Hello, and welcome to the Teleperformance first quarter 2025 revenue. My name is George, and I'll be your coordinator for today's event. Please note this conference is being recorded, and for the duration of the call, your lines will be in a listen-only mode. However, you will have the opportunity to ask questions towards the end of the presentation, and this can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero, and you will be connected to an operator. Please also note the disclaimer on page two. The conference will be hosted by Mr. Olivier Rigaudy, Deputy CEO and Group CFO, and Mr. Thomas Mackenbrock, Deputy CEO. I'd like to hand the call over to Mr. Thomas Mackenbrock. Please go ahead, sir.
Thank you, and good evening, everybody, also from my side. It's a pleasure to be with you and share with my dear friend Olivier our Q1 results. Unfortunately, we cannot be in the same room today as I'm traveling in Asia, but we'll manage nevertheless. As you can see, and as you probably have read, we are very pleased with our Q1 results. I think it's important to start with the four main messages. Number one, as you can see, we reported 2.8% growth for the first quarter. On a like-for-like basis, it's 1.6%, respectively 2.6% if you adjust for the visa application contract that was not renewed, as we explained in February. This is in particular strong if you compare to 2024, which was a leap year. I think we referenced this also in February, where we had one working day less.
What in particular excites me is our very strong momentum across the board for core services. On a global level, we're growing 2.3% like-for-like. If you look, for instance, at EMEA, Asia, or Africa, that region, we are growing close to 4%, and there are a lot of, let's say, positive momentum in the business. That's why, as we indicated in February, we also see an acceleration of that growth throughout the year. Specialized services, we're very pleased that we have completed the acquisition of ZP in February this year. With ZP together, we are reporting growth of north of 10% on a like-for-like basis. Obviously, as we lost the visa business, it is smaller. Second point, Majorel integration, as well as the reorganization of TP France, is well on track. We will report over $20 million-$30 million synergies this year.
That comes on top to the reported 94 of last year, and we submitted the voluntary plan to the French authorities. Thirdly, as you remember, we announced in February a new AI partnership program. The idea is to build an open ecosystem with leading AI companies around the world, really trying to find the best-of-breed companies and work with them and collaborate with them when it comes to further enhancing their product and their go-to-market. After Sanas, which was an accent translation tool that we used to enhance our human colleagues around the world, we are very excited to have two agentic AI companies now part of this partnership program. As you remember, we had this notion about human augmented by AI and EI.
As we are the orchestrator and integrator of human AI-led services, we're very pleased to have Ema, that is a horizontal agentic AI company, and Parloa, who's an agentic AI company focusing on customer services as part of our group. Fourth point, given all this good news, we're very happy to confirm our financial objectives, and Olivier will share later a few more details. Let's look now at these different elements in a bit more detail. As you can see on the next page, our core services, as I said, are really in good shape. I'm just now in India. India remains a key driver for our growth momentum, but also the U.K., the Middle East, Egypt, South Africa, Turkey, Latin America. Really across the board, very strong momentum. As you can see, EMEA APAC, our business segment, 3.8 like-for-like.
Americas, we see in the actual U.S. some degrowth and some de-acceleration, but overall still plus 0.8% for that business segment. Specialized services with ZP together, close to 11%. If we adjust now on a like-for-like basis without the loss of the visa renewal, we're at close to 4%, and including the visa renewal service, as indicated, if you do the math, minus around 2.4%. In particular, when it comes to LanguageLine, as we indicated, we have a very close eye on this volatile environment in the U.S., and we're managing this quite closely, but do expect, obviously, for the further course of the year, in particular in the second half, some further acceleration of the growth. Let's move, I think, Best Shore year showing no surprise there. We see more momentum, in particular in multilingual hubs and offshore location.
ZP together, we announced end of February that we got the approvals and completed the acquisition. We're very happy to report that now the integration process is well underway. A synergies program is launched, obviously, for IT reporting, cash management. Olivier was a few weeks ago also on the ground to kick off all the synergy work streams. We are in a good shape. Also important to note, as we're now reporting the numbers for the first two months, it's really well in line with our business plan, and we're very happy to have the whole ZP family part of the TP group. Let's move on.
Here, as you remember, we are an orchestrator and integrator of four things: managing emotional intelligence with our colleagues around the world, and we continue to invest in their skills and upskilling to drive know-how on the AI side, as well as the EI on the emotional intelligence side to create deeper human connections. We continue to focus on process excellence because that's the core really of the DNA of TP now for over 40 years, to best in class of managing processes at scale and how to implement now all the new possibilities with AI in our process excellence. There we are also full on track with the global rollout. Thirdly, technology. We continue our internal transformation. We just did a review the last three days in India on all the tools and AI microservices that are implemented on a continuous basis in our client operation.
How do we use our tools to augment for more efficiency, more quality, our day-to-day operations? We will continue to drive this internal transformation. Secondly, on the partnership side, I will say a few words later, we are very happy to have these two new companies on board. Fourthly, domain expertise. We will move into more and more verticalized BPO operations. We see sustained growth in our non-voice activities, whether this is back-office BPO, analytics, trust and safety, consulting services. That is really great to see, and we want to build on this. We are investing in people, know-how, solutions on the verticals we really see promising, like BFSI or, for instance, finance and accounting services that we want to expand further. If we now turn the page and see on TP.ai, as presented in February, we have these three growth factors. One, AI data services.
This is one area where I particularly pay attention. We want three new client contracts. That is great to see on AI data services. We are also investing here in data services capabilities to really hone our know-how for how to train and to be a good operator and partner for the AI companies when it comes to data quality. TP Infinity, our more consulting technology-led arm, we see wins across analytics technology consulting. I am personally quite excited about the wins in analytics. We really have a great know-how to implement analytics in our existing operations, and we want to drive that capability that exists that is part of TP also for broader use cases outside of our existing operation. Second comment here, we continue to invest on technology capabilities. How to integrate IT as a service, technology as a service.
We have done this successfully, in particular in the Middle East, and we are expanding this know-how also now to the U.S. market. For TP.ai solution, you remember it is our own solution that we use for microservice in our operations, is working with our partner ecosystem, and we continue to do so in building a more targeted ecosystem with AI companies that we want to create win-win solution in orchestrating human and AI. Sanas was February. We continue to invest. Now we have Ema and Parloa, and we have some more in the pipeline, and hopefully we can share with you over the following month. Let's take a look at Ema first. Ema is a company that was founded by Surojit and Souvik a few years ago in San Francisco. I can tell you when I met first Surojit in Silicon Valley, I was amazed. I cannot say differently.
I feel very privileged to work with him together. He really built an absolutely amazing horizontal agentic AI platform. You have to see this that he's building libraries and know-how to drive universal AI employees that can automate enterprise workflows in an agentic manner. I mean, Surojit has worked very successfully at Coinbase at Google. I think he has more than 40 patents on his own U.S. patents for this. So it's an absolute pleasure to work with him. We're super excited to drive this partnership where we are an exclusive go-to-market partner and integrator for more than 400 clients globally for Ema. We also have the right to invest in Ema in the next financing round, and we want to collaborate very closely with them to really orchestrate our know-how on processes and humans for back offices with this digital transformation agentic AI approach.
I think it's an area for us that's really strategically important. Back office where we have grown, I shared this in November and February, double-digit last year, and we want to drive this transformational change on back-office BPO with Ema together. More to share at our Capital Markets Day in two months, but I'm very, very happy to have the whole Ema team part of our extended family on board and will be excited what we can do together. Let's move on. That's Ema. Parloa is a different story. It's also an agentic AI company, a little bit older. It's also now more than 300 people. It was founded by Malte and Stefan in Berlin. They further expanded. It's a very strong European footprint, and they focused on agentic AI solution for the customer services part, for the front office part.
We really see, of course, given TP's positioning in the worldwide market, a lot of opportunities also, again, blending agentic AI solution and our BPO front office expertise together, packages and go jointly to market with them. We also have the right to invest in their next financing round, and I do believe this will be a quite winning combination, giving our scale and footprint and distribution know-how to implement it in coupling with our core services and their agentic tools and capabilities. I think both great examples in addition to the family, and I'm very, very happy to share with you as we move forward more success stories, hopefully on this partnership that makes me quite excited. This on highlights strategy. Now let's take a closer look at our financial numbers. Olivier, over to you.
Thank you, Thomas. Good evening, everyone, and happy to share the good figure with you. Just going to start with the first slide just to show that growth is on track. Just wanted to stay a minute on this slide. The growth reported is 2.8%. As you can see, the like-for-like growth is 1.6%. I just wanted to highlight the fact that in this first quarter, we benefited from a dollar which was stronger than it is today, which is $1.05 versus $1.09 last year, and it is clearly not exactly at this level today because we are at $1.13, to make it simple. I just wanted to highlight that the figure in Q1 benefited from higher dollars than what we are going to have all over the year probably. This 1.6% like-for-like growth is, of course, higher than the consensus, which was 1.1%.
Let's move to the next slide to see what happened precisely in the growth. As you mentioned earlier, the currency effect is negative by $6 million. In fact, it's a mix of a positive one coming from the U.S. dollar, roughly $25 million. That is offset by the Egyptian lira, Brazilian real, and Colombian peso and others. Just to show that finally, on the first quarter, there are limited impacts, but there will be probably difference in the second part of the year. Being on that, we have a change in scope of consolidation of $36 million, which is, as you mentioned by Thomas a minute ago, the consolidation of ZP activity over two months, which have been consolidated early February. You have this growth of like-for-like growth of $42 million, which is mostly coming from the core service.
I'm going to give you much more detail in a minute. That's where we are. Next slide, please. Here is a revenue by activity split across core service and specialized service. As mentioned, you have a core service that is a growth of core service, which is 2.3%, significantly ahead of the forecast, mostly driven by, mentioned by Thomas a minute ago, by Europe, Middle East, and specifically Africa and Asia-Pacific. The specialized service, oh no, please stay on the previous slide, please. Thank you. The specialized service is growing by 10.7%, including the two months of ZP that I mentioned, which is 2.4% if you avoid, if you take out this impact. Knowing that beyond that, if you take out the famous non-renewal of the contract in the U.K., the growth would have been close to 4%. Next slide, please.
I just wanted to come back to the performance by vertical, and what you can see is that there is significant growth in government, travel, hospitality, and media entertainment and gaming. This has been also effectively happening in the multilingual hub, including Egypt, but also in Asia-Pacific. As you can see, the diversified client portfolio helps us to swallow any bump that we might have. Next slide, please. Performance by business lines. This is very interesting to see that Care is still 54% of the business and growing in line with overall growth. What we are seeing is that the growth is also happening significantly in BPO, other non-voice services across the region, whether it's trust and safety, whether it's back-office BPO, or in other stuff. Obviously, the part that is not Care is growing faster than Care that is online.
That's what I just wanted to let you know. Overall, a good performance. If we move to the outlook, please, next slide. We continue to see a volatile economic environment. I'm not there to comment on what you read on the paper every day. We have a positive market dynamic supported by ongoing offshore and automation trends that we are benefiting from. We also benefit from the continued vendor consolidation, and we continue to deliver, to announce or accelerate growth between 2%-4% like-for-like growth and 3%-5% if you exclude these famous contracts in the U.K. Margin will grow by 0-10 basis points all along the year, and we will continue to generate a strong free cash flow around $1 billion before non-recurring item and continue to decrease our ratio on net debt to recurring EBITDA.
That is the figure, and I'm leaving the speech handover to Thomas to announce much more in detail the follow-up.
Look, as we shared and discussed with many of our investors and with you in the call, there have been sort of the request to better understand what is our strategy in the age of AI, what are we doing to implement AI in our business process services, in our specialized services, what are our unique offerings on the AI side, and what role do we want to play in this AI ecosystem? Secondly, what is sort of a midterm outlook in this world of change in AI for TP in the next years ahead? For that, as indicated before, we will reserve and we organize this Capital Markets Day on June 18 in New York.
The idea is really to guide you through these questions that you have been asking in more detail, to share with you use cases, what we have done, how we implement our strategy, what we're seeing. As you see, we gave a little teaser at the end of February. We are executing now more on the AI partnership side, but there's many more to share with you, and we're really excited and looking forward to welcome many of you either physically in New York, it will be in the Rockefeller Center, or either online via live stream. Very much excited to see you all there, and there we can share a little bit more detail and have a dialogue on these topics. With that, we are open for Q&A and looking forward to all your questions.
Thank you very much, sir. Ladies and gentlemen, once again, as a reminder, if you have any questions, please press star one on your telephone keypad and just make sure that your lines are not muted to allow your signal reach your equipment. Our very first question today will be coming from Will Kirkness of Bernstein. Please go ahead. Your line is open.
Evening. Thanks for taking the questions. I've got two, please. Firstly, can you just talk a little bit about the LanguageLine slowdown? I think you might have seen something similar maybe back in 2017. If you could just give any more context on it and maybe any visibility on a rebound, that would be useful. Secondly, just on the investments in the AI. I think Sanas was maybe $13 million, and then Ema and Parloa are combined $25 million.
I just wondered how we can think about how that sort of flows out, what ownership you take, whether there's scope to move beyond those initial numbers. When we think about that $100 million in aggregate, can that grow? What are the implications, I suppose, for traditional M&A and/or shareholder returns? Thanks.
Let me start with the first one. I think you hinted to it. We saw a similar dynamic under the first Trump administration. There is a lot of uncertainty, I would say, in the market. It's less driven by regulatory change.
The language access regulation in the U.S. is in place, but we see in particular for the Spanish-speaking community that is obviously a relevant user group for our LanguageLine services in the U.S., some, how can I say this, hesitation to have access to public services, whether this is on the healthcare side or governmental side. This is a significant portion that we see on this slower development within LanguageLine Solutions. It's still growing, obviously, but let's say some hesitation in demand. It's, of course, very hard to predict how the environment changes there in the next month. We saw a rebound in 2017, and the team expects something similar for this year.
That is why we are more optimistic for the second half of the year, but we have to remain very vigilant and, of course, to monitor this very closely. We are in dialogue with the team quite closely because obviously, as you said rightly, it has been a slowdown in the growth compared to last year, but growing and managed really by, I would say, one of the best industry teams there is when it comes to interpreting solutions. The second question was on AI partnership. As we said, we started with this partnership, and I can tell you the feedback and response we have seen from partners around the world and from AI companies is very, very encouraging. It is very positive.
We work with many partners because we believe we want to put the best technology solution in place for our clients, so we are not bound to anyone, but we really see the value of collaborating closely with targeted companies where we really can create win-win situations. You've seen we have entered into augmenting our humans with accent translation. We now have two partnerships on the agentic side, one more on the front office customer experience services side, the other one a bit more on the back office side, horizontal AI. We also see on discussing vertical AI applications because AI needs to be often specific, addressed to a certain vertical need. Think about that we are exploring their opportunities on that side, but we want to always build the best-in-class solution for our clients combining AI and, let's say, human-led BPO. We're working on this plan.
I would say for this year, we have earmarked the $100 million. It's too early to tell how this will develop in the years after, but we're working on making progress and, of course, have to deliver also on the promises we see. As you see in the charts, the next financing rounds for both companies have not been completed. I think it's a very positive sign that we're allowed on their cap table because, as you can imagine, this is often highly contested. As we move forward and as they will do their financing rounds, then obviously, if they share it, you will know the valuations.
It is less so about the actual equity stake, but more the arrangement that we have to really allow us to orchestrate their solutions with our capabilities, with our go-to-market or managed service capabilities to really bring it to life because I do believe TP is one of the best partners to scale AI solutions that are in the market. I think this scaling the AI solution, bringing them to life on an enterprise level, is a huge value proposition that we have. Sorry for the long answer.
Okay. Yeah, no, thanks. No, that's very helpful. Thanks. Just to follow up then, in terms of more around capital allocation, is that a case of wait for the 18th of June Capital Markets Day?
Yes. I think for this year, as you've seen, we have done the acquisition of ZP. We, of course, increased our dividend for this year, and we have earmarked, as you remember, for over $1 billion free cash flow up to $100 million this year. Going forward on the capital application, we'll share, and we're working on it for the Capital Markets Day for sure.
Okay. Thanks very much.
Thank you, sir. We'll now go to Karl Green of RBC Capital Markets. Please go ahead.
Yes, thank you very much. Just two questions from me. Following up from Will's question just on the trends in LLS, it's clear that you're expecting a second-half pickup. If a second-half pickup doesn't materialize, what would the potential impact be on your 0 to 10 basis points guidance for the group overall? Just trying to get a sense as to how important the LLS recovery is going to be in terms of hitting that guidance. That's my first question.
Then the second question, just on the core and DIBS, that was a good performance in the first quarter, as you've identified. Could you just give us some flavor as to how that's broken down between new logo wins, new account wins versus that kind of ongoing deflation and offshoring impact, which you've sort of wrapped together? That would be very helpful. Thank you.
Olivier, you go ahead.
Yeah, I'm going to take the first question. Of course, we are following that very precisely because of the mix. What we are going to do, and we have already started to do, is just to be on the safe side on the cost, whether it's direct or G&A overheads. We are following that precisely to be able to deliver the growth from the margin that we have announced.
As far as we know, we are seeing some better momentum in terms of contract sales in LLS. It's not totally finished, but we do believe that there are reasonable chances that we will continue to grow at a higher speed in H2. Of course, during this uncertainty period, we are taking all the measures to control the cost and to make sure that we are able to deliver the guidance that we announced to the market.
Second question for you. Hello, can you hear me?
Yes.
I hope you can hear me.
I'm going to answer your question.
Thomas, you take the second question.
Sure. When you look where we see growth, it's in particular, as indicated before, media, government, fast-moving consumer goods as well, and travel and hospitality. As you know, our business is always about ramping up over time.
It's a mix of logos that we have won this year and also the growth with existing clients. As you remember, we have shared last year that we have continued and expanded our investment in our business development activities. I think it's a good, healthy mix of new logos won and existing clients that we have sort of business developed further in their expansion. It's a healthy mix, really, across the logos. If I look at the ramp-down for the year, as I said, I'm quite optimistic also for the second half.
That's great. Thank you.
Thank you very much, sir. We'll now move to Ben Wild of Deutsche Bank. Please go ahead, sir.
Thanks, everyone. It's a revenue update call today, but I have a few questions on the margin guide that you've reiterated today. Olivier, firstly, in terms of the cost flexibility that you've just described, if I go back to July last year, I think you said on one of these calls that you believed that the group could deliver significantly more than the initial EUR 150 million of Majorel synergy benefits. Since then, you've retained that EUR 150 million target. Where do we stand with respect to Majorel synergies? Do you now think that EUR 150 million is the absolute ceiling? Second question is on FX and the impact on the profitability of the group. There's obviously been some fairly strong FX moves in the last few weeks. Just a question on how you think about the impact of a weaker dollar on the margin. Thirdly, with LLS, I think at the beginning of March, there was an executive order, the kind of English-only executive order.
What gives you confidence that there will be an H2 recovery in LLS? And how are your clients responding to the regulatory change that's come through in March? Thank you.
Okay. About synergy, you remember that we delivered $94 million of synergy last year. We said to the market that we will deliver between $20 million or $30 million more this year, mostly geared on the second part of the year for a major reason, because this is something that is coming from mostly the IT and telephony costs that were linked to contracts that are going to finish by the end of June 2025. We will be able to deliver these savings not on a full-year basis, but closely six months in 2025. That is absolutely clear.
hundred fifty, I'll come back later on in H1 at the end of Q2 with a precise figure, but at that time, we will be clearer. What I can tell you is that most of the synergy has been launched. Of course, we harvest them on a timely basis, given the contracts that have been done, and especially on IT, but also on site, on certain sites that are, I would say, following some contracts that are absolutely we cannot get out before the timing. That's the first point. On FX, there are two issues. One is the transaction, one is the translation. Clearly, here we are speaking mostly of the translation impact. It's not exactly the same story to book a dollar at $1.05 in Q1 and $1.13 as it stands today in our figures, that's for sure.
In terms of business, we made our budget at a level which is not very far from the $1.13, but clearly we will have an impact on our sales and on our translation impact of the FX, clearly. We are following that very precisely. So far, we have not been so much hit in quarter one, in Q1, as you understood. That is why I wanted to highlight it in the second part of the year, in the next quarter to come. This will be probably, if it continues, this will have a negative translation impact, no doubt, either on sales and either on margin. Difficult to tell where we are going to land. Frankly, if you know that, I would be happy to share it.
On the transaction part, most of our, I would say, covered hedge have been done either in September, October, November, until early January. The transaction impact should be not dramatic. Of course, there are ups and downs, but the main impact would be translation. On the fact that the H2 of LLS will be better, of course, by nature, we don't know where is the H2. We have a budget. We have a pattern that we followed in 2017 that is clearly showing a recovery after the executive order. I just wanted to be clear on the executive order. The executive order is not a ban of other language and English at all. There are plenty of other rules that supersede that. This is not a ban. It is much more a global mood that doesn't help. Legally, people are still bound by their local stuff.
What we see is that new volume coming video is doing well. We see some, as I mentioned earlier, on some contracts have been about to be signed by LanguageLine Solutions. We are, of course, monitoring the situation very closely. This is something that we do believe that we can manage as of today. Of course, we will update the market as soon as we have more information about it or more visibility.
Maybe to add, because sometimes there is a misunderstanding what the executive order does. Even today, more than 30 states already have laws in place that designate English as their official language. It is not that this is something completely new. What the executive order does, as Olivier said, it rescinds an order that was signed by Bill Clinton some time ago for language assistance to individuals with limited English.
Yes, federal agencies have now greater discretion how to apply the respective laws. Language service agencies can remain their policies, in some cases, of course, necessary if you're in a hospital and you want to do this. What we see is more a demand-driven, less regulatory-driven change that people simply don't show up. If you read the news, I think you can understand why. It remains one of the focus areas for the group. Of course, LanguageLine is only a part of specialized services, which is a part, 50% of the overall business. We also have to put it into perspective. Obviously, as we said in February, as I said in every investor meeting, we remain super vigilant on this topic because this needs to be managed.
It is a bit outside of our control as this is a demand curve we have to observe in the market.
Sorry, I forgot to mention on your first question, you remember that we mentioned a French reorganization plan that we provided for last year that is underway. We do believe that we have good progress there. We do believe that beyond the agreement of the local representative, we will get a final approval, hopefully in the coming weeks from the French state. We believe that we could be able to deliver this plan starting early second part of the year. We do not know exactly yet today. That should also help to deliver on margin.
Just a final follow-up, if you do not mind. Are you willing to give an idea of roughly what level LLS growth is in Q1, please?
Mid-single digit.
Very clear. Thank you.
Thank you very much, sir. We'll now move to Rémi Grenu of Morgan Stanley. Please go ahead.
Good afternoon, gentlemen. Thanks for taking my questions. I've got two remaining. The first one is if there is any update on the ongoing transition for the CEO position, anything you would like to share with us. The second thing is on LLS. It seems to me that the ICE agency in the U.S. is developing some own AI tool for live translation. Wondering if you're doing any work for that government agencies and whether you expect any impact from that kind of internally developed tool by U.S. government agencies on LLS. Thanks.
On your two questions, first of all, thank you for them. The transition, as we said, it really works. I cannot stress this enough, very, very harmoniously with Daniel, the new chairman, Olivier.
It's a pleasure to work with them. We haven't set any time. There are so many things to be done. It's not a lack of work. It works, really. It works very collaboratively and I think also very effectively for the organization right now. With regard to the AI tool from the ICE agency, I have to confess, I haven't heard about it. We are not involved in developing it, but it's not something that has come up in our discussions. We're happy to go and come back to you on this one to share further details. Yeah. We're working with multiple, obviously, we're working with multiple institutions, I mean, also government institutions on various fronts. Of course, we are experimenting and working and piloting also with AI tools for these interpretation services.
Happy to come back to you on this one with a more detailed answer.
Yeah, yeah. Just to follow up on that, within the 14%, I think you are doing with governments within LLS. Does ICE represent a large part of that, or is it highly diversified, that 14%?
Not that I know. I'm going to check, but for me, it's very mostly. Because also the structure. Yes, because obviously also the structure of ICE is quite moving, but we'll come back to you on that one.
Yeah, understood. Thanks very much.
Thank you.
Some que stions.
Our next question is coming from Nicole Manion of UBS. Please go ahead.
Good afternoon. Thanks for taking my question. Just one left. Just on the AI piece.
Hey, Nicole.
I think you meant. Hey, hey. Just on the AI piece, I think you mentioned that.
We can't hear you.
I can't hear you.
Yes, I can hear you.
Can you hear me okay?
Go ahead, go ahead.
Okay, y eah.
It's okay for me.
Okay, I'll carry on. Yeah, just on the AI piece, I think you mentioned 80 projects launched in Q1, which sounds like your own initiatives. I mean, I guess this will be a big topic for the upcoming CMD, but does this sort of signal kind of a shift to sort of more of a partnerships approach rather than making your own investments in AI technology and so on? Or do you still intend to kind of have a hybrid approach there? Just trying to think about how we should think about the balance of those investments between kind of your own restructuring, minority investments, and so on. Any color there would be great. Thank you.
Yes. The question of make and buy , it's not either or, it's both. To be honest, we have such a great suite of AI application solutions internally at TP. Some of it's developed, some of it's sort of used market technology and customized. We have this under the umbrella of TP microservices from Agent Assist, simultaneous translation tools, knowledge tools, quality assurance, analytic support. It's really a great suite of tools. It's not one mega tool, which we also don't say, but really targeted to the specific needs. We continue to deploy this. That's the homework we have to do. I think there's still ample of space driving more transformation in our operations, and that's the tools that we use.
If you see really some of the cutting-edge technologies, and that's, I must say, we're really privileged to work with both companies or with all three companies now further, that's something that we don't have to that extent in-house in certain use cases. There, I think providing an open ecosystem and working with them closely makes complete sense. I think they're really, if you look at it, we will share more details. Having their partner approach is something that augments our capabilities. I think we have a lot of things that we can provide when it comes to the, as I said, scaling side, integrating the human element to it. That gives us, I do believe, a competitive edge going to our clients and offering the full breadth of our own services as well as our partner services with our partners and even other companies.
Got it. That's very helpful. Thank you.
Thank you. What's your questions, ma'am? Ladies and gentlemen, due to time constraints, we have only time for one question. Today's last question will be coming from Mr. Laurent Gélébart of BNP Exane. Please go ahead.
Yes, good evening. Actually, I will have two questions. The first one relates to the large volatility we have been seeing in the market. Last time we saw that was in the U.S. with the failure of regional banks. This led some of your clients to postpone outsourcing decisions. How do you see the pipeline of new business developing? Do you see some clients being hesitating going forward on what they are going to do? That's one. The second one relates to Forex.
Olivier, can you share with us the kind of sensitivity on the translation Forex, i.e., for one cent of euro appreciation versus the dollar, what would be the impact in terms of dips for the overall margin if you can?
You start, Thomas, or?
Yeah, please do start. I'll try to then answer the customer, sure.
No, I'm going just to depend, but roughly depending on the level, but beyond our market, beyond our budget, one cent might have an impact of EUR 20 million in sales. That is the impact.
In terms of profitability?
I have to check again. I'll let you know later. Significantly less, as you can imagine. No, it's true. It's true. Difficult to predict where we are going to land. I prefer to be on the safe side.
In terms of sales, yeah, it's $20 million a cent versus a budget, which is not so far from the actual present rate as we speak. We have been hopefully careful in doing our budget. The year is not over, far from it.
To your first question, Laurent, there, I do believe it's really the strength of TP comes into play. If you look at our broad client portfolio, you see all kinds of behavior. Some clients, as you said, maybe wait and see. They are a little bit unsure what will develop, and they maybe postpone a certain decision. Other clients want to know, given the macro environment, do have more cost saving and accelerated. We really see across the board. Some are affected negatively by the tariff, and certain ramps-ups are delayed. Some others see more opportunity to drive more offshoring. It's across the board.
I think that's the strength or the resiliency of TP, having this broad geographical exposure and this broad client exposure across different verticals. If you look at the growth of the different segments, it's different than what we've seen last year. I think the ability sort of to mitigate that risk is something that we feel quite strongly in a world that gets more and more volatile, almost by the week, that we are a little bit of a haven of stability. Yes, we see also volatility. Yes, LanguageLine, as I said, had some challenges still growing. On the other hand, the core business, that makes us quite excited, is growing faster. Last year, as you remember, it was almost the opposite in the beginning of the year.
I wasn't there, but in Q1, they said, "Oh, the core business was not growing, but specialized services are growing." The strength of TP is to have this broad mix across geos, across verticals, and across different lines of business that gives this overall stability. Yes, I'm not happy, I can tell you, with the development of LanguageLine. On the other hand, I'm super excited to see how we're growing in certain verticals. Yes, there are some clients who have a wait and see in where we are in ongoing discussion to do this. We have to manage this volatility, but from a position of relative strength in an oce an of volatility.
Thank you, Thomas.
We are seeing the core service growing again at a better speed, probably higher than people expected. This is something that should be noted. I'm happy to share. I think it's the last. We're happy to share again. As we move along, we have now end of April, the first quarter is over. We will be in five weeks or six weeks from now in the capital markets there. Of course, we will then present an update where we stand. Really looking forward to continue the dialogue with all of you.