Teleperformance, largest rise in the SBF 120 at the close of Friday, November 18, 2022

(AOF) –

Teleperformance

(+ 3.65% to 224.50 euros)

In decline on Wednesday and Thursday, the Teleperformance share won the largest increase in the Parisian index at the close. At the end of the day yesterday, the management of the business call center manager announced its decision to withdraw from the most offensive segment of its content moderation activity (Trust and Safety), at the heart of “the case Colombian”. Before the latter broke out, the stock had closed at 266.20 euros on Wednesday, November 9.

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Key points

– World leader in integrated digital solutions, created in 1978;

– Turnover of €7.1 billion from 2 branches: for 89%, core services & Digital Integrated Business Services activities (customer relations, technical assistance, customer acquisition, back-office in human resources and accounting, consulting in business processes in analytics, automated systems and artificial intelligence) then “specialized services”, with better margins (interpreting, management of visa applications, debt collection);

– Turnover divided between linguistic zones: Spain & Latin America for 33%, Asia-Pacific for 30%, Europe & Africa for 30%, and India & Middle East for 7%;

– “Simpler, Faster, Safer” business model of outsourcing offers for administrations and multinationals with 3 priorities – digital transformation, consolidation of sector expertise (financial services, health and public sector) and extension of international presence ;

– Split capital, the founder Daniel Julien holding 2% of the shares and assuming the presidency and general management of the board of directors of 16 members;

– Financial strength and agility (debt rating raised), with €2.6 billion in net debt, compared to €5.2 billion in equity, €661 million in net cash, and more than €1.5 billion in cash.

Challenges

– 2025 strategy combining sustained internal growth and acquisitions in the service of verticalization by sector and by market, aiming for revenue of €10 billion and an operating margin rate of 16%;

– “High touch-High tech” innovation strategy:

– internally: structuring by TAP (technology, data analysis, process excellence) aimed at harmonizing the architecture of systems and deploying expert solutions (omnichannel customer experience, predictive models, automation, etc.) and by Cloud Campus platform for remote management of teams and activities and centralization of interactions with customers,

– externally: from 100 exclusive platforms, advice to companies in their transformation, cybersecurity offer led by the “Trust & Safety” teams supported by the GSOC center of the Eagle project, the global “TIEC” showroom in Silicon Valley and the X-Lab research center;

– “Citizens of the planet” environmental strategy, aiming for carbon neutrality by 2040:

– 49% reduction by 2026, vs 2019, in carbon emissions per employee, validated by the SBTi,

– focused on reducing the carbon footprint, generated at 9/10ths by electricity consumption and on mitigating extreme weather risks, 40% of employees working in India, Mexico and the Philippines?

– launch in June of the 1st green bond;

– Commercial success of Digital Integrated Business Services, specializing in banking, hospitals, transport and health;

– Voluntarism in the deployment of new sites (20 in the 1st half, in Europe, Africa, United States, Peru and India) with maintenance of the teleworking offer (70% of the workforce);

– After the integration of the Americans Health Advocate (digital health management) and Senture, specialist in services to citizens, continued acquisitions (€1 to 2 billion by 2025) including PSG, specialist in recruitment processes.

Challenges

– Favorable impact on sales and operating profit of the recovery of the dollar against the Philippine peso, the Brazilian real, the Argentine peso and the euro, 45% of sales being denominated in the American currency;

– Questions about the working conditions of the group’s employees (1/2 working from home), particularly in Colombia, as well as their role in controlling the content of social networks;

– After a 6% increase in revenues at the end of September, raising of the 2022 objectives: growth in turnover of more than 12% (excluding the impact of the end of the Covid assistance contracts) and an operating margin of around 15 .5%;

– Launch of 150 M of share buybacks in reaction to the fall of the share cashed at the beginning of November following the allegations on the working conditions.

Sector analysis Communication and Advertising

Growth of online advertising slowed down

After a record year in 2021, advertisers are now more cautious. In the first quarter, online advertising recorded growth limited to 7% for Meta, the weakest level since its IPO in 2012. The ex-Facebook is particularly impacted by Apple’s new system which restricts the ad targeting. Indeed, applications in iPhones must now ask their users if their data can be shared with third parties for advertising purposes. According to an industry expert, the shortfall for Facebook, YouTube, Twitter and Snapchat could approach $16 billion in 2022.

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Teleperformance, largest rise in the SBF 120 at the close of Friday, November 18, 2022


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