Teleperformance: Third-Quarter 2018 Revenue

Regulatory News:

Teleperformance (Paris:TEP), the worldwide leader in outsourced omnichannel customer experience management, today released its revenue for the third quarter of 2018 (period from July 1 to September 30, 2018).

Continued strong revenue growth

• Nine months (to September 30, 2018): €3,146 million, up + 8.3% like-for-like*
• Third-quarter 2018: €1,076 million, up + 8.3% like-for-like*

2018 guidance confirmed and raised

• Raising full-year 2018 like-for-like revenue growth target: above + 8%, vs. above + 7.5% in previous guidance
• Full-year 2018 target for EBITA margin before non-recurring items above 13.5%, vs. 13.3% in 2017
• Continued strong net free cash flow generation
• Consolidation of Intelenet as from October 1, 2018

* at constant exchange rates and scope of consolidation

Commenting on this performance, Teleperformance Chairman and Chief Executive Officer Daniel Julien said: "Thanks to another solid quarterly performance, driven by like-for-like growth in our businesses of more than + 8%, we are raising our revenue target for full-year 2018.
Since the start of the year, we have continued to increase our market share, especially in Core Services, where gains are notably attributable to a healthy showing from offshore operations in Latin America, and, in continental Europe, a sustained development of the multilingual operations in Portugal and Greece. This strong momentum in these two countries is enabling us to expand our existing facilities and open new locations as we continue to support leading multinational companies in a variety of industries such as technology and e-services.
Prospects are also strong for Specialized Services, with growth primarily driven by online interpretation operations since the start of the year. In addition, the integration of Intelenet from October 1 has strengthened Teleperformance’s range of digital transformation solutions in customer experience management and enhanced its value-creating business model. As a direct result of the acquisition, Teleperformance has expanded its offering to include Digital Integrated Business Services – a new range of high-end solutions that mainly comprise Intelenet’s integrated offshore operations and Praxidia’s consultancy services.”

N.B.: A glossary of alternative performance indicators is included in the Appendix

NINE-MONTH AND THIRD-QUARTER 2018 GROUP REVENUE

CONSOLIDATED REVENUE

Revenue came in at €3,146 million for the first nine months of 2018, representing a year-on-year increase of + 8.3% at constant exchange rates and scope of consolidation (like-for-like) and + 1.6% as reported. The gap between reported and like-for-like figures was attributable to a sharply negative €191 million currency effect that was mainly linked to the weakening of the US dollar, Brazilian real and Argentine peso against the euro.

In the third quarter, revenue amounted to €1,076 million, up + 8.3% on a like-for-like basis. As reported, revenue advanced + 6.1%, with currency effects less negative than in the first half thanks to the rise in value of the US dollar against the euro.

REVENUE BY ACTIVITY

• Core Services

Core Services revenue amounted to €2,672 million for the first nine months of 2018. On a like-for-like basis, revenue climbed + 8.9% year-on-year. As reported, revenue was up + 2.2%, held back mainly by the weakening of the US dollar against the euro.

As in the first half, like-for-like growth in the first nine months of 2018 was supported by sustained strong performances in the Ibero-LATAM region and the continued recovery in Continental Europe & MEA. As expected, growth was lifted by a gradual improvement in the English-speaking market & Asia-Pacific (EWAP) region.

• English-speaking market & Asia-Pacific

Nine-month revenue for the English-speaking market & Asia-Pacific region came in at €1,137 million. Like-for-like, nine-month revenue rose + 1.2% compared with the same prior-year period. As reported, revenue was down 4.9% following the weakening of the US dollar against the euro.

Third-quarter 2018 revenue was up + 3.0% like-for-like. As expected, the pick-up in growth compared with the start of the year was mainly led by operations in North America.

Teleperformance continued to diversify its client portfolio in the region over the first nine months of 2018. The most dynamic major client segments were e-retail, fast-moving consumer goods, the energy industry and utility services.

Consumer electronics, the region’s top revenue contributor, expanded at a satisfactory pace, and the automotive industry and e-services continued to ramp up rapidly.

In Asia, the return to a solid pace of growth underway since the start of 2018 was confirmed. Development in the region continued to be driven by China and India, the most promising markets for outsourced business services.

In the United Kingdom, the outsourced customer experience management market continued to be impacted by the uncertainty caused by Brexit, as potential clients held off on outsourcing decisions.

• Ibero-LATAM

Nine-month revenue for the Ibero-LATAM region came in at €843 million. As in the first half, the Group’s businesses continued to advance at a rapid pace. Year-on-year growth came to + 16.3% on a like-for-like basis and to + 5.3% on a reported basis, mainly reflecting a decline in the US dollar, Brazilian real, Colombian peso and Argentine peso against the euro.

In the third quarter, revenue advanced + 14.7% like-for-like, confirming the very good performance posted in the first half.

The region’s main growth driver remains Portugal, where the Group continued to benefit from the fast development of multilingual hubs serving major multinationals. In Spain, the renewed sales momentum observed at the beginning of the year in various industries continued during the third quarter, further attesting to the effectiveness of the previous two years’ action plans and investments.

The Group continues to benefit from the attractiveness of pan-American nearshore solutions in Mexico and Colombia and is expanding its presence in many different segments such as specialized retailing, financial services and travel agencies in Mexico, and airlines in Colombia. It is also tapping into buoyant domestic markets in both countries.

Performance in Brazil remained solid, despite uncertain economic and geopolitical conditions.

The rapid ramp-up of operations in the Peruvian market, which the Group entered in 2017, also contributed to strong third-quarter business growth in the region.

To support this growth, Teleperformance continued to expand its existing sites and open new locations, especially in Portugal.

• Continental Europe & MEA

In the Continental Europe & MEA region, nine-month revenue climbed + 14.4% like-for-like to end the period at €691 million. As reported, the improvement was + 11.9%.

The gains recorded at the start of the year continued into the third quarter with like-for-like revenue growth coming out at + 14.3%, furthering the recovery enjoyed in the region since second-half 2017.

This performance reflects a very good sales dynamic among multinational clients and fast-growing local market leaders in a wide range of industries. Revenue generated by the Group’s multilingual hubs in Greece and by operations in Egypt, Turkey and Eastern Europe (Russia, Poland and Romania) rose significantly.

In third-quarter 2018, operations in France confirmed the return to satisfactory growth begun in the first half, particularly in domestic business, with a rise in new contracts signed, primarily in the energy and online services segments.

Other growth drivers in the region included the resounding business recovery in Sweden, in Italy and in Germany, with revenue reflecting the contribution of a new site in Kosovo serving the German market.

The fastest growing client segments in the region remained e-retail, leisure and entertainment, travel agencies, transportation and fast-moving consumer goods. The main revenue contributors, such as consumer electronics and financial services, continued to grow at a satisfactory pace.

Buoyed by the success of its multilingual hubs serving major multinationals, Teleperformance continued its expansion in Greece, adding capacity at existing sites and opening new locations.

• Specialized Services

Revenue from Specialized Services came in at €474 million in the first nine months of 2018. The business grew by + 4.8% like-for-like. As reported, it contracted by 1.7%. The negative currency effect resulted mainly from the US dollar’s significant fall against the euro during the first six months of the year. LanguageLine Solutions’ North American operations is a significant contributor to Specialized Services revenue. In the third quarter, revenue rose + 3.0% like-for-like and + 3.7% as reported compared with third-quarter 2017.

Over the first nine months, the LanguageLine Solutions business was the main driver of growth in Specialized Services.

TLScontact, the Group's visa application management service, reported a contraction in the third quarter, mainly as a result of a change in billing method for applications processed on behalf of the British government (UKVI). The change will have no negative impact on TLScontact’s profitability, which is once again expected to improve over the year as a whole.

Together, the LanguageLine Solutions and TLScontact businesses account for around 80% of Specialized Services revenues.

Revenue from the Group’s debt collection operations in North America was stable in the third quarter and over the first nine months of the year.

Intelenet’s high-end, high-growth operations will be consolidated as from October 1, 2018.

OUTLOOK

Teleperformance is raising its full-year 2018 like-for-like revenue growth objective from "above + 7.5%” to "above + 8.0%”.

The Group confirms its target for EBITA margin before non-recurring items, which is expected to be above 13.5% for the full year, and also expects to continue generating robust cash flow.

In addition, the Group confirms its revenue and profitability targets for 2022: revenue of more than €6 billion and EBITA before non-recurring items of more than €850 million. Further to completion of the Intelenet acquisition in October, the Group is expecting to update its long-term financial targets in the coming quarters.

DISCLAIMER

All forward-looking statements are based on Teleperformance management’s present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. For a detailed description of these factors and uncertainties, please refer to the "Risk Factors” section of our Registration Document, available at www.teleperformanceinvestorrelations.com. Teleperformance undertakes no obligation to publicly update or revise any of these forward-looking statements.

CONFERENCE CALL WITH ANALYSTS AND INVESTORS

Tuesday, October 30, 2018 at 6:15 PM CET
A webcast of the meeting will be available for subsequent viewing on Teleperformance's website, along with the relevant documentation, in the Investor Relations section under Quarterly Information (www.teleperformance.com), and by clicking on the following link:
http://www.teleperformanceinvestorrelations.com/en-us/press-releases-and-documentation/quarterly-information

PROVISIONAL INVESTOR CALENDAR

Full-year 2018 results: Thursday, February 28, 2019

ABOUT TELEPERFORMANCE GROUP

Teleperformance (TEP – ISIN: FR0000051807 – Reuters: ROCH.PA – Bloomberg: TEP FP), the global leader in outsourced omnichannel customer experience management, serves as a strategic partner to the world’s leading companies in a wide variety of industries. Its customer care, technical support, customer acquisition, consulting & analytics, digital integrated business service solutions and other high-value specialized services ensure consistently positive customer interactions that are reliable, flexible and intelligent. The company has established the highest security and quality standards in the industry and uses proprietary deep learning technology to optimize flexibility on a global scale.

The Group’s 300,000 employees, spread across nearly 80 countries, support billions of connections annually in 265 languages and enhance the customer experience with every interaction. In 2017, Teleperformance reported consolidated revenue of €4,180 million (US$4,720 million, based on €1 = $1.13).

Teleperformance shares are traded on the Euronext Paris market, Compartment A, and are eligible for the deferred settlement service. They are included in the following indices: CAC Large 60, CAC Next 20, CAC Support Services, STOXX 600, SBF 120, S&P Europe 350 and MSCI Global Standard. They have also been included in the Euronext Vigeo Eurozone 120 index since December 2015 and the FTSE4Good Index since June 2018 with regard to the Group's performance in corporate responsibility.

For more information: www.teleperformanceinvestorrelations.com
Follow us on Twitter @teleperformance

APPENDICES

GLOSSARY (ALTERNATIVE PERFORMANCE MEASURES)

Change in like-for-like revenue:
Change in revenue at constant exchange rates and scope of consolidation, corresponding to current year revenue - last year revenue at current year rates - revenue from acquisitions at current year rates / last year revenue at current year rates.

EBITDA before non-recurring items (Earnings before Interest, Taxes, Depreciation and Amortizations):
Operating profit before depreciation & amortization, amortization of intangible assets acquired as part of a business combination, goodwill impairment charges and non-recurring items.

EBITA before non-recurring items (Earnings before Interest, Taxes and Amortizations):
Operating profit before amortization of intangible assets acquired as part of a business combination, goodwill impairment charges and non-recurring items.

Non-recurring items:
Principally comprises restructuring costs, incentive share award plan expense, costs of closure of subsidiary companies, transaction costs for the acquisition of companies, and all other expenses that are unusual by reason of their nature or amount.

Net free cash flow:
Cash flow generated by the business - acquisitions of intangible assets and property, plant and equipment net of disposals - financial income/expenses.

Net debt:
Current and non-current financial liabilities - cash and cash equivalents.

Diluted earnings per share (net profit attributable to shareholders divided by the number of diluted shares and adjusted):
Diluted earnings per share is determined by adjusting the net profit attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding by the effects of all potentially diluting ordinary shares. These include convertible bonds, stock options and incentive share awards granted to employees when the required performance conditions have been met at the end of the financial year.

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