TTEC Holdings, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS ​ TTEC HOLDINGS, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Amounts in thousands, except share amounts) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2023 2022 ASSETS ​ ​ ​ ​ ​ ​ ​ Current assets ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 151,583 ​ $ 153,435 ​ Accounts receivable, net of allowance of $ 2,502 and $ 3,524 ​ 379,755 ​ 417,637 ​ Prepaids and other current assets ​ 118,956 ​ 133,365 ​ Income and other tax receivables ​ 11,832 ​ 45,533 ​ Total current assets ​ 662,126 ​ 749,970 ​ ​ ​ ​ ​ ​ ​ ​ ​ Long-term assets ​ ​ ​ ​ ​ ​ ​ Property, plant and equipment, net ​ 192,554 ​ 183,360 ​ Operating lease assets ​ ​ 119,544 ​ ​ 92,431 ​ Goodwill ​ 806,400 ​ 807,845 ​ Deferred tax assets, net ​ 44,474 ​ 18,713 ​ Other intangible assets, net ​ 206,800 ​ 233,909 ​ Other long-term assets ​ ​ 96,697 ​ ​ 67,734 ​ Income and other tax receivables, long-term ​ 39,595 ​ — ​ Total long-term assets ​ 1,506,064 ​ 1,403,992 ​ Total assets ​ $ 2,168,190 ​ $ 2,153,962 ​ ​ ​ ​ ​ ​ ​ ​ ​ LIABILITIES, STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY ​ ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 105,519 ​ $ 93,937 ​ Accrued employee compensation and benefits ​ 128,731 ​ 145,096 ​ Other accrued expenses ​ 53,975 ​ 34,451 ​ Income tax payable ​ 9,055 ​ 7,166 ​ Deferred revenue ​ 82,529 ​ 87,846 ​ Current operating lease liabilities ​ ​ 37,297 ​ ​ 35,271 ​ Other current liabilities ​ 5,691 ​ 7,597 ​ Total current liabilities ​ 422,797 ​ 411,364 ​ ​ ​ ​ ​ ​ ​ ​ ​ Long-term liabilities ​ ​ ​ ​ ​ ​ ​ Line of credit ​ 964,000 ​ 960,000 ​ Deferred tax liabilities, net ​ 3,284 ​ 3,829 ​ Non-current income tax payable ​ ​ 2,880 ​ ​ 9,140 ​ Non-current operating lease liabilities ​ ​ 97,899 ​ ​ 69,575 ​ Other long-term liabilities ​ 69,845 ​ 66,304 ​ Total long-term liabilities ​ 1,137,908 ​ 1,108,848 ​ Total liabilities ​ 1,560,705 ​ 1,520,212 ​ ​ ​ ​ ​ ​ ​ ​ ​ Commitments and contingencies (Note 10) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Redeemable noncontrolling interest ​ 4,310 ​ 55,645 ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders’ equity ​ ​ ​ ​ ​ ​ ​ Preferred stock; $ 0.01 par value; 10,000,000 shares authorized; zero shares outstanding as of September 30, 2023 and December 31, 2022 ​ ​ — ​ ​ — ​ Common stock; $ 0.01 par value; 150,000,000 shares authorized; 47,418,697 and 47,224,074 shares outstanding as of September 30, 2023 and December 31, 2022, respectively ​ 474 ​ 472 ​ Additional paid-in capital ​ 398,384 ​ 367,673 ​ Treasury stock at cost; 34,633,556 and 34,828,179 shares as of September 30, 2023 and December 31, 2022, respectively ​ ( 589,948 ) ​ ( 593,164 ) ​ Accumulated other comprehensive income (loss) ​ ( 103,039 ) ​ ( 126,301 ) ​ Retained earnings ​ 880,328 ​ 911,233 ​ Noncontrolling interest ​ 16,976 ​ 18,192 ​ Total stockholders’ equity ​ 603,175 ​ 578,105 ​ Total liabilities, stockholders’ equity and mezzanine equity ​ $ 2,168,190 ​ $ 2,153,962 ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 1 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (Loss) (Amounts in thousands, except per share amounts) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended September 30, ​ Nine months ended September 30, ​ 2023 2022 2023 2022 Revenue ​ $ 602,956 ​ $ 592,453 ​ $ 1,836,636 ​ $ 1,785,429 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of services (exclusive of depreciation and amortization presented separately below) ​ 479,699 ​ 450,454 ​ 1,427,064 ​ 1,361,179 ​ Selling, general and administrative ​ 66,781 ​ 75,226 ​ 216,129 ​ 206,831 ​ Depreciation and amortization ​ 25,595 ​ 27,117 ​ 76,368 ​ 80,061 ​ Restructuring charges, net ​ ​ 1,369 ​ ​ 1,113 ​ ​ 4,895 ​ ​ 4,261 ​ Impairment losses ​ 4,124 ​ 2,939 ​ 11,083 ​ 13,299 ​ Total operating expenses ​ 577,568 ​ 556,849 ​ 1,735,539 ​ 1,665,631 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income from operations ​ 25,388 ​ 35,604 ​ 101,097 ​ 119,798 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ 1,342 ​ 519 ​ 3,632 ​ 990 ​ Interest expense ​ ( 20,327 ) ​ ( 10,565 ) ​ ( 56,709 ) ​ ( 20,525 ) ​ Other income (expense), net ​ ​ 687 ​ ​ 3,946 ​ ( 2,232 ) ​ 11,317 ​ Total other income (expense) ​ ( 18,298 ) ​ ( 6,100 ) ​ ( 55,309 ) ​ ( 8,218 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income taxes ​ 7,090 ​ 29,504 ​ 45,788 ​ 111,580 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision for income taxes ​ ( 5,294 ) ​ ( 4,489 ) ​ ( 19,318 ) ​ ( 19,797 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ 1,796 ​ 25,015 ​ 26,470 ​ 91,783 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income attributable to noncontrolling interest ​ ( 3,326 ) ​ ( 2,766 ) ​ ( 8,142 ) ​ ( 10,896 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) attributable to TTEC stockholders ​ $ ( 1,530 ) ​ $ 22,249 ​ $ 18,328 ​ $ 80,887 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive income (loss) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 1,796 ​ $ 25,015 ​ $ 26,470 ​ $ 91,783 ​ Foreign currency translation adjustments ​ ( 10,312 ) ​ ( 23,123 ) ​ 18,453 ​ ( 46,197 ) ​ Derivative valuation, gross ​ ( 3,752 ) ​ ( 4,430 ) ​ 5,821 ​ ( 12,096 ) ​ Derivative valuation, tax effect ​ 976 ​ 1,150 ​ ( 1,521 ) ​ 3,138 ​ Other, net of tax ​ 119 ​ 70 ​ 299 ​ 424 ​ Total other comprehensive income (loss) ​ ( 12,969 ) ​ ( 26,333 ) ​ 23,052 ​ ( 54,731 ) ​ Total comprehensive income (loss) ​ ( 11,173 ) ​ ( 1,318 ) ​ 49,522 ​ 37,052 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less: Comprehensive income attributable to noncontrolling interest ​ ( 2,620 ) ​ ( 2,929 ) ​ ( 7,005 ) ​ ( 8,678 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Comprehensive income (loss) attributable to TTEC stockholders ​ $ ( 13,793 ) ​ $ ( 4,247 ) ​ $ 42,517 ​ $ 28,374 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average shares outstanding ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ 47,415 ​ 47,207 ​ 47,305 ​ 47,087 ​ Diluted ​ ​ 47,488 ​ 47,314 ​ 47,417 ​ 47,354 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) per share attributable to TTEC stockholders ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ ( 0.03 ) ​ $ 0.47 ​ $ 0.39 ​ $ 1.72 ​ Diluted ​ $ ( 0.03 ) ​ $ 0.47 ​ $ 0.39 ​ $ 1.71 ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 2 Table of Contents ​ TTEC HOLDINGS, INC. AND SUBSIDIARIES Consolidated Statements of Stockholders’ Equity and Mezzanine Equity (Amounts in thousands) (Unaudited) Three months ended September 30, 2022 and 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders’ Equity of the Company ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Treasury ​ Additional ​ Comprehensive ​ Retained ​ Noncontrolling ​ ​ ​ ​ Mezzanine ​ ​ Shares ​ Amount ​ Stock ​ Paid-in Capital ​ Income (Loss) ​ Earnings ​ interest ​ Total Equity ​ Equity Balance as of June 30, 2022 47,093 ​ $ 471 ​ $ ( 595,331 ) ​ $ 364,251 ​ $ ( 125,450 ) ​ $ 891,185 ​ $ 15,913 ​ $ 551,039 ​ $ 55,752 ​ Net income — ​ — ​ — ​ — ​ — ​ ​ 22,249 ​ 2,808 ​ 25,057 ​ ​ ( 42 ) ​ Dividends to shareholders ($ 0.52 per common share) ​ — ​ — ​ — ​ — ​ — ​ ​ ( 24,554 ) ​ ​ — ​ ​ ( 24,554 ) ​ ​ — ​ Dividends distributed to noncontrolling interest — ​ — ​ — ​ — ​ — ​ — ​ ( 2,329 ) ​ ( 2,329 ) ​ ​ ( 14 ) ​ Foreign currency translation adjustments — ​ — ​ — ​ — ​ ( 23,244 ) ​ — ​ 121 ​ ( 23,123 ) ​ ​ — ​ Derivatives valuation, net of tax — ​ — ​ — ​ — ​ ( 3,280 ) ​ — ​ — ​ ( 3,280 ) ​ ​ — ​ Vesting of restricted stock units 121 ​ 1 ​ 1,994 ​ ( 5,910 ) ​ — ​ — ​ — ​ ( 3,915 ) ​ ​ — ​ Equity-based compensation expense — ​ — ​ — ​ 5,358 ​ — ​ — ​ — ​ 5,358 ​ ​ — ​ Other, net of tax — ​ — ​ — ​ — ​ 70 ​ — ​ — ​ 70 ​ ​ — ​ Balance as of September 30, 2022 47,214 ​ $ 472 ​ $ ( 593,337 ) ​ $ 363,699 ​ $ ( 151,904 ) ​ $ 888,880 ​ $ 16,513 ​ $ 524,323 ​ $ 55,696 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders’ Equity of the Company ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Treasury ​ Additional ​ Comprehensive ​ Retained ​ Noncontrolling ​ ​ ​ ​ Mezzanine ​ ​ Shares ​ Amount ​ Stock ​ Paid-in Capital ​ Income (Loss) ​ Earnings ​ interest ​ Total Equity ​ Equity Balance as of June 30, 2023 47,276 ​ $ 473 ​ $ ( 592,306 ) ​ $ 396,444 ​ $ ( 90,463 ) ​ $ 906,518 ​ $ 16,876 ​ $ 637,542 ​ $ 3,997 ​ Net income — ​ — ​ — ​ — ​ — ​ ( 1,530 ) ​ 3,013 ​ 1,483 ​ ​ 313 ​ Dividends to shareholders ($ 0.52 per common share) ​ — ​ — ​ — ​ — ​ — ​ ​ ( 24,660 ) ​ ​ — ​ ​ ( 24,660 ) ​ ​ — ​ Dividends distributed to noncontrolling interest — ​ — ​ — ​ — ​ — ​ — ​ ( 2,520 ) ​ ( 2,520 ) ​ ​ — ​ Foreign currency translation adjustments — ​ — ​ — ​ — ​ ( 9,919 ) ​ — ​ ( 393 ) ​ ( 10,312 ) ​ ​ — ​ Derivatives valuation, net of tax — ​ — ​ — ​ — ​ ( 2,776 ) ​ — ​ — ​ ( 2,776 ) ​ ​ — ​ Vesting of restricted stock units 143 ​ 1 ​ 2,358 ​ ( 4,668 ) ​ — ​ — ​ — ​ ( 2,309 ) ​ ​ — ​ Equity-based compensation expense — ​ — ​ — ​ 6,608 ​ — ​ — ​ — ​ 6,608 ​ ​ — ​ Other, net of tax — ​ — ​ — ​ — ​ 119 ​ — ​ — ​ 119 ​ ​ — ​ Balance as of September 30, 2023 47,419 ​ $ 474 ​ $ ( 589,948 ) ​ $ 398,384 ​ $ ( 103,039 ) ​ $ 880,328 ​ $ 16,976 ​ $ 603,175 ​ $ 4,310 ​ ​ Nine months ended September 30, 2022 and 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders’ Equity of the Company ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Treasury ​ Additional ​ Comprehensive ​ Retained ​ Noncontrolling ​ ​ ​ ​ Mezzanine ​ ​ Shares ​ Amount ​ Stock ​ Paid-in Capital ​ Income (Loss) ​ Earnings ​ interest ​ Total Equity ​ Equity Balance as of December 31, 2021 46,990 ​ $ 470 ​ $ ( 597,031 ) ​ $ 361,135 ​ $ ( 98,426 ) ​ $ 856,065 ​ $ 15,812 ​ $ 538,025 ​ $ 56,316 ​ Net income — ​ — ​ — ​ — ​ — ​ ​ 80,887 ​ 9,931 ​ 90,818 ​ ​ 964 ​ Dividends to shareholders ($ 1.02 per common share) ​ — ​ — ​ — ​ — ​ — ​ ​ ( 48,072 ) ​ ​ — ​ ​ ( 48,072 ) ​ ​ — ​ Dividends distributed to noncontrolling interest — ​ — ​ — ​ — ​ — ​ — ​ ( 7,977 ) ​ ( 7,977 ) ​ ​ ( 1,584 ) ​ Foreign currency translation adjustments — ​ — ​ — ​ — ​ ( 44,944 ) ​ — ​ ( 1,253 ) ​ ( 46,197 ) ​ ​ — ​ Derivatives valuation, net of tax — ​ — ​ — ​ — ​ ( 8,958 ) ​ — ​ — ​ ( 8,958 ) ​ ​ — ​ Vesting of restricted stock units 224 ​ 2 ​ 3,694 ​ ( 10,676 ) ​ — ​ — ​ — ​ ( 6,980 ) ​ ​ — ​ Equity-based compensation expense — ​ — ​ — ​ 13,240 ​ — ​ — ​ — ​ 13,240 ​ ​ — ​ Other, net of tax — ​ — ​ — ​ — ​ 424 ​ — ​ — ​ 424 ​ ​ — ​ Balance as of September 30, 2022 47,214 ​ $ 472 ​ $ ( 593,337 ) ​ $ 363,699 ​ $ ( 151,904 ) ​ $ 888,880 ​ $ 16,513 ​ $ 524,323 ​ $ 55,696 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders’ Equity of the Company ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Treasury ​ Additional ​ Comprehensive ​ Retained ​ Noncontrolling ​ ​ ​ ​ Mezzanine ​ ​ Shares ​ Amount ​ Stock ​ Paid-in Capital ​ Income (Loss) ​ Earnings ​ interest ​ Total Equity ​ Equity Balance as of December 31, 2022 47,224 ​ $ 472 ​ $ ( 593,164 ) ​ $ 367,673 ​ $ ( 126,301 ) ​ $ 911,233 ​ $ 18,192 ​ $ 578,105 ​ $ 55,645 ​ Noncontrolling interest adjustment due to buyout ​ — ​ ​ — ​ ​ — ​ ​ 20,457 ​ ​ — ​ ​ — ​ ​ — ​ ​ 20,457 ​ ​ ( 20,457 ) ​ Net income — ​ — ​ — ​ — ​ — ​ 18,328 ​ 7,215 ​ 25,543 ​ ​ 927 ​ Dividends to shareholders ($ 1.04 per common share) ​ — ​ — ​ — ​ — ​ — ​ ​ ( 49,233 ) ​ ​ — ​ ​ ( 49,233 ) ​ ​ — ​ Buyout of noncontrolling interest ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 31,619 ) ​ Dividends distributed to noncontrolling interest — ​ — ​ — ​ — ​ — ​ — ​ ( 8,221 ) ​ ( 8,221 ) ​ ​ ( 186 ) ​ Foreign currency translation adjustments — ​ — ​ — ​ — ​ 18,663 ​ — ​ ( 210 ) ​ 18,453 ​ ​ — ​ Derivatives valuation, net of tax — ​ — ​ — ​ — ​ 4,300 ​ — ​ — ​ 4,300 ​ ​ — ​ Vesting of restricted stock units 195 ​ 2 ​ 3,216 ​ ( 6,156 ) ​ — ​ — ​ — ​ ( 2,938 ) ​ ​ — ​ Equity-based compensation expense — ​ — ​ — ​ 16,410 ​ — ​ — ​ — ​ 16,410 ​ ​ — ​ Other, net of tax — ​ — ​ — ​ — ​ 299 ​ — ​ — ​ 299 ​ ​ — ​ Balance as of September 30, 2023 47,419 ​ $ 474 ​ $ ( 589,948 ) ​ $ 398,384 ​ $ ( 103,039 ) ​ $ 880,328 ​ $ 16,976 ​ $ 603,175 ​ $ 4,310 ​ ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 3 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Amounts in thousands) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ ​ 2023 2022 Cash flows from operating activities ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 26,470 ​ $ 91,783 ​ Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 76,368 ​ 80,061 ​ Amortization of contract acquisition costs ​ 1,596 ​ 1,345 ​ Amortization of debt issuance costs ​ 801 ​ 735 ​ Imputed interest expense and fair value adjustments to contingent consideration ​ 6,864 ​ 2,070 ​ Provision for credit losses ​ 1,677 ​ 1,561 ​ Loss on disposal of assets ​ ​ 1,176 ​ ​ 1,587 ​ Loss on dissolution of subsidiary ​ ​ 301 ​ ​ — ​ Impairment losses ​ 11,083 ​ 13,299 ​ Deferred income taxes ​ ( 12,288 ) ​ ( 8,216 ) ​ Excess tax benefit from equity-based awards ​ 1,807 ​ ( 1,256 ) ​ Equity-based compensation expense ​ 16,410 ​ 13,240 ​ Loss on foreign currency derivatives ​ 552 ​ 269 ​ Changes in assets and liabilities, net of acquisitions: ​ ​ ​ ​ ​ ​ ​ Accounts receivable ​ 34,995 ​ ( 37,987 ) ​ Prepaids and other assets ​ ( 1,620 ) ​ 38,594 ​ Accounts payable and accrued expenses ​ ( 8,453 ) ​ 1,483 ​ Deferred revenue and other liabilities ​ ( 44,508 ) ​ ( 79,755 ) ​ Net cash provided by operating activities ​ 113,231 ​ 118,813 ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities ​ ​ ​ ​ ​ ​ ​ Proceeds from sale of long-lived assets ​ 246 ​ 189 ​ Purchases of property, plant and equipment, net of acquisitions ​ ( 54,722 ) ​ ( 64,564 ) ​ Acquisitions, net of cash acquired of zero and zero , respectively ​ — ​ ( 142,420 ) ​ Net cash used in investing activities ​ ( 54,476 ) ​ ( 206,795 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities ​ ​ ​ ​ ​ ​ ​ Proceeds from/(repayments of) line of credit, net ​ 4,000 ​ 164,000 ​ Payments on other debt ​ ( 1,929 ) ​ ( 2,568 ) ​ Payments of contingent consideration and hold back payments to acquisitions ​ ( 37,676 ) ​ ( 9,600 ) ​ Dividends paid to shareholders ​ ​ ( 24,572 ) ​ ​ ( 23,518 ) ​ Payments to noncontrolling interest ​ ( 8,407 ) ​ ( 9,562 ) ​ Tax payments related to issuance of restricted stock units ​ ​ ( 2,938 ) ​ ​ ( 6,980 ) ​ Net cash (used in)/provided by financing activities ​ ( 71,522 ) ​ 111,772 ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect of exchange rate changes on cash, cash equivalents and restricted cash ​ 3,889 ​ ( 22,226 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ (Decrease)/increase in cash, cash equivalents and restricted cash ​ ( 8,878 ) ​ 1,564 ​ Cash, cash equivalents and restricted cash, beginning of period ​ 167,064 ​ 180,682 ​ Cash, cash equivalents and restricted cash, end of period ​ $ 158,186 ​ $ 182,246 ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures ​ ​ ​ ​ ​ ​ ​ Cash paid for interest ​ $ 55,810 ​ $ 19,699 ​ Cash paid for income taxes ​ $ 35,542 ​ $ 32,705 ​ Non-cash investing and financing activities ​ ​ ​ ​ ​ ​ ​ Acquisition of long-lived assets through finance leases ​ $ 1,560 ​ $ 461 ​ Acquisition of equipment through increase in accounts payable, net ​ $ 3,534 ​ $ 6,625 ​ Dividend declared but not paid ​ $ 24,660 ​ $ 24,554 ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 4 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) (1) OVERVIEW AND BASIS OF PRESENTATION Summary of Business TTEC Holdings, Inc. (“TTEC”, “the Company”; 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. 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. The Company helps 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. TTEC’s 64,400 employees serve clients in the automotive, communication, financial services, national/federal and state and local governments, healthcare, logistics, media and entertainment, e-tail/retail, technology, and travel and transportation industries via operations in the United States, Australia, Belgium, Brazil, Bulgaria, Canada, Colombia, Costa Rica, Germany, Greece, India, Ireland, Mexico, the Netherlands, New Zealand, the Philippines, Poland, South Africa, Thailand, and the United Kingdom. The Company operates and reports its financial results of operation 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 the Company’s proprietary CX applications and technology partnerships. 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. 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. 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. 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. 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. Basis of Presentation The Consolidated Financial Statements are comprised of the accounts of TTEC, its wholly owned subsidiaries, its 55 % equity owned subsidiary Percepta, LLC, its 70 % equity owned subsidiary First Call Resolution, LLC through March 31, 2023 and then 100 % owned subsequently, and its 70 % equity owned subsidiary Serendebyte, Inc. (see Note 2). All intercompany balances and transactions have been eliminated in consolidation. 5 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) The unaudited Consolidated Financial Statements do not include all of the disclosures required by accounting principles generally accepted in the U.S. (“GAAP”), pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited Consolidated Financial Statements reflect all adjustments which, in the opinion of management, are necessary to state fairly the consolidated financial position of the Company and the consolidated results of operations and comprehensive income (loss) and the consolidated cash flows of the Company. All such adjustments are of a normal, recurring nature. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. These unaudited Consolidated Financial Statements should be read in conjunction with the Company’s audited Consolidated Financial Statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Use of Estimates The preparation of the Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates including those related to derivatives and hedging activities, income taxes including the valuation allowance for deferred tax assets, litigation reserves, restructuring reserves, allowance for credit losses, contingent consideration, redeemable noncontrolling interest, and valuation of goodwill, long-lived and intangible assets. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ materially from these estimates under different assumptions or conditions. Out -of-period Adjustment The Consolidated Financial Statements for the three months ended June 30, 2023 included an adjustment of $ 13.8 million to other comprehensive income and deferred tax assets, to correct for an error identified by management during the preparation of the financial statements. This adjustment was to reflect the deferred tax impact of currency translation adjustments, of which $ 0.5 million related to the three months ended March 31, 2023, and the remaining $ 13.3 million related to prior annual fiscal periods. Management has determined that this error was not material to the historical financial statements in any individual period or in the aggregate and did not result in the previously issued financial statements being materially misstated. The impact to the three and six month periods ended June 30, 2023 is not material. As such, management recorded the correction as an out-of-period adjustment in the three months ended June 30, 2023. Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents consist of cash, primarily held in interest-bearing investments, and liquid short-term investments, which have original maturities of three months or less. Restricted cash includes cash whereby the Company’s ability to use the funds at any time is contractually limited or is generally designated for specific purposes arising out of certain contractual or other obligations. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Consolidated Balance Sheets that sum to the amounts reported in the Consolidated Statement of Cash Flows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2023 December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ ​ $ 151,583 $ 153,435 ​ Restricted cash included in "Prepaid and other current assets" ​ ​ 6,603 ​ 13,629 ​ Total ​ ​ $ 158,186 $ 167,064 ​ ​ 6 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Concentration of Credit Risk The Company is exposed to credit risk in the normal course of business, primarily related to accounts receivable and derivative instruments. Historically, the losses related to credit risk have been immaterial. The Company regularly monitors its credit risk to mitigate the possibility of current and future exposures resulting in a loss. The Company evaluates the creditworthiness of its clients prior to entering into an agreement to provide services and as necessary through the life of the client relationship. The Company does not believe it is exposed to more than a nominal amount of credit risk in its derivative hedging activities, as the Company diversifies its activities across eight investment-grade financial institutions. Recently Adopted Accounting Pronouncements In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform” (Topic 848), which provides optional expedients and exceptions for contracts, hedging relationships, and other transactions affected by reference rate reform due to the anticipated cessation of the London Interbank Offered Rate (”LIBOR”). The ASU is effective from March 12, 2020, may be applied prospectively and could impact the accounting for LIBOR provisions in the Company’s credit facility agreement. In addition, in January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform – Scope,” which clarified the scope of ASC 848 relating to contract modifications. The Company adopted the standard effective April 1, 2023 and the adoption of this guidance did not have a material impact on the Company’s financial position, results of operations or cash flows. ​ ​ (2) ACQUISITIONS AND DIVESTITURES FCR Pursuant to the Membership Interest Purchase Agreement of October 26, 2019 between Ortana Holdings, Inc. and TTEC Services Corporation for the acquisition by TTEC of 70 % interest in First Call Resolution, LLC (“FCR” and “FCR MIPA”, respectively), Ortana Holdings exercised its put rights in January 2023, which required TTEC to acquire Ortana Holdings’ remaining 30 % interest in FCR. The purchase price for the remaining 30% interest was determined based on the express provisions of the FCR MIPA and was based on FCR’s performance during 2022. The buyout agreement was signed on April 4, 2023 and reflected a buyout purchase of $22.4 million. In connection with the triggering of the option, as of March 31, 2023, the $ 22.4 million purchase price was reclassified from Redeemable noncontrolling interest to Accrued expenses and the remaining balance of $ 20.5 million was reclassified to Additional paid in capital. In February 2023, a $ 9.2 million payment related to excess cash distribution was completed and in April 2023 the final payment of $ 22.4 million was completed. Certain Assets of Faneuil On April 1, 2022 , the Company completed an asset acquisition through its subsidiary TTEC Government Solutions LLC, of certain public sector citizen experience contracts in the transportation infrastructure and healthcare exchange industries from Faneuil, Inc., a subsidiary of ALJ Regional Holdings, Inc. (“the Faneuil Transaction”). The acquired business is operated as part of the TTEC Engage segment and was fully consolidated into the financial statements of TTEC. The Faneuil Transaction was recorded as a business combination under ASC 805, Business Combinations, with identifiable assets acquired and liabilities assumed recorded at their estimated fair values as of the acquisition date. Total cash paid at the time of acquisition was $ 142.4 million. In addition, Faneuil granted to TTEC Government Solutions LLC a three-year call right and right of first offer to purchase certain other assets of Faneuil in its utilities and commercial healthcare verticals as well as certain proprietary technology. The Faneuil Transaction includes two contingent payments which were anticipated to be paid in early 2024 which are based on the revenue and EBITDA performance of one contract and one potential contract. 7 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) The fair value of the two contingent payments was estimated using a Monte Carlo model. The model was based on current expected EBITDA performance for the two specific client programs, a discount rate of 7.6 % related to revenue and a discount rate of 19.3 % related to EBITDA, a volatility rate of 20 %, and an adjusted risk-free rate of 1.7 %. The potential payments ranged from a minimum of zero to an unlimited maximum. Based on the model, a combined $ 8.8 million expected future payment was calculated and recorded as of the acquisition date. During the third quarter of 2022, a $ 2.4 million net gain was recorded related to fair value adjustments for the estimated contingent payments based on the timing of cash flows and market interest rates which resulted in an updated discount factor for one contract, and a complete reduction for the second contract as it was not awarded to the Company. During the fourth quarter of 2022, a $ 0.5 million net gain was recorded related to a fair value adjustment for the estimated contingent payment based on changes in estimated EBITDA and the timing of cash flows. During the first quarter of 2023, a $ 0.6 million net expense was recorded related to a fair value adjustment for the estimated contingent payment based on the timing of cash flows and market interest rate changes. During the second quarter of 2023, an amendment to the agreement was signed which modified the contingent payment for a minimum payment of $7.4 million and a maximum payment of $10.4 million. Based on this modification, an updated estimated EBITDA and the revised timing of cash flows, a $1.7 million expense was recorded as of June 30, 2023. An initial payment of $7.4 million was completed in May 2023. During the third quarter of 2023, a $0.1 million net expense was recorded related to a fair value adjustment for the estimated contingent payment based on the timing of cash flows and market interest rate changes. These benefits (expenses) were included in Other income (expense) in the Consolidated Statements of Comprehensive Income (Loss). As of September 30, 2023, the contingent payment is accrued at $ 0.9 million and is included in Other long-term liabilities in the accompanying Consolidated Balance Sheets. The Faneuil Transaction included a call option providing the right but not the obligation to purchase additional assets in the utilities and commercial healthcare verticals based on trailing twelve-month revenue plus an additional earn-out payment based on newly added contracts. A second call option provided the right to purchase a software intangible asset and related support functions based on trailing twelve-month revenue. These call options were valued based on information including the call right and the exclusivity period and a $ 270 thousand asset was recorded as of the acquisition date which is included in Other long-term assets in the accompanying Consolidated Balance Sheets. During the fourth quarter of 2022 and the first quarter of 2023, reductions in fair value of $ 52 thousand and $ 140 thousand, respectively, were recorded due to changes in estimated revenue, which were included in Other income (expense) in the Consolidated Statements of Comprehensive Income (Loss). During the second quarter of 2023, an amendment to the agreement was signed which cancelled the option to purchase the additional assets in certain verticals, and thus the remaining $ 78 thousand accrual was removed and included in Other income. As of September 30, 2023, the fair value is zero. The Faneuil Transaction included an indemnity escrow which was disbursed as a holdback payment on the acquisition date. The indemnity payments relate to real estate and technology funds that will be spent post-close related to various IT upgrades and real estate expenses, and indemnity related to potential future employee wage increases. The indemnity payments were valued based on a weighted average of several current scenarios and a receivable of $ 10.4 million was recorded as of the acquisition date. During the third and fourth quarters of 2022 and the first quarter of 2023, reductions in the fair value were calculated and a $ 4.4 million expense, a $ 0.2 million expense and a $ 2.5 million expense, respectively, were recorded related to fair value adjustments for the receivable based on current information reflecting a better outcome with the contract negotiations and lower anticipated IT and facilities spending. During the second quarter of 2023, the payout value related to the IT and Facilities reimbursement was finalized at $ 1.3 million, and an expense of $ 1.9 million was recorded. The payment was received by TTEC in May 2023 and as of June 30, 2023, the receivables were reduced to zero on the Consolidated Balance Sheet. The reductions in fair value related expenses were included in Other income (expense) in the Consolidated Statements of Comprehensive Income (Loss). 8 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) A multi-period excess earnings method under the income approach was used to estimate the fair value of the customer relationships intangible assets. The significant assumptions utilized in calculating the fair value of the customer relationships intangible assets were the customer attrition rate, revenue growth rates, forecasted EBITDA, contributory asset charge, and the discount rate. The following summarizes the fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date (in thousands): ​ ​ ​ ​ ​ ​ ​ Acquisition Date ​ ​ Fair Value Cash ​ $ — ​ Accounts receivable, net ​ 704 ​ Prepaid and other assets ​ 8,420 ​ Net fixed assets ​ ​ 5,622 ​ Right of use lease assets ​ ​ 17,778 ​ Other assets ​ ​ 2,572 ​ Customer relationships ​ ​ 61,310 ​ Goodwill ​ ​ 75,902 ​ ​ ​ $ 172,308 ​ ​ ​ ​ ​ ​ Accrued employee compensation ​ $ 202 ​ Accrued expenses ​ 2,763 ​ Right of use lease liability – current ​ 3,129 ​ Right of use lease liability – non-current ​ ​ 14,092 ​ Deferred income ​ ​ 811 ​ Other liabilities ​ 8,891 ​ ​ ​ $ 29,888 ​ ​ ​ ​ ​ ​ Total purchase price ​ $ 142,420 ​ ​ In the first quarter of 2023, the Company finalized the valuation of Faneuil for the acquisition date assets acquired and liabilities assumed and determined that no material adjustments to any of the balances were required. The Faneuil customer relationships are being amortized over a useful life of 10 years . The goodwill recognized from the Faneuil acquisition is attributable to, but not limited to, the acquired workforce and expected synergies with the TTEC Engage segment. The tax basis of the acquired intangibles and goodwill will be materially deductible for income tax purposes. The acquired goodwill and intangibles and operating results of Faneuil are reported within the TTEC Engage segment from the date of acquisition. Financial Impact of Acquired Businesses The acquired business purchased in 2022 noted above contributed revenues of $ 45.3 million and net income of $ 0.4 million to the Company for the three months ended September 30, 2023, and revenues of $ 138.2 million and net income of $ 4.3 million to the Company for the nine months ended September 30, 2023. The unaudited proforma financial results for the three and nine months ended September 30, 2022 combines the consolidated results of the Company and Faneuil assuming the acquisition had been completed on January 1, 2021. The reported revenue and net income of $ 592.5 million and $ 22.2 million would have been $ 592.5 million and $ 22.2 million for the three months ended September 30, 2022, respectively, on an unaudited proforma basis. The reported revenue and net income of $ 1,785.4 million and $ 80.9 million would have been $ 1,827.4 million and $ 84.3 million for the nine months ended September 30, 2022, respectively, on an unaudited proforma basis. 9 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) The Company did not have any material, nonrecurring proforma adjustments directly attributable to the business combination included in the reported proforma revenue earnings. These proforma amounts have been calculated after applying the Company’s accounting policies and adjusting the acquired business results to reflect the additional depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant and equipment, and intangible assets had been applied from the date indicated, with the consequential tax effects. The unaudited proforma consolidated results are not to be considered indicative of the results if the acquisition occurred in the periods mentioned above, or indicative of future operations or results. Additionally, the proforma consolidated results do not reflect any anticipated synergies expected as a result of the acquisition. ​ ​ (3) SEGMENT INFORMATION The Company reports the following two segments: TTEC Digital is one of the largest pure-play CX technology service providers with expertise in CX strategy, digitization, analytics, process optimization, systems integration, cloud-based technology solutions, and transformation enabled by the Company’s proprietary CX applications and technology partnerships. TTEC Digital designs, builds, and operates robust digital experiences for clients and their customers through the contextual integration and orchestration of CRM, data, analytics, CXaaS technology, and intelligent automation to ensure high-quality, scalable CX outcomes. ● Technology Services: The technology services design, build, and operate highly scalable, digital omnichannel technology solutions in the cloud, on premise, or hybrid environment, including journey orchestration, automation and AI, knowledge management, and workforce productivity, among others. ● Professional Services: The management consulting practices deliver customer experience strategy, analytics, process optimization, and system integration, among others. TTEC Engage provides the digitally enabled CX managed services to support our clients’ end-to-end customer interaction delivery at scale. 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 AI operations, and fraud management services. ● Customer Acquisition, Growth, and Retention Services: The customer growth and acquisition services optimize the buying journeys for acquiring new customers by leveraging technology and analytics to deliver personal experiences that we believe increase the quantity and quality of leads and customers. ● Customer Care, Technology Support, and Order Fulfillment Services: The customer care, technology support, and order fulfillment services provide turnkey contact center solutions, including digital omnichannel technologies, associate recruiting and training, facilities, and operational expertise to create exceptional customer experiences across all touchpoints. ● Digitally Enabled Back Office and Specialty Services: The digital AI operations and fraud detection and prevention services provide clients with data tagging and annotation capabilities to train and enable AI platforms, community content moderation, and compliance to meet client content standards, and proactive fraud solutions to assist our clients in the detection and prevention of fraud. The Company allocates to each segment its portion of corporate operating expenses. All intercompany transactions between the reported segments for the periods presented have been eliminated. 10 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Effective January 1, 2023, the Company completed a small reorganization of the internal reporting structure and one component from the TTEC Digital segment was reclassified and will now be included in the TTEC Engage segment. All balances have been recast for 2022 to conform to the updated segment presentation. The following tables present certain financial data by segment (in thousands): Three Months Ended September 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation Income ​ ​ Gross ​ Intersegment ​ Net ​ & ​ from ​ ​ Revenue ​ Sales ​ Revenue ​ Amortization ​ Operations TTEC Digital ​ $ 133,252 ​ $ — ​ $ 133,252 ​ $ 6,801 ​ $ 11,925 ​ TTEC Engage ​ 469,704 ​ — ​ 469,704 ​ 18,794 ​ 13,463 ​ Total ​ $ 602,956 ​ $ — ​ $ 602,956 ​ $ 25,595 ​ $ 25,388 ​ ​ Three Months Ended September 30, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation Income ​ ​ Gross ​ Intersegment ​ Net ​ & ​ from ​ ​ Revenue ​ Sales ​ Revenue ​ Amortization ​ Operations TTEC Digital ​ $ 116,208 ​ $ ( 35 ) ​ $ 116,173 ​ $ 7,340 ​ $ 8,015 ​ TTEC Engage ​ 476,280 ​ — ​ 476,280 ​ 19,777 ​ 27,589 ​ Total ​ $ 592,488 ​ $ ( 35 ) ​ $ 592,453 ​ $ 27,117 ​ $ 35,604 ​ ​ Nine months Ended September 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation Income ​ ​ Gross ​ Intersegment ​ Net ​ & ​ from ​ ​ Revenue ​ Sales ​ Revenue ​ Amortization ​ Operations TTEC Digital ​ $ 367,764 ​ $ — ​ $ 367,764 ​ $ 20,384 ​ $ 19,864 ​ TTEC Engage ​ 1,468,872 ​ — ​ 1,468,872 ​ 55,984 ​ 81,233 ​ Total ​ $ 1,836,636 ​ $ — ​ $ 1,836,636 ​ $ 76,368 ​ $ 101,097 ​ ​ ​ Nine Months Ended September 30, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation Income ​ ​ Gross ​ Intersegment ​ Net ​ & ​ from ​ ​ Revenue ​ Sales ​ Revenue ​ Amortization ​ Operations TTEC Digital ​ $ 342,055 ​ $ ( 35 ) ​ $ 342,020 ​ $ 24,023 ​ $ 24,971 ​ TTEC Engage ​ 1,443,409 ​ ​ — ​ 1,443,409 ​ 56,038 ​ 94,827 ​ Total ​ $ 1,785,464 ​ $ ( 35 ) ​ $ 1,785,429 ​ $ 80,061 ​ $ 119,798 ​ ​ ​ 11 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ ​ September 30, ​ September 30, ​ ​ ​ 2023 2022 2023 2022 Capital Expenditures ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ TTEC Digital ​ $ 1,461 $ 3,408 $ 6,087 $ 6,880 ​ TTEC Engage ​ 20,307 ​ 25,366 ​ 48,635 ​ 57,684 ​ Total ​ $ 21,768 $ 28,774 $ 54,722 $ 64,564 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2023 December 31, 2022 ​ Total Assets ​ ​ ​ ​ ​ ​ ​ ​ TTEC Digital ​ ​ $ 809,741 $ 807,247 ​ TTEC Engage ​ ​ 1,358,449 ​ 1,346,715 ​ Total ​ ​ $ 2,168,190 $ 2,153,962 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The following table presents revenue based upon the geographic location where the services are provided (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ ​ 2023 2022 2023 2022 ​ Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ United States / Canada ​ $ 415,463 ​ $ 416,815 $ 1,274,353 ​ $ 1,262,559 ​ Philippines / Asia Pacific / India ​ 117,204 ​ 110,381 ​ 354,981 ​ 336,658 ​ Europe / Middle East / Africa ​ 37,095 ​ 34,507 ​ 107,574 ​ 100,307 ​ Latin America ​ 33,194 ​ 30,750 ​ 99,728 ​ 85,905 ​ Total ​ $ 602,956 $ 592,453 ​ $ 1,836,636 ​ $ 1,785,429 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (4) SIGNIFICANT CLIENTS AND OTHER CONCENTRATIONS The Company had one client that contributed in excess of 10% of total revenue for the nine months ended September 30, 2023; this client operates in the automotive industry and is included in the TTEC Engage segment. This client contributed 10.1 % and 10.5 % of total revenue for the nine months ended September 30, 2023 and 2022, respectively. In addition, the Company has other clients with aggregate revenue exceeding $ 100 million annually and the loss of one or more of these clients could have a material adverse effect on the Company’s business, operating results, or financial condition. To mitigate this risk, the Company’s business arrangements with these larger clients are structured as multiple contracts with different statements of work that are specific to a different line of business or service; each of these contracts have different durations and renewal dates and a revenue opportunity below the $100 million aggregate. To limit the Company’s credit risk with its clients, management performs periodic credit evaluations, maintains allowances for credit losses and may require pre-payment for services from certain clients whose financial stability or payment practices raise concern. Based on currently available information, management does not believe significant credit risk existed as of September 30, 2023. Activity in the Company’s Allowance for credit losses consists of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2023 2022 2023 2022 Balance, beginning of period ​ $ 2,347 ​ $ 5,406 ​ $ 3,524 ​ $ 5,409 ​ Provision for credit losses ​ ( 27 ) ​ 1,363 ​ 1,677 ​ ​ 1,561 ​ Uncollectible receivables written-off ​ 183 ​ ( 890 ) ​ ( 2,702 ) ​ ​ ( 1,110 ) ​ Effect of foreign currency ​ ​ ( 1 ) ​ ​ ( 24 ) ​ ​ 3 ​ ​ ( 5 ) ​ Balance, end of period ​ $ 2,502 ​ $ 5,855 ​ $ 2,502 ​ $ 5,855 ​ ​ 12 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Accounts Receivable Factoring Agreement The Company is party to an Uncommitted Receivables Purchase Agreement (“Agreement”) with BMO Bank, N.A. (“Bank”), whereby from time-to-time the Company may elect to sell, on a revolving basis, U.S. accounts receivables of certain clients at a discount to the Bank for cash on a limited recourse basis. The maximum amount of receivables that the Company may sell to the Bank at any given time shall not exceed $ 100 million. The sales of accounts receivable in accordance with the Agreement are reflected as a reduction of Accounts Receivable, net on the Consolidated Balance Sheets. The Company has retained no interest in the sold receivables but retains all collection responsibilities on behalf of the Bank. The discount on the accounts receivable sold will be recorded within Other expense, net in the Consolidated Statements of Comprehensive Income (Loss). The cash proceeds from this Agreement are included in the change in accounts receivable within the operating activities section of the Consolidated Statements of Cash Flow. The balances related to the Agreement are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2023 ​ December 31, 2022 ​ Total accounts receivable factored ​ $ 91,526 ​ $ 99,503 ​ ​ ​ ​ ​ ​ ​ ​ ​ Total amounts collected from clients not yet remitted to Bank ​ $ 6,577 ​ $ 13,602 ​ ​ The unremitted cash is restricted cash and is included within Prepaid and other current assets with the corresponding liability included in Accrued expenses on the Consolidated Balance Sheet. The Company has not recorded any servicing assets or liabilities as of September 30, 2023 as the fair value of the servicing arrangement as well as the fees earned were not material to the financial statements. Effective November 1, 2022, the Company amended the arrangement to modify the list of eligible clients whose accounts receivable may be sold pursuant to the Agreement, and to memorialize the transition from LIBOR to SOFR for discount calculation purposes. On July 21, 2023, BMO Financial Group completed its acquisition of the Bank from PNB Bank Paribas. The Agreement transitioned with the acquisition and TTEC has no reason to believe that the new owner of the Bank would not wish to continue its business arrangements with the Company. ​ (5) GOODWILL ​ Goodwill consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect of ​ ​ ​ ​ December 31, ​ Acquisitions / ​ ​ ​ ​ Foreign ​ September 30, ​ ​ 2022 ​ Adjustments ​ Impairments ​ Currency ​ 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ TTEC Digital ​ $ 502,806 ​ $ ( 2,763 ) ​ $ — ​ $ ( 1,058 ) ​ $ 498,985 ​ TTEC Engage ​ 305,039 ​ 2,763 ​ ​ — ​ ​ ( 387 ) ​ 307,415 ​ Total ​ $ 807,845 ​ $ — ​ $ — ​ $ ( 1,445 ) ​ $ 806,400 ​ ​ The Company performs a goodwill impairment assessment on at least an annual basis. The Company conducts its annual goodwill impairment assessment during the fourth quarter, or more frequently, if indicators of impairment exist. During the quarter ended September 30, 2023, the Company assessed whether any such indicators of impairment existed and concluded there were none. 13 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Effective January 1, 2023, the Company completed a small reorganization of the internal reporting structure and one component from the TTEC Digital segment was reclassified and will now be included in the TTEC Engage segment. Given the modification in reporting units, the Company conducted an impairment test before and after the change, and it was concluded that the fair value of the reporting units exceeded the carrying value on both testing dates. With the change in reporting units, the Company performed a relative fair value valuation calculation to allocate a portion of the Company’s historical goodwill to this specific component, which was then reallocated from the TTEC Digital segment to the TTEC Engage segment. ​ ​ (6) DERIVATIVES Cash Flow Hedges The Company enters into foreign exchange related derivatives. Foreign exchange derivatives entered into consist of forward and option contracts to reduce the Company’s exposure to foreign currency exchange rate fluctuations that are associated with forecasted revenue earned in foreign locations. Upon proper qualification, these contracts are designated as cash flow hedges. It is the Company’s policy to only enter into derivative contracts with investment grade counterparty financial institutions, and correspondingly, the fair value of derivative assets considers, among other factors, the creditworthiness of these counterparties. Conversely, the fair value of derivative liabilities reflects the Company’s creditworthiness. As of September 30, 2023, the Company has not experienced, nor does it anticipate, any issues related to derivative counterparty defaults. The following table summarizes the aggregate unrealized net gain or loss in Accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2023 and 2022 (in thousands and net of tax): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ ​ September 30, ​ September 30, ​ ​ ​ 2023 2022 2023 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Aggregate unrealized net gain/(loss) at beginning of period ​ $ 7,164 ​ $ ( 5,718 ) ​ $ 89 ​ $ ( 40 ) ​ Add: Net gain/(loss) from change in fair value of cash flow hedges ​ ​ ( 3,764 ) ​ ​ ( 2,004 ) ​ ​ 2,288 ​ ​ ( 7,774 ) ​ Less: Net (gain)/loss reclassified to earnings from effective hedges ​ ​ 989 ​ ​ ( 1,276 ) ​ ​ 2,012 ​ ​ ( 1,184 ) ​ Aggregate unrealized net gain/(loss) at end of period ​ $ 4,389 ​ $ ( 8,998 ) ​ $ 4,389 ​ $ ( 8,998 ) ​ ​ The Company’s foreign exchange cash flow hedging instruments as of September 30, 2023 and December 31, 2022 are summarized as follows (amounts in thousands). All hedging instruments are forward contracts. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Local ​ ​ ​ ​ ​ ​ ​ ​ Currency ​ U.S. Dollar ​ ​ % Maturing ​ ​ Contracts ​ ​ Notional ​ Notional ​ ​ in the next ​ ​ Maturing As of September 30, 2023 ​ Amount ​ Amount ​ ​ 12 months ​ ​ Through Canadian Dollar 5,250 ​ $ 3,893 ​ ​ 100.0 % ​ September 2024 ​ Philippine Peso 8,466,000 ​ 150,988 (1) ​ 57.7 % ​ July 2026 ​ Mexican Peso 863,000 ​ 38,700 ​ ​ 60.8 % ​ April 2026 ​ ​ ​ ​ ​ $ 193,581 ​ ​ ​ ​ ​ ​ ​ ​ 14 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Local ​ ​ ​ ​ ​ ​ ​ ​ ​ Currency ​ U.S. 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 September 30, 2023 and December 31, 2022. ​ Fair Value Hedges The Company enters into foreign exchange forward contracts to economically hedge against foreign currency exchange gains and losses on certain receivables and payables of the Company’s foreign operations. Changes in the fair value of derivative instruments designated as fair value hedges are recognized in earnings in Other income (expense), net. As of September 30, 2023 and December 31, 2022 the total notional amounts of the Company’s forward contracts used as fair value hedges were $ 76.4 million and $ 80.8 million, respectively. Derivative Valuation and Settlements ​ The Company’s derivatives as of September 30, 2023 and December 31, 2022 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2023 ​ ​ Designated Not Designated ​ ​ as Hedging as Hedging ​ Designation: ​ Instruments Instruments ​ Foreign Foreign Derivative contract type: ​ Exchange ​ Exchange Derivative classification: ​ Cash Flow ​ Fair Value ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value and location of derivative in the Consolidated Balance Sheet: ​ ​ ​ ​ ​ ​ ​ Prepaids and other current assets ​ $ 7,003 ​ $ 72 ​ Other long-term assets ​ 2,683 ​ — ​ Other current liabilities ​ ( 3,184 ) ​ ( 419 ) ​ Other long-term liabilities ​ ( 565 ) ​ — ​ Total fair value of derivatives, net ​ $ 5,937 ​ $ ( 347 ) ​ ​ 15 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ Designated Not Designated ​ ​ as Hedging as Hedging ​ Designation: ​ Instruments Instruments ​ Foreign Foreign Derivative contract type: ​ Exchange ​ Exchange Derivative classification: ​ Cash Flow ​ Fair Value ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value and location of derivative in the Consolidated Balance Sheet: ​ ​ ​ ​ ​ ​ ​ Prepaids and other current assets ​ $ 4,001 ​ $ 281 ​ Other long-term assets ​ 3,019 ​ — ​ Other current liabilities ​ ( 5,157 ) ​ ( 76 ) ​ Other long-term liabilities ​ ( 1,748 ) ​ — ​ Total fair value of derivatives, net ​ $ 115 ​ $ 205 ​ ​ The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the three months ended September 30, 2023 and 2022 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ ​ 2023 ​ 2022 ​ ​ Designated as Hedging Designation: ​ Instruments Derivative contract type: ​ Foreign Exchange Derivative classification: Cash Flow ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount of gain or (loss) recognized in Other comprehensive income (loss) - effective portion, net of tax ​ $ 989 ​ $ ( 1,276 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount and location of net gain or (loss) reclassified from Accumulated OCI to income - effective portion: ​ ​ ​ ​ ​ ​ ​ Revenue ​ $ 1,336 ​ $ ( 1,724 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ ​ 2023 ​ 2022 Designation: Not Designated as Hedging Instruments ​ Derivative contract type: Foreign Exchange ​ Derivative classification: Fair Value ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount and location of net gain or (loss) recognized in the Consolidated Statement of Comprehensive Income (Loss): ​ ​ ​ ​ ​ ​ ​ Other income (expense), net $ ( 369 ) $ 15 ​ ​ 16 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the nine months ended September 30, 2023 and 2022 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ ​ ​ 2023 ​ 2022 ​ ​ ​ Designated as Hedging ​ Designation: ​ Instruments ​ Derivative contract type: ​ Foreign Exchange ​ Derivative classification: Cash Flow ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount of gain or (loss) recognized in Other comprehensive income (loss) - effective portion, net of tax ​ $ 2,012 ​ $ ( 1,184 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount and location of net gain or (loss) reclassified from Accumulated OCI to income - effective portion: ​ ​ ​ ​ ​ ​ ​ Revenue ​ $ 2,719 ​ $ ( 1,598 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ ​ ​ 2023 ​ 2022 ​ Designation: Not Designated as Hedging Instruments ​ Derivative contract type: Foreign Exchange ​ Derivative classification: Fair Value ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount and location of net gain or (loss) recognized in the Consolidated Statement of Comprehensive Income (Loss): ​ ​ ​ ​ ​ ​ ​ Other income (expense), net $ 1,017 $ 273 ​ ​ ​ ​ ​ ​ ​ (7) FAIR VALUE The authoritative guidance for fair value measurements establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires that the Company maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, similar assets and liabilities in markets that are not active or can be corroborated by observable market data. Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The following presents information as of September 30, 2023 and December 31, 2022 for the Company’s assets and liabilities required to be measured at fair value on a recurring basis, as well as the fair value hierarchy used to determine their fair value. Accounts Receivable and Payable - The amounts recorded in the accompanying balance sheets approximate fair value because of their short-term nature. 17 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Investments – The Company measures investments, including cost and equity method investments, at fair value on a nonrecurring basis when they are deemed to be other-than-temporarily impaired. The fair values of these investments are determined based on valuation techniques using the best information available, and may include market observable inputs, and discounted cash flow projections. An impairment charge is recorded when the cost of the investment exceeds its fair value and this condition is determined to be other-than-temporary. Debt - The Company’s debt consists primarily of the Company’s Credit Facility, which permits floating-rate borrowings based upon the current Prime Rate or SOFR plus a credit spread as determined by the Company’s leverage ratio calculation (as defined in the Credit Agreement). As of September 30, 2023 and December 31, 2022, the Company had $964.0 million and $ 960.0 million, respectively, of borrowings outstanding under the Credit Facility. During the third quarter of 2023 outstanding borrowings accrued interest at an average rate of 6.9 % per annum, excluding unused commitment fees. The amounts recorded in the accompanying Balance Sheets approximate fair value due to the variable nature of the debt based on Level 2 inputs. Derivatives - Net derivative assets (liabilities) are measured at fair value on a recurring basis. The portfolio is valued using models based on market observable inputs, including both forward and spot foreign exchange rates, interest rates, implied volatility, and counterparty credit risk, including the ability of each party to execute its obligations under the contract. As of September 30, 2023, credit risk did not materially change the fair value of the Company’s derivative contracts. The following is a summary of the Company’s fair value measurements for its net derivative assets (liabilities) as of September 30, 2023 and December 31, 2022 (in thousands): As of September 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements Using ​ ​ ​ ​ Quoted Prices in Significant ​ ​ ​ ​ ​ Active Markets ​ Other ​ Significant ​ ​ ​ ​ ​ for Identical ​ Observable ​ Unobservable ​ ​ ​ ​ ​ Assets ​ Inputs ​ Inputs ​ ​ ​ ​ ​ (Level 1) ​ (Level 2) ​ (Level 3) ​ At Fair Value Cash flow hedges ​ $ — ​ $ 5,937 ​ $ — ​ $ 5,937 ​ Fair value hedges ​ — ​ ( 347 ) ​ — ​ ( 347 ) ​ Total net derivative asset (liability) ​ $ — ​ $ 5,590 ​ $ — ​ $ 5,590 ​ ​ As of December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements Using ​ ​ ​ ​ Quoted Prices in Significant ​ ​ ​ ​ ​ Active Markets ​ Other ​ Significant ​ ​ ​ ​ ​ for Identical ​ Observable ​ Unobservable ​ ​ ​ ​ ​ Assets ​ Inputs ​ Inputs ​ ​ ​ ​ ​ (Level 1) ​ (Level 2) ​ (Level 3) ​ At Fair Value Cash flow hedges ​ $ — ​ $ 115 ​ $ — ​ $ 115 ​ Fair value hedges ​ — ​ 205 ​ — ​ 205 ​ Total net derivative asset (liability) ​ $ — ​ $ 320 ​ $ — ​ $ 320 ​ ​ 18 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) The following is a summary of the Company’s fair value measurements as of September 30, 2023 and December 31, 2022 (in thousands): ​ As of September 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements Using ​ Quoted Prices in ​ ​ Significant ​ ​ Active Markets for ​ Significant Other ​ Unobservable ​ ​ Identical Assets ​ Observable Inputs ​ Inputs ​ ​ (Level 1) ​ (Level 2) ​ (Level 3) Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative instruments, net ​ $ — ​ $ — ​ $ — ​ Deferred compensation plan asset ​ ​ 28,341 ​ ​ — ​ ​ — ​ Contingent consideration ​ ​ — ​ ​ — ​ ​ — ​ Total assets ​ $ 28,341 ​ $ — ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative instruments, net ​ $ — ​ $ 5,590 ​ $ — ​ Contingent consideration ​ — ​ — ​ ( 880 ) ​ Total liabilities ​ $ — ​ $ 5,590 ​ $ ( 880 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Redeemable noncontrolling interest ​ $ — ​ $ — ​ $ ( 4,310 ) ​ ​ As of December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements Using ​ Quoted Prices in ​ ​ Significant ​ ​ Active Markets for ​ Significant Other ​ Unobservable ​ ​ Identical Assets ​ Observable Inputs ​ Inputs ​ ​ (Level 1) ​ (Level 2) ​ (Level 3) Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative instruments, net ​ $ — ​ $ 320 ​ $ — ​ Deferred compensation plan asset ​ ​ 25,046 ​ ​ — ​ ​ — ​ Contingent consideration ​ ​ — ​ ​ — ​ ​ 5,724 ​ Total assets ​ $ 25,046 ​ $ 320 ​ $ 5,724 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative instruments, net ​ $ — ​ $ — ​ $ — ​ Contingent consideration ​ — ​ — ​ ( 5,916 ) ​ Total liabilities ​ $ — ​ $ — ​ $ ( 5,916 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Redeemable noncontrolling interest ​ $ — ​ $ — ​ $ ( 55,645 ) ​ ​ Deferred Compensation Plan — The Company maintains a non-qualified deferred compensation plan structured as a Rabbi trust for certain eligible employees. The plan assets are invested in a variety of equity and bond mutual funds. The deferred compensation asset represents the combined fair value of all the funds based on quoted values and market observable inputs. 19 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Contingent Consideration - The Company recorded contingent consideration payable related to the acquisition of Faneuil that closed in 2022. The contingent payables for Faneuil were calculated using a Monte Carlo simulation including a discount rate of 19.3 %. The measurements were based on significant inputs not observable in the market. The Company records interest expense each period using the effective interest method until the future value of these contingent payments reaches the expected total future value. During the third and fourth quarters of 2022, and the first, second and third quarters of 2023, fair value adjustments of a $ 2.4 million benefit, a $ 0.5 million benefit, $ 0.6 million expense, $ 1.7 million expense and $ 0.1 million expense, respectively, were recorded related to fair value adjustments of the estimated contingent payments associated with the Faneuil acquisition based on updated discount factors, the passage of time, updated EBITDA estimates and a modification to the agreement (see Note 2) for one contract, and a complete reduction for the second contract as it was not awarded to the Company. The fair value adjustment benefits(expenses) were included in Other income (expense) in the Consolidated Statements of Comprehensive Income (Loss). Contingent Receivables – The Company recorded a contingent receivable related to the Faneuil acquisition. During the third and fourth quarters of 2022, and the first and second quarters of 2023, the Company recorded fair value adjustments for the receivable based on current information which caused the receivable to decrease, and a $ 4.4 million expense, a $ 0.2 million expense, a $ 2.5 million expense, and a $ 1.9 million expense, respectively, were included in Other income (expense), net in the Consolidated Statements of Comprehensive Income (Loss). A rollforward of the activity in the Company’s fair value of the contingent consideration payable is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Imputed ​ ​ ​ ​ December 31, ​ ​ ​ ​ ​ ​ ​ Interest / ​ September 30, ​ ​ 2022 ​ Acquisitions ​ Payments ​ Adjustments ​ 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Faneuil ​ $ ( 5,916 ) ​ $ — ​ $ 7,400 ​ $ ( 2,364 ) ​ $ ( 880 ) ​ Total ​ $ ( 5,916 ) ​ $ — ​ $ 7,400 ​ $ ( 2,364 ) ​ $ ( 880 ) ​ ​ A rollforward of the activity in the Company’s fair value of the contingent consideration receivable is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Imputed ​ ​ ​ ​ December 31, ​ ​ ​ ​ ​ ​ ​ Interest / ​ September 30, ​ ​ 2022 ​ Acquisitions ​ Payments ​ Adjustments ​ 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Faneuil ​ $ 5,724 ​ $ — ​ $ ( 1,343 ) ​ $ ( 4,381 ) ​ $ — ​ Total ​ $ 5,724 ​ $ — ​ $ ( 1,343 ) ​ $ ( 4,381 ) ​ $ — ​ ​ ​ ​ ​ ​ 20 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) (8) IMPAIRMENT OF ASSETS During each of the periods presented, the Company evaluated the recoverability of its leasehold improvement assets at certain customer engagement centers, building and land assets, as well as all internally developed software projects. An asset group is considered to be impaired when the anticipated undiscounted future cash flows of its asset group is estimated to be less than the asset group’s carrying value. The amount of impairment recognized is the difference between the carrying value of the asset group and its fair value. To determine fair value, the Company used Level 3 inputs in its discounted cash flows analysis. Assumptions included the amount and timing of estimated future cash flows and assumed discount rates. During the three and nine months ended September 30, 2023, the Company recognized impairment losses, net related to leasehold improvements assets, right of use lease assets, internally developed software and certain computer equipment of $ 4.1 million and $ 11.1 million, respectively, across the TTEC Digital and TTEC Engage segments. (9) INCOME TAXES The Company accounts for income taxes in accordance with the accounting literature for income taxes, which 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. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using tax rates in effect for the year in which the differences are expected to reverse. Quarterly, the Company assesses the likelihood that its net deferred tax assets will be recovered. Based on the weight of all available evidence, both positive and negative, the Company records a valuation allowance against deferred tax assets when it is more-likely-than-not that a future tax benefit will not be realized. The Company’s selection of an accounting policy with respect to both the global intangible low taxed foreign income (“GILTI”) and base erosion and anti-abuse tax (“BEAT”) rules is to compute the related taxes in the period the entity becomes subject to either GILTI or BEAT. As of September 30, 2023, the Company had $ 44.5 million of net deferred tax assets (after a $ 34.0 million valuation allowance) and a net deferred tax asset of $ 41.2 million (after deferred tax liabilities of $ 3.3 million) related to the United States and international tax jurisdictions whose recoverability is dependent upon future profitability. The effective tax rate for the three and nine months ended September 30, 2023 was 74.7 % and 42.2 %, respectively. The effective tax rate for the three and nine months ended September 30, 2022 was 15.2 % and 17.7 %, respectively. The Company’s U.S. income tax returns filed for the tax years ending December 31, 2017 to present, remain open tax years . The Company has been notified of the intent to audit or is currently under audit of income taxes for the United States for tax year 2017 and 2018 , the Philippines for tax year 2020 , the state of California in the United States for tax years 2017 and 2018 , the State of Illinois in the United States for tax year 2020 , Canada for tax year 2021 , and India for tax years 2017 through 2022 . Although the outcome of examinations by taxing authorities are always uncertain, it is the opinion of management that the resolution of these audits will not have a material effect on the Company’s Consolidated Financial Statements. When there is a change in judgment concerning the recovery of deferred tax assets in future periods, a valuation allowance is recorded into earnings during the quarter in which the change in judgment occurred. In the first, second and third quarters of 2022, $ 1.3 million, $ 0.6 million and $ 2.5 million, respectively, were released from the valuation allowance for assets that are expected to be recognized in the future. During the first, second and third quarters of 2023, a $ 1.3 million, a $ 3.1 million and a $ 4.4 million valuation allowance were recorded, respectively, for assets that are not expected to be recovered in future periods. Additionally, during the third quarter 2023, a valuation allowance in the amount of $ 1.7 million was released for assets now expected to be recovered in future periods. 21 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) The Company has been granted “Tax Holidays” as an incentive to attract foreign investment by the governments of the Philippines and Costa Rica. Generally, a Tax Holiday is an agreement between the Company and a foreign government under which the Company receives certain tax benefits in that country, such as exemption from taxation on profits derived from export-related activities. In the Philippines, the Company has been granted multiple agreements under local laws which result in an overall reduced tax rate. These incentives have varying benefit year over year and expire at various times beginning in 2030. The aggregate benefit to income tax expense for the three months ended September 30, 2023 and 2022 was approximately $ 0.8 million and $ 0.3 million, respectively, which had an impact on diluted net income per share of $ 0.02 and $ 0.01 , respectively. The aggregate benefit to income tax expense for the nine months ended September 30, 2023 and 2022 was approximately $ 1.8 million and $ 1.3 million, respectively, which had an impact on diluted net income per share of $ 0.04 and $ 0.03 , respectively. ​ ​ (10) COMMITMENTS AND CONTINGENCIES Credit Facility On November 23, 2021 , the Company entered into a Sixth Amendment to the Amended and Restated Credit Agreement (the “Credit Agreement”) originally dated June 3, 2013, (collectively, the “Credit Facility”) to convert the $300 million term loan included in the total Credit Facility commitments, that was previously agreed on March 25, 2021 as part of the Fifth Amendment to the Credit Agreement, into a $ 1.5 billion senior secured revolving Credit Facility with a syndicate of lenders led by Wells Fargo, National Association, as agent, swingline and fronting lender. The Credit Facility matures on November 23, 2026. On April 3, 2023, the Company entered into a Seventh Amendment to the Credit Agreement which replaces the use of LIBOR with SOFR as of the date of the amendment, thus will affect the interest rates paid for a portion of the Credit Facility starting in the second quarter of 2023. The maximum commitment under the Credit Facility is $ 1.5 billion in the aggregate, if certain conditions are satisfied. The Credit Facility commitment fees are payable to the lenders in an amount equal to the unused portion of the Credit Facility multiplied by a rate per annum as determined by reference to the Company’s net leverage ratio. The Credit Agreement contains customary affirmative, negative, and financial covenants. 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 also permits the utilization of up to $100 million of limits within the Credit Facility for letters of credit to be used in the business. As defined in the Credit Agreement, 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 %. Base rate loans shall be based on the base rate, plus the applicable credit margin which ranges from 0 % to 0.875 % 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 1.875 % based on the Company’s net leverage ratio. 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. 22 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) The Company primarily utilizes its Credit Facility to fund working capital, general operations, dividends and other strategic activities, such as the acquisitions described in Note 2. As of September 30, 2023 and December 31, 2022, the Company had borrowings of $ 964.0 million and $ 960.0 million, respectively, under its Credit Facility, and its average daily utilization was $ 1,057.6 million and $ 1,023.6 million for the nine months ended September 30, 2023 and 2022, respectively. Based on the current level of availability based on the covenant calculations, the Company’s remaining borrowing capacity was approximately $ 215 million as of September 30, 2023. As of September 30, 2023, the Company was in compliance with all covenants and conditions under its Credit Agreement. Letters of Credit As of September 30, 2023, outstanding letters of credit under the Credit Facility totaled $0.2 million and primarily guaranteed workers’ compensation and other insurance related obligations. As of September 30, 2023, letters of credit and contract performance guarantees issued outside of the Credit Agreement totaled $0.3 million. Guarantees Indebtedness under the Credit Agreement is guaranteed by certain of the Company’s present and future domestic subsidiaries. Legal Proceedings From time to time, the Company has been involved in legal actions, both as plaintiff and defendant, which arise in the ordinary course of business. The Company accrues for exposures associated with such legal actions to the extent that losses are deemed both probable and reasonably estimable. To the extent specific reserves have not been made for certain legal proceedings, their ultimate outcome, and consequently, an estimate of possible loss, if any, cannot reasonably be determined at this time. Based on currently available information and advice received from counsel, the Company believes that the disposition or ultimate resolution of any current legal proceedings, except as otherwise specifically reserved for in its financial statements, will not have a material adverse effect on the Company’s financial position, cash flows or results of operations. ​ (11) DEFERRED REVENUE AND REMAINING PERFORMANCE OBLIGATIONS Revenue recognized for the nine months ended September 30, 2023 from amounts included in deferred revenue as of December 31, 2022 was $ 230.0 million. Revenue recognized for the nine months ended September 30, 2022 from amounts included in deferred revenue as of December 31, 2021 was $ 196.5 million. Remaining performance obligations (RPO) represent the amount of contracted future revenue that has not yet been recognized, including both deferred revenue and non-cancelable contracted amounts that will be invoiced and recognized as revenue in future periods. The Company’s RPO excludes performance obligations from on-demand arrangements as there are no minimum purchase commitments associated with these arrangements, and certain time and materials contracts that are billed in arrears. As of September 30, 2023, the Company’s RPO was $ 337.0 million, which will be delivered and recognized within the next nine year s. However, the amount and timing of revenue recognition are generally driven by customer consumption, which can extend beyond the original contract term in cases where customers are permitted to roll over unused capacity to future periods, generally upon the purchase of additional capacity at renewal. 23 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) (12) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ​ The following table presents changes in the accumulated balance for each component of Other comprehensive income (loss), including current period other comprehensive income (loss) and reclassifications out of accumulated other comprehensive income (loss) (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign ​ ​ ​ ​ ​ ​ ​ ​ Currency ​ Derivative ​ ​ ​ ​ ​ ​ ​ ​ Translation ​ Valuation, Net ​ Other, Net ​ ​ ​ ​ ​ Adjustment ​ of Tax ​ of Tax ​ Totals ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated other comprehensive income (loss) at December 31, 2021 ​ $ ( 95,547 ) $ ( 40 ) $ ( 2,839 ) $ ( 98,426 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive income (loss) before reclassifications ​ ( 44,944 ) ​ ( 7,774 ) ​ 627 ​ ( 52,091 ) ​ Amounts reclassified from accumulated other comprehensive income (loss) ​ — ​ ( 1,184 ) ​ ( 203 ) ​ ( 1,387 ) ​ Net current period other comprehensive income (loss) ​ ( 44,944 ) ​ ( 8,958 ) ​ 424 ​ ( 53,478 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated other comprehensive income (loss) at September 30, 2022 ​ $ ( 140,491 ) $ ( 8,998 ) $ ( 2,415 ) $ ( 151,904 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated other comprehensive income (loss) at December 31, 2022 ​ $ ( 123,734 ) $ 89 $ ( 2,656 ) $ ( 126,301 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive income (loss) before reclassifications ​ 18,362 ​ ​ 2,288 ​ ​ 566 ​ 21,216 ​ Amounts reclassified from accumulated other comprehensive income (loss) ​ 301 ​ ​ 2,012 ​ ​ ( 267 ) ​ 2,046 ​ Net current period other comprehensive income (loss) ​ 18,663 ​ 4,300 ​ 299 ​ 23,262 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated other comprehensive income (loss) at September 30, 2023 ​ $ ( 105,071 ) $ 4,389 $ ( 2,357 ) $ ( 103,039 ) ​ ​ The following table presents the classification and amount of the reclassifications from Accumulated other comprehensive income (loss) to the Statement of Comprehensive Income (Loss) (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Statement of ​ ​ ​ For the Three Months Ended September 30, ​ Comprehensive Income ​ ​ 2023 2022 (Loss) Classification ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative valuation ​ ​ ​ ​ ​ ​ ​ ​ ​ Gain on foreign currency forward exchange contracts ​ $ 1,336 ​ $ ( 1,724 ) Revenue ​ Tax effect ​ ( 347 ) ​ 448 Provision for income taxes ​ ​ ​ $ 989 ​ $ ( 1,276 ) Net income (loss) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ Actuarial loss on defined benefit plan ​ $ ( 69 ) ​ $ ( 75 ) Cost of services ​ Tax effect ​ 7 ​ 8 Provision for income taxes ​ ​ ​ $ ( 62 ) ​ $ ( 67 ) Net income (loss) ​ ​ 24 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Statement of ​ ​ For the Nine Months Ended September 30, ​ Comprehensive Income ​ 2023 2022 (Loss) Classification ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative valuation ​ ​ ​ ​ ​ ​ ​ ​ ​ Gain on foreign currency forward exchange contracts ​ $ 2,719 ​ $ ( 1,598 ) Revenue ​ Tax effect ​ ( 707 ) ​ 414 Provision for income taxes ​ ​ ​ $ 2,012 ​ $ ( 1,184 ) Net income (loss) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ Actuarial loss on defined benefit plan ​ $ ( 297 ) ​ $ ( 226 ) Cost of services ​ Tax effect ​ 30 ​ 23 Provision for income taxes ​ ​ ​ $ ( 267 ) ​ $ ( 203 ) Net income (loss) ​ ​ ​ ​ ​ ​ ​ (13) WEIGHTED AVERAGE SHARE COUNTS ​ The following table sets forth the computation of basic and diluted shares for the periods indicated (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2023 2022 2023 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares used in basic earnings per share calculation ​ 47,415 47,207 47,305 47,087 Effect of dilutive securities: ​ ​ ​ ​ ​ ​ ​ ​ Restricted stock units ​ 73 107 104 258 Performance-based restricted stock units ​ — — 8 9 Total effects of dilutive securities ​ 73 107 112 267 Shares used in dilutive earnings per share calculation ​ 47,488 47,314 47,417 47,354 ​ For the three months ended September 30, 2023 and 2022, there were Restricted Stock Units (“RSUs”) of 950 thousand and 542 thousand, respectively, outstanding which were excluded from the computation of diluted net income per share because the effect would have been anti-dilutive. For the nine months ended September 30, 2023 and 2022, there were RSUs of 992 thousand and 377 thousand, respectively, outstanding which were excluded from the computation of diluted net income per share because the effect would have been anti-dilutive. ​ (14) EQUITY-BASED COMPENSATION PLANS All equity-based awards to employees are recognized in the Consolidated Statements of Comprehensive Income (Loss) at the fair value of the award on the grant date. The following tables present the total equity-based compensation expense (stock options and RSUs) for the three and nine months ended September 30, 2023 and 2022 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ ​ Equity-based compensation expense recognized in Cost of services ​ $ 3,009 ​ $ 2,155 ​ Equity-based compensation expense recognized in Selling, general and administrative ​ ​ 3,599 ​ ​ 3,202 ​ Total equity-based compensation expense ​ $ 6,608 ​ $ 5,357 ​ ​ 25 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ ​ Equity-based compensation expense recognized in Cost of services ​ $ 7,407 ​ $ 5,390 ​ Equity-based compensation expense recognized in Selling, general and administrative ​ ​ 9,003 ​ ​ 7,850 ​ Total equity-based compensation expense ​ $ 16,410 ​ $ 13,240 ​ ​ Restricted Stock Unit Grants During the nine months ended September 30, 2023 and 2022, the Company granted 587,490 and 365,515 RSUs, respectively, to new and existing employees, which vest over four to five years . The Company recognized compensation expense related to RSUs of $ 6.5 million and $ 15.8 million for the three and nine months ended September 30, 2023, respectively. The Company recognized compensation expense related to RSUs of $ 5.0 million and $ 12.4 million for the three and nine months ended September 30, 2022, respectively. As of September 30, 2023, there was approximately $ 41.2 million of total unrecognized compensation cost (including the impact of expected forfeitures) related to RSUs granted under the Company’s equity plans. Performance Based Restricted Stock Unit Grants During 2020, the Company awarded Performance Restricted Stock Units (“PRSUs“) that are subject to service and performance vesting conditions. If defined minimum targets are met, the annual value of the PRSUs issued will be between $ 0.2 million and $ 2.0 million and vest immediately. If the defined minimum targets are not met, then no shares will be issued. The number of shares awarded are based on the Company’s annual revenue and adjusted operating income for the fiscal years 2021 and 2022. Each fiscal year’s revenue and adjusted operating income will determine the award amount. The Company recognized compensation expense related to the 2020 PRSUs of $ 0.0 million and $0.1 million, respectively, for the three and nine months ended September 30, 2023, The Company recognized compensation expense related to the 2020 PRSUs of $0.3 million and $0.8 million, respectively, for the three and nine months ended September 30, 2022. During 2021, the Company awarded PRSUs that are subject to service and performance vesting conditions. If defined minimum targets are met, the annual value of the PRSUs issued will be between $ 1.2 million and $ 4.9 million and vest immediately in 2024. If the defined minimum targets are not met, then no shares will be issued. The number of shares that will be awarded will be based on the Company’s annual revenue and adjusted operating income for the fiscal year 2023. The Company recognized compensation expense related to the 2021 PRSUs of $ 0.1 million and $0.5 million for the three and nine months ended September 30, 2023, respectively. During 2022, the Company made awards of two different PRSU programs that are subject to service and performance vesting conditions: ordinary course annual PRSUs and one-time stretch financial goals PRSUs. For the ordinary course annual PRSUs, if defined minimum targets are met, the annual value of the PRSUs issued will be between $ 0.9 million and $ 3.5 million and vest immediately in March 2025. If the defined minimum targets are not met, then no shares will be issued. The number of shares that will be awarded will be based on the Company’s annual revenue and adjusted EBITDA for the fiscal year 2024 . For the one-time stretch financial goals PRSUs, if defined minimum targets at TTEC Engage and TTEC Digital business segments’ levels are met, the number of shares of PRSUs issued will be between 0.0 million shares and 0.5 million shares and will vest immediately in March 2026. If the defined minimum targets are not met, then no shares will be issued. The number of shares to be awarded will be based on the TTEC Engage and TTEC Digital business segments’ annual revenue and adjusted EBITDA for the fiscal year 2025. Expense for these awards will begin at the start of the requisite service period, beginning January 1, 2024 and January 1, 2025, respectively. 26 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) During 2023, the Company awarded PRSUs that are subject to service and performance vesting conditions. If defined minimum targets are met, the annual value of the PRSUs issued will be between zero and $ 8.9 million and vest immediately. If the defined minimum targets are not met, then no shares will be issued. The number of shares that will be awarded will be based on the Company’s annual revenue and adjusted EBITDA for the fiscal year 2025. Expense for these awards will begin at the start of the requisite service period, beginning January 1, 2025. ​ (15) RELATED PARTY TRANSACTIONS The Company entered into an agreement under which Avion, LLC (“Avion”) and Airmax LLC (“Airmax”) provide certain aviation flight services as requested by the Company. Such services include the use of an aircraft and flight crew. Kenneth D. Tuchman, Chairman and Chief Executive Officer of the Company, has an indirect 100 % beneficial ownership interest in Avion and Airmax. During the nine months ended September 30, 2023 and 2022, the Company expensed $ 0.8 million and $ 0.4 million, respectively, to Avion and Airmax for services provided to the Company. There was $ 104 thousand in payments due and outstanding to Avion and Airmax as of September 30, 2023. Ms. Michelle Swanback, President of the Company, is a member of the board of directors of WTW (NYSE: WTW) (fka “Willis Towers Watson”), that provides compensation consulting and insurance brokerage services to the Company. During the nine months ended September 30, 2023 and 2022, the Company expensed $ 2.8 million and $ 2.2 million, respectively, for these services. ​ ​ ​ 27 Table of Contents CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS ​ This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995, relating to our operations, expected financial position, results of operation, and other business matters that are based on our current expectations, assumptions, and projections with respect to the future, and are not a guarantee of performance. In this report, when we use words such as “may,” “believe,” “plan,” “will,” “anticipate,” “estimate,” “expect,” “intend,” “project,” “would,” “could,” “target,” or similar expressions, or when we discuss our strategy, plans, goals, initiatives, or objectives, we are making forward-looking statements. We caution you not to rely unduly on any forward-looking statements. Actual results may differ materially from those expressed in the forward-looking statements, and you should review and consider carefully the risks, uncertainties and other factors that affect our business and may cause such differences as outlined in Part II. Item 1A Risk Factors of this report and Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022. Important factors that could cause our actual results to differ materially from those indicated in the forward looking statements include, among others: the risks related to our business operations and strategy in a competitive market; our ability to innovate and introduce disruptive technologies that would allow us to maintain and grow our market share (e.g., effective adoption of artificial intelligence into our solutions); risks that may arise in connection with events outside of our control (e.g. macroeconomic conditions, geopolitical tensions, outbreaks of infectious diseases); risks inherent in a disruption and cybersecurity of our information technology systems, including as a result of criminal or other unauthorized activity, which can impact our ability to consistently deliver uninterrupted service to our clients or unauthorized access to data, any of which may result in government investigations and enforcement actions, and private legal actions; risks inherent in the delivery of services by employees working from home; our ability to attract and retain qualified personnel at a price point that we can afford and our clients are willing to pay; our M&A activity, including our ability to properly integrate acquired businesses; our reliance on a relatively small number of TTEC Engage clients to generate the majority of our revenue and our reliance on technology partners to generate a large portion of TTEC Digital’s revenue; changes in laws and regulations that impact our and our clients’ businesses, including rapidly changing data privacy and data protection laws, healthcare business regulations, and financial and public sector specific regulations; the cost of labor and data privacy litigation and other class action litigation; the risks related to our international operations including the stress that geographic expansion may have on our business, the impact if we are unable to expand geographically to meet our clients’ demand or our clients’ reluctance to expand the delivery of their services in certain parts of the world due to conflict or other disruptions; and risks inherent in our equity structure including our controlling shareholder risk, and Delaware choice of dispute resolution risks. Our forward-looking statements speak only as of the date that this report is filed with the United States Securities and Exchange Commission (“SEC”). We undertake no obligation to update them, except as may be required by applicable law. Although we believe that our forward-looking statements are reasonable, they depend on many factors outside of our control and we can provide no assurance that they will prove to be correct. ​ ​ ​ 28 Table of Contents