TDCX (US:TDCX)2023-11-22 15:18Financial Data and Key Metrics Changes - In Q3 2023, the company reported revenue of $120 million, stable on a constant currency basis, but down 5.4% year-on-year due to a stronger Singapore dollar [42][74] - Adjusted EBITDA margins improved to 27.8% in Q3 2023 from 25.9% in Q2 2023, reflecting successful cost optimization initiatives [42][76] - Profit for the period increased by 2.3% year-on-year to $23 million, indicating resilience in overall business performance [43][69] Business Line Data and Key Metrics Changes - Revenue from clients outside the top 5 grew by 51% year-on-year, demonstrating strong performance from newer clients [44][68] - Revenue from omnichannel CX solutions decreased by 3% to $72 million, primarily due to reduced volumes from key clients in the digital advertising and media vertical [70] - Revenue from sales and digital marketing services increased by 3% to $32 million, while revenue from content, trust, and safety declined by 30% to $14 million [78] Market Data and Key Metrics Changes - The top 2 clients contributed 47% of Q3 2023 revenue, down from 56% in the same period last year, indicating improved client diversification [45][55] - Revenue from new geographies grew 5x compared to Q3 2022, showcasing successful geographic expansion efforts [46][62] - The digital advertising and media vertical now represents 43% of the business, while travel and hospitality grew 8% year-on-year, indicating stabilization in the travel sector [61] Company Strategy and Development Direction - The company is focusing on diversifying its client base and reducing client concentration, with a total client count rising by 31% to 94 clients [45][60] - Continued investment in TDCX AI is seen as a strategic advantage to strengthen client relationships and enhance operational efficiency [31][49] - The company is actively pursuing M&A opportunities to enhance capabilities and accelerate growth [48][49] Management's Comments on Operating Environment and Future Outlook - The macroeconomic environment remains challenging, with key clients reducing volumes as part of cost efficiency measures [47][56] - Management reiterated full-year 2023 revenue growth guidance of 2% to 4% on a constant currency basis, reflecting cautious optimism for Q4 [56][26] - There are indications of potential growth in 2024, but the global macroeconomic environment remains uncertain [67] Other Important Information - The company has engaged in share buybacks, purchasing around 930,000 shares from July to November 2023, totaling over $15 million since the program's inception [59] - The company has made significant progress in AI and consulting, positioning itself as an ideal outsourcing partner for clients [66] Q&A Session Summary Question: Revenue slowdown in Q3 driven by top clients - Management acknowledged the revenue slowdown was expected, primarily due to volume cuts from large digital advertising clients, but noted that excluding the top client, revenues across all segments would have grown in low teens [5][6] Question: Why hasn't Meta's growth translated into the company's numbers? - Management indicated that while Meta's growth is positive, it is challenging to directly correlate their performance with the company's due to the nature of their business relationship [9][10] Question: Headcount reduction implications for growth opportunities - Management clarified that headcount reduction is directly related to decreased business volume, and they are not continuously cutting headcount but rightsizing according to business needs [14][15] Question: Impact of FX on EBITDA margin improvement - Management stated that FX had a lesser effect on margin improvement, attributing it more to higher utilization and rightsizing of headcount [20][68] Question: Guidance for FY '23 and expectations for Q4 - Management reiterated the guidance of 2% to 4% revenue growth for FY '23, indicating that the first half was stronger than the second half, and they are adapting to client behavior and macroeconomic conditions [26][56]