Transcom Holding AB (publ): First quarter report 2024

Q1 2024 highlights

• Revenue decreased to 189.1M€ (192.8)
• EBITDA excluding non-recurring items decreased to 21.9M€ (25.5)
• EBITDA margin excluding non-recurring items amounted to 11.6% (13.2%)
• Operating cash flow amounted to 18.8M€ (17.9)
• Net debt/EBITDA amounted to 4.0 (3.4)

Comments by the CEO: Subdued start of the year, as expected

Transcom's performance in the first quarter of 2024 was subdued as expected, with a slight decline in revenue of -1.9% (comparable organic development of -0.6% excluding exited business in Spain). EBITDA margin was 11.6%. While the eCommerce & Tech sector remained strong, the Telco & Cable and Service & Utilities sectors in the European segment faced challenges. The eCommerce & Tech sector remained the largest sector, representing 46% of total revenue in the last twelve months.

New clients added in 2023 contributed well to the quarter, but this was offset by lower-than-expected volumes with existing clients, a reflection of the slowdown in consumer demand due to macroeconomic uncertainty. In addition, slower decision-making on new outsourcing initiatives is driving longer sales cycles.

Profitability challenges stemmed predominantly from lower seat utilization due to lower volumes from existing clients, and the cost of re-skilling parts of our labor force to adjust to this slowdown. The European segment, which has been the most affected, is undergoing a rigorous operational transformation to further optimize costs, streamline efficiency and drive higher utilization. The English segment improved significantly due to solid operational performance and improved mix of shoring. Following the reorganization of the Operational and Account management structure, we are making progress to standardize our operating model globally, and to address all performance opportunities.

Delivering digitally-enabled and AI-driven solutions remains an area of both revenue growth and strategic focus as the industry continues to evolve. Transcom has established multiple partnerships with leading technology providers while simplifying our suite of digital offerings focusing on areas where client demand is the highest. We have expanded our offering to include various people-powered digital services with the aim to go beyond applying AI to assist our workforce, to helping our clients implement, manage, and continuously improve the effectiveness of their AI deployments. 

Looking forward, we expect the next quarters to be subdued due to weak consumer demand, but also due to expected investment in the ramp ups of new and existing clients. Further ahead, Transcom has substantially focused sales efforts on penetrating the US market which is expected to pay dividends before the end of the year and leading into 2025. In Q1, we also completed the acquisition of VCosmos, now Transcom India, opening up an important market. Meanwhile, we will maintain a relentless focus on operational excellence, cost reductions, and new business sales to drive growth and improve profitability. Lastly, Transcom will continue to pursue inorganic growth through strategic acquisitions and partnerships that broaden our sector diversity, geographic footprint and the depth of our digital capabilities.

Brian Johnson, President & CEO

Q1 2024 Financial Update Webcast

Transcom will host a live webcast on Thursday, May 16, 2024 at 9:00 CET. The presentation is available on https://www.transcom.com/global/about-us/investor-relations.

Presentation details

Date/Time: Thursday, May 16, at 9:00 am CET

Online Registration link: https://app.livestorm.co/transcom-holding/transcom-holding-ab-q1-2024-results-presentation

Important note: Please register via the link above at least 5-10 minutes prior the webcast in order to obtain the webcast link. If you register in advance, you will be sent an email reminder an hour prior to the webcast.

For further information, please contact

Snejana Koleva, Chief Financial Officer
Phone: + 46 (0)70 508 3830, email: snejana.koleva@transcom.com

Helene Ruda, Head of Group Communications
Phone: +46 (0) 70 311 7560, email: helene.ruda@transcom.com

About Transcom

Transcom provides AI and digitally enhanced customer experience (CX) services to some of the world's most ambitious brands. More than 300 clients globally, including disruptive e-commerce players, category redefining fintechs, and technology legends rely on us for on-, off-, and nearshoring services. Transcom’s over 30,000 employees work in over 90 contact centers and work-at-home networks across 29 countries, creating brilliant experiences in customer care, sales, content moderation and backoffice services. We help our clients drive their brands forward, customer satisfaction up and operating costs down. For more information, visit www.transcom.com.