TDCX (US:TDCX)2023-08-24 20:13Financial Data and Key Metrics Changes - Q2 2023 revenue increased by 5.5% year-on-year, with constant currency growth at 11.3%, exceeding guidance [5][38] - Profit for the period rose by 9.4% to USD 22 million, demonstrating strong earnings growth despite a challenging environment [7][39] - Adjusted EBITDA decreased by 7.1% to USD 32.7 million, with margins contracting from 29.4% to 25.9% due to higher infrastructure and employee costs [12][14] Business Line Data and Key Metrics Changes - Revenue from Omnichannel CX grew by 8% year-on-year to USD 76 million, driven by higher business volumes across various sectors [40] - Sales and Digital Marketing services revenue increased by 15% to USD 33 million, supported by the expansion of existing campaigns [13][43] - Content, Trust and Safety revenue declined by 19% to USD 16 million due to reduced volume requirements from existing clients [40] Market Data and Key Metrics Changes - Revenue from plans outside the top 5 clients grew by 67% year-on-year, indicating successful diversification efforts [6] - The company has expanded its geographic footprint significantly, with a headcount of over 18,700 employees globally [10] - The top 5 clients contributed 73% of revenue in Q2 2023, down from 83% in the same period last year, reflecting improved revenue diversification [35] Company Strategy and Development Direction - The company is focused on geographic expansion and enhancing its TDCX AI capabilities to better serve clients and accelerate growth [33][34] - TDCX aims to prioritize share buybacks to enhance shareholder returns, indicating confidence in its cash generation and profitability [9][75] - The company is exploring M&A opportunities to enhance capabilities and reach, while also investing in organic initiatives [33] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2024, citing encouraging signs of economic activity and potential growth in various sectors [11][50] - The company has adjusted its full-year 2023 revenue growth outlook to 2% to 4% due to delays in client decision-making and reduced volume forecasts from key clients [44][68] - Management highlighted the importance of operational excellence and value addition to clients as key strategies moving forward [11][27] Other Important Information - Cash generated from operations was USD 49 million for the first half of 2023, with cash and cash equivalents totaling USD 301 million and no debt [7] - The company is leveraging AI to enhance productivity and client relationships, with several projects in the pipeline [34][51] Q&A Session All Questions and Answers Question: Can you please go over the rationale for the substantial change to your revenue guidance? - Management noted that delays in closing deals and slower-than-anticipated deal velocity contributed to the revised guidance, with some clients indicating weaker performance than expected [21][22] Question: How may AI impact your business? - Management indicated that AI is expected to strengthen client relationships and enhance productivity, with commercial proposals being developed sooner than anticipated [23][51] Question: Can you share more about the revenue contribution outside of your top 5 clients? - Management highlighted significant growth outside the top 5 clients, with successful onboarding of new clients contributing to this growth [25] Question: What is the outlook for new geographies like Indonesia and Brazil? - Management described Brazil as a tremendous success with rapid growth, while Indonesia is in early stages but showing promise [62][79] Question: Can you provide more color on the key client that reduced volumes? - Management explained that the reduction in volumes primarily affected the digital advertising sector, with some recovery expected in fintech later in the year [63][64]