ ​ % Maturing ​ ​ Contracts ​ ​ Notional ​ Notional ​ ​ in the next ​ ​ Maturing As of December 31, 2022 ​ Amount ​ Amount ​ ​ 12 months ​ ​ Through Canadian Dollar 12,000 ​ $ 9,177 ​ ​ 100.0 % ​ December 2023 ​ Philippine Peso 8,617,000 ​ 157,855 (1) ​ ​ 55.7 % ​ September 2025 ​ Mexican Peso 1,024,500 ​ 44,690 ​ ​ 60.2 % ​ March 2025 ​ ​ ​ ​ ​ $ 211,722 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Local ​ ​ ​ ​ ​ ​ ​ ​ Currency ​ U.S.
Dollar ​ ​ % Maturing ​ ​ Contracts ​ ​ Notional ​ Notional ​ ​ in the next ​ ​ Maturing As of December 31, 2023 ​ Amount ​ Amount ​ ​ 12 months ​ ​ Through Canadian Dollar 2,250 ​ $ 1,670 ​ ​ 100.0 % ​ September 2024 ​ Philippine Peso 9,324,000 ​ 165,842 (1) ​ ​ 58.7 % ​ December 2026 ​ Mexican Peso 938,000 ​ 44,155 ​ ​ 60.8 % ​ December 2026 ​ ​ ​ ​ ​ $ 211,667 ​ ​ ​ ​ ​ ​ ​ ​ 44 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Local ​ ​ ​ ​ ​ ​ ​ ​ Currency ​ U.S.
All hedging instruments are forward contracts, except as noted. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Local ​ ​ ​ ​ ​ ​ Currency ​ U.S.
Our cash flow hedging instruments as of December 31, 2023 and 2022 are summarized as follows (in thousands). All hedging instruments are forward contracts, except as noted. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Local ​ ​ ​ ​ ​ ​ Currency ​ U.S.
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Failure to successfully hedge or anticipate currency risks properly could adversely affect our consolidated operating results. 43 Table of Contents Our cash flow hedging instruments as of December 31, 2022 and 2021 are summarized as follows (in thousands).
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FINANCIAL STATEMENTS AND SUPPLEMENTARY DAT A ​ The financial statements required by this item are located beginning on page F-1 of this report and incorporated herein by reference. ​ ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUR E ​ Not applicable. ​

Other TTEC 10-K year-over-year comparisons