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DERIVATIVES

3 Months Ended

Mar. 31, 2025

DERIVATIVES [ABSTRACT]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

(6)DERIVATIVES

TTEC’s Financial Risk Management Committee (“FRMC”) monitors cash flow and fair value foreign exchange exposures and interest rate exposures on a worldwide basis, assesses the potential economics and earnings impact from foreign exchange and/or interest rate fluctuations, and deploys risk management policies and solutions to reduce volatility related to TTEC’s exposure to foreign exchange rate changes and interest rate changes.

The Company enters into foreign exchange forward and option contracts to reduce its exposure to foreign currency exchange rate fluctuations that are associated with forecasted revenue earned in foreign locations. Upon proper qualification, these contracts are designated as cash flow hedges. The Company formally documents at the inception of the hedge all relationships between hedging instruments and hedged items as well as its risk management objective and strategy for undertaking various hedging activities.

The Company also enters into fair value derivative contracts that hedge against foreign currency exchange gains and losses primarily associated with short-term payables and receivables. These swap contracts are not designated as hedges under ASC Topic 815, Derivatives and Hedging.

It is the Company’s policy to only enter into derivative contracts with investment grade counterparty financial institutions, and correspondingly, the fair value of derivative assets considers, among other factors, the creditworthiness of these counterparties. Conversely, the fair value of derivative liabilities reflects the Company’s creditworthiness. As of March 31, 2025, the Company has not experienced, nor does it anticipate, any issues related to derivative counterparty defaults.

All derivative financial instruments are reported at gross fair value and recorded in Prepaids and other current assets, Other long-term assets, Other current liabilities, and Other long-term liabilities in the accompanying Consolidated Balance Sheets as applicable for each period end.

Fair Value of Derivative Instruments

The fair value and location of derivatives in the Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024 were as follows (in thousands):


		March 31, 2025
		Designated			Not Designated
		as Hedging			as Hedging
Designation:		Instruments			Instruments
		Foreign			Foreign
Derivative contract type:		Exchange			Exchange
Derivative classification:		Cash Flow			Fair Value

Prepaids and other current assets		$	698		$	42
Other long-term assets			54			—
Other current liabilities			(1,166)			(150)
Other long-term liabilities			(485)			—
Total fair value of derivatives, net		$	(899)		$	(108)


		December 31, 2024
		Designated			Not Designated
		as Hedging			as Hedging
Designation:		Instruments			Instruments
		Foreign			Foreign
Derivative contract type:		Exchange			Exchange
Derivative classification:		Cash Flow			Fair Value

Prepaids and other current assets		$	783		$	6
Other long-term assets			—			—
Other current liabilities			(2,679)			(183)
Other long-term liabilities			(1,471)			—
Total fair value of derivatives, net		$	(3,367)		$	(177)

Cash Flow Hedges

Changes in fair value of derivative instruments designated as cash flow hedges are recorded in Accumulated other comprehensive income (loss), a component of Stockholders’ Equity, to the extent they are deemed effective. Ineffectiveness is measured based on the change in fair value of the forward contracts and the fair value of the hypothetical derivatives with terms that match the critical terms of the risk being hedged. Based on the criteria established by current accounting standards, the Company’s cash flow hedge contracts are deemed to be highly effective. Any realized gains or losses resulting from the foreign currency cash flow hedges are recognized together with the hedged transaction within Revenue.

The Company’s foreign exchange cash flow hedging instruments as of March 31, 2025 and December 31, 2024 are summarized as follows (amounts in thousands). All hedging instruments are forward contracts.

Local

Currency

U.S. Dollar

% Maturing

Contracts

Notional

Notional

in the next

Maturing

As of March 31, 2025

Amount

Amount

12 months

Through

Philippine Peso

4,657,000

81,212

⁽¹⁾

71.9

%

March 2027

Mexican Peso

441,500

21,525

71.1

%

December 2026

$

102,737

Local

Currency

U.S. Dollar

% Maturing

Contracts

Notional

Notional

in the next

Maturing

As of December 31, 2024

Amount

Amount

12 months

Through

Philippine Peso

6,034,000

$

105,098

⁽¹⁾

67.8

%

March 2027

Mexican Peso

548,000

26,682

64.6

%

December 2026

$

131,780

(1)	Includes contracts to purchase Philippine pesos in exchange for New Zealand dollars and Australian dollars, which are translated into equivalent U.S. dollars on March 31, 2025 and December 31, 2024.

The amounts and location of gains and losses on Cash Flow Hedges within the Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2025 and 2024 were as follows (in thousands):


		Three Months Ended March 31,
		2025			2024
Foreign Exchange Cash Flow Hedges, effective:

Amount of gain (loss) recognized in Other comprehensive income (loss) ⁽¹⁾		$	2,340		$	966

Amount and location of gain (loss) reclassified from Accumulated OCI to:
Revenue		$	(173)		$	1,624
Provision for income taxes			45			(423)
Net income (loss)		$	(128)		$	1,201

⁽¹⁾ As a result of the valuation allowance recorded in Q2 2024 against the Company’s U.S. Deferred Tax Assets, there is no tax impact recognized in Other comprehensive income (loss) for unrealized foreign exchange cash flow hedge gains or losses in 2025.

The activity related to the change in net unrealized gains and losses on the cash flow hedges included in “Accumulated other comprehensive income (loss)” in our unaudited consolidated statements of stockholders’ equity is presented in Note 12.

Fair Value Hedges

Changes in the fair value of derivative instruments not designated as hedges are recognized in earnings in Other income (expense), net on a before tax basis and are offset by gains and losses on the related hedged items.

The Company’s volume of foreign exchange fair value derivative contracts as of March 31, 2025 and December 31, 2024 are summarized as follows (in thousands):


		Local
		Currency		U.S. Dollar
		Notional		Notional
As of March 31, 2025 ⁽²⁾		Amount		Amount
Australian Dollar		3,950		$	2,485
Canadian Dollar		7,220			5,044
Euro		10,400			11,236
British Pound		4,000			5,178
Mexican Peso		266,000			13,118
New Zealand Dollar		3,968			2,278
Polish Zloty		10,000			2,590
				$	41,929

⁽²⁾All fair value hedges are short-term and matured in April 2025.


		Local
		Currency		U.S. Dollar
		Notional		Notional
As of December 31, 2024 ⁽³⁾		Amount		Amount
Australian Dollar		3,850		$	2,393
Canadian Dollar		5,850			4,137
Euro		11,000			11,456
British Pound		5,600			7,066
Mexican Peso		130,000			6,307
New Zealand Dollar		3,400			1,914
				$	33,273

⁽³⁾ All fair value hedges are short-term and matured in January 2025.

The amounts and location of before tax gains and losses on Fair Value Hedges within the Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2025 and 2024, respectively, were as follows (in thousands):


		Three Months Ended March 31,
		2025			2024
Foreign Exchange Fair Value Derivatives, not designated as Hedging Instruments:

Other income (expense), net		$	48		$	226

The related cash flow impacts of all the derivative activities are reflected as cash flows from operating activities.