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spk04: Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome and thank you for joining the TDCX second quarter 2022 results conference call. Through our today recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question and answer session. If you would like to ask a question, you may press star followed by one on your touch-tone telephone. Press the star key followed by zero for operator assistance. It's my pleasure and I would now like to turn the conference over to the management. Please go ahead.
spk05: Hello everyone and welcome to TDCX Second Quarter 2022 Earnings Conference Call. I'm Jason Lim, the Head of Investor Relations. Allow me to introduce management on the call.
spk03: We have our Executive Chairman, Founder and CEO, Mr. Lahorn Junick, our CFO, Mr. Chin Suning, and our EVP of Corporate Development, Mr. Edward Goh. Before we continue, I would like to remind you that we will make forward-looking statements which are subject to risks and uncertainties and may not be realised in the future. You should not place any reliance on any forward-looking statements. Also, this call includes the discussion of certain non-IFRS financial measures such as adjusted EBITDA, adjusted EBITDA margins, adjusted net income and adjusted net income margins. For reconciliation of the non-IFRS measures to the closest IFRS measures, please refer to our press release on the Form 6K, which are available on our website. We have provided a convenient translation for the translation of Singapore dollar to US dollar. This was done at the rate of $1 to 1.3918 Singapore dollar. This should not be construed as representation that any Singapore dollar amount can be converted into USD at this or any other rate. Our mentor will now share updates on the operating and financial performance. With that, let me hand over the call to Lahong. Lahong, please. Hello everyone and welcome to our Results Dealing for the second quarter of 2022. We are happy to deliver another strong set of quarterly results. Once again, The people of TDCX have put together another outstanding performance and have navigated through the market's overall macroeconomic challenges. I am so proud of their determination, resolve, and I sincerely appreciate their tremendous efforts. TDCX's emphasis on competency and building a wonderful working environment for all has paid off. I would also like to thank all our clients for their support and putting their faith in us. And I'm also happy to report that during the quarter, we had our carbon footprint reporting certified by British Standards Institute ISO 14064-1. And for our corporate social responsibility initiatives, we just incorporated the TDCX Foundation Our focus here is on building long-term partnerships to uplift communities in Asia through digital empowerment, specifically with three key themes of digital access, digital literacy, and capabilities in terms of readiness for digital work and small business support. Let me next cover some highlights of our financial performance. We delivered robust revenue growth in Q2 2022, as revenue rose 23.3% to $117 million or $162 million. This was driven by strong contributions from clients across key verticals, including digital advertising and media, and travel and hospitality, and especially from our top five clients, who are growing at the fastest pace in twisting at twice the pace of our deep revenue growth in Q2 2022. Now, in terms of revenue contribution from verticals of travel and hospitality, including our airline clients, continued its recovery trajectory and was up 25% compared to Q2 2021. Our revenue from travel and hospitality is now higher compared to Q2 2021. We're still some 16% below our peak order in this space in 2019. There's still some room for us to grow, and this will depend on the output of global and especially Asian travel. The prospect of North Asia travel reopening is an exciting one, of course, but this is not confirmed yet as I speak. On the fintech side, we continue to rise at high percentages year on year, and it remains our third largest vertical. To recap, we serve payment gateways, crypto exchanges, and other fintech companies. And as shared before, we have always taken a careful approach to crypto. While we're happy with our progress in this space, the revenue contribution is around 1%. We feel the risks are manageable. We're looking to add more FinTech clients and also to continue to bring in a variety of clients across different verticals, such as e-commerce, to grow the business. On the digital advertising media vertical, we continue to deliver double-digit percentage growth year-on-year, powered by our strength in the sales and digital marketing service and the acquisition of new clients. We have onboarded the leading short-form video social media platform and we started to contribute in Q2. As shared before, it will take time for any new clients to start contributing meaningfully in terms of group revenue, but we are happy with the progress we've made yet. On our earnings and quality growth, even as we pressed on with our business expansion, we maintain our focus on quality growth Adjusted net income, which strips out the performance, share plan costs for a life-for-life basis comparison, rose 35.5% year-on-year to $22 million, or $30 million. We continue to deliver our industry-leading profitability with adjusted EBITDA margins of 31% in Q2 2022, and I want to take this opportunity We thank our CFO, Mr. Chin, and his team of incredible professionals for the continuous efforts in cost control and efficient planning. The quality of our earnings growth is also shown in the strong cash flow conversions. Q3 2022 net cash from operating activities was $76 million, almost doubling year-on-year. Our CFO will share more details on the numbers in the later sections. From a business segment point of view, from Q2 2022, we have renamed our content monitoring and moderation services as content trust and safety services. The change reflects the industry's broader view that content moderation services are part of a larger group of services that include other trust and safety-related services and helps enhance our ability to track our performance. The content, trust and safety services comprises content moderation and monitoring. Trust and safety services, such as those to ensure authenticity and accuracy of listing, as well as data annotation services for machine learning. Our total revenue from Southeast Asia stands at 91% of first half of 2022 revenues. In the latest edition of the Internet Economy Research Program by Google, the Masek, Zain, Southeast Asia now has a total of 440 million Internet users, while the Southeast Asian Internet economy is expected to reach $360 billion by 2025, powered by e-commerce, food delivery, With our unique footprint, TDCX provides investors with strong exposure to Southeast Asia fast-growing digital transformation. Our plant team in Indonesia and Vietnam are on track and we aim to launch operations there before the end of the year. The new market adds further flexibility to offer key Southeast Asia languages in a multi-lingual centralized model as well as a decentralized model. In addition, North Asia is gaining momentum with a contribution of 7% of revenue. Our expansion in Asia Pacific, Europe, and Latin America was strategically planned with the objective of positioning ourselves well to be much stronger amid the changes in the CX outsourcing space. This means even more time now with the rapid changes in the business environment, and I'm confident our end will provide us with a competitive edge going forward. Now, on fine wings, we have continued our business development momentum, signing up a total of 25 logos for the first half of 2022, more than triple the age we signed in the first half of 2021. This includes two Southeast Asian market leaders, added in Q2, a leading regional airline, and one of the largest integrated car e-commerce platforms. This demonstrates our strength, once again, Our long-time count now stands at 16 as of 1 June 2022, up 40% compared to 43 a year ago. Revenue from new economy clients stood at 93% for the first half of 2022. We've put in efforts to reduce our current concentration, and our top three clients now represent 57% of Q2 2022 revenue, compared to 63% in Q2 2021. Now I'll hand over to Mr Chin to cover the financials in detail as well as an update on the guidance. Thank you, Lohan. Let me first share some details on our Q3 2022 financial performance. Revenue rose 23.3% to USD 117 million, driven by growth across the omnichannel, CX, and SAFE and digital marketing business segments. Adjusted EBITDA, which excludes share-based expense, for the like-for-like comparison rose 23% to $26 million, while margins remained largely stable at 31%. Adjective net income, which similarly excludes share-based expense, rose 35.5% to $22 million. Net profit for the period rose at a normal 19.6% on the reported basis due largely to the implementation of the performance share plan, which did not exist in the same period last year, as well as higher income tax expense. Next, we share more details on our Q2 revenue performance by the services type that we offer. Revenue from omni-channel CS solutions goes 19% to $16 million due mainly to high business volumes driven by the expansion of existing campaigns in the feedback and technology verticals. In addition, business volumes for our two travel and hospitality clients are benefited from the gradual recovery from the impact of the COVID-19 pandemic, although the recovery has yet to reach pre-pandemic levels. Revenue from sales and digital marketing services increased by 64% to 28 million users with the continuing volume expansion of existing campaigns by key digital advertising and media clients. Commencing from Q2 2022, content monitoring and moderation service has been renamed as content trust and safety. Relay for Trust and Safety Related Services that were previously classified under Omni-Channel State Solutions and other services which can currently be reasonably identified and quantified will now be reported as Content, Trust and Safety Services. In Q22022, revenue from content, charts, and safety services rose by 6% to $19 million, primarily due to an increase in business volumes from the client in the travel and hospitality vertical. In Q22022, Omnichannel CX mixed up 59% of our business, while sales and digital marketing is at 24%, and content, charts, and safety, 70%, respectively. Let me next share some details on our expenses. For Q2 2022, operating costs as a percentage of revenues stood at 27.5%. Excluding TSC costs on a life-for-life basis, this stood at 25.3%, lower than 27.3% for the same period last year, largely due to the lower depreciation expenses. Employee benefit expenses remain the largest portion of our total operating cost base. Our employee benefit expenses increased by 31% to $75 million for Q2. Excluding P&T costs for a life-for-life basis, employee benefit expense would have increased by 20%, higher than revenue growth of 23%. pursuant to higher wage costs of our staff costs and the increased competition for talent in the respective markets that we operate in. Our depreciation expense declined by 8% largely due to certain office renovation assets in Singapore, Thailand and Philippines being only repriced during the period with no big ticket capital expenditure incurred. All other expenses, which include items such as recruitment, transport and telecommunication expenses rose 1% for Q2 2022, lower than our revenue growth, which demonstrates continuing focus on student cost management. Next, let me share some details of our first half 2022 financial performance. Revenue rose 25.1% to USD 226 million, similarly driven by growth in the omnichannel sales and digital marketing business segment. Adjusted EBITDA rose 25.2% to USD 17 million, with margins stable at 31.1%. Adjusted net income, which excludes the impact of share-based expense, rose by 25.2% to USD 43 million. That profit for the period rose at a lower 9.5% on the reported basis due largely to the implementation of the performance share plan, which did not appear in the same year last year. In terms of performance by services we offer, revenue for omnichannel PX solutions rose 21% to $133 million due mainly to higher interest rates given by the expansion of existing campaigns. Revenue from sales and digital marketing services increased by 57% to $54 million, with the expansion of existing campaigns of key types in the digital, advertising, and media verticals. Revenue from content, charts, and safety services rose by 6% to $38 million, primarily due to an increase in business volumes for a trial in the travel and hospitality verticals. In the first half of 2022, Only channel sales reached up 59% of our business, while sales and digital marketing is at 24% and content trust and safety, 70% respectively. Let me make share some details on our first half expenses. The trends are largely similar to what I shared earlier for Q2 2022. For 3rd half 2022, operating costs as a percentage of values stood at 29.3%. Exceeding TSC costs due to at 25.7% lower than 27.9% for the same period of 2021 due to lower depreciation expense. Employee benefit expressed increased by 35% to US$150 million for the first half and would have increased by 10% excluding CSE costs due to higher wage costs and increased competitive dynamics of the talent market conditions. Our depreciation expenses declined by 5% lastly due to student renovation assets due to depreciation costs. All other expenses rose by 4% for first half 2022, lower than our revenue growth, which illustrates our continued prudent attention to cost management. Lastly, let me provide an update on our two-year 2022 outlook. We are reiterating the FY 2022 outlook which we issued during our Q1 results announcement. Our full-year 2022 revenue guidance remains unchanged at $625 million. This represents revenue growth range of 20.1% to 21.6% compared with FY 2021. The company's financial information is stated in Singapore dollars. However, we provide a continuous translation to help regions who are not familiar with the Singapore Dollar Currency to understand the approximate context and content of the numbers in USD. As the approximate rate in effect as of June 30, 2022 of USD1 to USD1.3918, this represents around USD467 to USD425 million. Previously, at the approximate rate in the 10th of March 2022 of USD1 to USD1.3534, which represented around USD400 to USD499 million. Do note that there is no change to Al-Qaeda in Singapore Donald Trump. With a continued focus on cost management and employee productivity, we maintain our full year 2020 adjusted EBITDA margins to be approximately 13% to 32%. With that, let me hand over back to Jameson. Thank you Mr Chin for bringing us through the results presentation.
spk05: We are now ready for Q&A. Before we start, can I just make a request that you keep your questions to three at the maximum? Thank you. Operator, Q&A, please.
spk04: Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. We got the first question from Tang Vitt from Goldman Sachs. Please go ahead.
spk00: Thank you very much for the opportunity to respond. A question for you, please. Firstly, on the guidance, can you please explain why are you reiterating the current guidance? What is the basic assumption for this? What's the maximum level that you can achieve? In particular, why do you expect the second half growth to decelerate sharply? And for the past level, there's a likely return in travel investment. Have you also factored in any of the impact on inflation through margin guidance as well? So that's question number one. Question number two, we notice a strong local addition in the quarter. So any colors you can provide around this, who are the sector, in what countries you are representing them, and what type of opportunity and what type of product and services you are serving? Furthermore, can you also provide any additional colors around how much of the growth that we are seeing now is coming in from new local versus existing customers? So that's question number two. And last question, what is the management's current view around the global slowdown in the global tech space? And that comments around cutting costs, especially for your top social media clients. Any further comment you can provide? Thank you.
spk03: Thank you very much for the question. Laurent Junique here. So yes, on the guidance, very clearly we reiterated our guidance for the full year as we have already revised it at the last quarter. In retrospect, we were one of the first to go out there and revise guidance on new information we were having and really the quickly transforming macroeconomic and geopolitical landscape at the time, which obviously has not improved much. Rather, what was expected at the time has been confirmed. Now, why did we reiterate our guidance? First of all, the first strong half that we have, the first half of the year, is recovered. So a decent result of 25.1% growth in our revenue in the first half. But also I would want to commend my team for doing a fantastic job here at operations. And they've done very well throughout the summer as well. So, they really delivered the results for us and we see the efficiency of our operations and our management and our business development. So, we mentioned about bringing new logos. In the first half, we brought in three times of new logos than we did last year, with 25 new logos, so that's helping us to obviously bring some more growth to the business. We're getting a bit closer every day to the end of the year. We have a bit more visibility, although visibility is can come with a number of possible challenges around attrition, challenges around inflation, challenges around the variability, seasonality, So we're never completely shielded or protected from what may happen before the end of the year. Nonetheless, we have enough confidence at this moment to stick to our guidance. So that's important to reiterate. The new logo wins, which was already a second question. and so a bit more color here and so we have 15 new logos on the second half uh second quarter sorry uh 25 in total for the first half um you remember that in the first quarter we won this short form video platform and on the second quarter we brought in a regional airline um from asia an e-commerce car platform that is very exciting, a regional player. We brought three fintech companies, one insurance client. So a variety of clients in different sectors, and not just the economy as well in the nutrition space. So a variety of logos. So our business development team has worked very well and has really performed above the target here. And so the confidence is really building in our ability to bring new business. So the engine is working. We set it from the beginning. We came into this thing with an objective to drive organic growth at our first entry point and we are delivering on that front. So our new labels are actually accelerating and the growth from these labels is really starting to fail. I would like to point as well that there are now 16 clients that have been launched, but there are still 10 in that group that have not been launched yet. So there's some upside moving forward in the coming quarters. And so that's what the logo means. And now your question relating to tech and how is that impacting us? We're looking not so much at the tech sector, but really the businesses or the big sectors that are impacting us or driving us. So as you know, we have a bit of business in the digital advertising space, and we understand that the digital advertising space is going through a bit of pressure. right now and what we think is going to happen is possibly depending on the types of product lines that we work in, like omni-channel CX solutions could be under a bit of pressure for the digital advertising sector. But the reverse is true of the sales and digital marketing, where as the industry is getting more and more competitive. We think there's going to be more need for our sales and digital marketing services and we've seen that in our numbers. It's growing at the fastest pace once again for TDCX. So that's one area that we're watching and watching the impact. um trouble and hospitality are sectors that are picking up quite significantly as we speak and i think there's also a potential upside here with uh travel that has not recovered in north asia in japan uh and not that much in asia in china uh so When that comes, and I don't know when that is happening, we'll see how it impacts us, but it will impact us very quickly. So that's how we're watching the space. Not every client is equal in the face of economic slowdown. Some are more impacted than others, and some are benefiting. So I don't want to generalize. I don't want to stereotype. land everybody in one bag, but when we do our forecast and our plans, we take that into account and adjust accordingly. So that's what I could share, and I hope that answers your question.
spk04: Thank you. The next question is from Varun Ahuja from Credit Suisse. Please go ahead. Hi, thanks for the opportunity.
spk03: I've got three questions. First, learn to comment on the visibility that you may have on the business portfolio in terms of when you talk to clients. These are three months visibility, six months visibility.
spk02: And compared to six months ago, nine months ago, do you think that has reduced? So we'd love to hear. uh how much comfort you have in the next three to six months in terms of growth and whatever and if you can in the same light comment about your views on community and it's too early but how do you see it progressing given to individuals you see being 23 as of now. Number two, if you can, I know you talked about new client addition, which is 25. But if I look at your number of clients, it's 60.
spk03: And in December, it was around 52. So there is, again, a significant churn. My understanding is you have completed that restructuring phase where you had the co-operative unprofitable accounts. So it looks very high given you added 25 and there is a trend of 17 also. Is there anything we are missing here? What's happening on that dynamics with Dove2 here on that front?
spk02: Third, if you can comment a little bit on the NME site, given how you're looking at it, the cash flow remains healthy.
spk03: and mna is part of your growth strategy and given in this environment the valuations of a lot of companies may have come down especially on the private side so how are you looking at that space that will be helpful and lastly just one bookkeeping question uh taxton has moved up this quarter so mr if you can comment how should we think about it what has happened in this quarter and should we think about in the next few years thank you Thank you very much for the question. So regarding the visibility, if I understand correctly on your question, so it's a bit early for us to tell for the visibility in terms of duration. We used to have maybe six to nine months of visibility. We've cut back to three to six months. We're still in this kind of range. of vision, I would say, in terms of where our clients are budgeting and a few reasons. One of the uncertainty that the clients are facing in planning and budgeting and having to adapt in some occasions. uh the market volatility uh as well doesn't help very much we're entering the uh the budgeting process right now in uh the month of october with a number of our clients so uh post that moment i think we'll have a clearer view as to what 2023 um is looking like so it's not uh unusual it's quite common at this period of the year uh that uh clients are thinking that strategizing and we get involved in these discussions with thinking of ideas and how we're going to make the year next year and what kind of project we're going to be working on and what kind of right ideas can we propose to them. And so this is beginning to happen as we speak, as we enter September anytime soon. So visibility will hopefully expand next year if things get a little bit better economically. But for now, that's where we are, I would say. On the client side that you asked, I think maybe Jason later can talk maybe of some of the very detailed numbers, but I think it's a question of calculation here. You did mention there was a high churn. I want to confirm that there isn't. It's a very, very, very big trend. It has not really evolved in any way adverse to us. On the contrary, we've got a very high revenue retention and client retention, as usual. And we're adding clients. It's just that in the numbers we've provided, we just mentioned clients that have been launched. So we signed those that we've announced. We haven't launched them yet. That's what I was saying earlier on, that we have enough size. Maybe Jason, if you want to provide a bit more follow-up here. Yeah, so in addition, I think, Farooq, you mentioned 52 clients as of December. And although we added 25 for the half year, it doesn't add up to the total. We landed at 60 because there's still sort of over 10 clients that are not launched yet. So the active client, launch client power is actually different from the logos that we have signed. So I hope that helps. Can we just have you repeat the sort of, I think the big question you have is on capital management, like cash flow and capital management. Is that correct? Yeah, it's more on the M&A side. What you would think is it's been almost six months since the IPO. Yes, absolutely. I can touch on M&A and then maybe later down the road we can talk about capital management. So M&A, we've worked very hard on that front. Edward Goh and his team have reviewed about close to 100 targets, if not more. And interesting situations here, some opportunities. Once again, I just want to reiterate that we're looking for a quality target. So, obviously, out of the 100, there were a number of those that didn't meet the criteria. We've studied from day one, once again, we're looking for We know that we can leverage our organic growth to be able to pick it and choose it, and we absolutely are following this direction. But we have a nice pipeline, a nice portfolio. As you know, Varun, it takes a bit of time to conclude, but we're quite set on a number of targets here that I hope will bring to your attention soon and that will be interesting. But it takes time, and obviously we have some cash in the bank that we want to put to good use, and that would be very useful. We have a big growth target. We want to accelerate our strategy, so that's definitely working well for us at this stage, and looking forward to telling you more about it. Thank you. I think the last question was on the tax side. What was the question on tax? Can you repeat please? So this quarter the effective tax rate looks like around 29%.
spk02: So I think the earlier discussion suggested it should be closer to 20% to 23% full year. So anything which is happening there and how should we think about the tax rate?
spk03: Yeah, okay. The tax situation for the Malaysian tax is driven by two main factors. One is the Malaysian prosperity tax that was implemented by the government of Malaysia for the last year's announcement of the budget. And for the quarter of two, we have the Philippines business unit that used to enjoy the income tax breaks for quite a while. We will have the tax holiday suspended due to the implementation of the return to office status that is implemented on all the VDO players in the Philippines to compel the certain number of workers to be working in the office as opposed to the work from home situation. And because the Philippines unit were unable to meet the target, they had to come back to office. We had to incur these extended tax exposure for the Philippines unit affected from second quarter that was announced by the Philippines government. And these are the two main factors to the higher tax expense for the group. Okay, thank you. Thank you very much. Hi, sorry. So before we sort of go to the other question on the line, I think we have a couple of questions on the webcast asking us to clarify some data points during the call because I think the presentation was a bit marked for events of voice. So just to clear off the questions, the top two customer concentration now is 57% as of Q2 2022 versus 63% Q2 last year. In terms of the travel and hospitality space, it grew at 25% versus Q2 last year. This is still some 16% of the highest ever peak quarter that we had in 2019. So those are some of the data points that we are clearing up. Operator, please, next question on the line.
spk04: The next question is from Han Tan from HSBC.
spk02: Hey guys, congrats on those good results. My first question is, I noticed that you have been winning a lot of contracts with traditional non-tech companies. So how do you think about these contracts on the margin of growth specifically? Do you expect these new accounts to be diluted in terms of margins?
spk03: Thank you for the question. We have a number of clients, but the majority still remain very much in the new economy sector. We have a good range of clients, and most of the range of our clients are in Asia-Pacific, so in the fast-growth region as well. and although these are more traditional economy companies, we believe that they have a nice growth potential due to the fact that we're coming in early in the relationship as well as they are in the fast-growing region. The impact, considering that still 93% of our business is a new economy and 91% of it is in Asia, is not really material at this point. But we've also said that for quite some time as well, we're absolutely interested in the non-new economy sector. as well. It's good brands and good deals that we can sign with them where they have a need. After all, they have a large potential as well where we can gain market share.
spk02: Thank you. I was also wondering if you could share if you've seen any delays in any projects? And do you feel like... you have sufficiently de-risked your revenue guidance. So if there is micro-slowdown in the third quarter, would that impact you negatively?
spk03: Yes, I mean if there's some further slowdowns, we may be impacted. We have revised our guidance in Q1. on the back of delays as well as lower visibility for some projects. So yes, some projects have been delayed for us in the past. We see still some slow implementation, and that's something we're factoring into the reiteration of our guidance at this point. We just watch cool and then watching the space all the time to see whether this is going to continue, is it going to accelerate or reduce. We don't have control, unfortunately, over times decisions to either accelerate or slow down. And it depends on the sector as well. I mean, if you look at the travel right now, it's the opposite of slow down. It's really accelerating and clients are pushing us and it's nice to watch.
spk02: My final question is on vendor consolidation. How much of that are you seeing? And might this be a tailwind for growth, maybe for the second half of the next year?
spk03: So you're talking about our competitors consolidating, right?
spk02: Yes.
spk03: Are you winning market share from your competitors? So, I mean, we've seen some mergers, and we hear of maybe potential further mergers in the sector. So, the business is becoming very, very scale-focused, and this is something that we had anticipated. That's very much why we're going through the journey we're going through. The first one is expanding globally and having a global footprint is super important to us to remain competitive in the face of growing larger scale competition combined with clients who are getting bigger more global we want to contract with bigger global players so gdcx is racing to uh to reach that goal and through two ways organic growth geographical expansion and then the second one is the important mnas we are pursuing right now to accelerate that objective So, yeah, it's on our list of important strategic items that we want to progress as quickly as possible.
spk02: Thank you very much.
spk03: Thank you.
spk04: The next question is from Jonathan Wu.
spk05: Please go ahead. Thanks for taking my question. The first, I noticed there was almost a $10 million benefit from exchange differences from all foreign ops. Maybe could you elaborate a little bit on that and whether you expect this kind of benefit to continue moving into the second half of the year? And the second question is on share repurchasing. I noticed that you've done about $10 million in share repurchases. While you've got about $20 million in terms of allocation to go, how can we maybe give us a little bit of color on that? How can we expect repurchasing to continue moving forward for the rest of the year, given that there's only about slightly more than a quarter left? Thanks.
spk02: Jonathan, we are not sure where you got the $10 million FX benefit. I don't think we have that in our P&L.
spk03: Maybe let us, may I know which specific line you are looking at?
spk05: It's the line right above comprehensive income.
spk03: Other comprehensive income. The translation effect of the net assets due to the movement of the currency, which are not related to our business or not related to the transactional events above the profit before tax. So that is a translation effect.
spk01: due to the current transition of our net assets of our foreign subsidiaries in all the countries that we operate. So it comes from mainly the Philippines, Malaysia, the large units. If I may recall correctly, the bigger amount comes from those larger units as opposed to the smaller units as the amount suggested. So that has got nothing to do with the effect of our transactional level.
spk05: Okay, great. Thanks for clarifying.
spk01: Hey, Jonathan, Ed here.
spk03: On the question around share buyback, indeed for the last five months since we started the share buyback program, we've been guided by two key principles. First one is sort of valuations and how we stack up against the tiers in the broader market. But mindful also on sort of the impact around liquidity and float. So the management will continue to monitor based on these two guidelines. And if need to, we'll continue to implement
spk01: and uh this share buyback program given that we've announced a 30 million dollar program and we've deployed around 10 million dollars to date thank you there are no further questions at this time and i hand back to the manager for closing comments um
spk03: I think, Francie, that was a bit premature because I see there's KC on the line from CIMB and I have three questions.
spk04: Yes, I'll give him three. KC? Hi, thanks for speaking.
spk05: Hi, thanks for taking my question. I think just now you mentioned that most of your recent logo wins are from APAC. But just wondering if we could also be seeing potentially some logo wins from the Western countries or potentially bigger campaigns, given that some of your peers are mentioning about some offshoring trend in the BPO space. That's my question. Thanks.
spk03: Sorry, Casey, can you repeat the last line, just the very last line?
spk05: Yeah, just wondering if management is seeing some offshoring trends, for example, potentially from international internet firms or companies from the Western countries potentially offshoring their BTO services to APEC?
spk03: Yes, I think depending on how you look at offshore, we work for a number and we've onboarded a number of those clients and those clients are quite a lot of Western companies in addition to Asia-originated companies who work on an offshore basis by doing a centralized operation, for example, in Malaysia or and to cover multiple countries into one location as opposed to have a decentralized model per country. And then we have a number of clients that we've warned that are more domestic. So, for example, in Japan, we have one insurance client that is going to be joining us that's pretty domestic. The other one is another one luxury client as well in Japan. domestic. So it's a variety. There's a travel client that is based in the US to cover to offshore in Colombia, for example. So yes, the regional airline is the one central location in Asia where we are covering all the languages, for example. So offshore is still really at the center stage of what we do for the large majority of the work. If I got the question correctly.
spk05: Got it. Thank you.
spk03: Thanks, Casey. So let me just read out a couple of questions that we have from the webcast. For the new customer additions that we are getting, are they at the same margin profile or different margin profile from existing customers? Thank you for that question. There are a variety of margin profiles. We have a very strict bank that we apply depending on the strategy that we pursue. But in general, the mix of clients that we've brought on board are meeting our criteria and our financial criteria. Absolutely, as our CFO, it's quite picky about that. Thank you. Next question from Benjamin Ng. Can you share more about which inflation, some color, and how are we managing which inflation? Do you want to cover it? I can cover it. Yes, wage inflation is a factor that is affecting our operations at SEL. But on the SWIFT side, I think we are also operating our resources more efficiently than ever before. I think in the case of cost escalation, efficient resources utilization, enhanced productivity on our revenue is crucial to help buffer against all these cost inflationary factors and on the flip side, on the non-wage overheads, as you can see, we are also casing some of our own waste as possible in the first half year, especially on our capacity side of things, acquisition is lower to help address and buffer against all these So in a nutshell, I think these several moving parts kind of help to address our wage inflation adverse issues. Thanks, Mr Chin. Next question from Jin Leong. The growth of your top two customers seem to have slowed down. Any color on that, please? So the top two clients are, as you know, quite important to us. Our concentration has come down, which is also a good thing. And it's a mixed bag, actually, of situations. We think that one of the environments that is kind of challenging in the digital advertising very well impact us but it's also mitigated by the fact that we are quite strong in sales and digital marketing and we think like i said i think earlier on that as the the digital advertising market has become more and more competitive our clients have quite an appetite for engaging us to do sales and digital marketing. So we see that growing quite significantly. So I couldn't possibly call that a slowdown, rather a significant increase. So it's probably more of a rebalancing of the nature of the work we do for those clients that is important. And I'm talking about the digital advertising space in general. And as you know, we brought in additional clients in the short-form video space. They've been implemented. They're starting to really show up on our P&L, so that's cool. The travel and hospitality sector, which is another big sector for TDCX, is actually not slowing down. The opposite. We've had the worst years behind us now. So it grew 25% year on year. versus 22% in Q2 2020. But it's still behind, actually, the 2019 numbers. It's probably 16% behind what it used to be at its highest. So there's room for growth, taking into account, again, Asia has not reopened yet, and we could be benefiting from that possibility. We just don't know when. So, and again, the two clients that we have, then we have a whole cohort of large clients that are becoming a lot of revenue for us. And then a whole new group of new logos that are bringing accelerated growth into the mix. So the blend of it all is coming out quite nicely for us. Thank you, Lahong. Next question, again, from the webcast from Wilson Wong. Any update on the Airbnb warrants? Hey, this is Ed here. Let me take this one. The discussions are still ongoing, and we feel really good about where we're going with this. We hope to be able to share some further information with you as soon as possible. Obviously, I think, as Lauren just mentioned, on the fact of that travel rebound, very timely, we're able to So that depends on ties with this strategic client of ours.
spk01: So still working on it. Just bear with us a bit. Hope to be able to share something with you soon.
spk03: Thanks, Ed. I think we have time for just one last question. So last question on the line. Two people asking the same questions, actually. Have we been able or are we able to build rich inflation to our new contracts? Yes, actually we are able to do this and we have some clients who have the cost of living adjustment, but not all. So we cannot every time pass on that cost of living adjustment, but we've been successful in quite a number of situations and occasions. And the suggestion that you're having is opportunity of really this crisis to go back again to our clients in a very systematic manner and really ask for this to happen as a matter of protecting their interests, not just ours as well. to retain the employees that they so value. So thank you for the suggestion, but we have a number of clients who have the call line and the contract, some don't, and we are able to renegotiate when we're able to, and in some cases we're successful, sometimes we're not. Thanks, Nahon. I think that's all the time we have on the call today. Thank you for spending time with us, for joining us. If you have any follow-on questions, you can reach out to us. Reach out to me after this. I'd just like to, on behalf of management, thank you for your time. Thank you, everyone.
spk01: Thank you.
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