Teleperformance profits decline and appoints McKinsey executive as CEO, stock price drops

Investing.com - Teleperformance SE announced its annual profits and revenues declined on Friday. The French customer service outsourcing company appointed a McKinsey advisor as CEO and ousted its founder, causing the stock to drop over 3%.

The Paris-listed group reported 2025 revenue of €10.21 billion, down 0.7% on a reported basis but up 1.3% year-over-year, excluding a 0.3% drag from inflation.

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The core service business, which accounts for most of the group’s revenue, grew 2.7% year-over-year to €8.72 billion. Professional services declined 9.3% year-over-year to €1.49 billion, impacted by the non-renewal of visa processing contracts in its TLScontact division.

Recurring EBITA fell from €1.54 billion a year earlier to €1.49 billion, with profit margins narrowing from 15.0% to 14.6%, affected by IT costs related to artificial intelligence. The company stated this reduced profit margins by 15 basis points. After excluding €31 million in non-recurring cash expenses, net free cash flow was €901 million, down from €1.08 billion in 2024. Net debt increased from €3.89 billion to €3.97 billion.

Q4 revenue declined 0.6% year-over-year, below market expectations of 0.3% growth. The core services grew just 1% in the quarter, compared to about 4% in Q3, while professional services fell 10.9%.

The company reported impairments of €97 million related to goodwill and intangible assets in its PSG Global Solutions and Health Advocate divisions, citing challenges in the U.S. market.

Jorge Amar, who led McKinsey’s global digital customer service business for over ten years, will become CEO on March 16. Founder and CEO Daniel Julien and COO Thomas Mackenbrock will step down from their executive roles on March 15. Julien will also leave the board on the same day.

CFO Olivier Rigaudy will retire, and Deputy CFO Benoit Gabelle has been appointed interim CFO.

“I am leaving with great confidence in the group’s strength and future,” Julien said in a statement. “As a founder, I have always been—and will continue to be—a long-term shareholder.”

Amar stated that the group needs to accelerate existing product development and enable clients to achieve efficiency gains. “We now need to speed up the rollout of our current products, enrich our solutions portfolio, and help our clients realize the efficiency and productivity improvements that technology can now deliver,” he said.

The board also announced four new members, including Amar and Mackenbrock, subject to shareholder approval at the annual general meeting on May 21.

Teleperformance said it has launched an internal AI efficiency program aimed at saving over €100 million annually.

The company expects restructuring and workforce adjustment costs of €70 million to €90 million in 2026, with €56 million already committed at earnings release. About half of the operational savings are expected to be realized in 2026.

For 2026, the company projects revenue growth of 0% to 2% year-over-year, with Q1 likely below this range.

Recurring EBITA margin is expected to stabilize around 14.6%, assuming an average EUR/USD exchange rate of 1.20. Net free cash flow is forecasted at €800 million to €850 million, excluding non-recurring cash expenses.

The company plans to propose increasing the dividend from €4.20 to €4.50 per share, subject to shareholder approval. It also announced the initiation of a strategic portfolio review, including potential asset sales.

Mid-term targets for 2028 include revenue growth of 4% to 6% year-over-year, an EBITA margin of approximately 15.5%, and a cumulative net free cash flow of about €3 billion from 2026 to 2028.

Royal Bank of Canada Capital Markets maintained a “Outperform” rating with a target price of €105 per share. UBS maintained a “Neutral” rating but lowered the target price from €55 to €52.

This article was translated with the assistance of artificial intelligence. For more information, please see our Terms of Use.