TDCX Inc.

Ladies and gentlemen, welcome to the TDCX Q1 2023 results announcement. My name is Neil and I will be coordinating your call today. If you would like to ask a question during the presentation, you may do so by pressing star 1 on your telephone keypad. I will now hand you over to your host, Jason Lim, Head of Investor Relations from TDCX to begin. Jason, please go ahead.

Hello everyone and welcome to TDCX First Quarter 2023 Earnings Conference Call. My name is Jason Lim, the Head of Investor Relations. Allow me to introduce management on the call. We have our Executive Chairman, Founder and CEO, Mr. Lahong Junick, our CFO, Mr. Chin Tzu-Ning, 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 realized 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 net income, and constant currency revenue growth. For a reconciliation of the non-IFRS measures to the closest IFRS measures, please refer to the Form 6K, which is available on our website. We have prepared a convenient translation for the translation of Singapore dollars to the US dollar. This was done at a rate of 1 USD to 1.327 Singapore dollars. It should not be construed as representation that any Singapore dollar amount can be converted to USD at this or any other rate. With that, let me hand over the call to Lahan. Lahan, please.

Hello, everyone, and thank you for joining us for TDCX first quarter 2023 results briefing. Our team delivered a resilient set of Q1 results through continued focus on operational excellence and efficiency, despite challenging market conditions. We'd like to thank the entire TDCx team spanning across 16 geographies for their efforts in keeping our forward momentum going. In particular, a warm welcome to our new TDCx colleagues at our newest locations of Brazil, Vietnam, and Turkey, who have done an amazing job for our clients since we started. Also want to thank our clients, many with whom we've had longstanding relationships for their continued trust in us. me begin with some highlights of our performance as a result of a great team effort we delivered at the top end of our revenue guidance this quarter with 124 million us dollars representing an 8.2 percent year-on-year growth the singapore dollar had strengthened considerably against all our foreign subsidiaries local currencies notably Bertrand de La Chapelle, across our Malaysians Philippines island and Japan businesses on a constant currency basis revenue would have grown 13.1% against the same period last year, this was driven by increased revenues across ourselves and digital marketing and omni channel CX service lines. Earnings performance was robust as EBITDA grew 7% to $32 million, while profit for the period was up 22.5% to $21 million. The set of results included a net reversal of equity settled share-based payment expenses of $3.9 million. To recap, the targets for our performance share program were set in November 2021, when the business and capital market environments were very different. Investing criteria for the PSP program includes, among others, total shareholder return and earnings criteria. In this current market environment, some of the key performance conditions of our performance share plan not expected to be obtained. Therefore, we had to reverse some previously accrued costs. Excluding the reversals, our adjusted EBITDA declined 16.2% to 30 million US dollars, and adjusted margins declined to 24.2% from 31.2% last year. Our CFO will provide detailed reasons for this later. To a large extent, much of the margin compression is due to planned costs, such as our geographic expansion, choosing to recruit in good time ahead of projected growth in the peak summer travel season and in keeping strong support and shared service staff ratios. We also continue to invest in initiatives such as the Digital CX Center of Excellence and TDCX AI, our in-house consulting arm. We run our business for the long term and believe these investments are necessary. Besides these, these are productivity measures and cost levers that we can pull to bring margins back nearer to our guidance levels over the course of the year. And our CFO will share more on this later. We continue to execute well from a business perspective. Operationally, I'm very proud that we remain at the top end of performance tables for our clients, demonstrating that TDCX continues to execute at the very highest levels Our client count rose by a strong 55% to 85% as of March 2023. Our growth was broad-based and we're excited that revenue from clients outside of top five rose 45% year on year. This included clients that we added from our Hong Kong subsidiary. As a result, we improved our revenue diversification. as our top five clients contributed 76% of this quarter's revenue, down from 83% in the same period last year. Lastly, we want to highlight our strong returns, which reflects the underlying strength of our business. A return on equity of 19% places us ahead of many of our peers. Over the last two years, we've embarked on a strategic geographic expansion, and this has really started to contribute meaningfully. For example, Korea, Colombia, Romania all recorded revenue in Q1 2023 more than four times what they contributed in Q1 2022. Last year, we've added new geographies like Turkey, Vietnam, and Hong Kong, which were not part of our footprint just a year ago. All in, revenue from new geographies was 10 times in Q1 2023 compared to what it was in Q1 2022. Most recently, we announced the launch of our newest campus in Sao Paulo, Brazil, in support of a key gaming client. We also opened our office in Jakarta in 2023, which further bolsters TDCX's Southeast Asia network. Indonesia is the largest Southeast Asian market with a population of 270 million, with over 70% internet penetration and a large ecosystem of international and regional tech companies. With a growing headcount of over 18,400 employees globally, we are excited by our new, wider geographic reach. This empowers us to serve more clients across the world. Moving into client highlights, as mentioned earlier, we continue to grow our client count steadily. While our client count stands at 85 as of March 2023, another six clients have been signed up, but not yet launched. We look forward to kick-starting this campaign soon. As shared earlier, our higher client count and growth-based growth have contributed to the improved revenue diversification metrics. In terms of contribution from verticals, digital advertising and media remains our largest vertical at 51% of revenue in this quarter. The revenue contracted slightly year on year with a decrease in volumes from some of our clients, partly offset by good growth from several other clients in this space. Our second largest vertical was travel and hospitality at 24% of revenue. This vertical saw a strong growth of 34% year on year, driven by the strong rebound in cross-border travel with room for further recovery. We have started ramping up our hiring to meet the demand for the summer peak period, as well as increased outbound Chinese travel in the second half. We have always shared that TVCX differentiator is our focus on more complex work. Now, given the speed of developments in tech and AI, the need for moving up the complexity ladder is all the more a key strategic priority for us. And we intend to deliver this by attracting top talent, providing good training, and optimizing our tools and processes. Allow me to illustrate how we do this across our three lines of business. Sales and digital marketing, which represent 27% of our Q1 revenue mix involves digital marketing experts focused on optimizing average revenue per account for SMB advertisers, campaign and lifecycle management, agency management and onboarding, deep analytics, creative consulting and marketing operations on behalf of our digital advertising clients. Our talents in this LOB are recruited from a diverse range of linguistic backgrounds with obvious higher qualifications and capabilities on the content trust and safety which represents 13 of our revenue mix it involves complex content moderation interventions that require human interpretation and nuanced knowledge of cultural and political norms we also perform a wide range of complex trust and safety functions to ensure the authenticity and accuracy of listings for rental or sales, KYC procedures for some of our FinTech clients, as well as data annotation and labeling work. Lastly, our biggest service line remains Omnichannel CX, which is 59% of our Q1 revenue mix. The vast majority of these are primarily complex B2B interactions or complex b2c discussions for example many of our clients have multiple tiers of complexity or escalation we typically deal with the highest tiers and serve the most demanding or highest paying customers who require a wide globe approach others such as escalations are time sensitive and require us to employ empathy and mediation skills to intervene Our long-standing focus on new economy clients has provided us with deep domain expertise and understanding of innovative verticals and client needs. We have doubled down on our consulting strategy to add even greater value to our clients. This January, we launched our Digital CX Center of Excellence to pilot and validate new CX models to support emerging technology architecture, as well as to develop practical real-world use cases. By leveling up our consulting capabilities, we're able to showcase our domain expertise, obtain a seat at the strategic table, and can therefore deepen our relationship with clients. I'm also happy to announce that we recently launched TDCX AI, a specialized consulting division which leverages AI in CX applications and helps clients on their AI journey. The team is composed of 50 specialists with expertise in AI algorithms, data science, and business analytics. We think these insights and tools will help clients deliver hyper-personalized customer experiences, which will allow clients to create tailored CX journeys or targeted marketing strategies, which will in turn drive customer loyalty and revenue growth. We are also investing in generative AI tools to enhance internal productivity, which will free up our employees to focus on higher value, more rewarding and fulfilling work. There are lots of fresh and exciting opportunities presented by this generative AI wave, and we are agile and nimble enough to pivot quickly to meet new demands. We will share more about developments in TDCxAI in due time. To sum up, a solid presence in asia a globally expanding footprint a culture aligned with new economic clients and continuous technological innovation i believe tdcx of the right fundamentals and we're well positioned to excel in this constantly evolving bpo market Before I pass my time to Mr. Chin, who will bring you through our results and guidance in greater detail, I'd like to briefly touch upon outlook. Broadly speaking, the near-term macroeconomic outlook remains uncertain. Sales cycles have lengthened, and generally speaking, clients remain hesitant to commit into more business in the near term. On the other hand, a number of our largest clients have recently reported slightly more optimistic Q1 earnings. We are cautiously optimistic that business will improve into FY2024. With that, let me hand over to Mr Chin.