TTEC 10-K & 10-Q changes, risk factors and insider trading

•risks related to our business operations and our industry;

Failure to successfully execute our business strategy could adversely affect our financial results

Our business performance depends on our ability to compete successfully in the markets we currently serve, while expanding into new, profitable markets. Our industry is highly competitive, fragmented, and is undergoing structural and technological transformation.

Our clients' rapid adoption of Artificial Intelligence (AI) solutions could reduce demand for our services and adversely affect our business, results of operations, and financial condition if we cannot adapt and offer differentiated AI-enabled service offerings

The rapid development and adoption of AI technologies by our clients and across our industry present significant risks to our business. Our clients are increasingly deploying AI-powered tools and solutions to automate, replace, or materially supplement some of the services that we have historically provided. This trend may accelerate as AI technologies continue to advance in capability, reliability, and cost-effectiveness.

If our clients determine that AI solutions can adequately perform some of the services that we currently provide, or that AI-enabled alternatives offer a more cost-effective or efficient way to achieve their business objectives, demand for our services could decline. Such a shift in client preferences may result in reduced business volumes, pricing pressure, contract cancellations or non-renewals, and a decrease in overall revenue. The pace and extent of AI adoption may vary across our client base and service lines, making it difficult to predict the timing and magnitude of these impacts on our business.

Our ability to mitigate these risks depends in part on our capacity to adapt our service offerings, continue to develop differentiated solutions that leverage AI to add value to our clients, and identify new market opportunities. There can be no assurance, however, that we will be able to do so successfully or in a timely manner. The cost of developing and integrating AI capabilities into our offerings may be substantial, and these investments may not achieve the desired revenue stabilization and profitability quickly enough to offset the impact of emerging technologies on our business. We may also face significant competition from established competitors, new market entrants, and our clients who may have invested heavily in AI technologies. Additionally, AI solutions we develop or deploy may not achieve market acceptance, may underperform expectations, or may expose us to new risks, including those related to data privacy, intellectual property, regulatory compliance, and reputational harm.

If we are unable to successfully anticipate and respond to the risks associated with the rapid adoption of AI by our clients, our business, results of operations, financial condition, and competitive position could be materially and adversely affected.

Our leverage and debt service obligations, and the terms of our credit facility, may adversely affect our business and financial condition

Our ability to satisfy our debt obligations depends on our future performance, which could be affected by financial, business, economic and other factors. As of December 31, 2025, we had $905.0 million of borrowings outstanding and a maximum borrowing capacity of up to $1.05 billion in the aggregate under our credit facility; this revolving commitment is reduced by $25 million on April 1, 2026 and July 1, 2026. The credit facility, as amended in November 2025, matures on November 23, 2027, and a one-time extension fee of 1.5% of the aggregate revolving credit commitment is payable if the credit facility in its current form is still in effect on October 1, 2026. The Company engaged a financial advisor to evaluate refinancing alternatives for the credit facility to enhance our long-term financial flexibility and/or to pursue other capital structure alternatives. There can be no assurance, however, that we will be able to extend or restructure the current credit facility on acceptable terms.

Furthermore, our operations may not generate sufficient cash flows to service our debt and meet our other obligations. If we fail to make a payment on our debt, we could be in default on such debt, and the lenders could declare such debt due and payable, which would have a material adverse effect on our business, financial condition and results of operations.

In addition, our indebtedness and financial covenants under our credit facility could have other adverse consequences for our business, including:

This places us at a disadvantage compared to our competitors, who may be better positioned to take advantage of opportunities that our leverage prevents us from exploiting.

Any of these consequences, individually or collectively, could have a material adverse effect on our business, financial condition and results of operations.

We are subject to financial and operating restrictions built into our credit agreement.

Our credit agreement includes a number of financial and operating restrictions. For example, our credit agreement requires us to meet financial ratios, including leverage ratios and an interest coverage ratio, among others. The Credit Facility currently provides for a net leverage ratio covenant of no more than 4.00 to 1 and the minimum interest coverage ratio to not less than 2.5 to 1, with such levels gradually becoming more restrictive during subsequent fiscal quarters. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources”.

Our credit agreement also contains provisions that restrict our ability to, among other actions, create liens on our assets; dispose of assets; engage in mergers or consolidations; and pay dividends or make other distributions to our stockholders, or repurchase shares of our common stock. These provisions may competitively disadvantage us relative to other companies and adversely impact our ability to conduct our business. Potential important opportunities or transactions, such as significant acquisitions, may require the consent of our lenders. In addition, our failure to comply with these covenants could result in a default under the credit agreement.

If our client service demand, level of effort and capacity forecasts are not accurate, our ability to serve our clients profitably could be materially impacted

In our TTEC Engage business, we rely on client demand forecasts to make timely staffing level decisions and investments in our delivery centers and remote work technologies. This forecasting information is critical to our successful execution and profitability maximization. We can provide no assurance that our clients will continue to provide us with reliable demand forecasts, nor that we will continue to be able to maintain desired delivery center capacity utilization and remote delivery mix. If we are unable to dynamically adjust to changes in clients’ demand forecasts, if our facilities and staff utilization rates are below expectations or if unexpected shifts in demand make it difficult to right size our real estate and staffing commitments quickly, our results of operations may be adversely affected.

Our cost containment efforts may constrain investments necessary for growth and business opportunities, while failure to manage costs effectively could adversely impact our profitability and ability to service debt

We intend to continue growing our business through expanded client relationships, increased sales efforts, and new technology offerings while maintaining disciplined cost controls. This approach creates inherent tension: lean overhead combined with growth objectives may strain our management systems, infrastructure, and resources, potentially resulting in internal control failures, missed business opportunities, and staff attrition.

Our ability to improve or maintain profitability depends on continuous cost management across several areas, including workforce optimization and delivery center utilization, operational efficiency through offshoring and automation, and administrative cost discipline. These ongoing efforts must be balanced against necessary investments to support growth, address technology transformation, and respond to increasing cybersecurity threats. Additionally, inflationary pressures in the economies where we operate continue to affect our cost structure.

If we fail to manage costs effectively in response to changes in demand and pricing for our services, if cost discipline comes at the expense of investments necessary to grow and protect our business, or if we are unable to absorb or pass through increases in operating costs to our clients, our business, financial condition, and results of operations could be materially adversely affected.

The current outsourcing trend may not continue, and the prices that clients are willing to pay for the services may diminish, adversely affecting our business

Our business and the growth in our business depends, in large part, on the willingness of clients to outsource customer care and management services. There can be no assurance that the customer care outsourcing trend will continue, and clients may elect to perform these services in-house or rely on emerging technologies for some of the services they currently outsource to us. Reduction in demand for our services and increased competition from other providers, technologies, and in-house alternatives could create pricing pressures and excess capacity in the market that would have an adverse effect on our business, financial condition, and results of operations.

We have incurred, and may in the future incur, impairments to goodwill, long-lived assets or strategic investments, which would impact our financial results of operations

As a result of past acquisitions, as of December 31, 2025, we have approximately $368.7 million of goodwill and $133.7 million of intangible assets included on our Consolidated Balance Sheet. We review our goodwill and intangible assets for impairment at least once annually, and more often when events or changes in circumstances indicate the carrying value may not be recoverable. We perform an assessment of qualitative and quantitative factors to determine whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of the goodwill or intangible asset is less than its carrying amount. In the event that the book value of goodwill or intangible asset is impaired, such impairment would be charged to earnings in the period when such impairment is determined. We have recorded goodwill and intangible impairments in the past. For example, in 2024, we recorded a non-cash pre-tax goodwill impairment charge of $196.0 million in connection with the TTEC Engage reporting unit and an additional non-cash pre-tax $37.5 million impairment charge associated with certain tax effects for a total non-cash impairment loss of $233.5 million recognized in Q2 2024. In Q4 2025, we are recording a non-cash pre-tax goodwill impairment charge of $193.0 million in connection with the TTEC Digital reporting unit and an additional non-cash pre-tax $12.4 million impairment charge associated with certain tax effects for a total non-cash impairment loss of $205.4 million. There can be no assurance that we will not incur additional impairment charges in the future, which could have material adverse effects on our results of operations.

We routinely consider strategic transactions and may enter into such transactions at any time; such transactions could negatively impact our business and create unanticipated risks

We regularly evaluate potential acquisitions, divestitures, and business combinations that we believe could benefit our stockholders, and we may consider such transactions in the context of the changes we may introduce to our capital structure in connection with the refinancing of our credit facility. There can be no assurances, however, that we will be able to identify opportunities that complement our strategy, are available at valuation levels accretive to our business, or that our banking partners would consent to such transactions under our credit facility. Even if we are successful in executing such transactions, they may subject our business to risks that could adversely affect our results of operations, including:

While we consider and pursue these transactions to enhance our business, financial results, and stockholder value, there can be no assurance that we will achieve our objectives.

Risks Related to Our Business Operations and Our Industry

Our public sector business represents unique risks that can negatively impact our results of operations

A notable portion of our revenue comes from contracts with U.S. federal, state and local government entities, and our growth strategy includes further expansion of our public sector work. These contracts present distinct risks, including long and uncertain procurement cycles, limited ability to adjust pricing or other material contract terms when operating conditions change, funding and appropriation constraints, heightened compliance and audit exposure, and broad termination rights that can delay revenue, increase costs, and reduce margins.

Many of our public sector contracts impose strict change-control and approval requirements, and inflation, wage increases, increased cost of specialized technology and security requirements, regulatory changes, scope shifts, or volume and mix variances can raise delivery costs without timely recovery, producing unfavorable economics for the remaining performance period.

Public sector contracts are contingent on annual appropriations and funding decisions and may be terminated or not renewed if funds are unavailable, and budget shortfalls, policy shifts, continuing resolutions, or shutdowns can delay, downsize, or end awards, resulting in unfunded costs and under-utilized resources.

Public sector work also entails heightened compliance, audit, and oversight of performance, pricing, cost allocations, labor practices, information security, and subcontracting. Adverse findings can result in repayments, withholdings, penalties, reputational harm, or restrictions on future eligibility to bid for or perform public sector work.

Collectively, these public-sector-specific factors could delay or reduce anticipated revenue and increase compliance and delivery costs, materially and adversely affecting our profitability and results of operations.

The trend of clients seeking to transfer to service providers growing risks related to cybersecurity, data privacy and emerging technologies could significantly impact our operations and profitability

We often provide services in the clients’ and not in our information technology environments, and security and data privacy incidents that clients experience may have many causes and many contributory factors, most of which are unrelated to our activities or involve situations that we cannot reasonably control or mitigate. Yet, clients are increasingly demanding that service providers, like us, accept substantial or even unlimited liability for incidents that we did not cause but which our errors or omissions may have contributed to, in part. While clients expect the inclusion of emerging technologies, including AI, in our services offerings, they often are not positioned to nor do they wish to mitigate or assume responsibility for the often uncertain risks associated with such technologies, instead expecting us to assume that risk. Potential liability and related cost in connection with these risk transfers are often unpredictable, cannot be easily quantified or priced, and cannot always be insured. If we are unable to negotiate reasonable contractual terms with our clients where liabilities for our services are reasonably allocated to events that we can impact, control or mitigate, we may have to decline business opportunities or incur significant liability that would have impact on our results of operations.

Our remote service delivery model exposes us to identity verification, compliance, cybersecurity, and operational risks that could harm our business

Smaller Reporting Company Status

We are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. As a smaller reporting company, we are eligible to provide scaled disclosures in our filings with the SEC, the Company elected not to avail itself of this relief in this Annual Report on Form 10-K and will continue to provide the same level of disclosures as in its most recent fiscal periods. The Company will avail itself of certain disclosure relief, however, on select items generally included in the proxy materials and incorporated into the Form 10-K by reference. The Company may re-evaluate this decision at a later date.

Year Ended December 31, 2025 Compared to December 31, 2024

The tables included in the following sections are presented to facilitate an understanding of Management’s Discussion and Analysis of Financial Condition and Results of Operations and present certain information by segment for the years ended December 31, 2025 and 2024 (amounts in thousands). All inter-company transactions between the reported segments for the periods presented have been eliminated.

The increase in revenue for the TTEC Digital segment was driven by higher one-time on-premise related revenue. It was partially offset by a decrease in recurring and professional services revenue.

The operating income/(loss) reduction is primarily attributable to a $205.4 million goodwill impairment charge. The operating income/(loss) as a percentage of revenue decreased to (37.9)% in 2025 as compared to 5.2% in 2024. Included in the operating income/(loss) was amortization related to acquired intangibles of $14.7 million and $16.6 million for the years ended December 31, 2025 and 2024, respectively.

The operating income/(loss) change was primarily attributable to the goodwill impairment of $233.5 million in 2024 and lower restructuring expenses. As a result, the operating income/(loss) as a percentage of revenue increased to 3.6% in 2025 as compared to (11.3)% in the prior period. Included in the operating income/(loss) was amortization expense related to acquired intangibles of $16.3 million and $16.4 million for the years ended December 31, 2025 and 2024, respectively.

Interest income increased to $9.4 million in 2025 from $2.7 million in 2024 due to $8.5 million of interest income on an aged VAT receivable. Interest expense decreased to $71.7 million during 2025 from $84.3 million during 2024, primarily due to the termination of the factoring agreement and lower utilization and interest rates on the line of credit.

For the year ended December 31, 2025 Other income (expense), net decreased to a net income of $9.2 million from a net income of $18.6 million during the prior year.

Included in the year ended December 31, 2025 was a $10.4 million gain related to a recovery of an aged VAT receivable.

Included in the year ended December 31, 2024 was a net $15.5 million gain related to the sale of our real estate asset in Englewood, Colorado.

The reported effective tax rate for 2025 was (8.7)% as compared to (31.3)% for 2024. The effective tax rate for 2025 was impacted by earnings in international jurisdictions currently under an income tax holiday, a $7.1 million benefit related to changes in tax contingent liabilities, a $12.5 million benefit related to restructuring and impairment charges, $2.3 million of expense related to recovery of foreign tax receivables and $0.9 million of other tax expense. Without these items our effective tax rate for the year ended December 31, 2025 would have been 37.1%.

For the year ended December 31, 2024, our effective tax rate was (31.3)%. The effective tax rate for 2024 was impacted by earnings in international jurisdictions currently under an income tax holiday, $0.6 million of expense related to changes in tax contingent liabilities, $82.5 million of expense related to changes in valuation allowances and related deferred tax liabilities, $0.4 million of expense related to acquisitions, a $38.2 million benefit related to restructuring and impairment charges, $5.1 million of expense related to the amortization of purchased intangibles, and $0.4 million of other tax expense. Without these items our effective tax rate for the year ended December 31, 2024 would have been 40.9%

We primarily utilize our Credit Facility to fund working capital, general operations, and other strategic activities, such as the acquisitions described in Part II. Item 8. Financial Statements and Supplementary Data, Note 2 to the Consolidated Financial Statements. On November 5, 2025, the Company entered into a Tenth Amendment to the Credit Agreement (the “Tenth Amendment”) which extends the maturity date to November 23, 2027 and modifies certain other material terms of the Credit Facility, including the size of the facility, pricing and certain covenants. The aggregate revolving commitment is reduced from $1.2 billion to $1.05 billion, with further reductions of $25 million each on April 1, 2026 and July 1, 2026. The letter of credit sublimit is reduced from $100 million to $50 million. 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%, and (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 of 2.0% through September 30, 2026, increasing to 5.0% thereafter. SOFR loans bear interest at a rate equal to the applicable spread adjusted SOFR plus applicable credit margin of 3.0% through September 30, 2026, increasing to spread adjusted SOFR plus 6.0% thereafter. Alternative currency loans (not denominated in U.S. Dollars) bear interest at rates applicable to their respective currencies. A one-time extension fee of 1.5% of the aggregate revolving credit commitment is payable if the Credit Facility is still in effect on October 1, 2026. Limits on certain indebtedness, liens, investments and mergers are reduced by 50%, while acquisitions and restricted payments (subject to limited exceptions) are reduced by 100%. Certain other uses of cash are also restricted, subject to limited exceptions. The period during which certain covenant adjustments apply are as of March 31, 2026 and June 30, 2026. The maximum net leverage ratio steps down from the currently permitted 4.00 to 3.00 by the third quarter of 2027 (TTEC’s fourth quarter of 2025 net leverage ratio is 3.58). The upfront fee payable to consenting lenders is 20 basis points of the revolving credit commitment. As of December 31, 2025 and 2024, we had borrowings of $905.0 million and $975.0 million, respectively, under our Credit Facility, and our average daily utilization was $982.9 million and $1,050.3 million for the years ended December 31, 2025 and 2024, respectively. After consideration for the current level of availability based on the covenant calculations, our remaining borrowing capacity was approximately $95 million as of December 31, 2025. As of December 31, 2025, we were in compliance with all covenants and conditions under our Credit Facility.

On November 5, 2025, the Company entered into a Tenth Amendment to the Credit Agreement (the “Tenth Amendment”) which extends the maturity date to November 23, 2027 and modifies certain other material terms of the Credit Facility, including the size of the facility, pricing and certain covenants. The aggregate revolving commitment is reduced from $1.2 billion to $1.05 billion, with further reductions of $25 million each on April 1, 2026 and July 1, 2026. The letter of credit sublimit is reduced from $100 million to $50 million. 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%, and (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 of 2.0% through September 30, 2026, increasing to 5.0% thereafter. SOFR loans bear interest at a rate equal to the applicable spread adjusted SOFR plus applicable credit margin of 3.0% through September 30, 2026, increasing to spread adjusted SOFR plus 6.0% thereafter. Alternative currency loans (not denominated in U.S. Dollars) bear interest at rates applicable to their respective currencies. A one-time extension fee of 1.5% of the aggregate revolving credit commitment is payable if the Credit Facility is still in effect on October 1, 2026. Limits on certain indebtedness, liens, investments and mergers are reduced by 50%, while acquisitions and restricted payments (subject to limited exceptions) are reduced by 100%. Certain other uses of cash are also restricted, subject to limited exceptions. The period during which certain covenant adjustments apply are as of March 31, 2026 and June 30, 2026. The maximum net leverage ratio steps down from the currently permitted 4.00 to 3.00 by the third quarter of 2027 (TTEC’s fourth quarter of 2025 net leverage ratio is 3.58). The upfront fee payable to consenting lenders is 20 basis points of the revolving credit commitment.

The Redomestication became effective on May 28, 2026 (the “effective Time”), at which time the Company converted from a corporation organized under the laws of the State of Delaware to a corporation organized under the laws of the State of Texas. In connection with the Redomestication, the Company’s stockholders are subject to the Texas Certificate of Formation and Texas Bylaws in place of the Company’s prior Delaware charter and Bylaws. Certain rights of the Company’s stockholders were changed as a result of the Redomestication, as more fully described in the Company’s Current Report on Form 8-K filed with the SEC on May 27, 2026 and in the Company’s definitive proxy statement on Schedule 14A for the Annual Stockholders Meeting filed with the SEC on April 10, 2026.

Exploration of Strategic Alternatives for TTEC Digital

On August 10, 2026, TTEC announced that its Board of Directors authorized management to evaluate potential strategic alternatives for its TTEC Digital business to best position it to realize its full growth potential and maximize shareholder value. While the Board is prepared to consider a range of alternatives, it will prioritize transactions that sustain and enhance the continued commercial collaboration and innovation between TTEC Engage and TTEC Digital.

PJT Partners is serving as an independent financial advisor to TTEC in connection with the review of strategic alternatives. The Board has not set a deadline or definitive timeline for the completion of this review, and the Company does not intend to disclose developments unless or until a definitive agreement is executed or the Board determines that further disclosure is appropriate or required. There can be no assurance that this process will result in any particular transaction or outcome.

Included in the three months ended June 30, 2025 was a $2.7 million gain related to a recovery of an aged VAT receivable.

Six months ended June 30, 2026 compared to six months ended June 30, 2025

The tables included in the following sections are presented to facilitate an understanding of Management’s Discussion and Analysis of Financial Condition and Results of Operations and present certain information by segment for the six months ended June 30, 2026 and 2025 (in thousands). All intercompany transactions between the reported segments for the periods presented have been eliminated.

The decrease in revenue for the TTEC Digital segment was driven by lower recurring revenue and one-time on-premise related revenue.

The operating income decrease is primarily attributable to lower margins in our recurring and professional services revenue. Included in operating income was amortization expense related to acquired intangibles of $7.3 million and $7.3 million for the six months ended June 30, 2026 and 2025, respectively.

The decrease in revenue for the TTEC Engage segment is primarily due to client attrition and the absence of revenue from a short-term contract that was completed during the prior year period.

The change in operating income (loss) was primarily related to lower revenue which exceeded the benefit of reduced operating expenses. Included in operating income was amortization expense related to acquired intangibles of $8.1 million and $8.1 million for the six months ended June 30, 2026 and 2025, respectively.

Interest Income (Expense)

For the six months ended June 30, 2026 interest income decreased to $0.5 million from $7.8 million in the same period in 2025 due to $7.3 million of interest income on an aged VAT receivable during the six months period ended June 30, 2025. Interest expense decreased to $33.7 million during 2026 from $38.0 million during 2025 due to lower utilization and lower rates.

Other Income (Expense)

For the six months ended June 30, 2026 Other income (expense), net decreased to net income of $1.8 million from net income of $3.3 million during the prior year period.

Included in the six months ended June 30, 2026 was a $1.3 million gain due to change in foreign currency rates.

Included in the six months ended June 30, 2025 was a $6.6 million gain related to a recovery of an aged VAT receivable.

Income Taxes

The effective tax rate for the six months ended June 30, 2026 was 920.4%. This compared to an effective tax rate of 121.6% for the comparable period of 2025. The effective tax rate for the six months ended June 30, 2026 is primarily driven by the distribution of income between the U.S. and international tax jurisdictions, earnings in international jurisdictions currently under an income tax holiday, foreign currency gains and losses, and the impact of valuation allowances in the United States and several other jurisdictions.

On August 7, 2026, we entered into the Eleventh Amendment to our Credit Agreement, which reduced our revolving credit facility commitment to $975.0 million, increased the SOFR credit margin from 3.00% to 3.25% through September 30, 2026, and from 6.00% to 6.25% thereafter, expanded the collateral and guarantee package (including certain assets of certain foreign subsidiaries and equity interests therein), and imposed additional restrictions on indebtedness, liens, investments, dispositions, acquisitions, and restricted payments. At the same time, the Eleventh Amendment eased certain of our financial covenants, increasing the maximum permitted net leverage ratio to up to 4.25 in fiscal 2026 and up to 4.00 in fiscal 2027 and reducing the minimum required interest coverage ratio to 2.00 in fiscal 2027, which we believe provides additional covenant compliance headroom necessary to operate the business.

The Company’s actual net leverage ratio of 3.85 as of June 30, 2026 exceeded the 3.75 maximum net leverage ratio then applicable to the quarter under the Tenth Amendment. To secure compliance with net leverage ratio for the quarter ended June 30, 2026, on July 15, 2026, prior to finalizing our financial statements for the quarter, we obtained a waiver, of the maximum net leverage ratio covenant for the quarter.

We are also in discussions with our lender group regarding a potential extension of the maturity of the Credit Facility beyond 2027. We believe these amended terms, together with the covenant relief described above, will support our liquidity and covenant compliance over the next twelve months.