TTEC Holdings, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS ​ TTEC HOLDINGS, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Amounts in thousands, except share amounts) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ 2024 2023 ASSETS ​ ​ ​ ​ ​ ​ ​ Current assets ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 91,514 ​ $ 172,747 ​ Accounts receivable, net of allowance of $ 2,065 and $ 2,248 , respectively ​ 404,651 ​ 394,868 ​ Prepaids and other current assets ​ 104,985 ​ 95,064 ​ Income and other tax receivables ​ ​ 16,328 ​ ​ 18,524 ​ Total current assets ​ 617,478 ​ 681,203 ​ ​ ​ ​ ​ ​ ​ ​ ​ Long-term assets ​ ​ ​ ​ ​ ​ ​ Property, plant and equipment, net ​ 185,242 ​ 191,003 ​ Operating lease assets ​ ​ 113,060 ​ ​ 121,574 ​ Goodwill ​ 807,134 ​ 808,988 ​ Deferred tax assets, net ​ 52,059 ​ 38,151 ​ Other intangible assets, net ​ ​ 189,814 ​ ​ 198,433 ​ Income and other tax receivables, long-term ​ 41,501 ​ 44,673 ​ Other long-term assets ​ 108,766 ​ 101,573 ​ Total long-term assets ​ 1,497,576 ​ 1,504,395 ​ Total assets ​ $ 2,115,054 ​ $ 2,185,598 ​ ​ ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 90,473 ​ $ 96,577 ​ Accrued employee compensation and benefits ​ 120,340 ​ 146,184 ​ Other accrued expenses ​ 40,314 ​ 32,217 ​ Income tax payable ​ 5,444 ​ 4,909 ​ Deferred revenue ​ 87,787 ​ 81,171 ​ Current operating lease liabilities ​ ​ 36,457 ​ ​ 38,271 ​ Other current liabilities ​ ​ 3,400 ​ ​ 3,698 ​ Total current liabilities ​ 384,215 ​ 403,027 ​ ​ ​ ​ ​ ​ ​ ​ ​ Long-term liabilities ​ ​ ​ ​ ​ ​ ​ Line of credit ​ 953,000 ​ 995,000 ​ Deferred tax liabilities, net ​ 3,122 ​ 3,137 ​ Non-current income tax payable ​ ​ — ​ ​ — ​ Non-current operating lease liabilities ​ ​ 90,218 ​ ​ 96,809 ​ Other long-term liabilities ​ 72,090 ​ 72,083 ​ Total long-term liabilities ​ 1,118,430 ​ 1,167,029 ​ Total liabilities ​ 1,502,645 ​ 1,570,056 ​ ​ ​ ​ ​ ​ ​ ​ ​ Commitments and contingencies (Note 10) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders’ equity ​ ​ ​ ​ ​ ​ ​ Preferred stock; $ 0.01 par value; 10,000,000 shares authorized; zero shares outstanding as of March 31, 2024 and December 31, 2023 ​ — ​ — ​ Common stock; $ 0.01 par value; 150,000,000 shares authorized; 47,447,289 and 47,427,200 shares outstanding as of March 31, 2024 and December 31, 2023, respectively ​ 474 ​ 474 ​ Additional paid-in capital ​ 412,768 ​ 407,415 ​ Treasury stock at cost: 34,604,964 and 34,625,053 shares as of March 31, 2024 and December 31, 2023, respectively ​ ( 589,475 ) ​ ( 589,807 ) ​ Accumulated other comprehensive income (loss) ​ ( 93,733 ) ​ ( 89,876 ) ​ Retained earnings ​ 865,277 ​ 870,429 ​ Noncontrolling interest ​ 17,098 ​ 16,907 ​ Total stockholders’ equity ​ 612,409 ​ 615,542 ​ Total liabilities and stockholders’ equity ​ $ 2,115,054 ​ $ 2,185,598 ​ ​ 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 March 31, ​ 2024 2023 Revenue ​ $ 576,638 ​ $ 633,286 ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ ​ ​ ​ Cost of services (exclusive of depreciation and amortization presented separately below) ​ 453,818 ​ 482,678 ​ Selling, general and administrative ​ 74,575 ​ 74,010 ​ Depreciation and amortization ​ 25,145 ​ 25,827 ​ Restructuring charges, net ​ ​ 249 ​ ​ 2,053 ​ Impairment losses ​ 140 ​ 4,307 ​ Total operating expenses ​ 553,927 ​ 588,875 ​ ​ ​ ​ ​ ​ ​ ​ ​ Income from operations ​ 22,711 ​ 44,411 ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense) ​ ​ ​ ​ ​ ​ ​ Interest income ​ 983 ​ 1,164 ​ Interest expense ​ ( 21,071 ) ​ ( 17,391 ) ​ Other income (expense), net ​ 206 ​ 655 ​ Total other income (expense) ​ ( 19,882 ) ​ ( 15,572 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income taxes ​ 2,829 ​ 28,839 ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision for income taxes ​ ( 2,329 ) ​ ( 7,922 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ 500 ​ 20,917 ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) attributable to noncontrolling interest ​ ( 2,805 ) ​ ( 2,270 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (loss) income attributable to TTEC stockholders ​ $ ( 2,305 ) ​ $ 18,647 ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive income (loss) ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 500 ​ $ 20,917 ​ Foreign currency translation adjustments ​ ( 3,837 ) ​ 9,398 ​ Derivative valuation, gross ​ ( 310 ) ​ 8,861 ​ Derivative valuation, tax effect ​ 75 ​ ( 2,310 ) ​ Other, net of tax ​ 121 ​ 72 ​ Total other comprehensive income (loss) ​ ( 3,951 ) ​ 16,021 ​ Total comprehensive income (loss) ​ ( 3,451 ) ​ 36,938 ​ ​ ​ ​ ​ ​ ​ ​ ​ Less: Comprehensive income attributable to noncontrolling interest ​ ( 2,711 ) ​ ( 1,825 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Comprehensive (loss) income attributable to TTEC stockholders ​ $ ( 6,162 ) ​ $ 35,113 ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average shares outstanding ​ ​ ​ ​ ​ ​ ​ Basic ​ 47,432 ​ 47,234 ​ Diluted ​ ​ 47,587 ​ 47,401 ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (loss) income per share attributable to TTEC stockholders ​ ​ ​ ​ ​ ​ ​ Basic ​ $ ( 0.05 ) ​ $ 0.39 ​ Diluted ​ $ ( 0.05 ) ​ $ 0.39 ​ ​ 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 March 31, 2023 and 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 — ​ — ​ — ​ — ​ — ​ ​ 18,648 ​ 1,716 ​ 20,364 ​ ​ 553 ​ Dividends to shareholders ($ 0.52 per common share) — ​ — ​ — ​ — ​ — ​ ​ ( 24,572 ) ​ ​ — ​ ​ ( 24,572 ) ​ ​ — ​ Buyout of noncontrolling interest ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 31,619 ) ​ Dividends distributed to noncontrolling interest — ​ — ​ — ​ — ​ — ​ — ​ ( 3,181 ) ​ ( 3,181 ) ​ ​ ( 186 ) ​ Foreign currency translation adjustments — ​ — ​ — ​ — ​ 9,289 ​ — ​ 109 ​ 9,398 ​ ​ — ​ Derivatives valuation, net of tax — ​ — ​ — ​ — ​ 6,551 ​ — ​ — ​ 6,551 ​ ​ — ​ Vesting of restricted stock units 28 ​ 1 ​ 479 ​ ( 990 ) ​ — ​ — ​ — ​ ( 510 ) ​ ​ — ​ Equity-based compensation expense — ​ — ​ — ​ 4,154 ​ — ​ — ​ — ​ 4,154 ​ ​ — ​ Other, net of tax — ​ — ​ — ​ — ​ 72 ​ — ​ — ​ 72 ​ ​ — ​ Balance as of March 31, 2023 47,252 ​ $ 473 ​ $ ( 592,685 ) ​ $ 391,294 ​ $ ( 110,389 ) ​ $ 905,309 ​ $ 16,836 ​ $ 610,838 ​ $ 3,936 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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, 2023 47,427 ​ $ 474 ​ $ ( 589,807 ) ​ $ 407,415 ​ $ ( 89,876 ) ​ $ 870,429 ​ $ 16,907 ​ $ 615,542 ​ $ — ​ Noncontrolling interest adjustment due to buyout ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ Net (loss) income — ​ — ​ — ​ — ​ — ​ ( 2,305 ) ​ 2,805 ​ 500 ​ ​ — ​ Dividends to shareholders ($ 0.06 per common share) — ​ — ​ — ​ — ​ — ​ ​ ( 2,847 ) ​ ​ — ​ ​ ( 2,847 ) ​ ​ — ​ Dividends distributed to noncontrolling interest — ​ — ​ — ​ — ​ — ​ — ​ ( 2,520 ) ​ ( 2,520 ) ​ ​ — ​ Foreign currency translation adjustments — ​ — ​ — ​ — ​ ( 3,743 ) ​ — ​ ( 94 ) ​ ( 3,837 ) ​ ​ — ​ Derivatives valuation, net of tax — ​ — ​ — ​ — ​ ( 235 ) ​ — ​ — ​ ( 235 ) ​ ​ — ​ Vesting of restricted stock units 20 ​ — ​ 332 ​ ( 459 ) ​ — ​ — ​ — ​ ( 127 ) ​ ​ — ​ Equity-based compensation expense — ​ — ​ — ​ 5,812 ​ — ​ — ​ — ​ 5,812 ​ ​ — ​ Other, net of tax — ​ — ​ — ​ — ​ 121 ​ — ​ — ​ 121 ​ ​ — ​ Balance as of March 31, 2024 47,447 ​ $ 474 ​ $ ( 589,475 ) ​ $ 412,768 ​ $ ( 93,733 ) ​ $ 865,277 ​ $ 17,098 ​ $ 612,409 ​ $ — ​ ​ ​ ​ ​ ​ ​ 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) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ 2024 2023 Cash flows from operating activities ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 500 ​ $ 20,917 ​ Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 25,145 ​ 25,827 ​ Amortization of contract acquisition costs ​ 283 ​ 716 ​ Amortization of debt issuance costs ​ 643 ​ 268 ​ Imputed interest expense and fair value adjustments to contingent consideration ​ ( 1,240 ) ​ 3,178 ​ Provision for credit losses ​ ( 31 ) ​ 2,263 ​ Loss on disposal of assets ​ 510 ​ 605 ​ Impairment losses ​ ​ 140 ​ ​ 4,307 ​ Loss on dissolution of subsidiary ​ ​ — ​ ​ 301 ​ Deferred income taxes ​ ( 12,628 ) ​ ( 4,994 ) ​ Excess tax benefit from equity-based awards ​ 292 ​ ( 1 ) ​ Equity-based compensation expense ​ 5,812 ​ 4,154 ​ Loss (gain) on foreign currency derivatives ​ 77 ​ ( 493 ) ​ Changes in assets and liabilities, net of acquisitions: ​ ​ ​ ​ ​ ​ ​ Accounts receivable ​ ( 11,301 ) ​ 11,089 ​ Prepaids and other assets ​ 3,094 ​ 13,325 ​ Accounts payable and accrued expenses ​ ( 25,845 ) ​ ( 22,352 ) ​ Deferred revenue and other liabilities ​ ( 1,080 ) ​ ( 10,052 ) ​ Net cash (used in) provided by operating activities ​ ( 15,629 ) ​ 49,058 ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities ​ ​ ​ ​ ​ ​ ​ Proceeds from sale of long-lived assets ​ 25 ​ 26 ​ Purchases of property, plant and equipment, net of acquisitions ​ ( 13,473 ) ​ ( 13,669 ) ​ Net cash used in investing activities ​ ( 13,448 ) ​ ( 13,643 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities ​ ​ ​ ​ ​ ​ ​ Net proceeds (borrowings) from line of credit ​ ( 42,000 ) ​ ( 30,000 ) ​ Payments on other debt ​ ( 741 ) ​ ( 600 ) ​ Payments of contingent consideration and hold-back payments to acquisitions ​ — ​ ( 9,162 ) ​ Dividends paid to shareholders ​ ​ — ​ ​ — ​ Payments of debt issuance costs ​ ​ ( 1,100 ) ​ ​ — ​ Payments to noncontrolling interest ​ ​ ( 2,520 ) ​ ​ ( 3,367 ) ​ Tax payments related to issuance of restricted stock units ​ ​ ( 127 ) ​ ​ ( 510 ) ​ Net cash used in financing activities ​ ( 46,488 ) ​ ( 43,639 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect of exchange rate changes on cash, cash equivalents and restricted cash ​ 1,847 ​ 878 ​ ​ ​ ​ ​ ​ ​ ​ ​ Decrease in cash, cash equivalents and restricted cash ​ ( 73,718 ) ​ ( 7,346 ) ​ Cash, cash equivalents and restricted cash, beginning of period ​ 173,905 ​ 167,064 ​ Cash, cash equivalents and restricted cash, end of period ​ $ 100,187 ​ $ 159,718 ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures ​ ​ ​ ​ ​ ​ ​ Cash paid for interest ​ $ 19,755 ​ $ 17,097 ​ Cash paid for income taxes ​ $ 17,561 ​ $ 4,793 ​ Non-cash investing and financing activities ​ ​ ​ ​ ​ ​ ​ Acquisition of long-lived assets through finance leases ​ $ 200 ​ $ 197 ​ Acquisition of equipment through increase in accounts payable, net ​ $ ( 2,426 ) ​ $ 5,079 ​ Dividend declared but not paid ​ $ 2,847 ​ $ 24,572 ​ ​ 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 Founded in 1983, TTEC Holdings, Inc. (“TTEC”, “the Company”; pronounced “T-TEC”) is a global customer experience (“CX”) outsourcing partner for marquee and disruptive brands and public sector clients. The Company designs, builds, and operates technology-enabled customer experiences across digital and live interaction channels to help clients increase customer loyalty, revenue, and profitability. By combining digital solutions with data-driven service capabilities, the Company helps clients improve their customer satisfaction while lowering their total cost to serve. As of March 31, 2024, TTEC served approximately 750 clients across targeted industry verticals including financial services, healthcare, public sector, telecom, technology, media, travel and hospitality, automotive and retail. The Company operates and reports its financial results of operation through two business segments: • TTEC Digital is one of the largest CX technology providers and is focused exclusively on the intersection of Contact Center as a Service (CCaaS), Customer Relationship Management (CRM), and Artificial Intelligence (AI) and Analytics. A professional services organization comprised of software engineers, systems architects, data scientists and CX strategists, this segment creates and implements strategic CX transformation roadmaps; sells, operates, and provides managed services for cloud platforms and premise based CX technologies including Amazon Web Services (“AWS”), Cisco, Genesys, Google, and Microsoft; and creates proprietary IP to support industry specific and custom client needs. TTEC Digital serves clients across enterprise and small and medium sized business segments and has a dedicated unit with government technology certifications serving the public sector. • TTEC Engage provides the digitally enabled CX operational and managed services to support large, complex enterprise clients’ end-to-end customer interactions at scale. Tailored to meet industry specific and business needs, this segment delivers data-driven omnichannel customer care, customer acquisition, growth, and retention services, tech support, trust and safety and back-office solutions. The segment’s technology-enabled delivery model covers the entire associate lifecycle including recruitment, onboarding, training, delivery, workforce management and quality assurance. TTEC demonstrates its market leadership through strategic collaboration across TTEC Digital and TTEC Engage when there is client demand and fit for the Company’s integrated solutions. This partnership is central to the Company’s ability to deliver comprehensive and transformational customer experience solutions to its clients, including integrated delivery, go-to-market and innovation for truly differentiated, market leading CX solutions. During the first quarter of 2024, the combined TTEC Digital and TTEC Engage global operating platform delivered onshore, nearshore and offshore services in 22 countries on six continents – the United States, Australia, Belgium, Brazil, Bulgaria, Canada, Colombia, Costa Rica, Egypt, Germany, Greece, Honduras, India, Ireland, Mexico, the Netherlands, New Zealand, the Philippines, Poland, South Africa, Thailand, and the United Kingdom – with the help of approximately 58,000 customer care associates, consultants, technologists, and CX professionals. 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. through December 31, 2023 and then 100 % owned subsequently (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, 2024. 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, 2023. 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 $ 14.2 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 $ 14.2 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 was 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2024 December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ ​ $ 91,514 $ 172,747 ​ Restricted cash included in "Prepaid and other current assets" ​ ​ 8,673 ​ 1,158 ​ Total ​ ​ $ 100,187 $ 173,905 ​ ​ 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 Financial Accounting Standards Board (“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. Other Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, “Segment Reporting - Improvements to Reportable Segment Disclosures” which relates to disclosures regarding a public entity’s reportable segments and provides more detailed information about a reportable segment’s expenses. The ASU is effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024, with retrospective application required. The Company is assessing the effect on its annual consolidated financial statement disclosures; however, adoption is not expected to have a material impact the Company’s financial statements. In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures” to enhance the transparency and decision usefulness of income tax disclosures. The ASU is effective for fiscal years beginning after December 15, 2024, with retrospective application permitted. The Company is assessing the effect on its annual consolidated financial statement disclosures; however, adoption is not expected to have a material impact the Company’s consolidated balance sheets or income statements. ​ ​ (2) ACQUISITIONS AND DIVESTITURES Serendebyte In connection with the acquisition by TTEC Digital, LLC of a 70 % interest in Serendebyte Inc. (“Serendebyte”), Serendebyte’s founder exercised his put rights on December 8, 2023, which required TTEC to acquire the remaining 30 % interest in Serendebyte. As part of the exercise, the Serendebyte founder failed to fulfill the agreed provisions of the sale and purchase agreement that parties executed on February 7, 2020. Pending completion of the put exercise formalities by Serendebyte’s founder, TTEC Digital is not able to determine the final purchase price for the remaining 30% buyout agreement. In connection with triggering the option, on December 8, 2023, a $ 0.3 million accrual was reclassified from Redeemable noncontrolling interest to Accrued expenses and the remaining balance was reclassified to Additional paid in capital. 7 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) 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. 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 2022, a $ 2.9 million net gain was recorded related to fair value adjustments for the estimated contingent payments based on changes in estimated EBITDA, 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 second quarter of 2023, an amendment to the agreement was signed which modified the contingent payment to a minimum payment of $ 7.4 million and a maximum payment of $ 10.4 million. An initial payment of $ 7.4 million was completed in May 2023. During 2023, a combined $ 3.0 million net expense was recorded related to fair value adjustments for the estimated contingent payment based on changes in estimated EBITDA, 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 March 31, 2024, the contingent payment is accrued at $ 0.3 million and is included in Other long-term liabilities in the accompanying Consolidated Balance Sheets. 8 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) 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 was included in Other long-term assets in the 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 March 31, 2024, 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 related to real estate and technology funds that were 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). 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. 9 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) 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. ​ ​ (3) SEGMENT INFORMATION The Company reports the following two segments: TTEC Digital and the CX Technology Services Industry TTEC Digital buyers are seeking solutions in several areas including cost optimization, migration from outdated legacy platforms to more agile cloud environments, lack of CX talent and expertise and a need for a practical way forward with AI. TTEC Digital takes a technology agnostic approach to these challenges and focuses on designing and delivering solutions specific to each client’s specifications. TTEC Digital has entered into strategic partnerships with the leading CX software vendors including Genesys, Microsoft, Cisco, AWS and Google which positions TTEC Digital to support the majority of CX platform requirements. 10 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) TTEC Digital’s solutions are built to respond to market needs for both enterprise and small and medium-sized business clients. AI design and delivery capabilities are woven across all four of the following pillars. • Professional Services: CX and AI solution planning, design, and implementation services • Managed Services: Cloud application and premise support • CX Consulting, Analytics and AI: Transformation strategy and design, data science, engineering, and visualization • IP & Software: Custom software engineering through TTEC Digital’s IP and Software division The segment has a three-pronged go to market strategy that includes growing existing client relationships, partner channel motions and general market development. In 2023, TTEC Digital expanded its Hyderabad Innovation Studio in India with the goal of continuing to expand its offshore delivery capabilities, and currently approximately 40% of the staff are located in one of several offshore locations. TTEC Engage and the CX Business Process Outsourcing Services Industry The TTEC Engage segment’s solutions are built to respond to the following market needs for clients. • Customer Support • Tech Support • Revenue Generation and Growth Services • Trust & Safety • AI Operations, including data annotation and labeling • Back-office Support TTEC Engage goes to market through a vertical approach with customized solutions that include industry specific talent, technology, certifications, and capabilities. For example, in the Banking, Financial Services and Insurance (BFSI) vertical, we support several lines of business with customized offerings for retail banking, online banking, credit card, property and casualty and loans. In healthcare, the segment supports care, technical support, revenue generation and back-office capabilities to meet the needs of payer, provider, clinical and pharma clients. 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. The following tables present certain financial data by segment (in thousands): Three Months Ended March 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation Income ​ ​ Gross ​ Intersegment ​ Net ​ & ​ from ​ ​ Revenue ​ Sales ​ Revenue ​ Amortization ​ Operations TTEC Digital ​ $ 112,031 ​ $ — ​ $ 112,031 ​ $ 7,050 ​ $ 3,288 ​ TTEC Engage ​ 464,607 ​ — ​ 464,607 ​ 18,095 ​ 19,423 ​ Total ​ $ 576,638 ​ $ — ​ $ 576,638 ​ $ 25,145 ​ $ 22,711 ​ ​ Three Months Ended March 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation Income ​ ​ ​ Gross ​ Intersegment ​ Net ​ & ​ from ​ ​ ​ Revenue ​ Sales ​ Revenue ​ Amortization ​ Operations ​ TTEC Digital ​ $ 116,927 ​ $ — ​ $ 116,927 ​ $ 6,861 ​ $ 785 ​ TTEC Engage ​ 516,359 ​ ​ — ​ 516,359 ​ 18,966 ​ 43,626 ​ Total ​ $ 633,286 ​ $ — ​ $ 633,286 ​ $ 25,827 ​ $ 44,411 ​ ​ 11 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ ​ ​ 2024 2023 Capital Expenditures ​ ​ ​ ​ ​ ​ ​ TTEC Digital ​ $ 1,787 $ 2,274 TTEC Engage ​ 11,686 ​ 11,395 ​ Total ​ $ 13,473 $ 13,669 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2024 December 31, 2023 ​ Total Assets ​ ​ ​ ​ ​ ​ ​ ​ TTEC Digital ​ ​ $ 817,502 $ 815,488 ​ TTEC Engage ​ ​ 1,297,552 ​ 1,370,110 ​ Total ​ ​ $ 2,115,054 $ 2,185,598 ​ ​ The following table presents revenue based upon the geographic location where the services are provided (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ ​ 2024 2023 ​ Revenue ​ ​ ​ ​ ​ ​ ​ ​ United States / Canada ​ $ 386,916 ​ $ 444,035 ​ Philippines / Asia Pacific / India ​ 120,465 ​ 122,039 ​ ​ Europe / Middle East / Africa ​ 38,844 ​ 34,455 ​ ​ Latin America ​ 30,413 ​ 32,757 ​ ​ Total ​ $ 576,638 $ 633,286 ​ ​ ​ ​ ​ ​ ​ ​ (4) SIGNIFICANT CLIENTS AND OTHER CONCENTRATIONS The Company had one client that contributed in excess of 10% of total revenue for the three months ended March 31, 2024; this client operates in the automotive industry and is included in the TTEC Engage segment. This client contributed 10.8 % and 10.0 % of total revenue for the three months ended March 31, 2024 and 2023, 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. In the first quarter of 2024, one of our larger financial services clients notified us that it is exiting one of the lines of business that we support. 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 March 31, 2024. 12 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Activity in the Company’s Allowance for credit losses consists of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ 2024 2023 Balance, beginning of year ​ $ 2,248 ​ $ 3,524 ​ Provision for credit losses ​ ( 31 ) ​ 2,263 ​ Uncollectible receivables written-off ​ ( 150 ) ​ ( 712 ) ​ Effect of foreign currency ​ ( 2 ) ​ 3 ​ Balance, end of year ​ $ 2,065 ​ $ 5,078 ​ ​ Accounts Receivable Factoring Agreement The Company is party to an Uncommitted Receivables Purchase Agreement (“Agreement”) with BMO Bank, N.A. (“Bank”, or “BMO”), 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2024 ​ December 31, 2023 Total accounts receivable factored ​ $ 85,115 ​ $ 99,994 ​ ​ ​ ​ ​ ​ ​ Total amounts collected from clients not yet remitted to Bank ​ $ 8,673 ​ $ 1,158 ​ ​ 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 March 31, 2024 as the fair value of the servicing arrangement as well as the fees earned were not material to the financial statements. On July 21, 2023, BMO Financial Group completed its acquisition of Bank of the West from PNB Bank Paribas. The Agreement transitioned with the acquisition. On January 2, 2024, the Company amended the arrangement to adjust the discount rate to reflect BMO’s updated market pricing levels and other minor items. ​ (5) GOODWILL ​ Goodwill consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect of ​ ​ ​ ​ December 31, ​ Acquisitions / ​ ​ ​ ​ Foreign ​ March 31, ​ ​ 2023 ​ Adjustments ​ Impairments ​ Currency ​ 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ TTEC Digital ​ $ 500,576 ​ $ — ​ $ — ​ $ ( 1,061 ) ​ $ 499,515 ​ TTEC Engage ​ 308,412 ​ — ​ ​ — ​ ​ ( 793 ) ​ 307,619 ​ Total ​ $ 808,988 ​ $ — ​ $ — ​ $ ( 1,854 ) ​ $ 807,134 ​ ​ 13 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) 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 Company’s annual impairment testing as of December 1, 2023, the Company identified one reporting unit, Engage, being at risk for future impairment if projected operating results are not met or other inputs into the fair value measurement change. The carrying value of Engage was $ 1,092.1 million at December 1, 2023, including approximately $ 308.4 million of goodwill. Based on the Company’s assessment, the estimated fair value of the Engage reporting unit exceeded its carrying value by approximately 13.0 %. If all assumptions are held constant, either a 1.7% increase in the discount rate or a 2.0% annual decrease in the projected revenue over the forecast period , would result in approximately $ 138.0 million decrease in the estimated fair value of the Engage reporting unit. Such a change in either of these assumptions individually would have resulted in the Engage reporting unit failing Step 1 of the goodwill impairment analysis on December 1, 2023. As an international outsourcing agent, Engage’s revenue and cash flows are susceptible to global economic conditions and client business volumes. In performing the Step 1 evaluation, the reporting unit’s current backlog and pipeline of customer business were considered, as well as inflation rates, gross domestic product rates, historical revenue growth and profitability, and state of the CX industry. The estimate of fair value was based on generally accepted valuation techniques and information available at the date of the assessment, which incorporated management’s assumptions about expected revenues, future cash flows and available market information for comparable companies. Outside of our annual impairment testing process, the Company monitors its reporting units for any triggering events while also performing qualitative assessments of impairment indicators. During the first quarter of 2024, the Company concluded there were no triggering events and completed its qualitative assessment of impairment indicators, which included, among other things, an assessment of changes in macroeconomic conditions, comparison of the actual results to those forecasted in the most recent annual impairment test and performing sensitivity analysis on key assumptions. ​ ​ (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 March 31, 2024, 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 months ended March 31, 2024 and 2023 (in thousands and net of tax): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ ​ ​ 2024 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Aggregate unrealized net gain/(loss) at beginning of period ​ $ 6,315 ​ $ 89 ​ ​ Add: Net gain/(loss) from change in fair value of cash flow hedges ​ ​ 966 ​ ​ 6,935 ​ ​ Less: Net (gain)/loss reclassified to earnings from effective hedges ​ ​ ( 1,201 ) ​ ​ ( 384 ) ​ ​ Aggregate unrealized net gain/(loss) at end of period ​ $ 6,080 ​ $ 6,640 ​ ​ ​ 14 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) The Company’s foreign exchange cash flow hedging instruments as of March 31, 2024 and December 31, 2023 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 March 31, 2024 ​ Amount ​ Amount ​ ​ 12 months ​ ​ Through Canadian Dollar 1,500 ​ $ 1,113 ​ ​ 100 % ​ September 2024 ​ Philippine Peso 7,647,000 ​ 135,128 (1) ​ 61.8 % ​ December 2026 ​ Mexican Peso 776,000 ​ 36,727 ​ ​ 63.4 % ​ December 2026 ​ ​ ​ ​ ​ $ 172,968 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Local ​ ​ ​ ​ ​ ​ ​ ​ ​ Currency ​ U.S. Dollar ​ ​ ​ ​ ​ ​ ​ ​ Notional ​ Notional ​ ​ ​ ​ As of December 31, 2023 ​ Amount ​ Amount ​ ​ ​ ​ ​ ​ Canadian Dollar 2,250 ​ $ 1,670 ​ ​ ​ ​ ​ ​ ​ Philippine Peso 9,324,000 ​ 165,842 (1) ​ ​ ​ ​ ​ ​ Mexican Peso 938,000 ​ 44,155 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 211,667 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (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 March 31, 2024 and December 31, 2023. ​ 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 March 31, 2024 and December 31, 2023 the total notional amounts of the Company’s forward contracts used as fair value hedges were $ 46.6 million and $ 73.3 million, respectively. Derivative Valuation and Settlements The Company’s derivatives as of March 31, 2024 and December 31, 2023 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2024 ​ ​ 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 ​ $ 7,418 ​ $ 178 ​ Other long-term assets ​ 2,125 ​ — ​ Other current liabilities ​ ( 1,179 ) ​ ( 47 ) ​ Other long-term liabilities ​ ( 144 ) ​ — ​ Total fair value of derivatives, net ​ $ 8,220 ​ $ 131 ​ ​ 15 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 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 ​ $ 7,527 ​ $ 327 ​ Other long-term assets ​ 2,415 ​ — ​ Other current liabilities ​ ( 1,214 ) ​ ( 120 ) ​ Other long-term liabilities ​ ( 197 ) ​ — ​ Total fair value of derivatives, net ​ $ 8,531 ​ $ 207 ​ ​ The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2024 and 2023 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ 2024 ​ 2023 ​ ​ 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 ​ $ ( 1,201 ) ​ $ ( 384 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount and location of net (gain) or loss reclassified from Accumulated OCI to income - effective portion: ​ ​ ​ ​ ​ ​ ​ Revenue ​ $ ( 1,624 ) ​ $ ( 518 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ 2024 ​ 2023 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 $ 226 $ 1,400 ​ ​ ​ ​ ​ ​ ​ ​ ​ (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: 16 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) 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 March 31, 2024 and December 31, 2023 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. 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 March 31, 2024 and December 31, 2023, the Company had $ 953.0 million and $ 995.0 million, respectively, of borrowings outstanding under the Credit Facility. During the first quarter of 2024 outstanding borrowings accrued interest at an average rate of 7.1 % 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 March 31, 2024, 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 March 31, 2024 and December 31, 2023 (in thousands): As of March 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ $ — ​ $ 8,220 ​ $ — ​ $ 8,220 ​ Fair value hedges ​ — ​ 131 ​ — ​ 131 ​ Total net derivative asset (liability) ​ $ — ​ $ 8,351 ​ $ — ​ $ 8,351 ​ ​ 17 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) As of December 31, 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 ​ $ — ​ $ 8,531 ​ $ — ​ $ 8,531 ​ Fair value hedges ​ — ​ 207 ​ — ​ 207 ​ Total net derivative asset (liability) ​ $ — ​ $ 8,738 ​ $ — ​ $ 8,738 ​ ​ The following is a summary of the Company’s fair value measurements as of March 31, 2024 and December 31, 2023 (in thousands): ​ As of March 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ $ — ​ $ 8,351 ​ $ — ​ Deferred compensation plan asset ​ ​ 33,441 ​ ​ — ​ ​ — ​ Total assets ​ $ 33,441 ​ $ 8,351 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative instruments, net ​ $ — ​ $ — ​ $ — ​ Contingent consideration ​ — ​ — ​ ( 256 ) ​ Total liabilities ​ $ — ​ $ — ​ $ ( 256 ) ​ ​ As of December 31, 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 ​ $ — ​ $ 8,738 ​ $ — ​ Deferred compensation plan asset ​ ​ 31,082 ​ ​ — ​ ​ — ​ Total assets ​ $ 31,082 ​ $ 8,738 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative instruments, net ​ $ — ​ $ — ​ $ — ​ Contingent consideration ​ — ​ — ​ ( 1,496 ) ​ Total liabilities ​ $ — ​ $ — ​ $ ( 1,496 ) ​ ​ Deferred Compensation Plan — The Company maintains a non-qualified deferred compensation plan for certain eligible employees. The deferred compensation asset represents the combined fair value of all the funds based on quoted values and market observable inputs. All amounts deferred under the Plan are unfunded, unsecured obligations of the Company. The Company manages the risk of the changes in the fair value of the liability for deferred compensation by electing to match its liability under the Plan with investment vehicles that offset a portion of its exposure including a Company owned life insurance policy held in a rabbi trust. 18 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 2022 and 2023, fair value adjustments of a $ 2.9 million benefit and a $ 3.0 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. During 2024, a fair value adjustment of a $1.2 million benefit, was 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, and updated EBITDA estimates. The fair value adjustment benefits(expenses) were included in Other income (expense) 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 / ​ March 31, ​ ​ 2023 ​ Acquisitions ​ Payments ​ Adjustments ​ 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Faneuil ​ $ (1,496) ​ $ — ​ $ — ​ $ 1,240 ​ $ (256) ​ Total ​ $ ( 1,496 ) ​ $ — ​ $ — ​ $ 1,240 ​ $ ( 256 ) ​ ​ ​ ​ ​ ​ ​ (8) IMPAIRMENT OF ASSETS 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 months ended March 31, 2024 and 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 $ 0.1 million and $ 4.3 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. 19 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) As of March 31, 2024, the Company had $ 52.1 million of net deferred tax assets (after a $ 42.9 million valuation allowance) and a net deferred tax asset of $ 48.9 million (after deferred tax liabilities of $ 3.1 million) related to the United States and international tax jurisdictions whose recoverability is dependent upon future profitability. At the end of each interim period, we are required to estimate our annual effective tax rate for the fiscal year and to use that rate to provide for income taxes for the current year-to-date reporting period. The Company’s 2024 estimated annual effective tax rate of 37.3 %, before discrete items, is driven by the distribution of income between the U.S. and international tax jurisdictions, earnings in international jurisdictions currently under an income tax holiday, changes in valuation allowance, the associated U.S. tax impacts of foreign earnings and United States Federal Tax Credits. The Company’s first quarter effective tax rate was 82.3 %. This rate was the result of near breakeven year-to-date income, the exclusion of losses related to entities with a full valuation allowance and includes a $ 0.7 million benefit related to the tax impact of foreign remittances, $ 0.3 million of expense related to stock-based compensation, and $ 0.5 million of expense related to taxes on prior year filings. 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 , the State of Wisconsin for tax years 2019 through 2021 , 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. The Organization for Economic Co-operation and Development (OECD), supported by 140 of their member countries, have agreed to implement a minimum 15 % tax rate on certain multinational enterprises and have released model guidance. This global minimum tax, known as the Pillar Two framework, became effective across various countries in 2024, as each country works to enact legislation influenced by the OECD Pillar 2 rules. While the Company does not expect the adoption of the Pillar Two framework to have a material impact on its effective tax rate, the Company continues to evaluate additional guidance released by the OECD, along with the pending and adopted legislation in each of the countries in which it operates. 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. 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. During the first quarter of 2024, a valuation allowance of $ 3.0 million was recorded for assets that are not expected to be recovered in future periods. The Company has been granted “Tax Holidays” as an incentive to attract foreign investment by the governments of the Philippines and Honduras. 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 2031. The aggregate benefit to income tax expense for the three months ended March 31, 2024 and 2023 was approximately $ 0.7 million and $ 0.7 million, respectively, which had an impact on diluted net income per share of $ 0.02 and $ 0.01 , respectively. ​ ​ 20 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) (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 . The Company primarily uses the Credit Facility to fund working capital, general operations, dividends, acquisitions and other strategic activities. 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. On February 26, 2024 , the Company entered into an Eighth Amendment to the Credit Agreement to increase the net leverage ratio covenant, the lenders’ commitment fee rate and margin for a period starting with the quarter ending March 31, 2024 through the quarter ending March 31, 2025, from the current 3.5 to 1 to between 4.0 to 1 and 4.5 to 1, as may be applicable in different quarters; and reduced the total lenders’ commitment from $1.5 billion to $ 1.3 billion. TTEC may, at its option for any quarter during the amendment period, elect to revert to the net leverage ratio and the corresponding lenders’ commitment fee rate and margin to pre-amendment levels. The term of the Credit Facility will remain unchanged through November 23, 2026 . The Company’s Credit Agreement includes a number of financial covenants and operating restrictions of which failure to comply could result in a default under the Credit Agreement. The Company’s ability to comply with the covenants will depend on, among other things, financial, business, market, competitive and other conditions, many of which are beyond its control. As of the issuance of these financial statements, the Company believes it has sufficient cash on hand, positive working capital, and availability to access additional cash under the Credit Facility to meet its business operating requirements, its capital expenditures and to continue to comply with the amended debt covenants. In the event that the Company does not remain in compliance with the financial covenants under the Credit Facility, it may need to negotiate additional amendments to or waivers of the terms of such credit facilities, refinance its debt, or raise additional capital. The Company could also reduce discretionary spending, capital expenditures and dividends paid. The maximum commitment under the Credit Facility is $ 1.3 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 1 % based on the Company’s net leverage ratio. SOFR loans bear interest at a rate equal to the applicable spread adjusted SOFR plus applicable credit margin which ranges from 1 % to 2 % 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. 21 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) As of March 31, 2024 and December 31, 2023, the Company had borrowings of $ 953.0 million and $ 995.0 million, respectively, under its Credit Facility, and its average daily utilization was $ 1,072.0 million and $ 1,061.9 million for the three months ended March 31, 2024 and 2023, respectively. Based on the current level of availability based on the covenant calculations, the Company’s remaining borrowing capacity was approximately $ 95 million as of March 31, 2024. As of March 31, 2024, the Company was in compliance with all covenants and conditions under its Credit Agreement. Letters of Credit As of March 31, 2024, outstanding letters of credit under the Credit Facility totaled $ 0.2 million. As of March 31, 2024, 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 three months ended March 31, 2024 from amounts included in deferred revenue as of December 31, 2023 was $ 57.9 million. Revenue recognized for the three months ended March 31, 2023 from amounts included in deferred revenue as of December 31, 2022 was $ 76.2 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 March 31, 2024, the Company’s RPO was $ 354.9 million, which will be delivered and recognized within the next five years . 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. 22 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, 2022 ​ $ ( 123,734 ) $ 89 $ ( 2,656 ) $ ( 126,301 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive income (loss) before reclassifications ​ 8,988 ​ 6,935 ​ 10 ​ 15,933 ​ Amounts reclassified from accumulated other comprehensive income (loss) ​ 301 ​ ( 384 ) ​ 62 ​ ( 21 ) ​ Net current period other comprehensive income (loss) ​ 9,289 ​ 6,551 ​ 72 ​ 15,912 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated other comprehensive income (loss) at March 31, 2023 ​ $ ( 114,445 ) $ 6,640 $ ( 2,584 ) $ ( 110,389 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated other comprehensive income (loss) at December 31, 2023 ​ $ ( 93,144 ) $ 6,315 $ ( 3,047 ) $ ( 89,876 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive income (loss) before reclassifications ​ ( 3,743 ) ​ ​ 966 ​ ​ 12 ​ ( 2,765 ) ​ Amounts reclassified from accumulated other comprehensive income (loss) ​ — ​ ​ ( 1,201 ) ​ ​ 109 ​ ( 1,092 ) ​ Net current period other comprehensive income (loss) ​ ( 3,743 ) ​ ( 235 ) ​ 121 ​ ( 3,857 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated other comprehensive income (loss) at March 31, 2024 ​ $ ( 96,887 ) $ 6,080 $ ( 2,926 ) $ ( 93,733 ) ​ ​ 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ Statement of ​ ​ ​ March 31, ​ Comprehensive Income ​ ​ 2024 2023 (Loss) Classification ​ Derivative valuation ​ ​ ​ ​ ​ ​ ​ ​ ​ Gain on foreign currency forward exchange contracts ​ $ 1,624 ​ $ 518 Revenue ​ Tax effect ​ ( 423 ) ​ ( 134 ) Provision for income taxes ​ ​ ​ $ 1,201 ​ $ 384 Net income (loss) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ Actuarial loss on defined benefit plan ​ $ ( 121 ) ​ $ ( 69 ) Cost of services ​ Tax effect ​ 12 ​ 7 Provision for income taxes ​ ​ ​ $ ( 109 ) ​ $ ( 62 ) Net income (loss) ​ ​ ​ ​ ​ ​ ​ ​ 23 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) (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 March 31, ​ 2024 2023 ​ ​ ​ ​ ​ ​ Shares used in basic earnings per share calculation ​ 47,432 47,234 Effect of dilutive securities: ​ ​ ​ ​ ​ Restricted stock units ​ 150 143 Performance-based restricted stock units ​ 5 24 Total effects of dilutive securities ​ 155 167 Shares used in dilutive earnings per share calculation ​ 47,587 47,401 ​ For the three months ended March 31, 2024 and 2023, there were 946 thousand and 463 thousand, respectively, outstanding of Restricted Stock Units (“RSUs”) 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 for the three months ended March 31, 2024 and 2023 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ 2024 ​ 2023 ​ ​ ​ ​ ​ ​ ​ ​ Equity-based compensation expense recognized in Cost of services ​ $ 2,245 ​ $ 1,862 ​ Equity-based compensation expense recognized in Selling, general and administrative ​ ​ 3,567 ​ ​ 2,292 ​ Total equity-based compensation expense ​ $ 5,812 ​ $ 4,154 ​ ​ Restricted Stock Unit Grants During the three months ended March 31, 2024 and 2023, the Company granted 346,507 and 93,772 RSUs, respectively, to new and existing employees, which vest over four to five years . The Company recognized compensation expense related to RSUs of $ 5.8 million and $ 3.9 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, there was approximately $ 35.1 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 2021, 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 would 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 $ 0.0 million and $0.2 million for the three months ended March 31, 2024 and 2023, respectively. 24 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) 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. For the ordinary course annual PRSUs, no expense was recognized for the three months ended March 31, 2024. Expense for the one-time stretch financial goals PRSUs will begin at the start of the requisite service period, beginning January 1, 2025. 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. As of the date of this report, the Company has not yet awarded 2024 PRSUs but it plans to do so during the second quarter of 2024. The 2024 PRSUs will be subject to service and performance vesting conditions in a manner similar to prior years. ​ (15) NON-QUALIFIED DEFERRED COMPENSATION PLAN The Company maintains a non-qualified deferred compensation plan for executive officers and other eligible employees that permits such employees to defer a portion of their compensation, on a pretax basis, until after their termination of employment. The plan allows for deferral of up to 75 % of a participant’s base salary, bonus, commissions, and any amounts that U.S. highly compensated employees are limited from contributing into TTEC’s Deferred Tax Retirement Savings Plan (the “401K Plan”). All amounts deferred under the plan are unfunded, unsecured obligations and are recorded within Other long-term liabilities in the accompanying Consolidated Condensed Balance Sheets. In the event of bankruptcy, the assets of this plan are available to satisfy the claims of general creditors. Participants may choose among alternative earnings rates for the amounts they defer, which are primarily based on investment options within the 401K Plan. Amounts contributed and deferred under the Plan are credited or charged with the performance of investment options offered under the plan as elected by the participants. The Company manages the risk of changes in the fair value of the liability for deferred compensation by electing to match its liability under the plan with investment vehicles that offset a portion of its exposure including a Company owned life insurance policy held in a rabbi trust. ​ (16) 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 three months ended March 31, 2024 and 2023, the Company expensed $ 0.1 million and $ 0.3 million, respectively, to Avion and Airmax for services provided to the Company. There was $ 36 thousand in payments due and outstanding to Avion and Airmax as of March 31, 2024. 25 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) 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 three months ended March 31, 2024 and 2023, the Company expensed $ 0.8 million and $ 0.8 million, respectively, for these services. ​ ​ ​ 26 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. Forward-looking statements include, but are not limited to, statements regarding our operations, expected financial condition, results of operation, effective tax rate, cash flow, leverage, liquidity, business strategy, competitive position, demand for our services in international operations, acquisition opportunities and impact of acquisitions, capital allocation and dividends, growth opportunities, spending, capital expenditures and investments, competition and market forecasts, industry trends, our human capital resources, 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. Unless otherwise indicated or except where the context otherwise requires, the terms “TTEC,” “the Company,” “we,” “us” and “our” and other similar terms in this report refer to TTEC Holdings, Inc. and its subsidiaries. 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, 2023. Important factors that could cause our actual results to differ materially from those indicated in the forward looking statements include, among others, risks related to our business operations, our strategy and our industry, including risks related to our strategic execution in a competitive market, our ability to innovate and introduce technologies that are sufficiently disruptive to allow us to maintain and grow our market share such as the effective adoption of artificial intelligence into our solutions, revenue risks specific to client concentration in our TTEC Engage business segment and risks related to the product reliability of the technology partners and client transition from on premises to public cloud and SaaS information technology solutions in our TTEC Digital business segment, risks specific to remote work environment, risks related to the challenges inherent in demand and delivery center capacity forecasting, risks specific to labor costs and retention, risks related to operations controls and employees engaging in fraud, long sales cycles and lead time to revenue, risks specific to potential geographic and other expansions, risks that may arise in connection with events outside of our control such as macroeconomic conditions, geopolitical tensions, and outbreaks of infectious diseases, risks of M&A activity including our ability to identify, acquire and properly integrate acquired businesses in accordance with our strategy; risks related to our use of technology, including risk that could arise due to disruption to our information technology systems, cybersecurity events and unauthorized data access, our reliance on communication and utility services provided to third parties, risks specific to rapid adoption of AI/GenAI technologies, and the growing reliance on third parties for data, cloud and SaaS services; risks of our financial operations, including ineffective cost-management strategies, our leverage and debt service obligations, risks specific to financial and operating restrictions built into our credit facility, changes in the cost or availability of labor, telecommunication services, and other operational necessities that we cannot pass on to our clients, risks related to foreign currency exchange, changes in income tax rates and laws, and other laws and regulations relevant to our business, interpretations of transfer pricing arrangements, uncertainties tied to goodwill, assets and strategic investments’ impairments; risks specific to our contracting practices and laws and regulations that impact our business, including uncertainty and inconsistency in privacy and data protection laws, the high cost of compliance with such laws, the high cost and reputational damage of wage and hour class action lawsuits, contract terms that lead to volatility in revenue and profitability, the efforts by clients to transfer contractually cybersecurity, data privacy and emerging technology risks to service providers and our inability to always control or mitigate them, uncertainty in AI/GenAI regulatory environments, risks specific to IP protection and infringement, and our ability to timely secure and maintain licenses needed to support certain regulated lines of business; risks specific to operations outside of the U.S. and in jurisdictions where we have limited experience; risks related to the ownership of our common stock, including risks inherent in our capital structure, our controlling shareholder risk, risks related to the price and trading volumes of our common stock being affected by factors that we cannot fully impact or control, risks inherent in our dividend 27 Table of Contents and stock repurchase policies, risks specific to being a Delaware company and provisions in our charter documents that may discourage, delay or prevent a change in control events potentially depressing the price of our common stock, and the fact that our Chairman and Chief Executive Officer has control over matters requiring shareholder action potentially impacting our stock price and making it less attractive to investors. 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