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Earnings Transcript for TLPFF - Q2 Fiscal Year 2024

Quy Nguyen-Ngoc:
Operator: Hello, and welcome to Teleperformance 2024 First Half Results. My name is George, and I'll be coordinating for today's event. Please note this conference is being recorded and for the duration of the calls your lines will be on listen-only mode. However, you will have the opportunity to ask questions towards the end of the presentation [Operator Instructions]. I'd like to turn the call over to your host today, Mr. Olivier Rigaudy, Deputy CEO and Group CFO. Please go ahead, sir.
Olivier Rigaudy:
Quy Nguyen-Ngoc:
Quy Nguyen-Ngoc: Thank you, Olivier, and hello, everyone. It is my turn to welcome you to the Teleperformance First Half Fiscal 2024 Earnings Call. Financial press release related to the results has been published today at 5
Olivier Rigaudy: Thank you, Quinn. Next slide, please. So we are going to start with the first highlights. What are the key developments of this first half? Well, momentum in the business are simple. The first thing to tell, we have an acceleration in the growth in Q2. It was weighted that we are able to deliver it. The second stuff is that we are leading a smooth integration of Majorel. I'll come back to the economic side, but first of all, it's doing well on the client side. We didn't lose any client and we are having a good smooth integration with the people that are coming from our colleague from Majorel. If we move now to the economic side, what we see is the acceleration of the execution plan in Q2 2024 with main positive impact expected in H2. We confirm the expectation to generate 100, 150 cost synergy on a run rate basis by ‘24 and ‘25, respectively. As we are working more and more with our friends of Majorel and seeing much more precisely the asset, there might have some upside to the synergy. We are working and we are assessing this potentiality and we might come back later on that point with all the development. 3rd point, we continue to implement AI Gen-AI solution that accelerating client growth and internal efficiency. As we speak, more than 300 AI projects are in progress in the clients base today. I'm sure you have seen in the meantime that we developed new partnership with digital platform, of course, CoreAI, for which we just deliver a press release some weeks or some days ago and we got a price also from a GLOBEI, from Globee, from the Globee, 2024 Golden Bridge Awards for our AI-driven solutions that streamline back-office business, processedorclient.com in India. What is interesting that beyond the High-Touch -- beyond the I-tech part, we are all, as you know, moving on the High-Touch, we have 69 countries as we speak that have received grade-based certification covering 97% of the group employee. And lastly, there are some changes in governance. Mr. Moulay Hafid Elalamy has been appointed as Lead and Panel Director, replacing Mr. Thomas, who decided to step down after nearly 7 years on the Board of Directors. Next slide, please. So what are the results that are solid and they are led by accelerating growth and increased free cash flow? We do believe that this is a solid set of results in line with the annual objective. Of course, the growth as reported is 28.2% year-on-year, which is beyond EUR 5 billion. the pro-forma growth in H1 is now year-on-year 1.7% like-for-like with a significant acceleration in Q2 plus 2.4%, we are on track to achieve our annual financial objective in 2024. As far as margin is concerned, our pro-forma recurring EBITDA margin is up by 10 basis points versus pro forma last year versus H1 2023 and even 20 basis points at constant exchange rate. Moreover, we have been able to deliver close to EUR 450 million cash flow at 45% versus last year. So, we are quite confident that the net debt to EBITDA ratio will be below two times at the end of this year. And lastly, in terms of capital return beyond the dividend, we have been able to brought back shares for EUR 117 million in H1 2020-'24. That is the first major point that I wanted to point out in this first half. Let's -- next slide, please. What can we tell about the performance of where that we have achieved in this first half, whether it's growth, profitability, and cash generation? In terms of growth, specialized service continues to expand at a sustained pace. We are going to see that, but we are speaking of double-digit 12% growth in this area. We still continue to benefit from a resilient and diversified client portfolio, whether it's by geography, by vertical, or by product. And we start to see the first sign of volume recovery in tech and retail, notably in the U.S. We have seen ongoing solid dynamic in financial service and in automotive, which is quite brand new for us. And we continue to see a strong demand for offshore service, especially from India to serve the U.S. market. Let's move now on to profitability and cash generation. Of course, we start to see the first effect of cost synergy from the integration of measure oil, which are limited in H1, not so surprised, but they are going to be significantly improved in the second part of the year as the months will go by. We have a positive mixed effect on margin coming notably from specialized service and we continue to invest in operation. We are going to see in much more detail the disciplines that we followed in CapEx and working capital that helps to deliver the good cash flow figure. On the headwind side, we have been, of course, impacted by the FX movement in Latin America, notably Mexico and Colombia, where the currency has grown up versus euro/dollar and we continue to have transformation and development costs all along the first half. And finally, we had an impact of implementation costs on net free cash flow of EUR 25 million. I'll come back later on that. Before we move to the figure, I just wanted to show and to have a quick -- I would say, to cover two main among the 300 AI project to cover two specific case study that we thought that was interesting. Next slide, please. This is successful proof of concept for Teleperformance innovations. There are many of them, but we thought that these two were interesting because from one side, and I'll come back in detail, this is driving augmented volume and client penetration, for the other side, it's increasing productivity and client stickiness. Let's come to the first case study where TP AI solution deployed for UK-based digital bank has been able to grow volume and client penetration. So, the idea was to support farming and business development with AI. So, what we did? We did, of course, consulting to understand what was the need and the specificity of this client first to understand what was behind and we have been able to develop AI solution. Mainly, we call it TP Gen AI, which is a tool that helps to summarize the story of the question of the client, the classification of the organization of the demand that also brings some response generation -- automatic response generation and improve quality management. This is a knowledge-based solution that we are developing as in a lot of our clients in the TP Gen-AI. What are the impacts finally? We start with the first TP solution, which we have called TP simulation in 2022, and we implement TP Gen-AI in 2024. And at the end of the day, for TP, for Teleperformance, we move from 230 people in 2022 to more than 1,000 in 2024. So it means that Gen-AI is helping to get market share. If we move to the second case study, which is a little different, which is uplink to an American Internet domain registrar and web hosting, the idea was to increase productivity and client stickiness. All of that was just to automate all the quality auditing process with what we call TP Interact. The idea was to automate 100% of the interaction to build scorecard for each people and to generate reports globally for this company and at the end of the day, this was the idea was to build a predictive model to see what's happening in this case. So what has been the result? The result has been increase in 1st call resolution. We had 26 lower repetition. We had an 8-point improvement in Net Promoter Score. And for TP, at the end of the day, we have been able to grow by 50% in 2024 versus 2023. So as a whole, what we see today is that Gen-AI and AI is not absolutely an enemy for TP, absolutely not, it's all absolutely the opposite. It helps to generate business to increase stickiness, to increase productivity, and increase volume. Next slide, please. So let's move now to the first half result to get a much more precise figure. So when you look first, the results are -- the sales figure are beyond EUR 5 billion for the first time and we have been able to grow by 28.2% and the pro-form a growth is 1.7%, as I told you. Just to be very precise, this 1.7% is including 10 basis points for positive impaired inflation this time, which is limited but was not totally forecasted. The EBITDA is approaching the EUR 1 billion but more interestingly, EBITDA figure is EUR 703 million growing by 10 basis points versus last year and even 20 on a pro-forma basis. Just to be clear, the EUR 703 million is not including the EUR 36 million that have been spent to generate synergies that will occur much more in the 2nd quarter of the year. The operating profit is growing by 13% at 503, So net profit by 7.3%, and we just, for the first time, we thought it was interesting just to unlock and to show what is adjusted net profit without amortization of goodwill and without the cost of synergy that has been implemented. Here, you'd see that the growth is 26%. Next slide, please. What happened in H1? Of course, we start with the figure of last year of 3.9%. We had Majorel and for this 50 -- EUR 28 million, there is a currency effect, which is roughly limited, EUR 35 million net. In fact, it's made of positive, positive figure, Colombian pesos, Mexican pesos, and in sterling, which has been reduced by the Egyptian lira, the Turkish lira, and also the Nigerian krona and the Indian rupee. So at the end of the day, the currency effect is limited to 35 million, and we have been able on this base to generate 83 million, the 1.7% of our gross that I just mentioned a minute ago. Let's move to the next slide to show how it looks here. You remember that last year we had a decelerating growth from 11% in Q1, 6% in Q2, 4% in Q3 and 1% in Q4. We are now able to start to see the rebound and the momentum should accelerate in H2, 2024. Of course, this 2% growth in Q2 needs a lot of credibility to our guidance to 2% to 4% that is announced for the full year. Of course, we have to continue to deliver the growth and it's not going to be exploding, but we are absolutely confirming the growth that we have announced of 2% to 4%, meaning a higher growth in H2. Next slide, please. Where does it come from this growth in the first half? Not surprisingly, it's coming from specialized service, grossly 80 million, and mostly long edge line solution. I'll come back in a minute to that. And the core service is roughly flat, in fact, it's made of two different evolution. We have the EMEA impact growing at 2%, 41 million, while the Americas, including the Philippines and India, which are reducing by 37 million, mostly due to the impact of the offshore. Next slide, please. What makes a difference for TP? What makes the difference for TP is this slide. As you can see, there is not a big change, but again, I wanted to stress that again. TP is by far the most diversified company in this business. This is true geographically between Americas, EMEA, and specialized service across the globe. This is true by vertical and up here is the distribution of the different verticals that have been addressed by the Group across the geography and across the area. I mean, it's also true by product. Of course, there is a care that is 54% of the business, but they are still specialized. They are trust and safety. They are back office. They are sales. They are technical support. So, when you balance all these different aspects, whether it's geography, vertical, and product, you see that TP is probably the most diversified company of the sector and is able to swallow any headwinds. Next slide, please. So, let's move now to the EBITDA by activity. So, just to be clear, I just wanted to precise the figure there. So, again, when I'm putting the pro forma in front of 2024, it's a pro forma in terms of accounting standard, it's a pro forma in terms of, I would say scope and ethics. It's not a pro forma of the organization. That's explained mostly by the reason why the holding are moving differently because Majorel had a different allocation of profit between region and holding, so it's limited. Of course, the comparison, but this is a way you cannot avoid it. So, when you look at the figure of specialized service for which there is no impact of Majorel, it's growing dramatically and coming back to a level of profit that was -- we lived in the past, so more than 30%. And the core service has decreased a little, mainly due to the fix in that time to a lesser extent to the cost of integration, which are different from the cost of synergy. Cost of integration of Majorel is mainly license that you obliged to make sure that everybody is going to be on the same process while having all the other costs and some reinforcing of central structures that was needed given the size of the Group. So as a whole, there is very few positive impact of the synergy. We are speaking of roughly 10 million that have been incurred that have been realized, sorry, in the first half. Next slide, please. If we move to the operating profitability, of course, the amortization of intangible assets are growing not a surprise following the acquisition of Majorel and the amortization of the intangible asset arising from the acquisition. On the non-recurring item, you see that the performance share plan start to decline. It's not also a surprise, it would be probably more it will be more in the coming quarter and coming half year because of the decrease of the stock price and the impact on the allocation on the share -- performance share plans that have been allocated to deep volume. While the others are climbing by from 9 million to 42 million, of which 36 million are the synergy generation costs linked to the acquisition of Majorel, sorry. So at the end of the day, the operating profit is growing by closely 13%. Let's move to the next slide, please. Financial results. So earning performance, financial result, of course, is degrading, so it's not a surprise, which I believe it's a good result because when you think, I mean, that we have had 2 billion of debt for the full year -- for the full first half, sorry, at this level. So we had some costs that has increased, but we have been able to significantly improve our forex gain, notably on some specific currency that reduce the cost of the financial of the interest rate that have been incurred all along the year, all along the first half, sorry. Income tax, of course, there is an increase 2.2 notice here. First of all, you have the impact of the Pillar 2 impact, which is linked to the new regulations that are going to be applied for 2024 and paid in 2026. And, of course, we are incurring some costs to reorganize the legal and tax structure of Majorel to make sure that we will have the most efficient, I would say, network on circuit to repatriate dividend from elsewhere to the central company holding company. Net profit, as I told you, 7.4% on published term and 25.9% on adjusted net profit wise. Next slide, please. Just a word about cash flow. As you see, the cash flow is growing by 29%. I just wanted to remind you that this 29% are after 25 million of cost of cash out linked to the synergy linked to Majorel. And so without this amount, we would have reached 600 million. The change in working capital is roughly flat, while the net capital expenditure is decreasing either in volume, either in rate versus sales, it's not by chance again. You have two main impact, two main impacts, sorry. The first one being the use of the site of Majorel. So the site optimization that we have used to we have tried to use as maximum as we can. And secondly, we start to harvest the decision that we took 3 years ago in increasing cloudification of the infrastructure of TP or virtual desktop that is going to change, I would say, CapEx to OpEx and reduce the level of CapEx. We do believe that on the long run, the level of CapEx will be around 2% for the full year. Next slide, please. So, when you look at the financial structure, the story is simple. You have roughly free cash flow after, I would say costing to measure out including synergy of 450, of which 350 has been given back to shareholder either through dividend and either through share buyback. So, at the end of the day, the net debt is decreased by 100 million and we are absolutely convinced that we will be below two times net debt to EBITDA on a full-year basis and we get or maintain our credit rating of BBB as we have today with no change. Next slide. I'm not going to comment very much on the balance sheet because there are few things to tell versus the end of this -- versus the end of last time. And next slide. And I'm going to be much more precise -- next slide, please. On 2024 outlook, we confirm that we will be between 2% and 4% growth for this life-alike growth in 2024. We see an accelerated momentum in H2 2024, of course, with easier business comparison and increased new business. We see, again, margin growing by 10 to 20 basis points on a pro forma basis. Why? Because you have the seasonally effects that you know as always and the acceleration of the synergy in H2 2024. We do believe that we are going to have a sustained increase in net free cash flow. We will continue to complete our 2023 share buy program for which there are still 80 million remaining, and focus on returning capital while deliveraging and we confirm our net debt to the ratio at the end of the year of two times. So, that is the end of my presentation and I'm ready for taking all the questions right now.
Operator: Thank you very much, sir. [Operator Instructions]. Our first question today is coming from Suhasini Varanasi calling from Goldman Sachs. Please go ahead.
Suhasini Varanasi: Hi, good evening. Thank you for taking my questions. Two, please. Can you maybe talk about the ramp-up of new contract wins that you expect will benefit the growth in the second half of the year? Should we expect the benefit to accelerate evenly through 3Q and 4Q or is it going to be more 4Q weighted? The second question is on the synergy generation cost, I think about 35-36 million that you booked in 1H. Is it right that you booked it in the holding company cost and holding company line item? And how should we think about that number for second half of this year and for 2025, please? Thank you.
Olivier Rigaudy: Well, the growth, it's difficult to tell. Of course, it depends a lot on the volumes that people are going to give us because it's always something that we don't know. What we see is, of course, we understood that there is a base of comparison which is easy. Of course, we are waiting for specifically for also healthcare in Q4, but this is not written today in terms of we are seeing Q3, to be honest. Today, we are seeing a growth in Q3. We still need to see what's going to happen in Q4 but this is equally between Q3 and Q4 when there are still things that we don't know. As far as the synergy is concerned, we do believe that at the end of the day, you remember that we have announced last March a cost of synergy around 50 million for the full year. This is based on what we know, clearly, this figure is going to be confirmed. And, of course, there will be synergy that will be significantly beyond this figure. This is without taking account any additional thinking or reviews that we might make on different topics but roughly we do believe that the cost of synergy will be around 50 million this year and this is not always, I would say, booked in holding company. It's a different level. So this is this is not in holding only. So again 50 million roughly of cost of synergy. Synergy will be above this -- significantly above this amount, and we'll see whether we can make additional decision or in the second part of the year we are looking for.
Operator: Our next question will come from Edimi Grenouille calling from Morgan Stanley. Please go ahead.
Edimi Grenouille: The first question is on the guidance itself. So you're guiding for 2% to 4%. You said the base is easing, you expect some ramp-up in contract. So the first question is on whether why you've not decided to slightly increase the lower end of the guidance? What concerns you that don't have the visibility to do that? That would be the first question. The second one is on the profitability of the core business. I understand the currency rational, but can you maybe try to quantify its impact and elaborate whether there is any other negative factors to highlight there on why the profitability of the core business is down? And also on that, given the current FX rate, what would you expect the impact from currencies to be on the profitability of that division in the second half? And the third point is on the quite significant improvement in the profitability of specialized services. If you could elaborate on the drivers of that, whether it's been operating leverage, positive net pricing seems to be the case from what you're saying in the press release and all positive mix effect within.
Olivier Rigaudy: So coming to your first question of guidance, I'm going to be very clear. We have been hit once in the last 15 years in guidance. We are very careful but I am convinced at we would be between 2 and 4. So I don't want to make any -- to take any -- to make any chance of changing. So there is no reason to change that. We'll see whether we will do that and if we do that in Q3, but this is -- there is no reason to increase the guidance and people will understand. As far as profitability on cost service is concerned, two or three things. First of all, there is a significant heat coming from the FX in LATAM and we have been able to secure significantly more the second part of the year following the blip that happened in Mexican pesos following the election of the new president last May and that was welcomed, and we hope that we will be able to be in a better situation for the second part of the year. So I'm not going to give you precise figure, but this is helping dramatically the story. On top of that, there are some costs associated to integration. As I told you, I took this example of the license when you want that everybody wants to have the same system that you have across the groups, you have to pay some license for a group like Majorel that was significantly more important than was expected. For specialized service, you remember that a part of the story came from last year that the first half, notably in LanguageLine, was not at the level that we were used to, even if it was significantly at a good level. So, LanguageLine came back on the level that he had issues to be delivering. And I strongly believe that in the second part of the year, we will continue to deliver roughly the same figures that we have delivered the last year in the second part of the year. So, globally, specialized service is going to have a good year, whether it's gross or whether it's in margin. Of course, the leverage, the operational leverage has an impact. If you add the business on the same level of cost, it helps. So, as a whole, we are seeing a reasonable increase in specialized service, too. That's what I can tell you today.
Edimi Grenouille: Thank you.
Operator: Thank you very much, sir. We now move to Laurent Gelebart calling from BNP Exane. Please go ahead.
Q – Laurent Gelebart: Good evening, Olivier.
Olivier Rigaudy: Good evening.
Unidentified Analyst: Hello? Can you hear me?
Olivier Rigaudy: Yes. Good evening.
Q – Laurent Gelebart: Good evening. Sorry. Yes. Two questions on my side. The first one relates to your CapEx expending in H1. It was very limited at 1.7% of sales. Do you expect it to be in the same corridor in H2? That's the first question. And for the second one, in your core services EBITDA margin, is there some stuff that are non-recurring because you are mentioning license, for instance, for the…
Olivier Rigaudy: No. Today, what I'm telling is that when you move from a company from when you had EUR 2 billion in terms of business, of course, you're obliged to reinforce some stuff including the license but there are other costs that are going to be recurring. So, that's clear. This is something that is clear, and I just want it to be said. As far as CapEx is concerned, traditionally, we have always a little more CapEx in the second part of the year but I do believe that at the end of the day, we should be around 2% on the full-year basis. But clearly, we are benefiting on what we have done over the last 3 or 4 years that are significantly improving each year, what we call the cloudification of our system. And of course, you are moving, the hardware is less important, you have less stuff, but you are paying some license on top of that, but you are avoiding to buy hardware. And in the meantime, we are less using, we are needing less site because we have site with Majorel and the growth inside is coming from Asia, India, and to the extent the Philippines. So, it's where we are going to put new site if needed or new extension of site. Of course, they are still refurbishing, but the 2% seems to be reasonable as we speak today.
Q – Laurent Gelebart: Thank you.
Operator: Thank you, sir. The next call or question is from Carl Raynsford of Berenberg. Please go ahead.
Carl Raynsford: Good evening, Olivier. Can you hear me okay?
Olivier Rigaudy: Yes, I believe, I can hear you.
Carl Raynsford: Okay. Perfect. I'll speak loudly if that helps.
Olivier Rigaudy: Yes, please.
Carl Raynsford: Perfect. Three for me, please. Number one, could you perhaps quantify how many new contracts you've won in the second quarter because I remember you had two in the first quarter in financial services. So it just sounds like an increase, especially in the auto division. Number two, could you talk about the sustainability of the growth in language line services, clearly, I mean, yes, so some of those impacts seem fairly new in terms of video translation and that eventually gets more mature. So how important are harder comparable going to become each year? And thirdly, on the Americas region, could you talk about the pricing and volume on the subdued growth rate, please? It's still slightly negative. So would it be fair to assume volumes are increasing, but at a far cheaper price point given the shift to India? Thank you.
Olivier Rigaudy: Coming to your question that's finally covered, I agree with you. Volume are roughly moving to India. So, of course, it has a deflationary impact even if it's positive on the margin but this is a classical, and we continue to see what we have seen in the past. It was true last year, whether in first half or second half. This is accelerating, and this is continuing. New business are moving also to India or to Philippines despite, whatever. In terms of new contracts, it is difficult to quantify what we are seeing -- what we are seeing that, we have been able to grab business in automotive industry, as I told you. We have been able to grab business in some bank and finance industry, and also we start to see picking up in retail and in Internet but this is too early. Clearly, we are not seeing huge growth on new contract, but we have signed new contract and this is, happening in the right way. So I'm not going to quantify difficult to quantify what's we are going to have. Of course, there is a balance between things that are moving up and things that are flat or sometimes decreasing. But as a whole, we do believe that we are going to be able to go with these new contracts. Growth in LLS is clearly sustainable. Over the last 6 years in a row, for LLS, we have been able to continue to grow, of course, sometime a little more, sometime a little less depending on the region, on the year, sorry but from what I know -- from what I remember and those who know us, when we bought this company in 2016, since today, since its date, sorry, the company has doubled in size, whether it's video or over-the-phone interpretation. We have been surprised by the vigorous growth even on what we call OPI. So now growing at double-digit at the same pass and video. So this is not dramatically different whether it's OPI or video. So we do believe that this growth is sustainable, and that's what we have lived and what we have seen over the last 6 years in a row, sometime a little more, sometime a little bit. So we are fairly confident that the -- and the specialty service will continue to deliver a significant growth, yes.
Operator: Thank you very much, sir. We'll now move to Antonin Baudry calling from HSBC. Please go ahead.
Antoine Baudrillard: Yes. Good evening, Olivier. Thank you for taking my questions. Three quick questions. Will it be possible to have more color on the visibility you have on your environment? You described it as volatile at the beginning of the year. So do you see a kind of back to normal on the client side in terms of volatility? The second question is about the number of headcounts that you have at the end of H1 on what we should expect in the future. So with artificial intelligence solutions penetrating the mix, will it be fair to expect now a growth of the headcount lower than the growth of the revenues? And my third question is about the cloudification on the cost, the additional cost you have in your P&L related to that. Will it be possible to quantify this cost and does it change at the end the profile of margin of the core business going forward? Thank you.
Olivier Rigaudy: On the cloudification, there is nothing new. This is something that happened for the last 4 years. So, when you look at IT, we are spending more than EUR 400 million on IT each year. So this is growing for the last 2 or 3 years, so for even 4 years. So it's not changing dramatically the margin profile. What I'm telling you is that, of course, we move some. We are now making much more CapEx. Of course, there is some refurbishments, there are some sites that are happening, but also in IT, we are putting much more money in research, development, and new product, notably for AI. So it's not dramatically changing versus the past. If I'm coming back to your question about the headcount, it's hard to tell, hard to see today a switch, a move -- a significant move. I think there are some newer people that have been, some less people that have been disappeared but what we see is that instead of moving people offshore just to have headcounts, now we are moving, we are climbing the ladder, even in India and in Philippines, we are seeing people more and more agile, more and more educated. So we might have less people because you remember that last year we had less people following the COVID reduction, if I may say. So I'm not seeing a dramatic decrease this year, depending, of course, of the peak season of the Q4, because there is always a part of uncertainty due to the peak season but it's starting to move, but I'm not sure it's going to move dramatically, the ladder this year. It's starting to move, but it's just the beginning. As far as the environment, the environment is volatile because people start, you have -- you understood from my message that there are, I don't know if it's the start of the beginning, of the beginning of the start, just to make it clear in terms of new business coming from BFSI, from retail, from some new business but we see something just starting to move. Of course, there are still people who are very, very careful and not having a huge growth, but we are seeing improvement in travel, in BFSI, in retail too. So that's what we wanted to tell by seeing that the environment is volatile because you have positive and you have negative, so it's difficult to draw a line between both. But what we see a global environment that seems to be a little better without being too arrogant and to be sure of what's going to be the end of the year. That's the way we are seeing it.
Antoine Baudrillard: Thank you, Olivier.
Operator: Thank you, Mr. Baudrillard. We'll now move to Nicole Manion of UBS. Please go ahead.
Nicole Manion: Thank you. Good afternoon. Three questions, please. The first one, on the new contract wins that you've seen coming through in H1, are you seeing anything different in terms of the structure or pricing of those contracts or even the services maybe clients are asking for as a result of AI? Secondly, what does the potential upside to Majorel synergies depend on? Just wondering if based on what you've seen so far? Are the particular areas you've identified for this synergy realization or is that still very much? And then lastly, you've gone obviously from 3 to 2 regions in core services. Apologies if I've missed it somewhere, but as far as I can see, no kind of details, disclosures, or restatements, for instance, for the second half of 2023 or full year 2023 for those reporting regions. Just wondering, first of all, if that has been missed or if that will be provided and, yes, whether it hasn't been already. Thank you.
Olivier Rigaudy: On your contract in terms of pricing, of course, we have not seen dramatically change. So maybe much more than pricing is the ability to grab market share and to get volume from zero-zero makes the thing more efficient. We are not, of course, there is a bias that is probably growing less and group at market levels than before. Being one of the major player helps to grab this market share. I'm not saying that we are not seeing a dramatic decrease, not dramatic increase. Of course, people are looking to price. They are looking to value for that. What people are looking is much more value. So I wouldn't mention that there is a dramatic change in term of price, whether it's positive or negative. Of course, there are exception on that, but, frankly, I'm not seeing a dramatic change. On the potential side of synergy, of course, this is assessed as we speak. There are other additional stuff that might arrive. We need to work on it. It's too early to tell. But we believe that in having a much more precise view on the assets, we could probably deliver much more. This has to be assessed. This has to be worked on. We might come back later on that topic, but clearly, we're happy with that. But the reporting region, we said to the market very clear -- very clearly from the very beginning that we will cut the world into. This is exactly what we are doing on reporting purpose too. You have somebody taking care of the Americas, including India and Philippines, and somebody a team, it's not somebody there is, of course, plenty of teams. It's true for management, it's true for finance, it's true for marketing, it's true for sales and BG. So, of course, people are speaking together, but they are linked. They are kept in two big world that are now not autonomous because they are speaking together, and we are going to stick to this reporting approach for the year to come given because we thought that it was not interesting to get the group in, 10 or 5 or 6 or different region to come in. So we are going to stick to that, and we do not intend to go beyond that.
Nicole Manion: Got it. But will you provide the comparative, basically, is what I meant...
Olivier Rigaudy: Of course. We will give you, of course, the comparison business of last of pro-forma last year. But, of course, we will give you the information. I must confess that the pro-forma is complex to do because, as you understood, the pro-forma that we deliver is a pro-forma American team, scope, and FX method. It's not exactly the same allocation of profit between TP and Majorel because this was a group. It was not a pure on unique company, so we obliged to stick to what they did without re, I would say making again the accountancy under our allocation rules, which was very, very difficult to do with a different organization.
Nicole Manion: Okay. That’s very helpful. Thank you.
Operator: Thank you very much, Ms. Manion.
Olivier Rigaudy: Maybe the last one or two questions, please.
Operator: Yes, sir. I understand. So ladies and gentlemen, as we have time for one more question, we're just going to take the next question from Simona Sarli calling from Bank of America. Please go ahead.
Simona Sarli: Yes, good evening and thanks for taking my questions. Hi. I just have a couple of them left. So first of all, you mentioned the new generative artificial intelligence bots that you are starting to implement. So is there any colour that you can give in terms of percentage of your contract that include those new bots versus the more traditional ones? And also how that is impacting your pricing discussion with clients? And the second question is more related on the contribution from Offshoring Solution. How does it compare Q2 versus Q1 and Q4 because if I'm not mistaken, you have mentioned that was a steal-ahead wind, in particular in North America? Thank you.
Olivier Rigaudy: Okay. On Gen AI, it's too early to give you a precise figure. We are climbing the ladder. We are still at a small amount, probably in the range of 15% but what we have to do to add in all proposals, in each of our proposal that we have for clients, whether it's for farming, for entity, a transformation approach, this is absolutely key. So we are not selling seats and beds, but also transformation stuff. Of course, the volume may increase later. I just wanted to take the example of what I just tried to show in the two examples. We have been able to grow with that to increase stickiness and to get market share on the other. So this is key. And today, this is still progressing, of course, depends on the client but all of our clients have asked about that. But when it comes to reality, when it comes to precise stuff, they are very basic and they want to make sure that this is working before moving on. So we start with one proof of concept that are sometimes small, sometimes limited and growing dramatically on a fully-operated. So now it's still not majority, but it's improving dramatically where plenty of RFP are doing that. And of course, of pricing, it helps dramatically, as we can imagine, much more than before. In terms of contribution of offshore, we were at 55% of offshore last full year, sorry. I do believe we are going to move client runway to 57%, maybe 58% at the end of this year. It's too early to tell. But what I'm seeing is that moving more and more business from the U.S. to India to Philippine. And, of course, the contribution is higher, either in volume or either in percentage. That's what I can tell you.
Simona Sarli: Thank you.
Operator: Thank you, Ms. Sarli.
Olivier Rigaudy: Maybe a last question.
Operator: Ladies and gentleman, we do not appear to have any further questions at this time. Mr. Rigaudy, I would like to turn the call back over to you for any additional closing remarks.
Olivier Rigaudy: Thank you to all. Thank you. You have understood that we delivered a strong H1, not only in gross, but in cash flow and also in integration of Majorel. We are there where we should be. We are there and we are going to continue to develop or project across the countries, across the product and across the vertical. And being the leader in such a market makes a difference, I can tell you, even in a volatile and a complex environment. I thank you for -- your to be there and for your question and for your attention. I'm happy to develop this relation with investor relations that are, of course, available for any questions additional indications that you might have. Thank you so much. Thank you. Have a great day. Bye-bye.