Hello, and welcome to the Teleperformance Acquires PSG Global Solutions call. Please note, this call is being recorded. You will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on 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. I will now hand you over to Quy Nguyen. To begin today's conference, please go ahead. Yes. Hello, everybody. Good evening, good morning. I'm Quy Nguyen, Head of Investor Relations, Teleperformance. Welcome to this call for the presentation of the acquisition of PSG Global Solutions. I will make a preliminary comment. Please remember that we are currently in quiet period prior to the Q3 2022 revenue release, which is planned on 3rd November. For the results, we'll not talk about Q3 stuff and we'll not address any question on Q3 results. Now we hand the floor to Daniel Julien, CEO, of Teleperformance. Okay. Good morning, everybody, or good afternoon. We are together today to present the acquisition made today by Teleperformance of PSG Global Solutions. PSG Global Solutions is a company specialized in RPO, recruitment process outsourcing. PSG Global Solutions has developed a digital platform that scan and help to select and to hire the most adequate profile, reducing dramatically time to hire and cost to hire. Snapshot on the company. It's a company that started in 2008. Headquartered is in Marina del Rey in California with operations in the Philippines. The two Co-Presidents of the companies are Vivek Padmanabhan and Brian Cotter. Right now the company is strong of 4,000 employees. We are expecting $75 million in revenue in 2022. A little bit more than one of the 10 clients and with a high profitability and a high growth profile. Before Olivier is going to present you in details the characteristic of this acquisition, let me tell you the rationale for these acquisitions. First, it was the right company to acquire at the right time. Why? First, everybody knows the issues of recruitment and the market needs in the U.S., in the English-speaking world, and all over the world. Second, the company, thanks to its technology proprietary platform, has the potential to scale. Third, there is a synergy, natural synergy with Teleperformance core business as we hire several hundred thousands of people every year. Four, again, the proprietary technology of PSG Global Solutions is a very significant competitive advantage. The fifth point is that there is a highly committed management who choose to stay and develop the company with Teleperformance. This acquisition is going to help us to grow our already very successful line of specialized services that is led by Scott Klein, and in which you already have LanguageLine Solutions, the number one leader in online interpretation services in the U.S. and U.K. You have TLS, the visa processing company for governments. Health Advocate, the advocacy service for the employees in the U.S., and AllianceOne, the revenue cycle management. PSG Global Solutions is going to join this very dynamic and profitable group of specialized services that balance the activity of Teleperformance Group. Having said that, now, I think it's time for Olivier to present in a more structured fashion, the specifics of PSG. Olivier? Thank you, Daniel. I'm sure you noticed that the presentation that we display on our website is available. I I hope you have ability to reach it. You will see that we are presenting on page three, the different solutions that PSG Global Solutions with PSG Global is offering to this client. To make it simple, there are three type of possibilities, if I may say. One is recruiting, second one is recruiting support, and the other one is a full cycle recruiting process outsourcing. There are different, I would say, business of the ability of recruiting people that are offered to client. As you can see, that could be simple screening and sourcing, marketing, interview scheduling, and interview preparation to something much more, I would say, advanced with credentialing, clinical referencing, onboarding, payroll management, that is a recruiting support and the full cycle recruiting process outsourcing, which is totally, I would say, the full cycle, including the onboarding. The clients of the group, of the PSG Global Solutions, have the opportunity to pick the different process that they want to follow with PSG Global Solutions. If you look on page four on this presentation, you will see two things. First of all, of course, remind that this company has been established in two ways, so it's not a small company coming from nowhere. More than 4,000 employees. All of them are working in a remote work way. More than one in ten clients, as mentioned by Daniel, mostly blue-chip companies in sectors which are very solid, notably in healthcare. Annual revenue for this year, which is going to be $75 million, and a very high profitability and cash generative business. We are, of course, in the range of what we see in the Specialized Services division with DLS, with LLS and delivering very good figure. You have on the left side of this presentation, the revenue breakdown by different markets. As you can see, recruiting support is a major part of it. That's the partial recruiting is also 35%, and the full site RPO is only 3%, but growing fast. You have on the right side of the slide, the different sectors that are served by PSG Global Solutions. Not surprisingly, healthcare recruiting is a big one, is a big part. That's also a reason why, PSG Global Solutions, being part of Specialized Services working with LanguageLine Solutions, Health Advocate, are, I would say, landing in a place where healthcare is famous and well-known in the market, notably in U.S. This is going, of course, to help the scale-up of this business, as you can imagine. You will see that the other sector are there, and that's all the business that are covered by PSG Global Solutions, of course, without cross-service of Teleperformance, as mentioned by Daniel a minute ago. There are the different on the following page, you'll find the specific of the company, which is a delivery model based on the proprietary technology. They have a fully integrated proprietary technology, which leads to candidate engagement and recruitment management. They are very quick, very automated, and of course, they are focused on data, on analytics. The delivery is global. Of course, a big part of the workforce is based in Philippines, and these people are working together for the last 14 years in this region. They are able, probably, they will be able, not probably, but surely, to develop their skills across the Teleperformance network. We have as we want to do at Teleperformance, we have an end-market specialization, so there are very deep expertise in the different markets and in the recruitment business that helps to answer properly the demand of the client. Let's move now to the following slide and the acquisition rationale that has been explained by Daniel. I'm not going to comment much more on that. Clearly there is an added-value service with a high-profitability company, digitally integrated business service, mostly dedicated to U.S. healthcare, which is perfectly aligned with our strategic priorities. We call it the TP Cube. Of course, we can scale up this activity across new client verticals and new geographies and new languages, of course. It will help, of course, cross-service. The financial is simple. The operation is accretive Teleperformance earnings per share by nearly 3%. It's not so major, but it's nice to have. If you look on the following page, you have an idea of the size of the market, which is for U.S., estimated at $300 billion for the recruitment market spend for recruitment. Of which $25 billion are addressable market on recruitment process outsourcing. Today, only 3.4 is addressed by this kind of business. This market is going to grow by 12%. Again, I'm not going to comment anymore on what Daniel said about the difficulty of hiring across the world, across the different verticals, seasonality, cost of hiring, which is difficult, increased job churn. The fact that now this business is much more, I would say, professional and effective. Only 20% of the corporates utilize an outsourcing provider, and we do believe that this will increase dramatically. Revenue, you have the trend of the revenue on the following page eight of the company. That moved from $27 million to $75 million by 2022, and will probably continue at a very high speed in 2023. If you look on page nine, the impact for Teleperformance, the enterprise value is $300 million. Everything will be financed through cash on hand. There is nothing to fund this acquisition. This acquisition is, of course, accretive, and EBITDA margin will be roughly in the range of +16% by 2023 on a full pro forma basis. The earnings per share excluding the amortization of intangible should increase by 3%, nearly by 3%. Of course, at the end of the day will be after the acquisition, we'll have net debt to EBITDA ratio which will be in the range of 1.5, leaving the group totally in a position to seize any opportunity that might arise during the coming months and years. That is what I wanted to tell about this acquisition, and we are with Daniel and the team, of course, available for any questions you might have. Thank you. As a reminder, ladies and gentlemen, to ask a question, please press star one on your telephone keypad. That is star one for your questions today. Our first question today comes from Oscar Val Mas of JP Morgan. Please go ahead. Good afternoon, everyone. I have two questions. The first one is on the cyclicality of this business and what visibility you have for next year. Does the business have kind of new business wins that underpin your visibility for next year's growth? That's the first question. The second question is on the management team. Is there an earn-out in place, and is that part of the EUR 300 million? Thank you. First, your first question, yes, there is a pretty high visibility on 2023, and we expect a significant growth again. An element that I can say is that during our due diligence, we had the possibility to review the main clients of this company that are all extremely satisfied and express the intention to continue to develop their relationship with the company. On top, with the integration of the company, we plan to boost the development by strengthening the business development team here in the U.S., but also, and not necessarily just in 2023, but also by opening other markets where Teleperformance is present and is going to be a great facilitator for the business. Now,- The earn-out- the question of the earn-out, Olivier, maybe you want to answer? Yeah, yeah. There is an earn-out which is not part of this enterprise value, which is tied to, let's say, to the business plan that have been validated by the management team. Yes By us, of course. In fact, there is a earn-out that is very accretive for Teleperformance. Yeah. Based on midterm achievement of a business plan that is pretty aggressive. Okay, good to know. Just following up on the first part of the question, is it possible to quantify what your thoughts are for 2023 growth for this business? It's a question that I would prefer to answer in a couple of weeks from now because we are in a very strange period regarding 2023. As we are going to have a conference call on our Q3 on November 3, on which we are going to make the point on our activity, past activity and activity for the end of the year, and also how we foresee 2023, we prefer to keep that for one week from now rather than now. Yes, we have a pretty clear vision of a double-digit growth in indication. Yes, it's a solid growth, of course. Okay, great. Thank you very much. Thank you. We now move on to our next question, which comes from David Cerdan of Kepler. Please go ahead. Yeah, good evening, gentlemen. I have a very basic question. I don't understand the revenue per employee. $75 million of revenues for 4,000 employees. Can you explain me because if I'm right, the average revenue per employee is around $20,000, so it's really low. Yes. Can you explain that? It's very simple, David. It's very simple. Okay. The vast majority is based in the Philippines. Okay. So- 4,000 people are based in Philippines. How much? 4,000. Not exactly 4,000. 4,000 minus two dozens that are in the U.S. I agree with this. Oh, okay. Okay, regarding the scalability of this business. Okay. What is the plan? Is it to develop first in the U.S., second in outside the U.S., all together? Can you explain that? I mean, you know, I'm going to try to be very simple in my answer. First, we are buying a company that is a little bit less than 1% of our revenue, but that is going to be accretive on the earnings per share of 3%. That's quite interesting, and maybe it rings a bell for you. Second, we buy this company not only for what it is, but for what it can be by itself and with TP. What it can be by itself, when you decide to have a more aggressive plan to develop the business in verticals where they are present but where they can significantly develop, like logistics, like the financial services. It's amazing that they already do the business they do with their so reduced sales force. Of course, in the tradition of Teleperformance, we are going to significantly increase the sales force, one, in the U.S. Second, cross-fertilizing of course with clients of LanguageLine, who have thousands of clients, as you can imagine, where there is a clear interest, and also cross-fertilizing with our core service. Again, we have the time to do that. I mean, for me, the future is not the next quarter or the next year. I mean, it's the next three years. Of course, we are going to develop in the different English-speaking markets. As Teleperformance is extremely present in some non-English speaking markets, whether in Europe or in LatAm, yes, we are going to take advantage of a significant presence in these countries to help them to open antennas, always utilizing their digital platform, because this is the fundamental of their competitive advantage, which is to reduce the time to hire and the cost to hire. Clearly, and I'm not going to give today a number, but I see in a timeframe of three to five years, a business that is going to be multiplied by between three to five times. Okay, great. I have to ask you this question regarding the TikTok controversy. Can we have an update? No. Obviously, I prefer to give an update also in November the third, because again, we are in a period where it's not where we cannot speak too much. What you call the controversy is an article in the newspaper that has been used by different actors and that do not impact at all our business in content moderation with our different clients. The audit was supposed to be published now a few weeks ago, and Yes. Wait for November three. Do we have new- Wait for November three. I mean, I can tell you that Teleperformance respect strictly all the regulations, the best practice, and so the way the information was presented based on few interviews was misleading, and it's nice to say misleading. Okay. Well, thank you very much for your answers. Thank you. Thank you. We now move on to our next question, which is from Suhasini Varanasi. Please go ahead. Hi. Thank you for taking my question. Just one, please. This appears to be the first move into quite a different vertical, which is recruitment, compared to, let's say, LLS or, for example, you know. I know your specialized BPO services are a bit different, but recruitment already has, you know, well-established players. Just want to understand how you're thinking about this vertical in the medium term. Do you expect to allocate further capital to this sector in terms of M&A in order to build this out? Do you expect this to become a bit more material in the mix? Right now, for us, it goes in the strategy of strengthening our line of Specialized Services companies, which help us to enlarge the profile and the legitimacy of Teleperformance from being a CX outsourcer to being a digital integrated business service outsourcer. In fact, we are very pragmatic, you know. If we see a line of business that grow faster, better than another line of business, we allocate more resources. We are also very pragmatic and cautious. We are going to make sure in 2023 that all our expectations are matched in terms of top line and bottom line. Depending on the growth profile and the profitability profile in our bouquet of services, we will allocate more or less resources. We do not plan, at this stage, to make any other M&A. In any case, this is not in our first step. Thank you. Any other M&A in the RPO, in the recruitment process outsourcing. We continue to consider all the M&A in our core business or either in the Specialized Services. Understand. Thank you. Thank you. We now move on to our next questioner, which is Antonin Baudry of HSBC. Please go ahead. Yes. Good morning, everyone. Antonin Baudry, HSBC. This is the first medium-sized acquisition you do in the past 18 months, which is great. I just wanted to know if you had bigger targets in your plan, in your pipeline for future M&A. On the follow-up on that is, do you think that the evolution of the U.S. dollar versus euro could be a headwind in your strategy of acquisition, because it would imply higher price for acquisition euro? Thank you. You know, there are multiple factors that define the price of a company today that I am not sure that the U.S. dollar versus the euro is the main factor that we are going to consider. Our M&A strategy is very simple. We buy what we think is good for the business and for all the stakeholders of the business. We typically acquire companies that are going to help us to increase our ratios, whether they are growth ratios or profitability ratios. In that case, this company match these two requirements, and on top of that can also. This is a point that I did not mention so much before, but can also be of a great help for our core service, because I am sure that we are going to professionalize our own internal hiring process. Now, whether the company is midsize or large size, it also depends on the opportunity. I prefer to buy five mid-sized companies that are solid and extremely profitable than to take the risk to buy a larger company that doesn't match our requirements. Yes, we get on our deck multiple companies of all size. We try to remain very disciplined in our approach. If I may add, Antonin, if you look at the last 18 months with Health Advocate, with Senture and with PSG, it's roughly EUR 1.3 billion that has been put on the table for the M&A policy, which is not minimal. Mm-hmm. That's something I just wanted to highlight and to point out and show that we are managing our debts, we are managing our balance sheets, and we are adding good EBITDA at a good price. Mm. Thank you. A very quick follow-up. How do you integrate all these acquisitions? Do they remain totally independent or are they integrated somewhere under Teleperformance umbrella? Of course. They most of them can because they are typically niche gems, most of them keep their standalone structure, but they are integrated in a single management group with a clear strategy and process and so on, which is the group of the Specialized Services that is managed by Scott Klein. Scott Klein being the CEO of LanguageLine Solutions that we acquired something like, I think, I don't remember. Six years. Seven or eight years ago. I think that today it has been one of the great success of Teleperformance in terms of acquisitions, because the company is probably the double of what it was, and not only on top line, but also on bottom line. So these companies are not little shops next to each other. They are tightly managed by the global president of the Specialized Services. They are integrated, as you can imagine, in the whole system of the group in reporting, in cash. Of course. In controlling and all that stuff that can be procurement, insurance and everything that are taking advantage of the size of the group. Okay. Very clear. Thank you very much. Thank you. We now move on to Nicole Manion of UBS with our next question. Please go ahead. Hi. Thanks for taking my question. Two related questions, if that's okay. Firstly, just on the margin, I think you made a comment comparing the margin here to what you were seeing in Specialized Services more broadly. Just wanted to check I'd heard that correctly. Were you saying that the EBITDA margin was sort of roughly in line with what was reported for the overall division, or did I mishear that? Secondly, I think RPO in general as a segment has been characterized by some degree of margin pressure over the last decade. What gives you confidence here about the segment that you're entering? Is it because it is more of a digital asset or that it's in U.S. healthcare? What is it that gives you that confidence on the kind of margin view here? Thanks. Yes, first, you understood well. The margin of these companies are very much in line with the margin that we have with the Specialized Services. That's point number one. Point number two, yes, specifically with the crisis, the economic crisis that is coming and that is just at the beginning, there are permanent pressures on the margin. The name of the game for a service company like us is to be able to do, to always do somehow more with less and to make sure that we preserve or improve our profitability, which is a complex game. It's not just labor arbitrage. It has to do a lot with digital transformation and optimization of process. One of the reason why, besides the number of this company, is extremely interesting is its a suite of digital solutions that constitute a platform and that helps to get differentiated results. Now there is one point that I would like you to keep in mind, which is that over the last 10 years, where there has been pressure on margin, Teleperformance has systematically, year after year, increased its bottom line margin. If I may. Mm-hmm. This question was raised for LLS. Sorry. This question was raised at the time we bought LLS seven years ago, and we have not seen it. Yep, great. Thanks very much. It's very helpful. Thank you. As a brief reminder, to ask a question today, please signal by pressing star one. This is the last question. Our last comes from Christophe Chaput of ODDO BHF. Please go ahead. Good evening. Christophe. Thank you for taking my question. I've got two, please. The first one is, how much of the business is, like. Hello? Yeah, yeah, we hear you. I hope you hear me well. My question, good evening, is how much of the business is recurring here? Oh, uh, it's, uh- I mean, could you consider that the recruiting support, which is 62% of the business is? Yeah, you cut. It's difficult to understand because you cut. The question was related to the recurring business. Okay. Sorry. My question is, how much of the business is? Yes, and is it a long-term contract? Excuse me, Olivier, I don't know if you can hear him. Yes. I hear. For me on my side, he's cut. I get the two questions, whether the business is recurring and what are the lengths of the contracts. Those are the two questions that I got from Christophe Chaput. Am I correct, Christophe? Yeah. Okay. In any case, the business is. Yes, that is. The last one is- Do you already? No, we don't have. We didn't hear you, Christophe. Maybe you can drop us. We cannot hear you. Mm. Christophe, we can't hear you. We can't hear you. Uh, uh. Okay. The recurring business, I don't have the exact percentage just in front of me, but it's super high. As usual, it's linked to the level of client satisfaction. As the clients are highly satisfied, the recurring business is very important. As they serve a pretty large market, as there is a global macro trend of the market, of volatility of the employees, it's even more recurring today than it could have been in the past. The second question was what? The length of the contract. The length of the contract are not really dissimilar to the length that we have in all the BPO industry. It can vary from two years, three years. Of course, typically, what makes the stickiness of the customers is not the length of the contract, but the level of satisfaction that you deliver. Right now, again, it's a company that is praised by its client base. Okay. I think it was the last question. Yes. Uh. Yes, it is the last question. Thank you very much, investors. Yes, we are going to meet again in one week from now until next Thursday for the Q3 figures. Yes. Thank you very much. It was a pleasure to answer, and I hope you wish us the best of the success with this new acquisition. In any case, we are very confident that it's a good move for Teleperformance. Great. Thank you. Thank you to all. Have a good day. Bye-bye. Thank you. Thank you. Bye-bye. Bye. Bye. Thank you for joining today's call. You may now disconnect.