TDCX (US:TDCX)2023-06-01 06:18Financial Data and Key Metrics Changes - Revenue for Q1 2023 was USD 124 million, representing an 8.2% year-on-year growth. On a constant currency basis, revenue would have grown by 13.1% [53][62] - EBITDA increased by 7% to USD 32 million, while net profit grew by 22.5% to USD 21 million. Adjusted net income declined by 19.1% to USD 18 million [8][19][40] - Adjusted EBITDA margin decreased from 31.2% in Q1 2022 to 24.2% in Q1 2023 due to higher costs and the absence of COVID-19-related government aid [41][64] Business Line Data and Key Metrics Changes - Digital advertising and media remained the largest vertical, contributing 51% of revenue, although it contracted slightly year-on-year [7] - Sales and digital marketing services revenue increased by 23% to USD 33 million, driven by the expansion of existing campaigns and new client contributions [14] - Omnichannel CX revenue rose by 9% to USD 74 million, primarily due to increased business volumes from travel and hospitality clients [65] Market Data and Key Metrics Changes - Revenue from new geographies was approximately USD 8 million in Q1, with a tenfold increase compared to Q1 2022 [3][21] - The client count rose by 55% to 85 as of March 2023, with revenue from clients outside the top five increasing by 45% year-on-year [22][55] - New geographies such as Turkey, Vietnam, and Colombia recorded significant revenue growth, with Colombia, Korea, and Romania seeing revenue increase by over four times compared to Q1 2022 [31][85] Company Strategy and Development Direction - The company is focusing on geographic expansion and investing in initiatives like the Digital CX Center of Excellence and TDCX AI to enhance consulting capabilities [12][13] - TDCX aims to recover margin compression through better client engagement and optimizing resource allocation [9][30] - The strategic priority is to move up the complexity ladder in service offerings, particularly in response to advancements in technology and AI [23] Management's Comments on Operating Environment and Future Outlook - The near-term macroeconomic outlook remains uncertain, with sales cycles lengthening and clients hesitant to commit to new business [36][47] - Management expressed cautious optimism for business improvement into FY 2024, despite ongoing volatility in the macroeconomic environment [36][47] - The company is adapting to the complexities of client needs and the competitive landscape, focusing on retaining and training talent [46][73] Other Important Information - The company has launched TDCX AI to address client needs for advisory services in AI strategy [74][106] - Employee costs represented 64% of revenue in Q1, higher than the historical average of around 60%, with management indicating a focus on optimizing these costs [95][108] Q&A Session Summary Question: What is the visibility on revenue growth given the current economic conditions? - Management indicated that visibility has not improved significantly, and the macroeconomic environment remains volatile, impacting client decision-making [47][101] Question: How does the company plan to address margin compression? - Management noted that margin compression is partly by design, with strategic decisions made to adapt to current conditions while keeping client satisfaction in mind [45][78] Question: What is the impact of AI on the business and hiring decisions? - Management stated that while AI presents challenges, it also offers opportunities for growth, and the company is looking to hire talent in this area to enhance capabilities [104][106] Question: Can you provide insights on the new locations launched? - New locations in Brazil and Indonesia are expected to contribute positively, with Brazil already supporting a key gaming client [82][85] Question: What is the outlook for revenue growth in the second half of the year? - Management maintained a conservative stance on guidance, expecting potential headwinds despite strong Q1 performance [101][102]