TELUS International (Cda) Inc. Subordinate Voting Shares

Good morning, ladies and gentlemen. Welcome to the TELUS International first quarter 2024 investor call. My name is Jonathan, and I will be your conference facilitator today. At this time, all lines have been placed on mute to avoid background noise. After the speaker's remarks, there will be a question and answer period. If you'd like to ask a question during this time, please press star 11 on your telephone keypad. If you'd like to withdraw your question, simply press star 11 again. As a reminder, today's program is being recorded. I would now like to introduce Jason Meyer, Head of Investor 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 Q1 2024 Investor Call. Hosting our call today are Jeff Puritt, President and Chief Executive Officer, and Gopi Chanday, our Chief Financial Officer. As usual, we'll begin with some prepared remarks where Jeff will provide an operational and strategic overview of the quarter, followed by Gopi, who will provide some key financial highlights. We'll then open the line to questions from pre-qualified analysts before turning the call back to Jeff for his closing remarks. Before we begin, I'd 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 telusinternational.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 to differ materially from our current projections. We assume no obligation to update any forward-looking statements. Jeff and Gopi 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 issued this morning and regulatory filings available on CDAR Plus and EDGAR. I would also like to remind everyone that all financial measures we're referencing on this call and in our disclosure are in U.S. dollars unless 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 Pierret.

Thank you, Jason. Good morning, everyone. In the first quarter of 2024, TELUS International delivered results that were on track in terms of our expectations and what we see as a continued path to recovery. While the operating and the Macroeconomic environment remains pressured for the first half of the year with inflation and higher for longer rate narratives dominating the market sentiment. We anticipate demand starting to recover in the latter part of the year. We continue to center our efforts on what we can control and with our meaningful global cost efficiency programs executed over the past nine months, we're maintaining our focus on profitability. Our outlook for 2024 is unchanged and it remains prudent based on our current view of client demand and our assumptions around the macroeconomic conditions in the near term. Gopi will share more details on this topic later in the call. With our third largest client, a leading social media network, we're encouraged by recent volume stabilization. Our team is working to surface incremental opportunities for further rejuvenation in the account through a potential expansion in our service line offerings and geographic diversification Although these efforts will likely play out over the medium and longer term. Carrying over from last year's results, our momentum continues in AI data solutions, driven by the strength of our relationship with Google in particular, while we're also working diligently on pilots and opportunities with many major foundational AI model developers. In this regard, the progression of our Fuel IX Gen AI client engagement led by our Willowtree team is accelerating, and I'll share more details shortly regarding our most recent beta launch last month. This launch positions us favorably as we endeavor to become the AI-fueled customer experience partner of choice for our clients and across the industry. To start the year, our global sales team won several new clients, including a multinational hospitality company, a Canadian-based global e-commerce powerhouse, a leading provider of win-loss analysis services and technology, and a financial technology company in the U.S., among others. To highlight a few wins by our team at Willowtree, they secured mandates with a multinational consumer credit reporting agency, an American biotechnology company, a movie theater chain that operates the second largest theater circuit in the United States, and a global fashion house, Coach. For the latter, well-recognized name in particular, our team at Willowtree will lead a transformative project involving strategy development, research, design, and advice on technical architecture to envision a seamless, single pane of glass employee retail experience. Importantly, we also continue to deepen our relationships across our existing client base. In the first quarter, we expanded work for many of our long-tenured clients including one of the largest global logistics providers focused on transportation, e-commerce, and business services, a leading ride-hailing services company, an American telecommunications and media conglomerate, and a leading information services provider of financial property and consumer information and analytics. We also continue to be a beneficiary of steady growth serving TELUS Corporation, our parent company and anchor clients, including further ramp up within their Telus Health division that we expect to continue throughout 2024. Similarly, Willowtree secured an AI innovation win with an American consumer financial services company and saw incremental expansion with clients across diverse industries, including retail, fast food restaurants, energy, and insurance. Specifically, as it pertains to Fuel IX, our Willowtree team also continues to drive new client engagements including two well-established American financial services companies. I'll share details of one of these engagements, namely Inspira Financial, in a case study in just a moment. Last month, we announced a beta release of FuelIX as part of the ongoing growth and refinement of our enterprise-grade AI engine, structured now as two main solution layers, Core and Apps. FuelIX Core offers the orchestration, integration, and administration as a backbone for enterprise AI, while FuelIX apps includes templated GenA applications across customer and employee experiences. Think of these as add-on solutions and tools, including third-party applications, along with our own consulting and design services, for example, our eight-week GenAI Jumpstart accelerator program. Key divisions of our parent company, Telus, are part of both the Jumpstart and the FuelIX client rosters. Across multiple business areas and corporate support functions at TELUS, we've designed, built, and delivered AI solutions supporting an IT service desk, field service, and internal team member knowledge solutions, an in-store retail associate co-pilot, a customer service agent assistant, and a public-facing consumer website. These solutions have delivered tangible outcomes for TELUS already, helping them achieve a lower cost to serve and support their focus on driving a higher average margin per user. Our AI capabilities are expanding opportunities with TELUS, charting a path to an additional differentiated service revenue stream. In fact, we currently have several more pilots underway, as well as over 30 requests for new applications. Our TI sales team is also taking this successful real-world implementation at TELUS on the road to demonstrate the value of FuelIX to enterprise clients across multiple industries. We also continue to foster strategic technology partnerships to complement our capabilities and broaden the scope of our offerings. In March, TI announced the partnership with Local Measure, which is an out-of-the-box GenAI-enabled contact center solution powered by AWS Amazon Connect. This addition to our FuelIX platform provides our clients with even more choice and greater flexibility in implementing GenAI. In April, we announced an expansion of our strategic partnership with Appian, a company name spelled A-P-P-I-A-N, and not to be confused with another similar sounding company name out of Australia. The key focus of this partnership is to offer clients an intelligent automation as a service platform with low-code automation solutions accessible on demand and based in the cloud, with all elements and tools coming together to create a unified AI-powered IT ecosystem. We successfully tested this value proposition by deploying it for our anchor client, TELUS Corporation, within their core telecom business. Employees at TELUS were able to develop network build tools with a wide variety of functionalities, such as network design, configuration, deployment, and optimization. All of this at a pace five times faster than conventional methods and already resulting in savings of over $5 million. Turning to case studies, one of the Willowtree client wins in the quarter I mentioned a moment ago is Inspira Financial, a financial services company based in the U.S. providing custody solutions for alternative assets and retirement services, including self-directed individual retirement accounts, and 401k rollovers. Having acquired another player focused on providing health savings and spending account solutions, our client needed to undergo extensive rebranding as they brought the offerings of the two companies together under one portfolio to transform the combined company into a comprehensive health, wealth, retirement, and benefit solution provider for institutional business partners, employers, and individuals. To achieve this strategic goal, the client partnered with our team at WillowTree to expand the new brand through digital channels, including web and product platforms, creating impactful illustrations, animations, and content that resonated with users. We then applied these new digital brand guidelines to the product portals to support the enterprise-wide brand rollout. We also strategized and implemented marketing operations workflows to support the brand rollout and maintenance using tools like Adobe Workfront and Brand Portals. In addition to developing a web strategy for the new brand with key focus on designing and building an intuitive public web experience for the updated portfolio, our team has migrated the client systems and operations to Adobe Experience Cloud. Excitingly, we've also implemented an AI-powered navigational assistant to guide users through the new portfolio of offerings and reduce support costs by offering self-service solutions. The AI assistant we've built for the client is a hybrid LLM and rule-based chatbot with a secure intent classifier augmented by LLM function calls to deliver optimal solutions for user queries. It adeptly handles various needs such as FAQs, login inquiries, and guiding users to the next step in the journey with Inspira. The chatbot's engagement surpasses search usage by 5x, with a notable 53% conversion in engagement rate achieved to date. Moreover, insights collected from the chat bot logs and site analytics fuel continuous optimization aimed at reducing the client's call center volume. Another WillowTree client from a completely different industry, Mercury Marine, is a global leader in marine manufacturing offering a comprehensive range of engines. The client sought our expertise in digital transformation when they recognized the need to harness technology to improve their multi-channel offerings and deepen their direct engagement with customers. In less than 10 months of engagement, our team at Willowtree introduced a brand salient engaging design and modernized website for this client. The enterprise-grade website and e-commerce experience was developed on Adobe's cloud platforms, decentralizing the authoring model and allowing for regionally relevant and timely campaigns across 36 websites in 14 language combinations. Mercury Marine has seen growth in leads in the quarter following the launch of our solutions compared to the same time in the previous year. Meanwhile, better user experience enabled by our solutions has improved discoverability, driving increased customer interest and dealer profitability. For 2024, our team at Willowtree continues to work with Mercury Marine on improving their online presence through a more targeted search engine optimization and feature enhancements to create even better customer experiences. We believe this will enable further opportunities to drive additional revenue for the business, both that of our clients and our engagement with them. Next, I'll share a case study update from our computer vision group within our AI data solutions team. We continue to work with a long tenured client, an American robotics company based in California, who develops autonomous delivery vehicles. If you're from the San Francisco Bay Area or Houston, Texas, you may have seen their delivery vehicles in your neighborhood. Loyal listeners of our investor calls may also recall I spoke about this client and our work for them back in 2021 during one of our earlier earnings calls. In addition to creating training datasets for this client's computer vision perception models, we've expanded our scope to include fine-tuning of the client's LLMs built for real-time explainability of the autopilot's decisions. Our team's goal is to teach LLMs based on the expertise of a human driver with actions or preferences across various driving scenes, including complex and rare scenarios, as well as generate and explain resulting motion plans depending on a wide range of very specific traffic conditions. The workflow starts with several English-speaking and qualified drivers writing detailed and clear descriptions of various traffic scenarios they see in a given image or video, then annotating the edge cases in the image or video, followed by selecting their motion decisions for the given scenario. As you can imagine, the universe of potential scenes and traffic scenarios is very close to infinite. Yet the client and our team need to generate, categorize, structure, annotate, and ensure the quality of all these data points and permutations. Thanks to TI's proprietary multimodal annotation and fine-tuning platform, we're able to automate many of the steps involved using AI-assisted description generation and video labeling. Drivers then edit descriptions and annotations, applying their driving expertise, knowledge of traffic rules, and using their best judgments. This is a great example to illustrate how TI is able to combine deep human insights and nuances with high accuracy of input data for LLMs with speed at scale to build adaptable and safer gen AI models for our clients. In the spirit of continuously refining our own capabilities, and particularly in relation to AI, just two weeks ago, we launched TI's FineTune Studio, part of our broader AI data solutions proprietary platform. It's a task execution module designed to create high-quality fine-tuning data sets for LLMs and Gen AI models. While our experts engine can algorithmically match tasks with best-fit experts from our global crowdsourced AI community of more than 1 million contributors, the FineTune Studio goes further in enabling contributors to create high-quality data sets for LLM fine-tuning in more than 100 languages deployed across domains where a specialized responses are required, including STEM disciplines, healthcare, finance, and more. Our fine-tuned studios allows for native AI integrations, including real-time assessments of possible plagiarism, tone analysis, spelling and grammar checks, features that improve output accuracy and facilitate users' task completion with increased productivity and efficiency. Our team presented the fine-tuned studio during the 2024 World Summit AI, which took place in Montreal a couple of weeks ago, with a great reception from industry participants. One last case study I'll share today illustrates our deep capabilities to serve telecom clients. As you might expect, TELUS is a meaningful source of opportunities within our media and telecommunications industry vertical, and over the years, it's opened doors as a reference for other telecom businesses, notably in the U.S. On our investor call a couple of quarters ago, I shared with you an example of one such client, a large service provider of pay television and retail wireless services. One acquired a mobile network operator and turned to TI who then, excuse me, to help them, excuse me, reimagine and assemble a comprehensive cloud infrastructure. As an update on that engagement, After we successfully helped the client to set up their infrastructure, TI was then tasked to manage a complicated network migration of the client's entire customer base, a process that also necessitated an introduction of additional functionalities for customers, a customization of user interface and experience, integration with numerous application programming interfaces, a robust logging and exception handling framework, and a complex porting process for account management. Our team collaborated across several squad groups within TI's enterprise platform services working in the AWS cloud environment to deliver exactly what the client needed, while ensuring network compatibility, managing customer data, and overcoming technical integration obstacles, all while maintaining a positive customer experience. Among the outcomes delivered for the client, our team put together self-service tools that enabled customers to migrate seamlessly and independently. Our solution enhanced account management capabilities, providing customers with increased control and better insights. We streamlined support operations, reducing the time spent troubleshooting and tracking telephone numbers across different networks and data models. And we added new sales and service reporting capabilities, providing valuable insights for performance analysis and decision making. This example not only illustrates the continuity we enjoy with some of our clients, having done good work and shown value on the first engagement, we're often rewarded with more and more complex work in the future. It also shows how TI solutions address critical business needs for our clients, addressing both ends of successful customer experience management, cost efficiency, and growth enablement. We've also started the year on a positive note with several industry awards and rankings. which reflect our global team's continuing commitment to excellence in everything we do. Following on from our leader ranking in IDC's marketscape for worldwide data labeling software last December, this year TI was recognized as a leader in Everest Group's peak matrix for data annotation and labeling solutions for AI and machine learning. What's truly notable here is that TI was the only provider ranked in the top two for both these assessments. highlighting the unmatched leadership of our AI Data Solution Division's vision, strategy execution, innovation, and client satisfaction. Additionally, for the eighth consecutive year, TI was named on the Global Outsourcing 100 list, once again placing us amongst the best outsourcing providers for size and growth, customer references, awards and certifications, programs for innovation, and corporate social responsibilities. Also for the eighth year in a row, our global team's efforts were recognized by Business Intelligence Group in a 2024 Excellence in Customer Service Award within the Organization of the Year category. This award duly recognizes those who are transforming the customer experience in today's online-driven economy. Further, at this year's Webby Awards, known as the Internet's highest honor, our team at Willowtree and several of our clients were recognized among nearly 13,000 entries from 70 countries. You may recall among the case studies I shared with you on our investor call in November last year were Brightline Trains and McGraw-Hill. Both of these clients won the awards. Brightline Trains secured recognition as an honoree in two categories with their mobile app and enterprise website developed by Willowtree, excelling in the travel and travel and lifestyle sectors. Excuse me, McGraw-Hill's Access app also developed by Willowtree, was honored in the Education, Science, and Reference category. Additionally, Willowtree's Vocable app won the Trailblazing Techquity, which stands for Tech and Equity, Innovation Award, a much-deserved recognition for the team's groundbreaking initiative that redefines healthcare through digital innovation. Vocable was applauded as a healthcare initiative helping to close the digital divide in underserved or marginalized communities. If you haven't already done so, I encourage you to read my colleague Tobias Dengel's best-selling book, The Sound of the Future, which reveals how voice technology powered by the latest AI advancements is poised to drastically alter the way we live and how companies do business. Speaking of interesting reading material, TELUS International's second stand-alone sustainability and ESG report was published on April 5th this year, providing an update on our progress against our four pillars and 23 commitments. I'd like to highlight some of the encouraging results achieved in 2023. We volunteered over 90,000 hours, the equivalent of 12,000 days in the communities where we operate around the world. This included building schools, refugee centers and homes, planting trees and community gardens and building beehives, as well as providing mentorship and employment opportunities to historically marginalized communities across the Philippines, India, Guatemala, and El Salvador. We provided over $1.6 million in cash and in-kind donations to communities around the world. Additionally, our five international community boards allocated $2.5 million to fund 67 projects spanning our priority areas of health, employment and education, and the environment. We know that diversity, equity, and inclusion are integral to our ongoing success. As such, we set targets to ensure that there would be appropriate representation of women at all levels of the organization. In 2023, we surpassed those targets, with women representing 36% of board members and 44% of the executive team. Since 2012, we've also been developing programs to hire and provide career development opportunities to people in economically disadvantaged and or marginalized communities around the world. These powerful, life-changing impact sourcing programs have a dual benefit. They provide training, meaningful work, coaching, and development, while providing TELUS International with a deeply engaged, highly skilled workforce. For example, we run a training and employment initiative in India called Project Sakima, providing opportunities for women from economically challenged communities. And last, but certainly not least, as climate change remains one of the most challenging issues of our time, We're committed to continue to work in tandem with our parent company to achieve net zero operations through a combination of emission reduction and emission removal by our 2030 target. With that, I'll now invite our CFO, Gopi Chande, who's had a great fast-paced start to her role here at TI, to share details of our financial results, and I'll return to answer your questions. Gopi, over to you.