TELUS International (Cda) Inc. Subordinate Voting Shares

Good morning, ladies and gentlemen, and welcome to the TELUS International second quarter of 2021 Investor Call. My name is Jonathan, and I will be your conference facilitator today. At this time, phones have been placed on mute to avoid background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, please press star then 1 on your telephone keypad. If you would like to withdraw your question, please press the pound key. I will now turn the call over to your host, Jason Meyer, Senior Director and Best Relations and Treasurer at TELUS International. Mr. Meyer, you may begin the call.

Thank you, Jonathan. Good morning, everyone. Thank you for joining us today for TELUS International's Q2 2021 Investor Call. Joining us today are Jeff Puritt, President and CEO, and Vanessa Canu, our Chief Financial Officer. We will begin the call with some prepared remarks where Jeff will provide an operational and strategic overview of the quarter, followed by Vanessa who will provide some key financial highlights. We will then open the line to questions from pre-qualified analysts before turning the call back to Jeff for his closing remarks. Before I turn the call over to Jeff, I would like to direct your attention to slide two of the supplementary presentation available for download on this webcast and also available on our website at telusofinternational.com slash investors. The statements made during this call may be forward-looking in nature, including all comments reflecting expectations, assumptions, or beliefs about future events or performance that do not relate solely to historical periods. These forward-looking statements are subject to risks and uncertainties, which may cause actual results different materially from our current projections. We assume no obligation to update any forward-looking statements. Jeff and Vanessa will also discuss certain non-GAAP measures that the management team consider to be useful in assessing our company's underlying business performance. An explanation of these non-GAAP measures and a reconciliation to the comparable GAAP measures can be found in the appendices of today's supplementary presentation, along with the earnings news release and MD&A available on CDAR and on EDGAR with the SEC. I would also like to remind everyone that all financial measures we are referencing on this call And in our disclosure, our U.S. dollars are less specified otherwise and relate only to TELUS International results and measures. With that, I'll now pass the call over to our President and CEO, Jeff Garrett.

Thank you, Jason. Good morning, everyone, and thank you all for joining us today. In the second quarter, TELUS International delivered a 36% year-over-year increase in revenue and a 56% year-over-year increase in adjusted EBITDA. both of which were driven by strong organic growth as well as contributions from our acquisitions. These exceptional results continue to underscore the successful execution of our strategy to cultivate highly accretive business opportunities and our unrelenting focus on pursuing higher value digital engagements. Importantly, they also reflect the deep trust our clients place in their partnership with us. Equally impressive is the environment in which these results were achieved. Unlike many of our industry peers that struggled a year ago, having to recover from impacts to their businesses stemming from the pandemic, our company's financial results are building from a position of relative strength, resilience, and consistent execution last year, making our growth this year all the more impressive. Our sales team, led by our Chief Commercial Officer, Maria Pardee, helped to drive exciting new wins for Telus International in Q2, successfully converting on opportunities with the world's largest technology company by revenue, the world's largest e-commerce company, the world's fastest growing social media platform, and one of the world's largest banks, just to name a few. These are meaningful multi-year deals reflective of the accelerating sales traction we're seeing in the market through Telus International. Indeed, the second quarter concluded a remarkable first half of 2021 for TI, and it's on the strength of our Q2 results that we're raising our outlook for year-end 2021, as Vanessa will share in more detail later in the call. In a repeat of last quarter, our tech and games vertical represented the highest year-over-year percentage growth amongst our targeted industries. This growth was primarily driven by increased demand from our digital native and tech disruptor clients that recognize the value of our differentiated end-to-end capabilities, including our premium content moderation services and AI data solutions. For example, one of our multinational tech giant clients partnered with us to train, test, and scale their voice-controlled virtual assistants. With over 150 million global active users per month, this virtual assistant can schedule appointments among many other useful tasks and do impart to our efforts, it can now understand and perform tasks in more than a dozen new languages. We started with data annotation, including pronunciation checks and validation teach the advanced speech recognition system. This entailed collecting massive amounts of data by generating thousands of sentence variations, which were then recorded by native speakers before being loaded into the client's AI system. We also used a voice grammar extensible markup language, or XML, that contained a set of rules developed by our computational linguists to ensure the AI algorithm properly identified the inputs. This was an extremely complex undertaking requiring significant expertise and our specialized technology capabilities. It was also a very successful project and we continue to collaborate with this client to evolve their virtual assistant along with other projects across our broader portfolio of end-to-end client digital services. In another tangible example, our digital solutions team is working with one of the world's largest providers of agriculture products and services. This client has grown rapidly through acquisition and as a result was using an inefficient mix of resources providing employee experience support on an aging platform with limited quality assurance and data analytics capabilities that left many blind spots across their organization. TELUS International was hired to enable a new end-to-end employee experience, including a cloud-based platform which modernized interactions with an entire suite of digital solutions. We created a comprehensive set of digital value-add outcomes that includes seamless omni-channel integration with real-time transcription, including sentiment analysis, automated workflows enabled through integration with the client's ServiceNow instance, and dynamic digital analytics dashboards that provides an automated early warning system for technology problems in the client's environment. This integrated data-first solution enables deep analysis of all our clients' data to identify areas where they can reduce support effort through robotic process automation and build and deploy chatbots and chat automation to answer frequently asked questions and to enable self-service. Another example of our technology in action is work we performed to help an enterprise customer to develop an AI system that would automatically recognize receipts and invoices from over 20 countries. and have them converted into text for further processing in an extremely rapid and efficient manner. We completed the collection and annotation of thousands of receipts and invoices from different companies globally to train the client's AI system. This kind of application can be scaled and used by any business for expense management or company invoicing or anything that requires paper documents or inputs to be automatically translated into digital form for processing by an AI engine. And speaking of bots, yet another engagement is our support of a leading IT company based in Asia in the development of their AI emotion analysis algorithm to help their bots recognize emotion to sound more human during interactions with customers. While recognizing emotions when we converse may seem relatively simple to you and me, it poses considerable challenges for machine learning models. To help our client's AI engine that powers the bot's ability to understand emotions, our team collected and labeled thousands of written question and answer sets for emotional intent that was then used to train the client's bots. What's even more exciting is this client already has plans to develop future bot iterations that will use voice and facial recognition technology to identify customers' emotions, and with our enhanced image and video annotation capabilities, As part of our computer vision tool set added to our acquisition of Playment earlier this month, we're well positioned to win even more business from this client. Playment's capabilities also include a proprietary data annotation platform that specializes in 2D and 3D image, video, and LIDAR, a remote sensing method that uses laser pulses to measure variable distances, which are in high demand to power, evolve, and disrupt the world around us, in areas such as healthcare and agriculture applications, as well as in the creation of smarter consumer products and services. One particular payment client that is very well known in the autonomous vehicle space in Euro is currently leveraging our computer vision capabilities in its vehicles using robotics, think pizza or grocery delivery. This application requires an AI system to be able to recognize street signs, traffic patterns, driving rules, and the system must also learn to use judgment to avoid risks with people, dogs, and other objects on the street. Where our million-strong AI community and solutions come in is with labeling vast amount of image and video data captured from cameras and sensors in order to train the AI system to achieve effective self-driving and delivery capabilities. And while the autonomous vehicle market is still developing, computer vision technology also has applications in more traditional industries such as farming and mining. Worker safety continues to be a top priority in these types of businesses, and our AI data solutions have significantly improved their performance. For one of our clients, by creating training data sets of images of safety goggles, harnesses, vests, and other equipment worn properly and improperly, cameras located deep inside mines can then be fed into an algorithm that can identify when workers are not following regulations in order to alert leaders in real time to avoid potentially dangerous situations, reduce injuries, and minimize costly disruptions and delays. Playment, with its numerous adjacencies to our existing data annotation capabilities added through our acquisition of Lionbridge AI, was a natural complement to our ongoing integration of the latter, which has progressed well over the past seven months. We recently rebranded this division of our business to TELUS International AI Data Solutions. And today, we operate one of the largest data annotation platforms of its kind globally and are fully prepared to meet the exponential increase in demand for the high-quality, diverse data sets needed to power today's and tomorrow's AI-driven solutions. With data collection and labeling typically representing approximately 80% of the work on any given AI project, we are indisputably well-positioned on the AI and machine learning value chain. Finally, another adjacency and opportunity where we've leveraged our AI data annotation capabilities is to further enhance our market-leading content moderation services, an area that is experiencing tremendous growth with the explosion of user-generated content that is increasingly attracting regulatory attention to keep our online world safe and trustworthy. One very topical example is the work we perform for a leading social media giant to monitor the integrity of their user-generated data. For example, currently in the news is the topic of fake data around the effectiveness of COVID-19 vaccines and other health-related topics. Our team of annotators evaluates and rates news and information for relevance, accuracy, and integrity to ensure that users are not provided with false or misleading information. Our team is playing a critical role in helping to make the internet a safer place. And while content moderation has traditionally been a market more heavily skewed to tech hyperscalers, We're also seeing an increased appetite among clients in the enterprise and mid-market segments that have growing digital communications platforms to optimize, manage, and monitor. One clear application is in online advertising, with AI solutions helping to optimize results and improve the effectiveness of advertising campaigns. Our annotators provide the critical data that enables companies to place ads in the most relevant positioning for users in different countries, languages, and cultures. I hope these examples I shared help shed more light on not only what we do today, but also set the stage for the innumerable opportunities ahead of us in terms of how we're able to partner with our clients to achieve game-changing, industry-disrupting, and market-leading brand experiences using AI-powered services and solutions whose only limits will be our own imagination. Another feature of our success that I'm very pleased to share is that our accomplishments and unique approach to the industry is growing in recognition. In the second quarter, we were awarded the AI Breakthrough Award in the best informational bot solution category for the development of our intelligent agent assist chatbot. And more recently, our company was named a leader on Everest Group's customer experience management services peak matrix for the third consecutive year ranking in the top three for our strategic vision and capabilities among the nearly 40 companies that were included in the evaluation. We're also among the top 10 on the 2021 Everest Group BPS Top 50 list, a global ranking of the 50 largest third-party providers based on their revenues and year-over-year growth. This year, TELUS International was the top riser on the list, climbing an impressive 18 positions, and we were also ranked number one by percentage of revenue growth. Our caring culture and commitment to ensuring each and every one of our more than 56,000 team members is able to bring their whole selves to work was also recognized, with Telus International named one of Mogul's top 100 workplaces with the best diversity and inclusion initiatives for 2021. This list acknowledges the efforts of companies around the world that have implemented practices, invested in resources, and developed strategies to create more inclusive and diverse workplaces. Although I personally have the great pleasure of seeing the excellence displayed by our team day in and day out, whether they're building beehives in Cork, celebrating Pride Month with a drag contest in the Philippines, leading virtual roundtables on gender equality, or receiving accolades from our clients around the world for going above and beyond for their customers, these awards and distinctions are a fitting reflection of our team members' passion, ingenuity, and dedication in everything they do. and I am extremely proud of all their collective achievements. Just before I hand off to Vanessa to take us through our second quarter financial results in more detail, I wanted to share a quick update on our team. As some other companies have highlighted in comments recently, there was an increasing and competitive demand for talent in Q2. While we remained vigilant in assessing any emerging trends in our key labor markets around the globe, TI continues to be a destination for talent, notably While as expected, our attrition is higher than this time last year at the height of the pandemic, we have not seen any significant elevation in our attrition from 2019 pre-pandemic levels. Sequentially, our attrition in Q2 was consistent with Q1 with a nominal decrease of 10 basis points. And for the quarter, the TELUS International Family total team member count grew by 4,784. As at the end of June, about 80% of our global frontline team members continue to work safely from home as we continue to take a science-based methodical approach to safely bringing team members back to the office. We continue to closely track vaccine availability and rollouts in each of the regions where we operate. In countries where we're permitted to do so, we're also working with local governments to supplement their efforts by engaging accredited healthcare providers to help vaccinate our team members as well as family members. With that, let me now pass the call to our Chief Financial Officer, Vanessa Cano, and I'll be back for the Q&A. Vanessa, over to you.