TELUS International (Cda) Inc. (NYSE:TIXT) Q1 2023 Earnings Conference Call May 4, 2023 10:30 AM ET Company Participants Jason Mayr - Head of Investor Relations and Treasurer Jeff Puritt - President & Chief Executive Officer Vanessa Kanu - Chief Financial Officer Conference Call Participants Keith Bachman - BMO Cassie Chan - Bank of America Ramsey El-Assal - Barclays Aravinda Galappatthige - Canaccord Genuity Tien-tsin Huang – JPMorgan Jesse Wilson - William Blair Stephanie Price - CIBC Ryan Potter - Citi D ...

Exhibit 99.1 TELUS INTERNATIONAL (CDA) INC. CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 2023 TELUS International (Cda) Inc. Condensed Interim Consolidated Statements of Income and Other Comprehensive Income (Loss) (unaudited) | | | | | Three months | | | --- | --- | --- | --- | --- | --- | | Periods ended March 31 (US$ millions except earnings per share) | Note | | 2023 | | 2022 | | REVENUE | 3 | $ | 686 | $ | 599 | | OPERATING EXPENSES | | | | | | | Salaries and benefits | | | ...

TELUS International (Cda) Inc. (NYSE:TIXT) Q4 2022 Earnings Conference Call February 9, 2023 10:30 AM ET Company Participants Jason Mayr – Senior Director-Investor Relations and Treasurer Jeff Puritt – President and Chief Executive Officer Vanessa Kanu – Chief Financial Officer Conference Call Participants Ramsey El-Assal – Barclays Tien-tsin Huang – JPMorgan Keith Bachman – BMO Cassie Chan – Bank of America Divya Goyal – Scotia Stephanie Price – CIBC Dan Perlin – RBC Richard Tse – National Operator Good mo ...

Disclaimer This presentation also contains certain non-GAAP financial measures, which are not measures of financial performance in accordance with GAAP and may exclude items that are significant in understanding and assessing our financial results. Therefore, these measures should not be considered in isolation or as an alternative to GAAP measures. You should be aware that our presentation of these measures may not be comparable to similarly-titled measures used by other companies, including companies in o ...

Financial Performance - Adjusted EBITDA was $157 million, up 10% from $143 million in the same quarter of the prior year, with an Adjusted EBITDA Margin of 24.9%, an increase from 23.8%[10] - Revenue of $2,468 million, up $274 million or 12% year-over-year, despite a 4% unfavorable foreign currency impact[10] - Net income of $183 million and diluted EPS of $0.68, compared to $78 million and $0.29 in the prior year, with Adjusted Net Income at $332 million, a 24% increase year-over-year[10] - Cash provided by operating activities was $437 million, up 41% from $311 million in the prior year, and Free Cash Flow was $333 million, up 59% from $210 million[10] - Revenue for Q4 2022 was $630 million, a 5% increase from $600 million in Q4 2021; total revenue for 2022 reached $2,468 million, up 12% from $2,194 million in 2021[28] - Net income for Q4 2022 was $34 million, slightly down from $36 million in Q4 2021; total net income for 2022 was $183 million, compared to $78 million in 2021[28] - Adjusted EBITDA for Q4 2022 was $157 million, up from $143 million in Q4 2021; total adjusted EBITDA for 2022 was $607 million, compared to $540 million in 2021[35] - The company reported a free cash flow of $60 million for Q4 2022, an increase from $37 million in Q4 2021; total free cash flow for 2022 was $333 million, compared to $210 million in 2021[36] - Operating income for Q4 2022 was $61 million, compared to $63 million in Q4 2021; total operating income for 2022 was $284 million, up from $185 million in 2021[28] Future Outlook - Full-year 2023 revenue outlook is between $2,970 million and $3,030 million, including $255 to $260 million from WillowTree, representing growth of 20.3% to 22.8%[11] - Adjusted EBITDA for 2023 is projected to be in the range of $705 to $725 million, representing growth of 16% to 19%[11] - Adjusted Diluted EPS for 2023 is expected to be between $1.20 and $1.25, reflecting higher interest charges associated with the WillowTree acquisition[11] - The company anticipates continued growth driven by business expansion and operational efficiencies despite potential economic challenges[22] Debt and Leverage - Net Debt to Adjusted EBITDA Leverage Ratio was 1.1x as of December 31, 2022, improved from 2.1x as of December 31, 2021, but increased to 2.9x post-WillowTree acquisition[10] - The net debt to adjusted EBITDA leverage ratio improved to 1.1 as of December 31, 2022, down from 2.1 as of December 31, 2021[37] Team and Community Impact - Team member count was 73,142 as of December 31, 2022, an increase of 18% year-over-year[10] - Since 2007, TELUS International has positively impacted over 1.2 million citizens globally through community initiatives[40] - The company has allocated $5.1 million in funding to grassroots charitable organizations since 2011[40] Company Services - TELUS International provides next-generation digital solutions to enhance customer experience for global brands[39] - The company supports the full lifecycle of clients' digital transformation journeys, enabling quicker adoption of digital technologies[39] - TELUS International's integrated solutions include digital strategy, IT lifecycle management, and end-to-end AI data solutions[39] Assets and Cash Position - Cash and cash equivalents at the end of Q4 2022 were $125 million, up from $115 million at the end of Q4 2021[29] - Total assets decreased to $3,556 million as of December 31, 2022, from $3,626 million as of December 31, 2021[29] Foreign Exchange Impact - The company experienced a foreign exchange loss of $18 million in Q4 2022, compared to a gain of $2 million in Q4 2021[28] Earnings Per Share - Basic earnings per share for Q4 2022 were $0.13, down from $0.14 in Q4 2021; diluted earnings per share remained at $0.13 for both quarters[28]

[Risk Factors](index=7&type=section&id=Item%203%20Key%20Information) The company faces diverse risks spanning business operations, talent management, financial stability, legal compliance, and its relationship with the controlling shareholder [Business & Operational Risks](index=9&type=section&id=BUSINESS%20%26%20OPERATIONAL%20RISKS) The company faces intense competition, technological obsolescence, global economic volatility, client concentration, and acquisition integration challenges - The company faces intense competition from professional services firms, IT companies, and traditional BPO providers, which could lead to client turnover, revenue loss, and reduced margins[28](index=28&type=chunk)[29](index=29&type=chunk) - Global economic conditions, including inflation, rising interest rates, and potential recession, pose a risk by potentially reducing client spending and affecting their ability to make timely payments[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) - The ongoing Russia-Ukraine conflict creates political uncertainty and economic volatility, which could adversely impact clients' demand for services and pose risks to operations in neighboring countries[42](index=42&type=chunk)[43](index=43&type=chunk) - The company's reliance on a few major clients is a key risk. For FY2022, three clients (TELUS, a leading social media company, and Google) accounted for **17.3%**, **15.0%**, and **11.9%** of revenue, respectively. The loss of any of these clients could materially harm the business[96](index=96&type=chunk) - There are significant risks associated with integrating acquisitions, including the recent WillowTree purchase. Challenges include diverting management attention, retaining key personnel and clients, and integrating operations and systems[66](index=66&type=chunk)[67](index=67&type=chunk) [Talent-Related Risks](index=17&type=section&id=TALENT-RELATED%20RISKS) The company's growth relies on attracting and retaining talent, maintaining its culture, managing content moderation team well-being, and mitigating risks from reclassifying contractors - The company's success depends on attracting and retaining skilled professionals, as competition for talent is intense. Increased attrition could raise recruiting costs and decrease operating efficiency[78](index=78&type=chunk)[79](index=79&type=chunk) - Maintaining the company's unique culture is critical for attracting and retaining talent and clients. Rapid growth, geographic expansion, and acquisitions could make it difficult to preserve this culture[81](index=81&type=chunk) - Content moderation work poses risks to team members' mental health. The wellness programs in place may be insufficient, potentially leading to higher attrition, increased costs, and legal claims[85](index=85&type=chunk)[86](index=86&type=chunk) - The classification of data annotators for the TIAI business as independent contractors is a risk. If they were reclassified as employees, the company could incur significant additional expenses for wages, benefits, and taxes[92](index=92&type=chunk)[93](index=93&type=chunk) [Financial Risks](index=20&type=section&id=FINANCIAL%20RISKS) The company faces financial risks from pricing model inaccuracies, client concentration, operational variability, foreign currency fluctuations, and tax incentive dependency - Three clients (TELUS, a leading social media company, and Google) accounted for a combined **44.2%** of revenue in 2022. The loss or reduction of business from these clients could have a material adverse effect[96](index=96&type=chunk) - The company identified material weaknesses in internal control over financial reporting as of December 31, 2021, related to the integration of entities acquired in 2020. These weaknesses were remediated in fiscal year 2022[103](index=103&type=chunk) - The company's credit agreement contains restrictive covenants, including a Net Debt to EBITDA ratio. Non-compliance could result in default and acceleration of debt[108](index=108&type=chunk) - The company's primary operating currency is the U.S. dollar, but it generates revenue and incurs expenses in other currencies like the Euro and Philippine peso, exposing it to adverse impacts from foreign currency fluctuations[110](index=110&type=chunk)[111](index=111&type=chunk) - The company benefits from tax incentives in jurisdictions like India and the Philippines. The reduction or withdrawal of these benefits could increase the effective tax rate and adversely affect financial results[113](index=113&type=chunk)[116](index=116&type=chunk) [Legal & Regulatory Risks](index=25&type=section&id=LEGAL%20%26%20REGULATORY%20RISKS) The company faces significant legal and regulatory risks, including non-compliance with data privacy laws, cyberattacks leading to data breaches, and potential intellectual property infringement claims - The company is subject to complex and sometimes conflicting legal regimes globally, covering areas like anti-corruption, data privacy (GDPR, CCPA), and labor standards. Non-compliance could lead to fines, sanctions, and reputational damage[121](index=121&type=chunk) - Unauthorized disclosure of sensitive client, customer, or employee data through cyberattacks or other breaches poses a major risk, potentially exposing the company to litigation, fines, and loss of business[122](index=122&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk) - The company's services could be alleged to infringe on the intellectual property rights of others, which could lead to costly litigation, royalty payments, or the need to alter business practices[132](index=132&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) [TELUS Relationship & Shareholder Risks](index=28&type=section&id=TELUS%20RELATIONSHIP%20RISKS) The company's dual-class share structure grants TELUS controlling voting power, influencing corporate governance and limiting subordinate shareholder influence due to its 'controlled company' status - The dual-class share structure concentrates voting control with TELUS, which holds approximately **72.4%** of the combined voting power, limiting the ability of subordinate shareholders to influence corporate matters[142](index=142&type=chunk)[143](index=143&type=chunk) - A shareholders' agreement grants TELUS the right to nominate a majority of the board of directors and provides special approval rights over key decisions, including CEO selection and amendments to the company's articles[147](index=147&type=chunk)[149](index=149&type=chunk) - The company qualifies as a "controlled company" under NYSE rules, exempting it from requirements for a majority-independent board and fully independent human resources and nominating committees[153](index=153&type=chunk) - As a foreign private issuer, the company is not subject to certain U.S. securities law disclosure requirements, such as U.S. proxy rules and Section 16 reporting for insiders, which may limit the information available to shareholders[158](index=158&type=chunk)[159](index=159&type=chunk) [Company Information](index=35&type=section&id=Item%204%20Information%20on%20the%20Company) This section provides an overview of the company's business, including its service offerings, global presence, client base, and growth strategies [Business Overview](index=35&type=section&id=B.%20Business%20Overview) TELUS International delivers digital customer experience solutions, including AI data and content moderation, for global brands across high-growth industries, emphasizing its unique caring culture - The company's integrated solutions include digital strategy, IT lifecycle management, intelligent automation, end-to-end AI data solutions, and omnichannel CX and trust and safety services[185](index=185&type=chunk) - As of December 31, 2022, the company has over **73,000** team members in **28** countries, with significant delivery centers in Asia-Pacific, Central America, and Europe[189](index=189&type=chunk) - The company serves over **650** clients, with a focus on high-growth verticals like tech and games, communications and media, eCommerce and fintech, and healthcare[197](index=197&type=chunk) - The company emphasizes its unique caring culture, which promotes diversity, inclusivity, and community giving, as a key driver of team member engagement and client satisfaction[209](index=209&type=chunk) [WillowTree Acquisition](index=37&type=section&id=About%20WillowTree%20and%20the%20acquisition) The company completed the acquisition of WillowTree for approximately $1.1 billion, enhancing its digital product capabilities, expanding geographic presence, and diversifying its client base - On January 3, 2023, the company completed the acquisition of WillowTree, a full-service digital product provider, for a total consideration of approximately **$1.1 billion**[200](index=200&type=chunk)[204](index=204&type=chunk) - The acquisition adds over **1,000** digital strategists, designers, and engineers, and expands the company's geographic presence to **13** new global studios[203](index=203&type=chunk) - WillowTree is expected to bolster client diversification by adding new marquee customers and enhance cross-selling opportunities, particularly in verticals like financial services, healthcare, and consumer goods[202](index=202&type=chunk) [Growth Strategy](index=39&type=section&id=Our%20Growth%20Strategy) The company's growth strategy focuses on expanding existing client relationships, establishing new ones, leveraging technology for efficiency, and pursuing strategic acquisitions - The company's growth strategy is focused on four key pillars[216](index=216&type=chunk) - **Expand with Existing Clients:** Deepen relationships by cross-selling existing services and developing new adjacent offerings - **Establish New Client Relationships:** Target new clients, particularly disruptors, that value customer experience as a brand differentiator - **Leverage Technology:** Continuously improve operational efficiency and enhance margins through technology and process optimization, such as using "Six Sigma" methodologies - **Strategic Acquisitions:** Enhance core capabilities through culturally aligned acquisitions, such as the recent purchase of WillowTree to add mobile development skills [Operating and Financial Review](index=46&type=section&id=Item%205%20Operating%20and%20Financial%20Review%20and%20Prospects) This section provides a detailed analysis of the company's financial performance, including revenue, expenses, profitability, and liquidity position [Operating Results](index=46&type=section&id=A.%20Operating%20Results) In FY2022, the company achieved strong financial growth, with revenue increasing **12%** to **$2,468 million** and net income rising **135%** to **$183 million**, driven by client expansion despite foreign currency headwinds Key Financial Performance (FY 2022 vs. FY 2021) | Financial Metric | 2022 ($M) | 2021 ($M) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $2,468 | $2,194 | +$274 | +12% | | **Operating Income** | $284 | $185 | +$99 | +54% | | **Net Income** | $183 | $78 | +$105 | +135% | | **Adjusted EBITDA** | $607 | $540 | +$67 | +12% | | **Diluted EPS** | $0.68 | $0.29 | +$0.39 | +134% | | **Adjusted Diluted EPS** | $1.23 | $1.00 | +$0.23 | +23% | - Revenue growth in 2022 was driven by expanded services to existing clients and new client additions, but was negatively impacted by an unfavorable foreign currency effect of approximately **4%** due to the strengthening U.S. dollar[275](index=275&type=chunk) - Net income saw a significant increase of **135%** to **$183 million** in 2022, primarily due to higher revenues and a **$50 million** decrease in share-based compensation expense[307](index=307&type=chunk)[291](index=291&type=chunk) [Revenue Analysis](index=51&type=section&id=Revenue%20Analysis) This section details the company's revenue breakdown by industry vertical and geographic region, highlighting key client concentrations Revenue by Industry Vertical (in millions) | Industry Vertical | 2022 ($M) | 2021 ($M) | 2020 ($M) | | :--- | :--- | :--- | :--- | | Tech and Games | $1,148 | $999 | $617 | | Communications and Media | $581 | $537 | $481 | | eCommerce and FinTech | $285 | $259 | $171 | | Banking, Financial Services and Insurance | $166 | $97 | $68 | | Travel and Hospitality | $75 | $62 | $54 | | All others | $213 | $240 | $191 | | **Total** | **$2,468** | **$2,194** | **$1,582** | Revenue by Geographic Region (in millions) | Geographic Region | 2022 ($M) | 2021 ($M) | 2020 ($M) | | :--- | :--- | :--- | :--- | | Europe | $880 | $921 | $636 | | North America | $621 | $502 | $346 | | Asia-Pacific | $591 | $455 | $337 | | Central America | $376 | $316 | $263 | | **Total** | **$2,468** | **$2,194** | **$1,582** | - Revenue from the top three clients in 2022 was highly concentrated: TELUS Corporation (**17.3%**), a leading social media company (**15.0%**), and Google (**11.9%**)[277](index=277&type=chunk) [Expense Analysis](index=53&type=section&id=Expense%20Analysis) This section analyzes the company's key operating expenses, including salaries, goods and services, share-based compensation, and acquisition-related costs - Salaries and benefits increased by **14%** to **$1,393 million** in 2022, driven by a higher team member count (from **62,141** to **73,142**) and wage increases[285](index=285&type=chunk)[282](index=282&type=chunk) - Goods and services purchased rose **8%** to **$468 million**, mainly due to higher crowdsourced contractor costs for the TIAI business[288](index=288&type=chunk) - Share-based compensation expense decreased by **$50 million** to **$25 million** in 2022. This was primarily due to a decline in the company's share price, which lowered the expense on liability-accounted awards[291](index=291&type=chunk) - Acquisition, integration and other costs increased by **$17 million** to **$40 million**, mainly due to transaction costs related to the WillowTree acquisition[294](index=294&type=chunk) [Liquidity and Capital Resources](index=62&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) As of December 31, 2022, the company maintained strong liquidity of **$1,383 million** and a healthy leverage ratio, further enhancing its financial flexibility by expanding its credit facility to **$2,000 million** for future growth and acquisitions Liquidity Position as of Dec 31, 2022 | Component | Amount ($M) | | :--- | :--- | | Cash and cash equivalents | $125 | | Available borrowings under credit facility | $1,258 | | **Total Available Liquidity** | **$1,383** | Cash Flow Summary (in millions) | Cash Flow | 2022 ($M) | 2021 ($M) | 2020 ($M) | | :--- | :--- | :--- | :--- | | Cash from Operating Activities | $437 | $311 | $297 | | Cash used in Investing Activities | ($119) | ($110) | ($1,872) | | Cash (used in) provided by Financing Activities | ($300) | ($235) | $1,657 | - The Net Debt to Adjusted EBITDA Leverage Ratio was **1.1x** as of Dec 31, 2022. However, on a pro-forma basis reflecting the WillowTree acquisition financing, the ratio was **2.9x**[363](index=363&type=chunk)[365](index=365&type=chunk) - In December 2022, the company amended and expanded its credit facility to an aggregate of **$2,000 million** to support the WillowTree acquisition and provide future flexibility[259](index=259&type=chunk)[350](index=350&type=chunk) [Governance and Management](index=70&type=section&id=Item%206%20Directors%2C%20Senior%20Management%20and%20Employees) This section outlines the company's leadership, executive compensation practices, corporate governance structure, and employee demographics [Directors and Senior Management](index=70&type=section&id=A.%20Directors%20and%20Senior%20Management) The company's leadership includes President and CEO Jeffrey Puritt, a key executive team, and an **11-member** Board of Directors chaired by Darren Entwistle of TELUS Corporation - Key executive officers include Jeffrey Puritt (President & CEO), Vanessa Kanu (CFO), Maria Pardee (CCO), Marilyn Tyfting (Chief Corporate Officer), and Michael Ringman (CIO)[390](index=390&type=chunk)[410](index=410&type=chunk) - The Board of Directors is chaired by Darren Entwistle, President and CEO of TELUS Corporation. Josh Blair serves as Vice-Chair[390](index=390&type=chunk)[398](index=398&type=chunk)[399](index=399&type=chunk) [Executive and Director Compensation](index=73&type=section&id=B.%20Compensation) The company's executive compensation aligns pay with performance through base salaries, annual bonuses, and long-term incentives (RSUs and PSUs), while director compensation includes cash retainers and equity awards - The compensation philosophy is market-based and performance-based, with a focus on aligning executive pay with shareholder value creation and promoting sound risk-taking[411](index=411&type=chunk)[412](index=412&type=chunk) - For 2022, the annual performance bonus (PBP) for NEOs was weighted **70%** on corporate performance and **30%** on individual performance (**80/20** for the CEO). The corporate scorecard multiplier for 2022 was **70%**[436](index=436&type=chunk)[459](index=459&type=chunk) - Long-term incentives for 2022 were granted as **50%** RSUs (time-vesting) and **50%** PSUs (performance-vesting). PSU vesting is tied to EPS Growth CAGR (**60%** weight) and Organic Revenue Growth CAGR (**40%** weight) over a three-year period[447](index=447&type=chunk)[453](index=453&type=chunk) 2022 NEO Base Salaries | Name | Title | 2022 Annual Base Salary ($) | | :--- | :--- | :--- | | Jeff Puritt | President & CEO | 850,000 | | Vanessa Kanu | CFO | 468,430 | | Maria Pardee | CCO | 450,000 | | Marilyn Tyfting | CCO-CHRO | 350,766 | | Michael Ringman | CIO | 350,000 | - Independent directors receive an annual cash retainer of **$80,000** and an equity award of **$150,000**. TELUS-employed directors receive an annual equity award of **$230,000**[532](index=532&type=chunk) [Board Practices and Corporate Governance](index=101&type=section&id=C.%20Board%20Practices) The company's corporate governance is shaped by its 'controlled company' status under TELUS, impacting board independence and committee structures, while adhering to a board diversity policy - The company is a "controlled company" under NYSE rules, as TELUS holds over **50%** of the voting power, and thus relies on exemptions from certain governance requirements, such as a majority-independent board[554](index=554&type=chunk) - The Board of Directors has **11** members, of which **four** are determined to be independent (**36%**)[547](index=547&type=chunk)[556](index=556&type=chunk) - The board has an Audit Committee, a Human Resources Committee, and a Governance and Nominating Committee. The Audit Committee is composed entirely of independent directors[570](index=570&type=chunk)[572](index=572&type=chunk) - The company has a board diversity policy and aims for at least **30%** of its board members to be women. As of the report date, **three** of **ten** directors (**30%**) were women[589](index=589&type=chunk) [Employees](index=110&type=section&id=D.%20Employees) As of December 31, 2022, the company employed over **73,000** team members globally, primarily in service delivery, emphasizing its caring culture and commitment to diversity and inclusion for talent management Employee Headcount by Function | Function | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | :--- | | Delivery of our services | 67,664 | 59,493 | 48,948 | | Corporate, support and administrative | 5,478 | 2,648 | 1,670 | | **TOTAL** | **73,142** | **62,141** | **50,618** | - The company's talent strategy focuses on its caring culture, training and development (e.g., TELUS International University), and diversity and inclusion to attract and retain employees[597](index=597&type=chunk)[598](index=598&type=chunk)[601](index=601&type=chunk) - As of December 31, 2022, women represented approximately **48%** of the total workforce and **42%** of management positions[602](index=602&type=chunk) [Shareholders and Related-Party Transactions](index=112&type=section&id=Item%207%20Major%20Shareholders%20and%20Related%20Party%20Transactions) This section details the company's major shareholders, particularly TELUS and BPEA, and significant related-party transactions that highlight TELUS's controlling influence [Major Shareholders](index=112&type=section&id=A.%20Major%20Shareholders) The company's ownership is concentrated with TELUS Corporation and BPEA, who exert controlling influence through a dual-class share structure, with TELUS holding **72.4%** of total voting power Beneficial Ownership (as of Dec 31, 2022) | Name of Beneficial Owner | % of Multiple Voting Shares | % of Total Voting Power | | :--- | :--- | :--- | | TELUS | 74.8% | 72.4% | | BPEA | 25.2% | 24.4% | - The company has a dual-class share structure where multiple voting shares have **10** votes per share, while subordinate voting shares have **one** vote per share[662](index=662&type=chunk) [Related-Party Transactions](index=114&type=section&id=B.%20Related-Party%20Transactions) The company engages in significant related-party transactions with TELUS Corporation, including a Master Services Agreement generating **$428 million** in 2022 revenue, and a Shareholders' Agreement solidifying TELUS's control - The Master Services Agreement (MSA) with TELUS has a ten-year term from January 2021 and includes a minimum annual spend commitment of **$200 million** from TELUS[617](index=617&type=chunk) Transactions with TELUS Corporation (in millions) | Transaction | 2022 ($M) | 2021 ($M) | 2020 ($M) | | :--- | :--- | :--- | :--- | | Revenue from TELUS | $428 | $353 | $310 | | Management Fees to TELUS | ($33) | ($30) | ($29) | - A Shareholders' Agreement grants TELUS significant control, including the right to nominate a majority of the board and special approval rights over key corporate actions as long as it holds at least **50%** of the voting power[633](index=633&type=chunk)[639](index=639&type=chunk) - The company's credit facility includes TELUS as a lender, and contains covenants tied to the relationship with TELUS, such as a change of control clause if TELUS ceases to hold more than **50%** of the voting power[626](index=626&type=chunk)[630](index=630&type=chunk) [Additional Information](index=121&type=section&id=Item%2010%20Additional%20Information) This section provides details on the company's share capital structure, articles of association, and key U.S. and Canadian tax considerations for shareholders [Share Capital and Articles of Association](index=121&type=section&id=B.%20Memorandum%20and%20Articles%20of%20Association) The company's share capital includes dual-class shares with varying voting rights, protected by a Coattail Agreement, and its articles specify forum selection for legal disputes - The company has an unlimited number of subordinate voting shares (**1** vote each), multiple voting shares (**10** votes each), and preferred shares[661](index=661&type=chunk)[662](index=662&type=chunk) - Multiple voting shares automatically convert to subordinate voting shares if transferred to a non-Permitted Holder, or if the aggregate holdings of TELUS Permitted Holders or BPEA Permitted Holders fall below a **10%** threshold of total outstanding shares[663](index=663&type=chunk)[664](index=664&type=chunk) - A Coattail Agreement ensures that in a take-over bid, holders of subordinate voting shares are offered a price and terms at least as favorable as those offered to holders of multiple voting shares[687](index=687&type=chunk)[688](index=688&type=chunk) - The articles contain a forum selection clause designating the Supreme Court of British Columbia for derivative actions and breaches of fiduciary duty, and the U.S. District Court for the Southern District of New York for claims arising under the U.S. Securities Act and Exchange Act[693](index=693&type=chunk) [Taxation Summary](index=129&type=section&id=E.%20Taxation) This section outlines U.S. and Canadian federal income tax considerations for shareholders, including the company's non-PFIC status and applicable dividend withholding tax rates under the U.S.-Canada tax treaty - For U.S. federal income tax purposes, the company does not believe it was a Passive Foreign Investment Company (PFIC) for its 2022 taxable year and does not expect to be classified as a PFIC in the near future[726](index=726&type=chunk) - Dividends paid to U.S. Holders may be eligible for the favorable "qualified dividend income" tax rates, provided the company is not a PFIC and other holding period requirements are met[721](index=721&type=chunk) - Dividends paid to non-resident holders are subject to Canadian withholding tax at a rate of **25%**, which is generally reduced to **15%** for U.S. residents under the U.S.-Canada income tax treaty[736](index=736&type=chunk) [Controls and Procedures](index=138&type=section&id=Item%2015%20Controls%20and%20Procedures) Management confirmed the effectiveness of disclosure controls and internal control over financial reporting as of December 31, 2022, successfully remediating prior material weaknesses identified in FY2021 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[759](index=759&type=chunk) - Management assessed internal control over financial reporting as effective as of December 31, 2022, based on the COSO framework[761](index=761&type=chunk) - The material weaknesses in internal control over financial reporting that were reported for the year ended December 31, 2021, have been successfully remediated during fiscal year 2022[763](index=763&type=chunk) - The independent auditor, Deloitte LLP, issued an unqualified attestation report on management's assessment of the company's internal control over financial reporting[762](index=762&type=chunk) [Financial Statements](index=145&type=section&id=Item%2018%20Financial%20Statements) Deloitte LLP issued unqualified opinions on the consolidated financial statements for the years ended December 31, 2022, 2021, and 2020, prepared under IFRS, and on the effectiveness of internal control over financial reporting - The independent registered public accounting firm, Deloitte LLP, issued an unqualified opinion on the consolidated financial statements for the three years ended December 31, 2022[791](index=791&type=chunk) - Deloitte LLP also issued an unqualified opinion on the Company's internal control over financial reporting as of December 31, 2022[792](index=792&type=chunk)[798](index=798&type=chunk) - The financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB)[791](index=791&type=chunk)[821](index=821&type=chunk)

Q3 2022 Performance Highlights - Total revenue increased by 11% to $615 million compared to Q3 2021[8] - Revenue growth on a constant currency basis was 16%[9] - Net income margin was 9.6% and Adjusted EBITDA Margin was 25.7%[12] - Cash provided by operating activities increased by 44% year-over-year to $124 million[18] - Free Cash Flow increased by 56% year-over-year to $98 million[20] - Diluted EPS increased from $0.09 to $0.22 year-over-year[17] - Adjusted Diluted EPS increased from $0.26 to $0.32 year-over-year[19] FY2022 Outlook - The company anticipates revenue between $2,450 million and $2,490 million, representing a year-over-year increase of 11.7% to 13.5%[28] - Revenue growth on a constant currency basis is expected to be 16% to 18%[28] - Adjusted EBITDA Margin is projected to be 24.4% to 24.6%[29] - Adjusted Diluted EPS is expected to be $1.18 to $1.23[29] WillowTree Acquisition - The company plans to acquire WillowTree for an enterprise value of $1.225 billion[62] - The financing structure includes $125 million in TELUS International subordinate voting shares, $160 million reinvested by WillowTree management, and $940 million in cash from credit facilities[62]

TELUS International (Cda) Inc. (NYSE:TIXT) Q3 2022 Earnings Conference Call November 4, 2022 10:30 AM ET Company Participants Jason Mayr - Senior Director, Investor Relations and Treasurer Jeff Puritt - President and Chief Executive Officer Vanessa Kanu - Chief Financial Officer Conference Call Participants Ramsey El-Assal - Barclays Tien-tsin Huang - JPMorgan Chase & Co. Stephanie Price - CIBC World Markets Inc. Divya Goyal - Scotiabank Keith Bachman - BMO Capital Markets Dan Perlin - RBC Capital Markets R ...

[Condensed Interim Consolidated Financial Statements (Unaudited)](index=1&type=section&id=Condensed%20Interim%20Consolidated%20Financial%20Statements) [Condensed Interim Consolidated Statements of Income and Other Comprehensive Income (Loss)](index=2&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Income%20and%20Other%20Comprehensive%20Income%20(Loss)) The company reported significant increases in revenue, operating income, and net income for both the three-month and nine-month periods ended September 30, 2022, compared to the prior year, leading to substantial growth in basic and diluted earnings per share Revenue Performance (US$ millions) | Period | 2022 | 2021 | Change (YoY) | | :--- | :--- | :--- | :--- | | Three months ended Sep 30 | $615 | $556 | +10.6% | | Nine months ended Sep 30 | $1,838 | $1,594 | +15.3% | Operating Income (US$ millions) | Period | 2022 | 2021 | Change (YoY) | | :--- | :--- | :--- | :--- | | Three months ended Sep 30 | $84 | $47 | +78.7% | | Nine months ended Sep 30 | $223 | $122 | +82.8% | Net Income (US$ millions) | Period | 2022 | 2021 | Change (YoY) | | :--- | :--- | :--- | :--- | | Three months ended Sep 30 | $59 | $23 | +156.5% | | Nine months ended Sep 30 | $149 | $42 | +254.8% | Earnings Per Share (US$) | Period | 2022 (Basic) | 2021 (Basic) | Change (YoY) | 2022 (Diluted) | 2021 (Diluted) | Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Three months ended Sep 30 | $0.22 | $0.09 | +144.4% | $0.22 | $0.09 | +144.4% | | Nine months ended Sep 30 | $0.56 | $0.16 | +250.0% | $0.55 | $0.16 | +243.8% | [Condensed Interim Consolidated Statements of Financial Position](index=3&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Financial%20Position) As of September 30, 2022, total assets decreased by $153 million compared to December 31, 2021, primarily due to reductions in intangible assets and goodwill, while total liabilities also decreased by $216 million, resulting in a $63 million increase in owners' equity Financial Position (US$ millions) | As at | Sep 30, 2022 | Dec 31, 2021 | Change | | :--- | :--- | :--- | :--- | | Total assets | $3,473 | $3,626 | -$153 | | Total liabilities | $1,755 | $1,971 | -$216 | | Owners' equity | $1,718 | $1,655 | +$63 | [Condensed Interim Consolidated Statements of Changes in Owners' Equity](index=4&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Changes%20in%20Owners'%20Equity) Owners' equity increased from $1,655 million at January 1, 2022, to $1,718 million at September 30, 2022, driven by net income of $149 million and share-based compensation of $23 million, partially offset by an other comprehensive loss of $109 million Changes in Owners' Equity (Nine months ended Sep 30, 2022, US$ millions) | Item | Amount | | :--- | :--- | | Balance as at January 1, 2022 | $1,655 | | Net income | $149 | | Other comprehensive loss | $(109) | | Share-based compensation | $23 | | Balance as at September 30, 2022 | $1,718 | [Condensed Interim Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Cash%20Flows) Cash provided by operating activities significantly increased for both the three-month and nine-month periods ended September 30, 2022, while cash used in investing activities decreased for the three-month period but increased for the nine-month period, and cash used in financing activities increased across both periods, primarily due to debt repayments Cash Flow from Operating Activities (US$ millions) | Period | 2022 | 2021 | Change (YoY) | | :--- | :--- | :--- | :--- | | Three months ended Sep 30 | $124 | $86 | +44.2% | | Nine months ended Sep 30 | $337 | $218 | +54.6% | Cash Flow from Investing Activities (US$ millions) | Period | 2022 | 2021 | Change (YoY) | | :--- | :--- | :--- | :--- | | Three months ended Sep 30 | $(19) | $(40) | +52.5% (less cash used) | | Nine months ended Sep 30 | $(89) | $(78) | -14.1% (more cash used) | Cash Flow from Financing Activities (US$ millions) | Period | 2022 | 2021 | Change (YoY) | | :--- | :--- | :--- | :--- | | Three months ended Sep 30 | $(78) | $(34) | -129.4% (more cash used) | | Nine months ended Sep 30 | $(206) | $(160) | -28.8% (more cash used) | [Notes to Condensed Interim Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Notes%20to%20Condensed%20Interim%20Consolidated%20Financial%20Statements%20(Unaudited)) [General application](index=6&type=section&id=General%20application) This section outlines the basis of presentation for the condensed interim financial statements, including adherence to IFRS-IASB and IAS 34, details a reclassification of certain liabilities, and discusses upcoming accounting policy developments with no expected material impact, also describing the company's capital management objectives and policies [1. Condensed interim consolidated financial statements](index=6&type=section&id=1.%20Condensed%20interim%20consolidated%20financial%20statements) - The condensed interim consolidated financial statements are presented in United States dollars and comply with International Financial Reporting Standards (IFRS-IASB) and International Accounting Standard 34 (IAS 34)[15](index=15&type=chunk) - The company reclassified certain current and non-current liabilities into 'Accounts payable and accrued liabilities' and 'Other long-term liabilities' for immaterial amounts, with comparative periods reclassified to conform[17](index=17&type=chunk)[20](index=20&type=chunk) - Upcoming amendments to IAS 1, IFRS Practice Statement 2, IAS 8, and IAS 12, effective January 1, 2023, are not expected to materially affect the company's financial disclosure or performance[21](index=21&type=chunk)[22](index=22&type=chunk) [2. Capital structure financial policies](index=8&type=section&id=2.%20Capital%20structure%20financial%20policies) - The objective of capital management is to maintain a flexible capital structure that optimizes cost and availability of capital at acceptable risk levels[23](index=23&type=chunk) - Capital includes owners' equity (excluding accumulated other comprehensive income), long-term debt, and cash and cash equivalents[24](index=24&type=chunk) - Capital is managed by monitoring financial covenants in the credit facility and may involve issuing new shares or debt, or paying down debt with cash flows from operations[24](index=24&type=chunk)[25](index=25&type=chunk) [Consolidated results of operations focused](index=8&type=section&id=Consolidated%20results%20of%20operations%20focused) This section details the company's revenue disaggregation by industry vertical and geographic region, provides summaries of share-based compensation plans, breaks down interest and income tax expenses, and explains the calculation of basic and diluted earnings per share [3. Revenue](index=8&type=section&id=3.%20Revenue) Revenue by Strategic Industry Vertical (Nine months ended Sep 30, US$ millions) | Vertical | 2022 | 2021 | Change (YoY) | | :--- | :--- | :--- | :--- | | Tech and Games | $856 | $719 | +19.1% | | Communications and Media | $432 | $397 | +8.8% | | eCommerce and FinTech | $221 | $186 | +18.8% | | Banking, Financial Services and Insurance | $127 | $69 | +84.1% | | Travel and Hospitality | $55 | $43 | +27.9% | | Other | $147 | $180 | -18.3% | Revenue by Geographic Region (Nine months ended Sep 30, US$ millions) | Region | 2022 | 2021 | Change (YoY) | | :--- | :--- | :--- | :--- | | Europe | $667 | $669 | -0.3% | | North America | $456 | $362 | +26.0% | | Asia-Pacific | $441 | $331 | +33.2% | | Central America | $274 | $232 | +18.1% | [4. Share-based compensation](index=9&type=section&id=4.%20Share-based%20compensation) - Share-based compensation expense for the nine months ended September 30, 2022, was **$20 million**, down from **$66 million** in the prior year[3](index=3&type=chunk) [(a) Restricted share unit plan](index=9&type=section&id=4(a)%20Restricted%20share%20unit%20plan) Restricted Share Unit Activity (Nine months ended Sep 30, 2022) | Item | Number of units (Non-vested) | Number of units (Vested) | Weighted average grant-date fair value | | :--- | :--- | :--- | :--- | | Outstanding, January 1, 2022 | 1,850,807 | — | $21.94 | | Granted or exchange of rights | 806,395 | 59,512 | $26.52 | | Vested | (520,717) | 520,717 | $17.76 | | Exercised | — | (579,157) | $18.93 | | Forfeited | (188,256) | — | $17.70 | | Outstanding, September 30, 2022 | 1,948,229 | 1,072 | $25.48 | - As at September 30, 2022, outstanding restricted share units comprised **1,286,634 RSUs**, **408,321 PSUs**, and **253,274 Phantom RSUs**[30](index=30&type=chunk) [(b) Share option award plan](index=10&type=section&id=4(b)%20Share%20option%20award%20plan) Share Option Award Activity (Nine months ended Sep 30, 2022) | Item | Number of share option award units (Non-vested) | Number of share option award units (Vested) | Weighted average exercise price | | :--- | :--- | :--- | :--- | | Outstanding, January 1, 2022 | 1,084,185 | 2,096,582 | $10.74 | | Vested | (293,860) | 293,860 | $8.46 | | Exercised | — | (293,860) | $8.46 | | Forfeited | (157,336) | — | $6.80 | | Outstanding, September 30, 2022 | 632,989 | 2,096,582 | $11.21 | - As at September 30, 2022, the exercise price for outstanding options ranged from **$4.87 to $8.95** for **2,233,471 options** (4.4 years remaining life) and **$25.00** for **496,100 options** (8.4 years remaining life)[33](index=33&type=chunk) [5. Interest expense](index=11&type=section&id=5.%20Interest%20expense) Interest Expense (US$ millions) | Periods ended September 30 | 2022 (Three months) | 2021 (Three months) | 2022 (Nine months) | 2021 (Nine months) | | :--- | :--- | :--- | :--- | :--- | | Interest on long-term debt, excluding lease liabilities | $6 | $5 | $17 | $23 | | Interest on lease liabilities | $3 | $4 | $10 | $11 | | Amortization of financing fees and other | $1 | $1 | $2 | $2 | | **Total Interest expense** | **$10** | **$10** | **$29** | **$36** | [6. Income taxes](index=11&type=section&id=6.%20Income%20taxes) Income Tax Expense (US$ millions) | Periods ended September 30 | 2022 (Three months) | 2021 (Three months) | 2022 (Nine months) | 2021 (Nine months) | | :--- | :--- | :--- | :--- | :--- | | Current income tax expense | $30 | $22 | $74 | $62 | | Deferred income tax expense (recovery) | $(4) | $(7) | $(4) | $(19) | | **Total Income tax expense** | **$26** | **$15** | **$70** | **$43** | Effective Income Tax Rate | Periods ended September 30 | 2022 (Three months) | 2021 (Three months) | 2022 (Nine months) | 2021 (Nine months) | | :--- | :--- | :--- | :--- | :--- | | Income taxes computed at applicable statutory income tax rates | 23.3% | 23.9% | 23.5% | 23.7% | | **Effective income tax rate** | **30.6%** | **39.5%** | **32.0%** | **50.6%** | [7. Earnings per share](index=12&type=section&id=7.%20Earnings%20per%20share) [(a) Basic earnings per share](index=12&type=section&id=7(a)%20Basic%20earnings%20per%20share) Basic Earnings Per Share (US$) | Periods ended September 30 | 2022 | 2021 | | :--- | :--- | :--- | | Net income for the period | $59 | $23 | | Weighted average number of equity shares outstanding (millions) | 266 | 266 | | Basic earnings per share | $0.22 | $0.09 | [(b) Diluted earnings per share](index=12&type=section&id=7(b)%20Diluted%20earnings%20per%20share) Diluted Earnings Per Share (US$) | Periods ended September 30 | 2022 | 2021 | | :--- | :--- | :--- | | Net income for the period | $59 | $23 | | Weighted average number of equity shares outstanding (millions) | 266 | 266 | | Dilutive effect of share-based compensation (millions) | 3 | 3 | | Weighted average number of diluted equity shares outstanding (millions) | 269 | 269 | | Diluted earnings per share | $0.22 | $0.09 | [Consolidated financial position focused](index=13&type=section&id=Consolidated%20financial%20position%20focused) This section provides detailed information on accounts receivable, financial instruments, property, plant and equipment, and intangible assets and goodwill, including the announced acquisition of WillowTree, also covering long-term debt, share capital, and contingent liabilities [8. Accounts receivable](index=13&type=section&id=8.%20Accounts%20receivable) Accounts Receivable (US$ millions) | As at | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Accounts receivable – billed | $203 | $213 | | Accounts receivable – unbilled | $209 | $175 | | Other receivables | $16 | $28 | | Allowance for doubtful accounts | $(1) | $(2) | | **Total** | **$427** | **$414** | Allowance for Doubtful Accounts Activity (Nine months ended Sep 30, US$ millions) | Item | 2022 | 2021 | | :--- | :--- | :--- | | Balance, beginning of period | $2 | $5 | | Recovery | — | $(3) | | Write-off | $(1) | — | | Balance, end of period | $1 | $2 | [9. Financial instruments](index=14&type=section&id=9.%20Financial%20instruments) - The fair values of cash and cash equivalents, accounts receivable, and accounts payable and accrued liabilities approximate their carrying values due to their short-term maturity[44](index=44&type=chunk) - Derivative financial instruments used to manage currency risks are measured at fair value on a recurring basis using significant other observable inputs (Level 2)[45](index=45&type=chunk)[46](index=46&type=chunk) [10. Property, plant and equipment](index=15&type=section&id=10.%20Property,%20plant%20and%20equipment) Property, Plant and Equipment Net Book Value (US$ millions) | As at | Dec 31, 2021 | Sep 30, 2022 | | :--- | :--- | :--- | | Owned assets | $215 | $227 | | Right-of-use lease assets | $190 | $190 | | **Total** | **$405** | **$417** | [11. Intangible assets and goodwill](index=15&type=section&id=11.%20Intangible%20assets%20and%20goodwill) [(a) Intangible assets and goodwill](index=15&type=section&id=11(a)%20Intangible%20assets%20and%20goodwill) Intangible Assets and Goodwill Net Book Value (US$ millions) | As at | Dec 31, 2021 | Sep 30, 2022 | | :--- | :--- | :--- | | Customer relationships | $1,009 | $880 | | Crowdsource assets | $105 | $94 | | Software | $26 | $24 | | Brand and other | $18 | $9 | | **Total intangible assets** | **$1,158** | **$1,007** | | Goodwill | $1,380 | $1,288 | | **Total intangible assets and goodwill** | **$2,538** | **$2,295** | [(b) WillowTree](index=15&type=section&id=11(b)%20WillowTree) - TELUS International announced a definitive agreement to acquire WillowTree, a digital product provider, for an enterprise value of **$1,225 million**, including **$210 million** of assumed debt[51](index=51&type=chunk) - The acquisition consideration includes **$125 million** in TELUS International subordinate voting shares, approximately **$160 million** retained by management (performance-based), and the balance in cash[51](index=51&type=chunk) - The acquisition is anticipated to close in January 2023 and will be partially funded by an expanded **$2 billion** credit facility[51](index=51&type=chunk)[54](index=54&type=chunk) [12. Long-term debt](index=16&type=section&id=12.%20Long-term%20debt) Long-term Debt (US$ millions) | As at | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Credit facility | $786 | $941 | | Lease liabilities | $206 | $215 | | Deferred debt transaction costs | $(6) | $(8) | | **Total Long-term debt** | **$986** | **$1,148** | [(a) Credit facility](index=16&type=section&id=12(a)%20Credit%20facility) - The credit facility's effective interest rate increased to **4.57%** as at September 30, 2022, from **1.87%** at December 31, 2021[56](index=56&type=chunk) - The company was in compliance with all financial covenants, including Net debt to EBITDA ratio (not to exceed 4.50:1.00 for fiscal 2022) and EBITDA to debt service ratio (not less than 1.50:1.00), as at September 30, 2022[59](index=59&type=chunk)[60](index=60&type=chunk) - Subsequent to September 30, 2022, the company secured a commitment to expand its credit facility to an aggregate **$2 billion** (comprising **$800 million** revolving and **$1.2 billion** term loans) to fund the WillowTree acquisition[61](index=61&type=chunk) [(b) Long-term debt maturities](index=17&type=section&id=12(b)%20Long-term%20debt%20maturities) Anticipated Long-term Debt Maturities (Principal and Interest, US$ millions) | Fiscal year ending Dec 31 | Long-term debt, excluding leases | Leases | Associated interest and like carrying costs | Total Undiscounted Contractual Maturities | | :--- | :--- | :--- | :--- | :--- | | 2022 (remainder) | $236 | $5 | $3 | $249 | | 2023 | $30 | $20 | $44 | $84 | | 2024 | $30 | $12 | $30 | $72 | | 2025 | $490 | $11 | $21 | $522 | | 2026 and thereafter | — | $20 | $27 | $65 | | **Total** | **$786** | **$68** | **$93** | **$1,085** | [13. Share capital](index=17&type=section&id=13.%20Share%20capital) Authorized and Issued Share Capital (millions) | Share Type | Authorized (Sep 30, 2022) | Issued (Sep 30, 2022) | | :--- | :--- | :--- | | Preferred Shares | unlimited | — | | Multiple Voting Shares | unlimited | 200 | | Subordinate Voting Shares | unlimited | 66 | - As at September 30, 2022, **18 million** subordinate voting shares were reserved for share-based compensation plans and **5 million** for the employee share purchase plan[64](index=64&type=chunk) [14. Contingent liabilities](index=18&type=section&id=14.%20Contingent%20liabilities) [(a) Indemnification obligations](index=18&type=section&id=14(a)%20Indemnification%20obligations) - The company provides indemnification in certain transactions, with no maximum limit in some cases, but has not made significant payments historically, and no liability was recorded as of September 30, 2022[65](index=65&type=chunk) [(b) Claims and lawsuits](index=18&type=section&id=14(b)%20Claims%20and%20lawsuits) - The company is involved in various legal proceedings and claims, the ultimate outcome of which is uncertain and could adversely affect financial results if resolved for amounts exceeding management's estimates[66](index=66&type=chunk) [Other](index=18&type=section&id=Other) This section covers related party transactions, including significant dealings with TELUS Corporation, and provides additional financial information such as major customer revenue concentration and detailed cash flow components [15. Related party transactions](index=18&type=section&id=15.%20Related%20party%20transactions) [(a) Transactions with TELUS Corporation](index=18&type=section&id=15(a)%20Transactions%20with%20TELUS%20Corporation) - TELUS Corporation and its subsidiaries are related parties, receiving customer care and IT outsourcing services from TELUS International and providing various services to it[67](index=67&type=chunk)[68](index=68&type=chunk) Transactions with TELUS Corporation and Subsidiaries (US$ millions) | Period | Item | 2022 | 2021 | Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Three months ended Sep 30 | Revenues from services provided to subsidiaries | $108 | $90 | +20.0% | | | Goods and services purchased from subsidiaries | $(8) | $(7) | -14.3% | | Nine months ended Sep 30 | Revenues from services provided to subsidiaries | $302 | $258 | +17.1% | | | Goods and services purchased from subsidiaries | $(20) | $(23) | +13.0% | - As at September 30, 2022, amounts due from affiliated companies were **$50 million**, and amounts due to affiliated companies were **$81 million**[69](index=69&type=chunk) [(b) Transactions with Baring Private Equity Asia](index=20&type=section&id=15(b)%20Transactions%20with%20Baring%20Private%20Equity%20Asia) - Baring Private Equity Asia exercises significant influence, but there were no balances due to or from, or recurring transactions with, Baring Private Equity Asia during the reported periods[71](index=71&type=chunk)[72](index=72&type=chunk) [(c) Transactions with key management personnel](index=20&type=section&id=15(c)%20Transactions%20with%20key%20management%20personnel) - Share-based compensation expense of **$2 million** was recognized for key management personnel during the three months ended September 30, 2022, and **$10 million** for the nine-month period[73](index=73&type=chunk)[74](index=74&type=chunk) - During the nine months ended September 30, 2022, key management personnel were granted **301,190 RSUs** and **229,627 PSUs** (total grant-date fair value of **$14 million**) and exercised **338,499 equity-accounted awards** and **330,456 liability-accounted awards** (cash-settled for **$7 million**)[74](index=74&type=chunk) [16. Additional financial information](index=20&type=section&id=16.%20Additional%20financial%20information) [(a) Statements of income and other comprehensive income](index=20&type=section&id=16(a)%20Statements%20of%20income%20and%20other%20comprehensive%20income) Major Customer Revenue Concentration (Nine months ended Sep 30) | Customer | 2022 Revenue % | 2021 Revenue % | | :--- | :--- | :--- | | TELUS Corporation | 16.5% | 16.2% | | Leading social media company | 16.1% | 17.0% | | Google | 11.8% | 11.2% | [(b) Statements of financial position](index=20&type=section&id=16(b)%20Statements%20of%20financial%20position) Other Long-term Assets (US$ millions) | As at | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Lease deposits and other | $20 | $26 | | Other | $6 | $7 | | **Total** | **$26** | **$33** | Accounts Payable and Accrued Liabilities (US$ millions) | As at | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Trade accounts payable | $16 | $79 | | Accrued liabilities | $88 | $75 | | Payroll and other employee-related liabilities | $170 | $144 | | Share-based compensation liability | $9 | $22 | | Other | $12 | $16 | | **Total** | **$295** | **$336** | [(c) Statements of cash flows—operating activities and investing activities](index=21&type=section&id=16(c)%20Statements%20of%20cash%20flows%E2%80%94operating%20activities%20and%20investing%20activities) Net Change in Non-Cash Operating Working Capital (US$ millions) | Periods ended September 30 | 2022 (Three months) | 2021 (Three months) | 2022 (Nine months) | 2021 (Nine months) | | :--- | :--- | :--- | :--- | :--- | | Accounts receivable | $(2) | $(25) | $(30) | $(98) | | Due to and from affiliated companies, net | — | $3 | $21 | $25 | | Prepaid expenses | $4 | $2 | $(2) | $(14) | | Accounts payable and accrued liabilities | $1 | $6 | $(22) | $63 | | Income and other taxes receivable and payable, net | $15 | $(3) | $8 | $(8) | | **Total** | **$17** | **$(11)** | **$(19)** | **$(29)** | Cash Payments for Capital Assets (US$ millions) | Periods ended September 30 | 2022 (Three months) | 2021 (Three months) | 2022 (Nine months) | 2021 (Nine months) | | :--- | :--- | :--- | :--- | :--- | | Property, plant and equipment, excluding right-of-use assets | $(24) | $(22) | $(71) | $(63) | | Intangible assets | $(2) | $(1) | $(9) | $(3) | | Change in accrued payables related to the purchase of capital assets | — | $(6) | $4 | $(1) | | **Total** | **$(26)** | **$(29)** | **$(76)** | **$(67)** | [(d) Changes in liabilities arising from financing activities](index=21&type=section&id=16(d)%20Changes%20in%20liabilities%20arising%20from%20financing%20activities) Changes in Long-term Debt from Financing Activities (Nine months ended Sep 30, 2022, US$ millions) | Item | Beginning of Period | Issued or received | Repayments or payments | Foreign exchange movement | Other | End of Period | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Credit facility | $941 | — | $(155) | — | — | $786 | | Lease liabilities | $215 | — | $(52) | $(18) | $61 | $206 | | Deferred debt transaction costs | $(8) | — | — | — | $2 | $(6) | | **Total** | **$1,148** | **—** | **$(207)** | **$(18)** | **$63** | **$986** |

TELUS International (Cda) Inc. (NYSE:TIXT) Q2 2022 Earnings Conference Call August 5, 2022 10:00 AM ET Company Participants Jason Mayr - Senior Director, Investor Relations and Treasurer Jeffrey Puritt - Director of the Board, President and Chief Executive Officer Vanessa Kanu - Chief Financial Officer Conference Call Participants Ramsey El-Assal - Barclays Tien-tsin Huang - JPMorgan Ryan Potter - Citi Stephanie Price - CIBC Jesse Fink - William Blair Daniel Chan - TD Securities Keith Bachman - BMO Jeff Can ...