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Investing.com -- Teleperformance (EPA:TEPRF) (TP) reported like-for-like (LFL) revenue growth of 1.6% year-on-year in the first quarter of 2025, slightly ahead of the consensus estimate of 1.1%.
This modest growth was primarily driven by positive trends in Core Services, despite a slower start to the year in Specialized Services due to known contract challenges and a volatile operating environment for LLS in the US.
The company reaffirmed its full-year 2025 earnings guidance, expecting LFL growth of 2-4%, a group EBITA margin of 15.0-15.1% (0-10 basis points year-on-year), and free cash flow of approximately €1 billion. The mid-term group adjusted EBITA estimates were slightly reduced by 5-6%, primarily due to a cautious outlook in Specialized Services and a 2% headwind from foreign exchange mark-to-market.
Core Services reported LFL growth of 2.3% year-on-year, beating the consensus estimate of 1.7%. This growth was led by approximately 4% growth in the EMEA and APAC regions, while deflationary offshoring continued to impact the Americas. The company’s management remains confident in growth acceleration throughout the year.
For the full year of 2025, LFL growth of 2.6% is now expected in Core Services, with a projected improvement to around 3% in the second half of the year.
Teleperformance also announced two additional AI partnerships, with a €100 million investment allocated for 2025. The economic impact and implications for capital allocation will be a focus at the company’s Capital Market Day on June 18.
On the other hand, Specialized Services reported a LFL growth of -2.4% year-on-year, missing the consensus estimate of -1.0%. This was primarily due to known contract headwinds in the visa business and higher uncertainty in the LLS, a largely US-exposed translation business.
Despite these challenges, LLS still achieved mid-single-digit percentage growth in the quarter. TP remains optimistic about an improvement in the second half of the year as service user confidence returns. However, given the uncertainty, a -1.0% LFL for the Specialized unit is projected for the full year of 2025.
Regarding group margins, a contraction of -10 basis points year-on-year is forecasted, allowing for some pressure on Core margins due to deflationary dynamics. A -100 basis points year-on-year pullback in Specialized Services is also expected, as the accretion from ZP is offset by the known drag from TLS and a more unfavorable operating environment from LLS.
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