Teleperformance SE (TEP) Earnings Call Transcript & Summary

Hello, and welcome to the Teleperformance 2021 Annual Results Call. My name is Courtney, and I'll be your coordinator for today's event. Please note that this call is being recorded. [Operator Instructions] And I will now hand you over to your host, Daniel Julien, Chairman and Chief Executive Officer, to begin today's conference. Thank you.

Hello? [Technical Difficulty]

Apologies for the delay. We are currently experiencing a technical difficulty. Please stay connected and your conference will be starting shortly. Thank you. Thank you for your patience, I will now hand you over to your host, Daniel Julien, Chairman and Chief Executive Officer, to begin. Thank you.

Okay. Thank you very much. If you may put the slides on the screen, this would be helpful. Okay. I cannot see the slide on the screen. So I'm going to tell you that I'm very happy to have the opportunity to present you Teleperformance 2021 results and our vision for the next 4 years. But having said that, as I cannot see the slide on the screen, I'm going to let Olivier Rigaudy, who is present in the center in Paris to make the whole presentation. Thank you very much.

Okay. So as a content, we are -- good morning and good afternoon to all. I'm going to present to you the result of the 2021 result of the group. We are going to cover, first, the key figure and highlight of FY 2021, give you some information about the objective and strategy from 2022 to 2025. And after, I will deep dive in the 2021 result before looking to give you much more detail on 2022 outlook. Let's start with the figure and highlights first. I don't know if you -- Daniel, you can see them?

It's not working.

So first off is just to see where we are. So Teleperformance in 2021 is at this level. We are more than close to 420,000 people along the worldwide with 70% of the people working from home. We are working in 88 countries in 265 language serving only for the call service, roughly 1,000 clients in 170 markets. As you can see on this map, we are showing where we are and highlighting the country where we are very, I would say, important, meaning Philippines, India, of course, Colombia and also some domestic country like Brazil, U.S. and in Europe with a 2 multilingual hub; Greece, Portugal and specifically also Netherlands this year, given of the COVID lines that I will come back later on. What are the main stuff to keep in mind about 2021? First of all, we have achieved a record growth in 2021. We are ahead of our 2017-2022 plan with revenue above EUR 7 billion. Like-for-like growth, which is 25.7%, which is significantly ahead of people's expectation, mainly driven by an acceleration in market digitalization and revenue-generating digital client up to nearly 50% in 2021. As you might remember, we have also been able to make 2 external growth last year with the acquisition of Health Advocate that has been completed in last July; and Senture, which was completed in December. Not only we grew but we have been able also to have a sharp increase in profitability. The EBITA figure is now, without nonrecurring items, close to EUR 1.5 billion, up more than 30% in 2021, which is a margin of 20.7%, 100 basis points versus 2020. The decrease in EBITA before nonrecurring item is 45-point -- close to 46% and exceed EUR 1 billion, EUR 1,071,000,000 for a margin, which is 15.1% up 200 basis points versus 2020 and far ahead of pre COVID level of 2019, which was 14.3%. Just to mention that our margins are up by activity and region. And not only we grew, not only we increase our profitability but we have been able to deliver a very good cash flow, EUR 661 million, up 36% versus 2020. And that has been recognized by Standard & Poor's that upgrade us from BBB- to BBB in the fourth quarter. That is the key figure. I just wanted to remind you 2 things, the 2 acquisitions that we made in U.S., Health Advocate, which is a company that helps American citizen to navigate through the complexity of the U.S. health care system and deliver 12,000 clients, which are mainly -- which are company, of which 20% are them -- are part of them, of the Fortune 500 and the revenue is EUR 140 million. Senture, which is a business that is a business process outsourcing operator for public service in U.S. with revenue of a little less than $200 million. And these 2 acquisitions are boosting group positioning in high value-added business and enhancing group's profitability profile, sorry. Not only we made acquisition but also this in 2021, we have been able to...

The slide came on my screen.

Finally. So I give you the stuff. Sorry, sorry.

This was my part of the presentation, I'm going to be happy to say, yes, you saw the results of '21, they were beyond our own expectations, whether in organic growth but also our ability to make targeted acquisitions. But also, there are a few information that are critical. Please don't change the slide before I ask. There are few information that are critical. We generated net 30,000 jobs, and we have been recognized by Great Place to Work for more than 98% of our operation covering our employee base. We reduced our carbon footprint of 15% per employee. And very important at the COVID time, we have been able to deliver a good quality of service with 70% of our employees working from home. Next, please. So among the awards, I'm not going to bother you with multiple awards. One recognition that was important was by Fortune Magazine, who, after reviewing 10,000 other companies with the help of Great Place to Work, had included Teleperformance as one of the World Best Workplace, 1 of the top 25 companies among 10,000. Next, please. Other awards and recognition. As usual, it's Everest that gives its leadership grid and as you can see, Teleperformance is up to the top. Thank you very much. Next. Next. So our full year objectives are extraordinarily simple. We recognize that we are in an exponentially transformative environment. Everything moves superfast. In this environment, we are going to maintain and to expand our global #1 leadership worldwide. In our business goal, which are the outsourced customer and citizen experience management and the related business service. And we are going to do that, thanks to our unique global range of services, from customer experience, service to the back office and very specific back office by vertical -- activity vertical. Thanks to very aggressive investment in digital transformation, analytics and process, already by the end of 2022, we are going to have more than 2,000 engineers and consultants in our transformative division, TAP, Technology, Analytics and Process. And we plan to go up to 5,000. Then we are going to develop and we are developing specific expertise by vertical, which means that we have people coming from the specific industry, knowing very well the pain point of this specific industry and helping to build solutions that improve the workflow. Our objective for 2025 are very simple. Like-for-like, EUR 10 billion plus targeted specific acquisitions that make the group stronger for EUR 1 billion to EUR 2 billion and improving our EBITA margin up to 16%, from the 15% to 16%. Next, please. So the strategy, again, nothing new. We are consistent. First, the high touch. We are the largest army of service in the world. Enthusiastic people, helping people. And of course, thanks to selection of the people, training of the people, coaching of the people and a way to manage and as it is laid out on this slide. Next, please. This unique army of service is enhanced by high-tech investment, hardware, software knowledge from the cloud-based solution with TP Cloud Center, the omnichannel solution, the artificial intelligence, the robotic process automation, the analytics, the Lean Six Sigma discipline and extraordinarily important, a best-in-class information security that we want at par with our clients or even both. This means a global security operation running 24/7, security operational center, 24/7, multifactor authentication, network segregation and so on. Next, please. So this high-touch high-tech will help Teleperformance to deliver an outstanding quality of service. And this outstanding quality of service that ensures our leadership is measured by objective key performance indicators, our client seniority, which define the loyalty, our stack ranking when we have several offers to serve a client needs, how well do we do, our Net Promoter Score, which is the client satisfaction. And of course, our share of wallet evolution client per client. We are an agile, responsive, consistent and scalable solution. And this is maybe the most important. Teleperformance is the most scalable solution in the industry. Next, please. Strategy, very simple, the verticalization by client sector. There is a Teleperformance bank finance and insurance. There's a Teleperformance for digital platform. There is a Teleperformance for add scale and so on. Second, adding new line of services with the digital transformation, like for the social media, the content moderation, like for the development of the AI, the leveling, like for the development of the blockchain, the solutions for cryptocurrency. Also offering one-stop shopping, front office, middle office, back office for our clients when they want just 1 integrated solution. Also offering our own expertise as a service. And as I said, we are going to continue to make targeted acquisitions who are going to enrich Teleperformance portfolio of offering. Next, please. Sales activity is going to be developed with a sense of responsibility and with a purpose. Corporate social responsibility is specific quantified at Teleperformance. First, we want to be a preferred employer in the market and these are the Great Place to Work certification. Second, we are going to continue to promote diversity, gender equality and inclusion. And we follow the ratio and we have specific proactive initiatives that everybody can see, for example, on legally, to promote diversity and inclusion. Our commitment on the SBTi targets for global warming, to reach the net zero by 2040. And finally, we want to be a force of good in the communities where Teleperformance operates and gives back to the community. Seize our different initiative like citizen of the world and many others that are going to be announced during the year 2022. Please keep in mind that Teleperformance has been a signature of -- a signatory of the Global UN Compact for already 11 years. Thank you very much.

I'm going to present to you the figure quickly before we answer the question you are going to raise after. So coming to the figure precisely, as I told you, we have achieved EUR 7.1 billion this year, which is a 24% reported growth but 25.7% like-for-like growth for the full year. And if you exclude the impact from COVID support contract, this growth is now at -- stands at 16.5%. This is absolutely amazing. This is a figure that we never achieved. I'll come back later on, on that to give you much more detail on that. Two questions -- 2 points I wanted to make. First, we are close to EUR 1.5 billion EBITDA by 2021, achieving 20.7% versus sales, which is a significant improvement over last year, of course, but over 2019 in the meantime. And EBITDA or figure -- a main figure across EUR 1 billion to achieve -- to attain EUR 1,071,000,000, 15.1%, up 46% versus last year. And net profit, EUR 557 million, close to 72% growth versus last year. If we now enter much more in detail on the sales and I know you are interested to understand what's happening on the sales. So here, you have the breakdown of the sales versus 2020, including, of course, the currency effect, which was negative this year, mainly due to the -- mainly in H1 and many are coming from the dollar and main American currencies. But after that, this 25.7% like-for-like is breakdown between COVID support contract impact on LFL, on like-for-like, and like-for-like growth, excluding COVID contract. As you see, we increased our sales by EUR 927 million this year from, I would say, between brackets recurring business and EUR 515 million from COVID line. And finally, we had EUR 64 million of change in scope link to LFL bucket that has been consolidated in -- first of July 2021. We tried to explain you much more in detail, on 2 years, the revenue growth analysis. Of course, this year is complex because you have 2 issues. One is the COVID line that we mentioned that are following a path that is not steady from a quarter to another, plus the base effect of the year of 2020, which was depressed and now better in 2021. But as a whole, if we neutralize these 2 effects and trying to define a growth path for 2020 and 2021 as an average, we see that the growth is 12% over the 2 years. Not only we saw that, but also we see that the figure of 20% of Q4 is significantly ahead of people who are waiting and delivering the really good figure for 2020, for the last quarter that is promising for 2022, as you can imagine. Let's move now to the detailed growth for the year and for the quarter. What is amazing here is just to see you have the breakdown of the 25% across the different division and then, of course, the different, I would say, geography. Interestingly, in Q4, we grew by 13.3%. In fact, if you take out COVID, it's a little less but 11% while we were facing a very, very hard comp to beat versus last year, which was tough to beat notably in Europe, but not only in Europe, also in LLS. And here, you see that all the company, all the regions are growing very fast. Even in U.S., we are back on track and we deliver a very good acceleration of market in Q4. This is, as I told you, very interesting for the start of 2022. And of course, on specialized service, not only we continue to grow on LanguageLine Solutions, but we are also enjoying a gradual recovery in the TLS contact business, not at the level we had before but starting to come back to a better pace. If we move now to the result by activity, I would say a few things to tell except that all figures, all of our geography, all regions are progressing, are improving versus last year, achieving record figure, notably in India, that you can see, we are achieving 18.2%. This is a result of the management -- of our management picking the right contract to deliver the right improved figure but also a very big growth in CMEA and nobody thought it could be possible to achieve close to 14% margin in '20 in CMEA, while Ibero-LATAM is continuing to deliver very good figure. EWAP is improving again and specialized service came back to the level that we were knowing in 2019, notably with LanguageLine Solutions but also the improvement of TLS back to normal, not exactly back to normal but on a pace to be back to normal. If we move now to the region, I would say notably in English world, of course, you see the figure, a 12.5% growth in Q4 while facing tough comp, notably in U.K. But now we have a gradual acceleration along the year in North American market, which is satisfactory. And Asia Pacific, very good activity in Southeast Asia. So margin is improving, as you can see, by 110 basis points -- by 90 basis points, sorry. Moving to -- now to -- sorry, I skipped Ibero-LATAM, which was a mistake. Very good expansion in Ibero-LATAM, 18.3% in Q4 versus 26% for the full year. Of course, comps were tough to beat also in Q4. Strong -- very good growth, I would say, everywhere, Colombia, Peru, nearshore, Argentina and in even Portugal and even Brazil, which is not there, but everywhere, we are enjoying good growth. And the margins are growing very fast by 160 basis points in 2021. If we move now to Europe. Europe, 41% growth, like-for-like growth, of course, this is important -- this is linked partially significantly, sorry, for the COVID support contracts that are going to dry up. That was supposed to dry up, but I'm not sure they are going to dry up so much in Q1 in 2022. And we have, of course, here comps to beat that are difficult in Q4, but we have still a 10.7% growth in Q4 and a significant improvement in margin, as we can see, for more than 400 basis points. Let's finish core service by India growing at a lower pace but it was maintained. It was under control. This is managed and achieving the best core service figure margin across the group to 18.2% at a very good level. To end the presentation on that specialized service, so back on track, 14.5% growth in Q4, close to 20% for the full year. Again, growth in the margin to 30.2%. You have, of course, LanguageLine that continued to deliver good margin. TLS that is back on track, even if it's not at the level that it was in 2019. And of course, 6 months of Health Advocate that is delivering very good figure as planned. Quick word about the rest of the P&L. Very few things to tell about the figure below EBITDA, mainly the increase of the cost of performance share plan, which is linked to the fact that the stock price is increasing, while we have no, this year, any goodwill impairment in 2021. To finalize the analysis, financial results that are showing -- in a decrease, a degradation this year. But in fact, we decided to repay in advance some private -- U.S. private placements. But if you exclude that, the financial charge would have been lower. And it is absolutely promising for 2022 because this cost will be done also in 2022. Income tax back on track to the 28% that we were, knowing in the past, given the fact that we have no impairment of loss on goodwill this year and a net profit that is EUR 557 million, which is EUR 9.36 per share. Quick word on cash flow because this is probably the most interesting stuff. The cash flow not only increased because of the EBITDA, you understood, but the change in working capital has been limited to EUR 75 million while the group was growing by EUR 1.4 billion in sales, and I just wanted to highlight that point. This is really an achievement. And in the meantime, we have been able to control the CapEx not only in percentage, given the increase of sales but also in value, given the fact that we are -- we have -- our CapEx were mainly used on IT and not really on new workstation in 2021. I'm not going to spend much more time on balance sheet, but I just wanted to stay a minute there to see that finally -- to show the evolution of the group today. And the debt grew, that moved from 2.2x to 2.6x. In fact, in 2021, we have been able to finance Health Advocate and Senture acquisition for close to EUR 1 billion with only an increase in debt of EUR 382 million versus last year. This is remarkable while we continue to pay to serve a good dividend. And finally, we land a net debt to EBITDA below 2x, with a ratio that is a published ratio, which is 1.8x, but if you exclude Senture, it's 1.75x. And I'm sure you understood that the fact that to be improved of our rating by Standard & Poor in such troubled market, notably in debt market is absolutely an asset as we speak. Just a word about our debt. I'm not going to spend much more time on that, but clearly, our gross debt was 1.3% and I do believe it's going to be down again in 2022. Lastly, if we are going to propose to the general meeting a dividend of EUR 3.30 per share, which is an increase of 37% versus last year, with a stable payout ratio of 35%. I'm going to finish with the outlook for 2022 and after, open the floor for questions. We guide the market. We decided to guide the market to have a double-digit like-for-like revenue growth above 10%. We do believe that if you exclude COVID line that we have had time to predict for 2022, we are going to grow above 10%. Of course, there will be a decrease in contribution from COVID support contract, no doubt on that, probably much more starting in the Q2, Q3, Q4 than Q1. And the like-for-like revenue, if you take in account this decrease in contribution from COVID support, we believe we will be above 5%. On top of that, we think that we announced that we are going to be 30 basis point increase in EBITDA margin by the end of this year of 2022. And as mentioned by Daniel, we are looking for further targeted acquisition. That's the end of what I wanted to say, and of course, we are ready to take your Q&A. Your question, much more than an A.

[Operator Instructions] And our first question comes in from the line of Oscar Val calling from JPMorgan.

Congratulations on the result. I had 2 questions. The first one, if you could touch upon wage inflation and where are you seeing that in your markets and how you can pass that through. That's the first question. And then the second question is on the underlying growth. Could you explain if this is taking market share from competitors? Is it new outsourcing? Is it -- yes. So those are the 2 questions.

Wage inflation is a characteristic that is developing more or less all over the world. Of course, it started more significantly in the U.S.A. We are integrating this element in our 2022 forecast, and we have been mostly able to pass it through. That's the first one. The second point, the underlying growth, I think it's an underlying growth of the volume of interaction between the customers and the companies they buy product and service from. That come from the fact that there is more and more subscription model. There are more and more technology, more and more e-commerce, more and more digital platform and this fuels more interaction. I also think that Teleperformance grows faster than the market due to the fact that the leaders and specifically in times that are a little bit disturbing, the leader have an advantage. We have the credibility, we have the security. And basically, I would say that last year, we generated 50% of our volume with digital helping digital services, whether digital companies or traditional companies in their digital activity. This is the main fuel of the growth.

The next question comes in from the line of Anvesh Agrawal calling from Morgan Stanley.

Three questions actually. First, just a technical one. You're saying that digital customers are about 50% of volume. I believe this number was more like mid-30s when last reported. So I just want to check if there is a change in definition or you have seen sort of a pickup in Q4?

It's a definition. We define the stuff differently and I'm going to send you the definition precisely. But there is also an increase -- a significant increase of our digital business all along this year.

And then the second question is, I mean, so you partially answered in the previous one, but we have had some sort of digital companies having some softer results. I mean, look at Facebook, Netflix, Roblox yesterday. And you seem to be growing much faster than sort of what's happening in the entire U.S. digital space. Can you just tell us like a bit more how you're able to grow faster than the entire sort of marketplace that seems to be slowing down? And then -- and the third question is your guidance of around EUR 10 billion of revenue, am I right in thinking you're sort of roughly baking in around 8% like-for-like growth over 2022 to 2025 within the guidance?

First, Teleperformance is a customer and citizen service company, which means that we are extraordinarily useful to help to reduce frictions. So there could be a decorrelation between how well one of our client can perform and the development of the volume of Teleperformance. It's not necessarily related. Very specifically, to give an example, if an airline company has trouble, they are not going to grow their top line, but Teleperformance is going to do much more activity. That was just an example to help you understand. Second, when Teleperformance grew very much the service around the digital platform, it's not just the social media platform but it's also the whole economy that is in transformation. The bank finance, for example, you have the neobank and you have an incredible growth of the neobanks. You have the fintechs. You have the buy now, pay later and you have an incredible growth of that. Same for the e-commerce activities. You can see in the big retailer of big -- brick-and-mortar retailers, you can see the progression in digital and we are here to accompany them. So I think that whatever is the specific of 1 company or another, there is more and more digital transformation, more and more direct relationship between the customers and the companies and this fuels the growth of Teleperformance.

Okay. And then just sort of what you're baking within your 2025 guidance for like-for-like?

It's a computation that it's a CAGR that is around 9%, 8.8%, if I'm not mistaken, exactly. This is the EUR 10 billion figure for 2025 is a threshold to get. Maybe we can get more, maybe, I don't know, but today, this makes a growth of roughly 9% CAGR from 2022 to 2025.

Yes. And the growth, 9% CAGR, but without neutralizing the impact of COVID when we think that probably the largest part of business that was related to COVID was more behind us than in front of us.

The next question comes in from the line of Simona Sarli, calling from Bank of America.

So a couple of them. So first of all, going back to your medium-term guidance of inorganic revenue CAGR close to 9%. You mentioned also in one of your slides that you have achieved a like-for-like organic revenue CAGR close to 12%. So just to try to better understand, what are the underlying assumptions for your medium-term growth? And what are the moving parts that might be -- bring you to deliver a double-digit organic growth in the medium term? That's the first one.

Okay. On this first question, I'm going to answer. It's always easier to look at the number of the past than to define the number of the future. And if Teleperformance has a characteristic, it's systematically to deliver what we have projected for the future. Honestly, I wouldn't -- people can be more optimistic, more pessimistic. I'm reasonably conservative. And by the way, right now, I hope that the situation in Europe is still peaceful so we can develop our business properly.

And during one of your previous presentations, you also mentioned new vertical outsourcing opportunities with the government agencies. Is there an update that you can provide on that front, if you have seen any new contracts coming in?

We have seen a lot of new contracts coming in within '21. And we think we are going to see also a lot coming in within '22. At the same time, the reality of the economies, you have part that goes up and part that goes down. You have less dynamic business. It's also -- and if the question is, is Teleperformance successful in business development and hunting and specifically in the dynamic segment of the economy, the answer is yes.

And 1 last 1. At the beginning of the presentation, you mentioned that you have now roughly 65% of your workforce working from home. Is that sustainable in the medium term? And what would you say is the cost optimization opportunity? And also considering that in 2022, you are guiding for a margin improvement of 30 basis points year-over-year, how much of this margin improvement is coming from the cost optimization opportunity?

A lot of questions in 1. The very first 1 is that there is a big question mark about the organization of the work is going to be in 6 months or 1 year from now. They are contradictory forces. Some forces that push towards going back to brick-and-mortar, specifically for data security concern, for loyalty concern, for even mental health of the employees' concern and so on. And you have exactly the antagonic forces, people who prefer to stay and work from home. They will be, of course, a balance. Where is going to be the balance? I just don't know. We are ready for all case of figures, understanding that this is going to be -- any kind of adjustment is not going to be welcome because it's going to be more work, more cost but there will be adjustments. So if in 1 year from now, we are at 50-50, I will not be surprised. If we're at 60% brick-and-mortar and 40% work from home, I will not be surprised. But I don't know who can say what it will be. I'm going to give you an example. Over the last 6 months, regularly, publicly, the largest companies of the world have said that they are going to bring their employees back to their office, at the end of a specific quarter or at the end of the next quarter and so on. Right now, no one of the prediction that was given has been effective. So we know we are going to have to deal with some changes. What is going to be the magnitude of the changes is pretty uncertain. Are we solid and are we confident that we are going to be able to deliver and keep our margin? Yes, because we have different levers that we can use to adjust to the situation.

The next question comes in from the line of Christophe Chaput calling from ODDO.

I've got 3, if I may. The first 1 is coming back to your margin, in your EBITDA margin for 2022. So obviously the plus 30 bps will benefit from TLS, but could you give us as well granularity on geographies and the main that are going to benefit from the leverage? The second question regarding 2025, you mentioned 16% for the EBIT margin. Is it like-for-like or with acquisition or it doesn't really make any difference?

It's like-for-like. In any case, in like-for-like, it would be 16%, And with acquisition, it can be -- there can be an upside or it can be no difference. I still don't know because the acquisitions are still not here.

Okay. And the last 1 is, you say that the digital clients represent 50% of the sales. Can we have a rough idea of the average of the market share on these clients? And how does it compare versus, let's say, traditional clients?

I think that the wisdom of the economic leaders all around the world is widely shared, which means that it's very rare when a large client who has a large business wants to put all its eggs in the same basket. So having said that, a number of the new economic clients tend to be smaller than some of our blue chip companies and, in that case, the share of wallets that 1 player can enjoy with these clients tend to be larger. Doesn't mean that we are going to have 100% and be the only 1 partner. And I would not even recommend that to our clients.

Just to understand, let's imagine that with a traditional client, you've got, I don't know, 30% market share, and in digital clients, let's say, 10% market share or below. Is there a reason why the market share in digital clients should be below the traditional one?

No, I said exactly the opposite.

Yes. And the question is how fast you can improve, let's say, the...

No. I mean, if you want, we can have, outside of this discussion, a specific discussion to try to approach a decent answer to your question. Frankly speaking, I'm unable to answer.

Regarding the plus 30 bps in 2022 by geographies, if you get some granularity, it will be great.

We are not here to give you a stick to beat us. There are so mainly multiple factors that can change the situation from a geography to another, that to start to give to the market a level of granularity for objectives that are objective in the future would be extraordinarily inappropriate because we do not master everything. Of course, there are going to be pieces of our business that are going to be better than what we are expecting and pieces of our business that are going to be worse than we are expecting. And so that's the reason why for each category of information, we define different level of granularity. You can have the granularity on the past. You -- we are unable to give the specific granularity on the future. I'm not the master of the market shares and of the battles of the different clients on 1 specific vertical.

The next question comes in from the line of Patrick Jousseaume calling from Societe General.

My first question, speaking about granularity, is the margin on COVID contracts. You've got basically EUR 550 million revenue, additional revenue on these contracts. And I know that these contracts are all in Europe and in Europe, you have improved your EBITDA by something around EUR 130 million. When I do the math and I calculate, that is very simplistic, but it should lead us to a 25% margin on the COVID contracts. Could you elaborate a bit on that?

No, I cannot elaborate too much. What's for sure is that on some COVID contracts, you have a kind of a -- you tend to have a positive effect because we have been running aboard our traditional SG&A ratios for some period of peaks. It's always the same case when you are at peaks.

Okay. And can I ask a second question?

Please go ahead.

And so well, assuming that the margin of COVID contracts is higher than the margin for the whole group, I guess that your plus 30 basis points margin improvement that you expect for next year is probably -- or for this year, sorry, is probably bigger if you would exclude the COVID contracts. So could you also elaborate on that?

No, I am not sure. Honestly, it's something that we can take also offline and Olivier will be able to answer you. But when we take all our COVID business, all our COVID business, EBITA versus top line, I'm not sure of what you said. Honestly, I did not check it specifically. We are going to make the calculation. But when you take all the COVID business we made around the world and in the different geographies, and I'm not sure of your calculation.

You're right, Daniel. We are not...

Olivier is going to follow up with that.

We are not so different from the total. There are some -- in some places, yes, but in some place, not. But as a whole, it's not changing totally the game.

I'm saying as a whole. As a whole, I'm pretty sure that we are not -- that is not so different. So again, it's a question. We need to check the specifics and answer you. But it's not that suddenly the COVID has been a drag for the group.

The next question comes in from the line of Antonin Baudry calling from HSBC.

Congratulations on my side for these results and the visibility for 2025. I have 2 questions, please. The first 1 is on the CapEx and free cash flow generation. Which kind of CapEx intensity should we expect during the next planned 2022-'25 period? Should we expect to remain between 3%, 3.5% of revenues in the coming months? That is my first question.

From your microphone, but we are probably around 3.5% for the next year in terms of intensity of CapEx. We have a hard time to listen to you because...

Is 3.5% sustainable in 2023 to 2025?

Yes, yes, yes. To be honest, the forecast for '22 is quite solid. But for '24, '25, I don't have a precise plan of the CapEx, but it makes sense to be in this range of 3.5% because, of course, you have much more -- you might have less CapEx from brick-and-mortar but also much more from IT and from laptop and from stuff like that. So 3.5% seems to be correct today.

On my second question, not possible to split your growth between existing clients or new clients in 2021 on the trend that you expect in 2022?

We are going to stay roughly in the same approach, meaning in the range of -- I would say more than new clients are probably in the range of 60,000 to 40,000.

60,000 for new clients.

I don't know if there are other questions, maybe we have to take the last 2 questions.

The next question comes in from the line of Nicolas Tabor calling from Stifel.

The first 1 quickly would be if you have an indicative trend of what you are seeing right now with the COVID contracts in Q1 and how we should think about them. I mean, you said, should still be there in Q1. What do you expect for Q2? I understand it's low visibility but just to have an idea. And then the second question, looking forward, your 16% margin target for 2022 at constant scope. I was trying to understand how much was coming from potential evolution from working from home with lower leasing and depreciation expenses and so on. And how much would come from just operating leverage? And then finally, just specialized services being a higher share of the mix. I mean, how do you model that? Because I guess you've done the math in detail, just to see how we should think about it as well.

So on margin, of course, I'm not going to answer the question differently that was not answered by Daniel about how we are going to split different stuff. But it's clear that the fact that in specialized services, the increase of TLS that we expect, plus the Health Advocate impact should have an impact on the margin. That's clear. That's -- clearly. But I do expect no bigger change elsewhere. The only question, and clearly, the visibility on COVID line are absolutely, I would say, 0. We have 15 days, maybe sometimes less in advance. What we do expect that there will be still COVID line at least until March, April. After, they are going to dry up. Probably it's starting already to dry up but not at the same -- not -- they are still testing in vaccine line. So it's difficult to tell. So that's the reason why we are careful about that. But what is sure of is that there will be probably much more COVID line in Q1 than people expected, I would say, last year.

Great. And finally, just the last 1. Can we -- can you say that your guidance for the 5%-plus organic growth is as conservative as it usually is at the beginning of the year?

What I'm just telling is that, of course, and Daniel mentioned it, we are committed to deliver. So if we are able to do better, we'll do better. But this is difficult to be much more precise today, mid-February.

And congratulations again.

The final question comes in from the line of Laurent Gelebart calling from BNP Paribas Exane.

Laurent speaking from BNP Exane. Just 1 question for you, Daniel. You're shooting to the midterm plan to 2025. I would like to know if you are going to run the business up to the end of this plan.

Typically, the human being propose and God decide. Right now, I'm here to present you 2021, to present you 2022, you are going to see me in 2023 to present you the results of 2022. And then we all will decide, the Board, the shareholder and myself. And I just want to thank you, everybody, who were here on this call. I deeply apologize for the very, very bad quality of the connections that we had today. Usually, it's clearly smoother than it has been. But in any case, what is important is the message, and the message is Teleperformance did well in 2021 and is going to do well in 2022. Thank you very much.

Thank you to all.