Welcome to TeleTech's Third Quarter 2017 Earnings Conference Call. [Operator Instructions]. This call is being recorded at the request of TeleTech. I would now like to turn the call over to Paul Miller, TeleTech's Senior Vice President, Treasurer and Head of Investor Relations. Thank you, and you may begin.

Good morning, and thank you for joining us today. TeleTech is hosting this call to discuss the third quarter financial results for the period ended September 30, 2017. Participating on today's call are, Ken Tuchman, our Chairman and Chief Executive Officer; and Regina Paolillo, our Chief Financial and Administrative Officer. Yesterday, TeleTech issued a press release announcing its financial results. While this call will reflect items discussed within those documents, we encourage all listeners to read our quarterly report on Form 10-Q. Before we begin, I want to remind you that matters discussed on today's call may include forward-looking statements related to our operating performance, financial goals and business outlook, which are based on management's current beliefs and assumptions. Please note that these forward-looking statements reflect our opinions as of the date of this call, and we undertake no obligation to revise this information as a result of new developments that may occur. Forward-looking statements are subject to various risks, uncertainties and other factors that could cause our actual results to differ materially from those expected and described today. Such factors include, but are not limited to, reliance on several large clients, the risks associated with lower profitability from or the loss of one or more significant clients, execution risks associated with ramping new business or integrating acquired businesses, the possibility of asset impairments and/or restructuring charges as well as fluctuations to our financial results due to foreign exchange or other legislative developments in the United States or other countries where we do business. For a more detailed description of our risk factors, please review our Annual Report on Form 10-K. A replay of this conference call will be available on our website under the Investor Relations section. I now turn the call over to Ken Tuchman, TeleTech's Chairman and Chief Executive Officer.

Thank you, Paul, and good morning, everyone. I'm delighted to be here. It's been quite a productive quarter. Over the past few months, we have delivered strong bookings, including record Customer Technology Service bookings with strong growth in our cloud-based services. We reported a solid revenue performance; closed on the strategic acquisition of Motif; advanced our innovation in our omni-channel analytics and AI practices; completed the majority of the integration of our health care services acquisition, Connextions, and made the necessary preparations for a substantial seasonal ramp in the fourth quarter. While the seasonal ramp temporarily weighed on our third quarter operating income results as anticipated, it helps set the stage for an improved outlook and confidence to increase our full year guidance. Today, I will focus my comments on three topics, the strategic rationale behind our Motif acquisition; the growing market momentum for our Humanify Customer Engagement as a Service offering; and our focus on continuing to deliver increased shareholder value. I will then turn the call over to Regina for a more detailed review of our third quarter results and full year guidance. Yesterday, we announced the acquisition of Motif. This strategic acquisition expands our customer experience solution portfolio with essential digital trust and safety services along with community moderation capabilities. Digital safety is a lightning rod issue impacting every brand that does business online. Companies everywhere are making investments to build safe environments to protect their customers and their brands from digital fraud. Today, billions are being spent in trust and safety, and the market is expected to grow significantly within the next 5 years. As more and more time and money is being spent online, trust is emerging as an essential component to building and maintaining relationships with customers. Our acquisition of Motif provides us with…

Thanks, Ken. Good morning, everyone. I'll start with the highlights of our third quarter 2017 financial guidance -- I'm sorry, excuse me. I'll start with the highlights of our third quarter 2017 financial results and then provide some commentary on our updated full year guidance. In the third quarter, we continued to execute in line with our 2017 financial guidance, which is on a non-GAAP basis, excluding restructure, integration, and impairment charges and the assets that we are exiting. During our last earnings call, we provided additional detail related to our 2017 guidance. Specifically, we estimated 27% of our full year revenue and 37% of our full year operating income was to be recognized in the fourth quarter. Using the midpoint of our full year guidance, $1.405 billion in revenue and 8.4% operating margin, our third quarter revenue, operating income and operating margin results exceeded guidance as follows. Revenue guidance was $348 million, we delivered $356 million. Operating income guidance was $22 million, we delivered $22.8 million. And operating margin guidance was 6.3%, we delivered 6.4%. The third quarter's 6.4% operating margin is lower than the first half, 7.7%, due to the planned increased spend associated with 2017's unprecedented seasonal ramp in Q4. In line with the midpoint of our updated guidance, which I will cover shortly, we anticipate fourth quarter revenue at $396 million, a sequential increase of 12% and a record-high quarter. To support this $44 million of sequential revenue growth, which is related to our CMS business, we incurred a planned step up in our recruiting, training, licensing, facilities management and support expenses in the third quarter. We are confident that the investment in these ramp expenses will be sufficiently covered within the fourth quarter where we estimate a standalone fourth quarter operating margin of approximately 11.4%.…

Thanks, Regina. As we open the call, we ask that you limit your questions to 1 or 2 at a time. Operator, you may now open the line.

[Operator Instructions]. Our first question comes from Frank Atkins from SunTrust.

First, congratulations on the Motif acquisition. Can you talk a little bit about the capabilities this team brings, the management and how they fit with the current culture at TeleTech?

Sure, hi. First of all, why don't we just start with the culture? Culture is something that we spend a great deal of time looking at before we do any acquisition. And as it happens, this is a management team that we've been chasing for almost 2 years. So this was not something that we just -- that just popped into our lap. It was something that we've had on our radar for quite some time, and we've been courting the management team. Frankly, we love the culture so much that the leadership of the company has sold no equity whatsoever and is staying on long term with the company. And we see them as a tremendous asset to our growth in India, to us growing trust and safety and our content moderation services across the globe, and we're giving them full access to our footprint and to our client base. So as far as a cultural fit, we think it's one of the best cultural fits of any of the acquisitions we've done. As it relates to what they actually do, as I mentioned in our script, it's no surprise that trust and safety, fraud protection and content moderation are all extremely important issues that every company is grappling with. So if we start out with something as basic as credit card fraud, which continues to increase year-over-year, one of the services that they offer is working with very, very large online companies across spaces like travel, et cetera, where they are taking -- where they are looking at unusual transactions and figuring out who the bad guys are and getting those transactions to become deleted before the expense is incurred. Additionally, if you move on to community moderation, that expands across multiple areas. Fake reviews, when you take…

Okay, great. That's very helpful. And my follow up, I wanted to ask a little bit about the margin ramp that's anticipated in 4Q as you've put a lot of work into preparing for that ramp. Just want to understand, is that primarily driven by CMS? Or should we expect some margin increases in the other segments as well?

Yes, it's predominately CMS.

Next question comes from Bill Warmington from Wells Fargo Securities.

It's Bill DiJohnson on for Bill Warmington. I was looking at -- the CMS segment had another solid quarter growing 4% year-over-year on a constant currency organic basis. Did you see any benefit from Hurricanes Irma and Harvey in the quarter?

Yes, we do. With a small amount in Q3 and we have included in our guidance in Q4 of FEMA as a client.

And then for capacity utilization, improved to 78% this quarter. Very strong and positive commentary around volume. Could we see you hit your target of 80% to 90% utilization in Q4 possibly next year?

You will see that in Q4.

Now mind you, just so that from a modeling standpoint that our fourth quarter is always our seasonal peak. So please understand that yes, you'll see very high utilization in Q4. But obviously, it then tapers off as you get past the health care enrollment season and obviously, the Christmas ramp up season and then the return season thereafter.

What about reaching a sustainable level in the 80% to 90% range?

Well, it's certainly our goal and it's something that we're working very hard at to make sure that we're optimized across the board in all aspects whether it be our infrastructure, our real estate, et cetera. It's something that's very important to us and obviously leads to better performance overall. So that is certainly the goal and that's what we're focused on. But one thing that -- as I'm sure you can imagine, at the end of the day, as we keep winning new logos and new clients, in many cases, where they need to be is not necessarily where we always have capacity at the time. So sometimes, that requires us to build out additional capacity over and above the capacity that we have, which is something that we probably don't talk about very often. But it's just the reality of our business.

And we are showing no questions at this at this time. [Operator Instructions]. And we're showing no questions at this time, and that's all the time we have today. Thank you for joining. And this concludes TeleTech's Third Quarter 2017 Earnings Conference Call. You may now disconnect at this time.