Hello, and welcome to today's Teleperformance first quarter 2021 revenue call. My name is Rosie, and I'll be your coordinator for today's event. Please note this call is being recorded, and for the duration, your lines will be on listen only. However, you will have the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question at any time. If you require assistance, please press star zero and you'll be connected to an operator. I will now hand you over to your host, Olivier Rigaudy, Deputy CEO and Group CFO, to begin today's conference. Thank you.
Thank you, Rosie. Good morning, everyone, and thank you for your presence today. I'm very happy to be with you this morning to comment on our figures for the first quarter of the full year. We thought that given the figures that we are knowing that we are going to publish, it was interesting to publish them as quick as we can to give you the right information and not to wait end of this month, as it was scheduled from the beginning. I'm hosting this call from France with the Investor Relations team. Quy Nguyen-Ngoc, Head of Investor Relations, has preliminary comments to make before we start the presentation.
Yeah, thank you, Olivier. Good morning, everybody. Financial press release related to the first quarter of 2021 revenue has been published today at 7:00 A.M. CET. Dedicated slides are available on Teleperformance website in the quarterly information page of the investor relations section. As usual, Olivier's presentation will be followed by a Q&A session. A replay of the conference call will be available today later by the dial-in numbers mentioned in the invitation to the presentation.
Today's call contains forward-looking statements that address our expected future performance and that, by their nature, address matters that are uncertain. These expectations are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statement. For a detailed description of these factors and uncertainties, please refer to the risk and control section in our 2020 universal registration document available on Teleperformance website. Now I'll let the floor to Olivier. Thank you, Olivier.
Thank you, Quy. Let's move on page three of this presentation. I just wanted to tell two or three words before we dig in detail. We have posted a strong first quarter 2021 revenue at EUR 1,712 million, up 26.6% as reported and up 30.9% like-for-like versus last year. This is definitely a record like-for-like growth and the rationale are solid. There are, in fact, three drivers. The first one is, of course, the strong sales momentum supported by faster digitization of the client environment and the development of high-value solution. This is exactly what we have believed, well, that we start to see for the first time in Q4 of last year. This is accelerating, this is increasing, and this is developing. In addition, we have also some easy comps for the second part of March, which was easier to beat.
This is going to last, of course, until early June. This is where we are. You remember that last year we have described this, where the sales go down, and we benefited from that in 2021 versus 2020. On top of that, also, we have a strong growth in support service for government vaccination campaign in continental Europe, mainly Netherlands, but also in the U.K. Those are the three steps on which the group take advantage this quarter. What I can say is that the driver of this growth are strong over time, beyond the impact of the sanitary crisis. If you take out the, what we call the support to government line and negative effect from lower activity, the growth of the group is significantly above 20%, probably in the range of 25%, 26% on like-for-like growth without this negative and non-permanent effect.
Finally, it's key to remind that this dynamic is driven by the effort of more than 260,000 people working from home and the rapid deployment of our TP Cloud Campus solution, which is a group digitally integrated solution for managing the customer experience remotely. That's what I just wanted. Let's move to the following page, please. Page four. This gives you the revenue growth analysis. You have a currency effect of EUR 93 million, mainly due to three currency. Of course, dollar is close to half of this. A part coming from also the Indian rupee and from the Brazilian real. Brazilian real, sorry. That is the main impact that we suffered from in Q1. As you see, the growth from Q1 at constant exchange rate to Q1 of 2021 is significant because we are speaking of more than EUR 450 million from this quarter.
Let's move to the following slide, please. Here are the precise figure, region by region. I will say that everything has grown, we'll come back later on that in much more detail. What is interesting is that the core service business grew by close to 40%, and I'll come back in a minute. Also, the Specialized Services grew by 10%, despite the difficulties that are still continuing in TLScontact because of the health crisis, because until mid-March, TLS was doing well last year, we are still significantly down in TLS this first quarter, versus last year. If we move to detail, you see that everything is growing, not exactly at the same level, not exactly at the same pace, but every part of the group, except TLS, is growing dramatically. Let's move to the next slide, which is the English-speaking world.
The growth is 26.6%. What we see is two things. North America is probably the most part that is much more hit by the crisis, notably because travel and tourism are still important in this part of the world, and has been, of course, but is very depressed. We have the growth coming back online, entertainment, automotive, and consumer electronics. We have two very significant growth. One in U.K., of course, of the support COVID line, COVID support service, but also in the energy, in the e-commerce that is growing fast in U.K. We are back on track with the high growth in China and in Malaysia, too. Finally, this part of the world is growing by close to 26% or something. If we move to Ibero-LATAM, here it's 37.4% growth with no support government for the crisis.
We have, of course, numerous contracts signed with the client across the world. We have sharp gain in Colombia and in the nearshore region, which is made of Mexico, Dominican Republic, and El Salvador, partially coming from the U.S., but not only. We have also a solid revenue growth in Portugal and Spain. That is satisfactory to the 37.4% growth in this Q1. If we move to Europe, here it's probably the most outstanding figure, 73.7% like-for-like growth. Of course, there is a rapid ramp-up of support service for the government, notably in Netherlands, and to a lesser extent in France and Germany.
Despite that, or, not despite, but close to that, we have very dynamic sales performance with multinational clients, not only in Greece, also [multilingual] , but also Germany, Netherlands, Italy, Turkey, and Egypt, and to a lesser extent, in Russia, too. That is not mentioned here. Here we are seeing a fantastic growth in Europe, which is going far beyond the COVID support. India and Middle East, lower growth, 7%, mainly in offshore operation, which were given priority, as you know, for the deployment of the work-from-home solution. With a high-value solution, we are here trying to improve dramatically, the performance in term of margin, but is significantly growing fast, and we are very happy of this result for India and Middle East. Again, retailing, consumer electronics, and food service are the most dynamic segments.
If we move now to Specialized Service. As I told you, TLS remains sharply down, around 75%, something like that. Of course, with travel restriction and border closure. I'll come back in a minute, but what's going on, it's starting now. We have a comparison basis, which is easing, and we hope that in second part of the year, we'll see travel again, and a better situation for TLS. LanguageLine Solutions continued at a brisk pace, very high, delivering very good figures, growing very fast.
Also we have solid growth in the debt collection business in North America. Based on that, we do believe that we have to increase our target, which will be in like-for-like growth at least 12%. We stay today on the margin, maybe the figure of more than 15%, sorry. We do believe that we are going to integrate Health Advocate quickly, hopefully next month, but in Q2 2021. That's what I wanted to leave you and to give you as information before the market open. I'm, of course, ready to take with the team all the questions that you will have or may have.
Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, you can press star two. You will be advised when to go ahead. The first question comes from the line of Patrick Jousseaume from Société Générale. Please go ahead.
Hello. Good morning, Olivier. Can you hear me?
Yeah, of course.
Okay. Thank you for this presentation, and congratulations for this good figure. I have three questions. The first one, you upgrade your like-for-like revenue guidance, but not your EBITDA margin guidance. Could you elaborate a bit on that? Second, what I understand from your detail on organic growth is that you have EUR 180 million of additional revenue coming from COVID-related business. Could you tell us what is the size of the business currently, in Q1, and should we expect more ramp-up in Q2? The third question is more a housekeeping question. You have moved EUR 10 million of revenue from India, Middle East to CEMEA for the quarter. Could you tell us how much you should move for the full year, please?
Okay. I'm going to start with that. The idea was simple, on this Indian stuff and Middle East stuff. You remember that when we bought Intelenet, at that time, there was India and Middle East. There was a business that was made in Saudi Arabia, Jordan, Dubai, mainly, that was run by Indian team. We decided to put all this business under the CEMEA business, where you had already Dubai and the Egypt business, which is a big one, to put that together. As a whole, we are speaking of a business between EUR 40 million-EUR 45 million. We do believe that it was sense to have a unique management for the region and to be under the same management, and to believe that we are going not only to make some savings, but to increase dramatically our commercial approach. That is the first point.
Second point, about the COVID lines. I don't know if it's COVID line because it's support to governments. You're right, this is roughly the figure. If you take the figure, we have something around EUR 190 million, something like that. We have no visibility what could be. Clearly, it will probably continue in Q2. To what level, it's too early to tell. This is difficult to see because it's linked to a mix of vaccination, mix of information, a mix of follow-up of people. It's difficult to tell what will be the decision of the government, mainly Netherlands one, U.K., and to a less extent, France and Germany. We have no visibility on that.
What is interesting is that when you take the growth of Teleperformance that has been published, which is 36%, if you strip down this part, and if you have what has been made by TLS and all the hotel industry, you have a net impact of roughly 10%, meaning that the group will be at 26% growth without the COVID line. That is what I need to explain that. Whether this COVID lines or this support development will continue or not, I don't know, frankly.
Of course it will continue in Q2, but how long? I don't know. What is clear is that this is something that show to the governments, and not only to the one we are used to work with, from Spain to U.K., that we are able to support them in different areas. This is something that is very good for the future. As a whole, that is what I can tell you. Your second question was linked to. I forgot, Patrick, what was the second question?
To the EBIT margin.
Yeah. What is the stuff? Of course we are reporting there a sales figure. It's difficult to start to speak about margin. By nature, it helps. It would be difficult to tell you that this is going to be a negative. Of course, it helps. This is something that we will come back to later on, probably in Q2. This is, of course, as you can imagine, something that is going to help us to achieve our goals.
Thank you.
Our next question comes from the line of Edward Stanley from Morgan Stanley. Please go ahead.
Morning, Olivier. Thank you for taking my questions.
Hi, Edward.
I've got a couple as well. The first one, you haven't given your monthly like-for-like chart anymore. I was just wondering whether you could comment on the exit rates. The second question, assuming TLS is still very difficult, which you've said, and LLS is growing very strongly, have you raised prices in LLS, or is that all volume-led with contracts like the one with FEMA, which I think you've signed or expanded? Finally, your cash performance must be increasingly strong this year. Do you have your eye on any acquisition targets, or are you waiting until Health Advocate is fully integrated before you acquire anything else?
Okay. Coming to our exit rates. Of course, we are not going to publish every time, and I'm sure you would be delighted with that, the monthly figure. What I can tell you is that, of course, March has been good. Of course, there is a part which is linked to the COVID line, so from the support to the government. Clearly, we have a good March. What I can tell you is that we have a good March. What is going to happen? It's clear for everybody that the second quarter, at least until early June, is going to be strong, of course, because we have a reference basis that is low. No doubt on that. Last question was on the acquisition, second question was on?
On LLS.
LLS. Okay. We have not increased price, no. Most of the story in LLS is volume. Is the fact that people are referring to, are using LLS as quick, as much as they can. I do believe, and I don't want to be arrogant, but I do believe that we are taking market share in this business because of the quality of the service, where people are in contact very quickly with interpreter or helps to drive the growth. People are staying, I would say, home, or we start to define a new way by which people think to LLS to help them for their day-to-day business. This is mainly volume. That's true. Volume, new contract, and also informing with contract that we are already working with. This is clear. In terms of cash, of course. The story is good, as you can imagine.
It's difficult to predict where we are going to land for the full year, depending, of course, of the working caps. Clearly, this is positive. We are not waiting that, Health Advocate, we'll be close to look to other targets. Frankly, Health Advocate, we are ready to integrate it. All the work is ongoing as we speak for all the team, notably for commercial, but not only for that. Now the job is to see. There is no change. We are still looking for, how can I say that? Meaningful acquisition.
Thank you very much.
The next question comes from the line of David Roux from Bank of America. Please go ahead.
Good morning, Olivier. Just two questions-
Good morning.
-from my side, please. Just going back to the COVID-19 support contracts. Could you perhaps just give us a sense of whether these are coming in at above group margin or below? My second question is relating to contracts outside of the government support contracts, so with your normal clients. How does the value of new contract wins in Q1 compare to what we've been seeing in the last few quarters? My last question relates to your U.S. operations. Given the strength of the recovery in the U.S. economy so far, are you seeing or are you anticipating any wage inflation pressures for your U.S.-based agents in the near term? Thank you.
Coming to your first question, which was the value from the margin of this contract. Depending, there are different cases. In certain cases, it's very high margin. On the other, it's less important. As a whole, this is in line with what the group is delivering, just to make it simple. The second stuff about the wage inflation, of course, this is not new. We are living with that for now, months and months in a row. The difficulty was much more, and is told by all people, is to find people, to run around people. To make sure that people will continue to work with us. Today, in the part of the country where we are based in U.S., we are able to make it happen. We are not seeing a huge impact. Of course, this is something that was happening for months.
We continue to live that on a regular basis, and we don't see why we should not be able to continue to do that. Other question will be at certain point of time, a discussion, if it matter dramatically, the other question will be a discussion with the clients. I'm sure we will be in a good position to take advantage of it. After, if you come to the sales pipeline, because that is the question that you have, we are not so different from last year. It's different from region to other, but we are in a roughly same pattern that what we were living before. There is a sustainable, significant growth, and we are very good with that. We are in the same trend than last year in term of business as we speak today, in term of pipeline.
It's not done exactly the same way region by region and country by country, as a whole, we do believe that we are going to also continue to take advantage of this business digitalization of this world. Clearly, the size of the group makes it more difficult. Despite that, we are able to deliver very good growth, and of course, in the right countries, that helps to deliver a good margin.
Great. Thank you very much.
The next question comes from the line of Nicolas Tabor from Stifel. Please go ahead.
Good morning. Thank you very much for taking my question. Can you hear me well?
Yeah.
Great. Congratulations for the results. The first question would be on the government contracts. Could you tell us if there were more, let's say, back-end loaded towards the month of March in Q1? How we should think of their impact across the quarter in Q1 to expect the upcoming impact into Q2. Coming back to the commercial pipeline, how much of the growth, for Q1, was already something that you had locked in H2 or in Q4 last year, and you had good visibility? How much of that was maybe incremental demand that came on top of your initial expectations from the discussions with clients? Thank you.
Okay. That is a tough question. This one is a tough question because it's a moving target, as you can imagine. This is not always easy to decide. If we come back to the government business, what's happening? The government business, because there are different governments. The government business is large. They are large. They are different business. They are different from a country to another. They are different place at that time, different timing also. It might continue. Probably it will continue in Q2. That's the way I'm seeing. At what level? I don't know. This is difficult to tell. This is going to continue at least till early June, probably mid-June. Maybe later on.
That's too early to tell, and as you know, most of these government, probably in Europe, don't know when they will get the vaccine, so they have time to predict the volume that they are going to be able to deliver, to ask for. That is the first point. The second point is that my view, our view, it is probably going to continue a certain point of at least continuing to continue probably during the summer. At what level? Difficult to predict. Clearly, we'll be able to give much more detail on that once the Q2 will be over. At least, that's what we see. Is there an acceleration? I do believe there is an acceleration versus what we lived in Q4. If you remember, we are 22%, 23%, if I remember properly, in Q4.
There was already a small part coming from the government, but now we are beyond that, significantly beyond that. As a whole, we are 36% versus 22%, 23%. While, of course, both legs have grown. Of course, we have the COVID lines that have grew significantly. All the other legs grew also significantly. This is where we are. I do believe it's going to help us for the year. What is difficult for us to tell today is how we look the second part of the year, not only the Q4. I'm sure you remember that we had this fantastic growth in Q4, so we have had time to predict what will be the Q4 today. As a whole, we are not really worried about that, as a whole, as you can imagine.
Great. Could you try and explain us how you were able to capture such strong growth, both in government support services and also in the digitization versus some of your key competitors? How were you able to deliver such a strong capture of pipeline? That means maybe some of the growth in the market is rather captured by you than the competitors. What made the difference, again, this year, in the value proposition?
We decided very early to pitch the government. Very early. We started to do that in Q3, end of Q3 last year. Sometime with success, sometime with no success. Of course, it's different from a country to another. You have to go for Germany's different states. In France, it's different also, ARS. We saw this. In U.K., it's more centralized, in Netherlands. There are plenty of situations which are different from a country to another and from an organization to another. Of course, sanitary organization are different from country to country. That is clear. As far as the rest is concerned, I would say there is no major change that we have already done in H2 last year. We are here investing the work that has been done in Q3, Q4.
As we speak, if I may say, we start to enter 2022 for the hunting season. Not yet, but in two months from now, we will be in 2022 season. The job is much more now to work for next year, even if we have plenty of work to deliver that has been sold in 2021 or end of 2020, plus the farming job that needs to be achieved too.
Great. Thank you very much.
The next question comes from the line of Suhasini Varanasi from Goldman Sachs. Please go ahead.
Hi. Good morning. Thank you for taking my questions. Just one from me, please. I think it's very clear that your commercial sales momentum has been very strong. I just wanted to get some color on, is there scope for new contracts to continue to ramp up, in Q2? Just sequentially, should we expect further acceleration in revenues? Maybe it's contracts that you signed through the quarter that need to ramp up in Q2, or is it now going to be sequentially stable and just better, easier comps in Q2 that we should be looking at?
I do believe there will be some ramp up in Q2. Hard to tell. Classically, the ramp up is much more Q2, Q3, Q4, much more than Q1, classically. The thing that little changed with this pandemic. Classically, yes, that's the way it should work. Of course, this is not written today in detail.
Thank you.
Our next question comes from the line of Sylvia Barker from Goldman Sachs. Please go ahead.
Hi, Olivier. Sylvia Barker from JP Morgan, actually.
Oh. Nothing like that.
Today, I'll ask three, hopefully not too long. On the COVID work, I think you mentioned EUR 200 million of COVID related work in full year 2020.
In 2020?
What's included in the 12% growth guidance for 2021, in terms of the COVID work, if we compare the 2021 versus 2020 figure? Maybe I'll take the other two.
To be honest, to be very clear, we made some assumptions, some conservative assumption, because we don't know. Even the government doesn't know. I can tell you it's difficult for us to predict something. We know what has been done in Q1. We have still growth in Q2, but we are not really, how can I say that?
Okay.
Very aggressive on H2. Let's put it this way.
You assume nothing in H2?
Nothing I don't know, but something low. Not dramatic, let's put it this way. Difficult to predict. Really difficult to predict.
Okay, thank you. The other two, on the COVID work, just some color on how it's delivered. Have you had to hire new people to deliver-
Of course.
-these government contracts? Are there any limitations because they are government contracts on the use of offshore? Do you have to use onshore? Finally, my third question is just on e-clients. I work out that e-clients contribute to about 7% of your full year 2020 growth. Presumably that was running much faster at the moment. Should we think about e-clients growing at, I don't know, 10%, 15% year-on-year at the moment?
Yes. Coming back to your question, of course, all of the people that we hired for this business are onshore. No doubt. This is not offshore business. This is done onshore in all these countries, no doubt. It doesn't change dramatically, the margin. We have good margin, depending where, we have, in some case, very good margin, some other lower. As a whole, we have a good margin on this job. The growth of e-clients is of course higher. In fact, you have two effects. You have the effect that the growth of this business as itself, without taking into account TP in a minute, is growing dramatically more than the rest. If you take all these people coming from Indian economy, they are growing faster than the others. We took advantage of that, and we continue to take advantage of that.
This is going to continue. Second thing is that, even the brick and mortar business had to move to digital if they want to survive. I'm exaggerating, but they have to move, they have to change. This is leading to opportunities that were existing before, but now there is no time to wait. Let's put it this way. That, of course, we are growing faster in this business than the other. Clearly, we still have a telco business that is not growing at the same pace than the rest, of course. Yes.
Okay. Thank you.
Before we continue, please be reminded that you can ask a question by pressing star one on your telephone keypad. Our next question comes from the line of David Cerdan from Kepler Cheuvreux. Please go ahead.
Okay. Yeah, good morning, Olivier. Congratulations for your strong start to the year. I have some question regarding COVID. You have gained some contract in two countries, but what about the U.S.? Can you explain why you have not issued gains from contracts in the U.S. related to COVID?
Maybe we are working on it. Maybe. We are working on it. It's not done. Situation is different in U.S. because it's by state, as you know. It could be global, it could be federal, but it's also by state. The situation is a little more complex. We are working on it as we speak. That's what I can tell you today.
Regarding the U.S. and the U.S. states, do you think that some contracts are already in place with some other subcontractor?
I'm less informed in detail of that. The story is different from state to state. I do believe there are some stuff that are existing today, yes.
Okay. Do you think that some other countries, Brazil or-?
Brazil, I won't bet a lot on Brazil, to be honest. There are probably other countries, yes. Of course.
In the U.S., Brazil, et cetera, is it managed by some public-?
Depending on the region. In Brazil, I'm not sure it's really managed at all, but it's also done by local states. São Paulo is different from Rio, different from Brasilia. It's a different approach, but clearly we are working on that as we speak.
Okay. I'm just surprised by the size, the scale of this kind of contract, close to EUR 200 million over a quarter. If we take just the example of Netherlands, which seems to be maybe the largest contract for you related to COVID, how many calls? Can you give us some volumetry on this kind of contract?
We are speaking of more than 10,000 people.
Hello?
Yeah. Can you hear me?
Yeah. More than 10,000 people. Thank you, Olivier.
Thank you.
Okay, we have no further questions coming through. Olivier, I'll hand back to you to conclude.
We are going to finish with this last question, if there is a last one.
It was the last question.
It was the last question. Okay. Thank you to all. Thank you for being able to join so quickly.
The information.
The team is ready to answer. Quy is going to give you some detail.
Yeah.
We are here, ready to answer your remaining questions.
Yes. Thank you, Olivier. A few key information and dates on our agenda. The next investor meeting is the Teleperformance shareholders' general meeting on 22 April. To have all the documentation and the agenda of the event, please go to our website in the IR shareholders' general assembly section. Of course, please reach out to Teleperformance for any question on it. Regarding the communication on financials, Teleperformance first half results will be released on 28th July with a webcast planned that day. Of course, Teleperformance will continue to participate in the coming months to numerous digital conferences organized by brokers. In parallel, don't hesitate to contact us if any interest in digital meetings with Teleperformance or follow-up questions. We will be happy to address your request. Thank you. Olivier?
Thank you. Bye-bye. Have a good day. Of course, let's continue. Thank you. Bye-bye.
Thank you. Bye-bye.
Thank you everyone for joining today's conference. You may now disconnect your lines.