Teleperformance's Share Buyback: A Signal of Confidence and Value

Teleperformance SE, a global leader in digital business services, recently announced a share buyback program worth up to EUR500 million, set to run from August 3, 2023, to December 31, 2024. This strategic move is a testament to the company's confidence in its short- and long-term growth prospects and its commitment to enhancing shareholder value. The program is expected to have a positive impact on the company's stock price and shareholder value, while also maintaining the company's financial flexibility and acquisition opportunities.

The share buyback program is a sign of Teleperformance's strong financial position and its ability to generate significant cash flow. By repurchasing its own shares, the company aims to partially offset the dilution resulting from the completion of the Majorel acquisition, expected during the fourth quarter of the current year. Most of the acquired shares will be cancelled, which is expected to partially offset the dilution.

Teleperformance's decision to initiate the share buyback program is driven by several factors:

1. Significant Cash Flow Generation: The company has been generating substantial cash flow, providing the financial capacity to execute the buyback program. In 2022, the company reported a trailing 12-month revenue of $10.2B and a net income of $658.54M, indicating its strong financial position.
2. Industry-Leading Performance: Despite the challenging macro-economic environment, Teleperformance has maintained strong performance. The company's revenue and net income have been consistently growing, with a trailing 12-month revenue of $10.2B in 2023, up from $8.41B in 2021.
3. Future Growth Prospects: Teleperformance believes that its future growth prospects are not properly reflected in the current stock price, making it an attractive investment opportunity. The company's diversified revenue stream across various industries, such as telecoms, technology, public, and retail sectors, positions it well for future growth.
4. Offsetting Dilution from Majorel Acquisition: The buyback program will partially offset the dilution that would result from the completion of the Majorel acquisition. By repurchasing and cancelling its own shares, Teleperformance can mitigate the impact of the acquisition on its earnings per share (EPS).
5. Maintaining Financial Flexibility: The amount allocated to the program, up to EUR500 million, will allow the Group to maintain its financial flexibility, especially its ability to pursue other attractive acquisition opportunities. This is evident in the company's history of strategic acquisitions, such as the acquisition of ZP Better Together in 2024.

The share buyback program is expected to have a positive impact on Teleperformance's stock price and shareholder value by reducing the number of outstanding shares, signaling confidence in the company's future prospects, and enhancing shareholder value. By cancelling most of the acquired shares, the number of outstanding shares will decrease, which can lead to an increase in earnings per share (EPS) for remaining shareholders. This can make the company's stock more attractive to investors, potentially leading to an increase in the stock price.

In conclusion, Teleperformance's share buyback program is a strategic move that demonstrates the company's confidence in its short- and long-term growth prospects and its commitment to enhancing shareholder value. The program is expected to have a positive impact on the company's stock price and shareholder value, while also maintaining the company's financial flexibility and acquisition opportunities.