We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is TTEC's High-Margin Digital Segment Capable of Driving the Core?
Read MoreHide Full Article
Key Takeaways
TTEC Q1'26 revenues fell 7.1% y/y and loss was 11 cents per share as adjusted EBITDA dropped 18.8%.
TTEC Engage margin eased to 6.3% as it cut weak accounts, offshored and automated AI workflows.
TTEC Digital fell 5.7% to $101.9M; margin sank to 6.6%, but the 2026 EBITDA margin is seen at 13.3-14.6%.
TTEC Holdings, Inc.’s (TTEC - Free Report) first-quarter 2026 financial results raised a vital question about TTEC Digital’s ability to offset the structural corrections in TTEC Engage. During the aforementioned quarter, the top and bottom lines experienced substantial dips, with revenues declining 7.1% year over year and a loss per share of 11 cents. On a similar note, adjusted EBITDA plummeted 18.8% from the year-ago quarter.
TTEC’s financial performance took a hit as both operating segments deteriorated substantially. TTEC Engage, which provides customer care and growth services, recorded a 7.5% year-over-year decline in revenues. The adjusted operating margin contracted to 6.3% from 6.9% in the year-ago quarter, but it remained relatively resilient as management rationalized underperforming client accounts and shifted to lower-cost offshore delivery and automated AI workflows.
On the TTEC Digital front, revenues declined 5.7% year over year to $101.9 million in the first quarter of 2026. Its adjusted operating margin squeezed to 6.6% from the year-ago quarter’s 11.2%. TTEC’s CFO, Kenny Wagers, stated that the deterioration in this tech-heavy segment was triggered by the signing of professional service engagements with a significant portion phased late in the quarter, impacting short-term revenues and profitability.
Despite the softness in the first quarter of 2026, management’s expectations for profitability enhancements rely on TTEC Digital. For 2026, this segment is anticipated to achieve a non-GAAP adjusted EBITDA margin of 13.3-14.6% (midpoint: 14%). Then again, for TTEC Engage, the same metric is expected to hover at 7.2-7.8% (midpoint: 7.5%).
While TTEC Engage stabilizes the client base, TTEC Digital’s late-quarter sales momentum and propelling enterprise demand for AI architecture must convert into high-margin revenues. We anticipate the inability to deploy TTEC Digital’s back-half pipeline to put the broader corporate turnaround under pressure.
The TTEC stock has dipped 17% over the past six months against a 4.9% rally in its industry. Its competitors Genpact (G - Free Report) and Maximus (MMS - Free Report) have declined 28% and 28.7%, respectively.
6-Month Share Price Performance
Image Source: Zacks Investment Research
From a valuation perspective, TTEC trades at a 12-month forward price-to-earnings ratio of 1.95, lower than Genpact and Maximus’ 7.58X and 6.89X, respectively.
P/E F12M
Image Source: Zacks Investment Research
TTEC Holdings, Genpact and Maximus carry a Value Score of A each.
The Zacks Consensus Estimate for TTEC’s 2026 and 2027 earnings has been unchanged at $1.2 and $1.33 per share over the past 30 days, respectively.
View the Zacks #1 Rank List
Image: Bigstock
Is TTEC's High-Margin Digital Segment Capable of Driving the Core?
Key Takeaways
TTEC Holdings, Inc.’s (TTEC - Free Report) first-quarter 2026 financial results raised a vital question about TTEC Digital’s ability to offset the structural corrections in TTEC Engage. During the aforementioned quarter, the top and bottom lines experienced substantial dips, with revenues declining 7.1% year over year and a loss per share of 11 cents. On a similar note, adjusted EBITDA plummeted 18.8% from the year-ago quarter.
TTEC’s financial performance took a hit as both operating segments deteriorated substantially. TTEC Engage, which provides customer care and growth services, recorded a 7.5% year-over-year decline in revenues. The adjusted operating margin contracted to 6.3% from 6.9% in the year-ago quarter, but it remained relatively resilient as management rationalized underperforming client accounts and shifted to lower-cost offshore delivery and automated AI workflows.
On the TTEC Digital front, revenues declined 5.7% year over year to $101.9 million in the first quarter of 2026. Its adjusted operating margin squeezed to 6.6% from the year-ago quarter’s 11.2%. TTEC’s CFO, Kenny Wagers, stated that the deterioration in this tech-heavy segment was triggered by the signing of professional service engagements with a significant portion phased late in the quarter, impacting short-term revenues and profitability.
Despite the softness in the first quarter of 2026, management’s expectations for profitability enhancements rely on TTEC Digital. For 2026, this segment is anticipated to achieve a non-GAAP adjusted EBITDA margin of 13.3-14.6% (midpoint: 14%). Then again, for TTEC Engage, the same metric is expected to hover at 7.2-7.8% (midpoint: 7.5%).
While TTEC Engage stabilizes the client base, TTEC Digital’s late-quarter sales momentum and propelling enterprise demand for AI architecture must convert into high-margin revenues. We anticipate the inability to deploy TTEC Digital’s back-half pipeline to put the broader corporate turnaround under pressure.
TTEC Holdings’ Price Performance, Valuation & Estimates
The TTEC stock has dipped 17% over the past six months against a 4.9% rally in its industry. Its competitors Genpact (G - Free Report) and Maximus (MMS - Free Report) have declined 28% and 28.7%, respectively.
6-Month Share Price Performance
From a valuation perspective, TTEC trades at a 12-month forward price-to-earnings ratio of 1.95, lower than Genpact and Maximus’ 7.58X and 6.89X, respectively.
P/E F12M
TTEC Holdings, Genpact and Maximus carry a Value Score of A each.
The Zacks Consensus Estimate for TTEC’s 2026 and 2027 earnings has been unchanged at $1.2 and $1.33 per share over the past 30 days, respectively.
TTEC Holdings currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.