TDCX Inc.

Ladies and gentlemen, welcome to the TDCF Q2 2023 results announcement. My name is Ada and I will be coordinating your call today. If you would like to ask questions during the presentation, you may do so by pressing star 1 on the telephone keypad. I will now hand you over to the management team to begin.

Hello everyone and welcome to TDCX Second Quarter 2023 Earnings Conference Call. My name is Jason Lim, the Head of Investor Relations. Joining us on the call today is 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 realised in the future. you should not put any reliance on any forward-looking statements. Also, this call includes the discussion of certain non-IFRS financial measures, such as adjusted EBITDA and constant currency revenue growth. For reconciliation to the closest IFRS measures, please refer to the Form 6K, which is available on our website. We have prepared a convenience translation for the Singapore dollar to the US dollar at a rate of 1 USD to 1.3557 Singapore dollars. This 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 Lahon. Lahon, please.

Hello, everyone, and thank you for joining us today. We delivered a strong and resilient set of results against the backdrop of a challenging environment. I appreciate that everyone at TDCX has put in the extra mile to achieve this, and I would like to thank our global team for their efforts. Let me begin with some highlights. Q2 2023 revenue rose 5.5% year on year. On a constant currency basis, revenue would have grown an even stronger 11.3%, which significantly exceeded our guidance. Our largest segment, Omnichannel CX, continued to grow at a nice clip of 8% year on year. Our traditional strength in sales and digital marketing also came through as the segment grew 15%. We continue to deliver industry leading margins with adjusted EBITDA margin at 25.9% for Q2 2023. Margins were down compared to last year as we continued to put in necessary investments to position ourselves stronger for tech sector recovery. This includes initiatives such as our geographic expansion, building out of our TDCX AI arm, and operationally keeping strong agent and support ratios for our clients. Our CFO, Mr. Chin, will provide more details on our margins later. Operationally, I'm very proud that we remain at the top end of performance tables for our clients, and as a result, continue to grow business broadly across our clients. Revenue from clients outside the top five grows 67% year on year. If not for the impact of one of our key clients reducing volumes as part of their focus on cost efficiency, we would have registered much stronger overall revenue growth. Our strategic geographic expansion over the last two years has really started to contribute meaningfully. All-in revenue from our new geographies was nine times in Q2 2023 compared to what it was in Q2 2022. This included clients that we added from our Hong Kong subsidiary as well. Overall, we delivered a robust earnings performance as profit for the period rose 9.4% to 22 million US dollars. We stand out amongst peers in our sector in still being able to deliver good earnings growth over a very tough period. This clearly demonstrates that TDCX continues to execute at very exceptional levels. Our profit performance has translated into strong cash flows and a strong balance sheet. Cash generated from operations was $49 million for the first half of 2023. As of 30 June 2023, we have $301 million cash and cash equivalents with no debt on the balance sheet. This puts us in a very strong position to move quickly on several strategic growth options, especially in an environment of high interest rates. We continue to explore M&A opportunities that could help enhance our capabilities or reach to better serve our clients or to accelerate our growth. Besides that, we have the financial strength and flexibility to deploy capital for important organic initiatives such as TDCX AI, our consulting capabilities and investing in our new geographic sites. I'm very happy with the progress that TDCX AI is making and we're growing our team steadily. Our clients have entrusted us on consulting and advisory services and in piloting and implementing AI-enabled CX solutions. A number of projects are in the pipeline. For example, with a large tech client, our team was tasked to analyze the cognitive load of multi-skilled agents and to identify the tipping point at which an individual agent would be overwhelmed by product information and which would impact the way a customer service campaign would be set up. Another example we've done for clients is modeling and analyzing agents' learning curves and thereafter developing customized roadmaps such that agents reach peak performance faster. For a travel and hospitality client, we incorporated machine learning to anticipate and decrease employee attrition by up to 15%. We are also leveraging Google Cloud's enterprise-grade generative AI capabilities, to build an AI-enabled chatbot to respond to candidates' queries about our company and the recruitment process, and integrating this with our proprietary flash hire recruitment system. To sum up, there are huge businesses as well as productivity improvement opportunities with AI, and we're moving at incredible pace to take advantage of these. CDCX is very differentiated. We are agile, nimble, and hyper-focused on the complex CX segments, which requires human intervention, and that is not easily replaceable. Our positioning and strengths in Southeast Asia are unique amongst global CX providers. I'm not sure if the public markets have misunderstood or overreacted to the threat of GenAI, while underestimating the efficiencies and opportunities that this could bring. At current trader levels and considering the profitability and cash generation of our differentiated business, we see great value and we intend to prioritize share buybacks as a form of enhancing shareholders' returns. Next, let me touch on some client highlights. Our business development momentum remains very strong. Client count rose 52% to 91 clients as of June 30th, 2023. And we have a further seven clients who have been signed up but not yet launched. Beyond the quantity, I'm excited about the quality of clients that we launched in Q2, which included several giants of the world in their respective spaces. This includes an established global e-commerce platform based out of the U.S., a rapidly growing fast fashion e-commerce platform, which is one of the two fastest growing giants globally, and a leading travel platform based out of Asia, which is one of the world's largest in this space. With a higher client count and broader growth, we improved our revenue diversification as our top five clients contributed 73% of this quarter's revenue down from 83%. in the same period last year. In terms of geographic reach, we now have a much wider footprint compared to two years ago. With a growing headcount of over 18,700 employees globally, we are able to serve more clients across the world. The revenue chart here demonstrates our unique positioning amongst global listed CX providers with around 71% of our business focused on serving Southeast Asian and North Asian languages. Before I hand over to our CFO, let me share some views on the outlook. Having completed half the year now, we have a better sense of where we will land for FY 2023. We've seen delays in decision-making from clients and the lengthening of the sales cycle throughout the first six months. The effect flows through to the second half, which means that the higher end that we were aiming for in second half 2023 is not coming through. As such, we are adjusting our FY 2023 revenue outlook to reflect this. Mr. Chin, we'll provide more details later. While we do not want to get too much ahead of ourselves, we are starting to get the slightly clearer picture of how the next year is going to unfold. They are encouraging signs for economic activity in the US, coupled with recent positive results for several of the tech giants, including those in the digital advertising space. This bodes well, and I'm cautiously optimistic that we're starting to see some green shoots for 2024 rebound. With our efforts on operational excellence and focus on value adding to our clients, We're in a very strong position to seize opportunities as they arise. With that, let me hand over to Mr Chin.