Q1 2021 Telus International Cda Inc Earnings Call

[music].

Good morning, ladies and gentlemen, and welcome to the Telus International first quarter 2021, 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 Speakers' remarks, there will be a question and answer period. If you would like to ask a question.

During this time period. Please press Star then one on your Touchtone telephone if you would like to withdraw your question. Please press the pound key I would now like to introduce Jason Mehr Senior director Investor Relations and Treasurer at Telus International Mr. Ma'am, you may begin.

Thank you Jonathan Good morning, everyone and thank you for joining us today for Telus International Q1, 2021 Investor call.

Joining us today are Jeff Pieratt, President and Chief Executive Officer, and Vanessa <unk>, our Chief Financial Officer.

I'll begin the call with some prepared remarks, Jeff will provide an operational and strategic overview of the quarter, followed by Vanessa who will provide some key financial highlights and outlook for 2021.

We will then open the line up to questions and prequalified analysts before turning the call back adjusted for his closing remarks.

Before I turn the call over to Jeff I'd like to direct your attention on slide two of the supplementary presentation available for download on this webcast and also available on our web site at Telus International blocks on slash investors.

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 cash injections, we assume no obligation to update any forward looking statements.

And Vanessa will also discuss certain non-GAAP financial measures that management team considered 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 SEDAR 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 are in U S dollars unless specified otherwise generally only to Telus International result of measures.

With that I'll now pass the call over to our President and CEO, Jeff here.

Thanks, Jason and good morning, everyone. It's truly my pleasure to welcome you all to Telus International's first ever quarterly Investor Conference call as a public company I.

I appreciate you taking the time to hear about our company's first quarter results as well as our full year outlook for 2021.

Following the successful completion of our IPO in February Telus International's strong Q1 performance was marked by continued resilience and underpinned by our diverse end to end digital capabilities.

Robust double digit revenue on adjusted EBITDA growth is a testament to our digital strategy and the remarkable commitment of our more than 51000 highly engaged team members and our 1 million Crowdsourced data annotation experts around the world. Despite the.

Challenges of the ongoing pandemic our team members remain focused on delivering the best outcomes for our valued clients and their end customers that day.

<unk> continues to disrupt our daily lives companies are seeing an acceleration in the need to embrace digital transformation and also on amplified focus on the importance of quality security and service excellence.

Increasing demand from businesses across many sectors, especially in the high growth verticals, we serve such as E Commerce games and fast growing technology in particular, bringing forth unprecedented opportunities for Telus international given our broad range of digital capabilities.

Our unique value proposition defines a new industry category at the intersection of digital and.

In digital CX, where we're able to design build and deliver next gen digital solutions that power differentiated customer experiences for our clients and drive value creation for our shareholders.

The successful execution of our strategy as evidenced in our first quarter results year over year.

Excuse me Telus International achieved revenue growth of 57%, including 20% organic revenue growth along with strong profitability with adjusted EBITDA, increasing 90% year over year. This profitability profile affords us meaningful headroom to continue investing in our business too.

Further amplify our capabilities and fuel accelerated revenue growth.

Additionally, the outlook, we're providing today further showcases our confidence in our company's strong operating momentum and our expectation that this growth will continue but that will review the details of our full year outlook later on this call.

Our Q1 results also reflect our success in growing with our existing clients as well as winning new clients. For example, this quarter, we ramped up a fast growing disruptor in the wellness space a major E Commerce company, a large financial institution, a new games client and a disruptive Fintech company.

Among many others, we continue to see good momentum in adding new logos across our targeted verticals many of which are leaders in their own sector, but that they will share a more detailed overview of our performance by vertical later on the call.

Our consistent focus on partnering with substantial sustainable businesses operating in fast growing technology forward industries, rather than chasing pandemic driven business that is inherently variable in nature positioned Telus international well for continued success.

We've also seen a very encouraging trend in our sales funnel with total estimated contract value of well over $2 billion of net new business, which is $400 million higher than this time last year.

Winning these significant opportunities would not have been possible without our broad range of digital capabilities and value add adjacencies, such as our trust and safety practice, which has achieved tremendous growth in the first quarter.

With user generated content at an all time high due to our daily lives shifting more and more online digital services such as content moderation are no longer only in demand by large social media entities and tech hyper scaler.

Businesses across all our target verticals are now also seeking support in this regard to safeguard their brand and protect their customers. There's a growing recognition in the market that if a company has an online presence digital trust and safety is now more important than ever Telus International is again extremely.

Well positioned to seize this opportunity by leveraging our scale expertise and thoughtful approach to caring for our global team of moderators, who have undertaken the critical role of keeping our online world safe.

Yet another exciting adjacency within our diverse digital service offerings is our data annotation capability that we added through the acquisition of Lionbridge AI at the end of 2020 as one of only two globally scaled managed training data and data annotation services and platform providers in the World We Act.

The crowd of over 1 million data Annotators that together support the development of AI algorithms for leading technology companies.

Through our acquisition of Lionbridge AI Telus International has added an important digital capability that we see as a meaningful differentiator versus our peers with our integration of Lionbridge AI progressing well, we're leveraging our experience and strength and executing on our M&A integration process that has been a.

Hallmark of our successful acquisition track record since our company's inception in 2005.

Unlike other data annotation providers, we expect our combination of scale and broader adjacent capabilities will help sustain our continued growth trajectory is AI adoption continues to expand beyond the hyperscale or community into enterprise and mid market organizations.

While we continue to operate in a challenging environment impacted by the pandemic our focus remains on the physical and mental health and wellbeing and safety of our team members. We are of course closely monitoring the situation in India and the devastating surge in COVID-19 cases in the country.

All of our Telus International team members in India continue to work from home as they have been since the initial lockdown occurred on March 18, 2020, and we have several support programs in place, including paid sick leave insurance coverage for treatment and additional care program to help team members during these difficult times.

As vaccination programs continue to rollout around the world we've committed to providing every single member of our team in every country, where we operate with access to an approved vaccine at no cost across all of our locations globally as of March 31, we have more than 80% of our team members who continue to work.

From home and we have comprehensive safety physical distancing and sanitation measures in place for those who are working in our sites.

Worthy of note our community based approach to giving continues to make an impact where it's needed. Most are five Telus international community boards across the globe will provide $500000 in funding in 2021 to local grassroots charities. Our team members also continued to exemplify our caring culture.

Volunteering on a virtual basis.

All of our team member recruitment has long since moved to a virtual process. So that we can continue to provide meaningful employment opportunities in many countries across the globe something that is especially impactful given the economic toll of the pandemic.

Now over 14 months into the pandemic, our personal and professional lives continue to be disrupted and impacted in some form which makes the ongoing resilience and positive energy of our team members all the more inspirational their dedicated efforts have been reflected in the client and industry accolades, we continue to receive.

In Q1, Telus International was recognized by leading industry analyst firm Gartner average group and Nelson Hall for our content moderation and trust and safety services and our execution on delivery of digital services and solutions and for the fifth consecutive year, we were named to IAA.

<unk> Global 100 list, citing our dedicated efforts to foster innovation and deliver impactful corporate social responsibility programs.

With that let me now pass the call to our Chief Financial Officer, Vanessa Canoe and then I'll be back to answer your questions Vanessa over to you.

Thank you Jack and good morning, everyone. Thank you for joining us today.

In my overview I'll provide a recap of our financial performance in the first quarter on 2021 focusing on the key items that we believe are most helpful. I think that's on.

For most of our business.

As Jason noted at the start off the call some of these items our non-GAAP measures.

In the first quarter, our revenues were $505 million.

Two 7% year over year boosted by our acquisitions from 2020.

However, organic revenue itself grew by 20% that growth coming from both new clients added organically and growth to existing clients.

This includes an FX tailwind of approximately 4% compared to the same period in the prior year.

In terms of our revenue by geography.

Liberty, you're hoping on growth in every one of our region without relying.

Making a significant contribution to our north American revenue stream.

We also posted very strong growth in Europe, driven by demand for our trust and safety services in that region.

With continued growth in Central America and Asia.

From an industry vertical perspective, we saw growth across all key vertical in the first quarter with continued strong momentum on our flagship tech and gaming vertical.

This vertical which represents a 44 per cent of our total revenues in the first quarter grew 88% year over year with nearly half of this growth attributed to our line PKI acquisition.

Our total games clients are themselves enjoying high growth.

And with many of them spending an increasing amount of time on line combined with the explosion in the popularity of online games, we are seeing a meaningful tailwind for Ti.

Our communications and media vertical which represents a 20% from total revenue from the quarter grew 16% year over year.

<unk> E Commerce, and Fintech, which represents 11% from total revenue grew 53% per year with the majority of this increase is attributed to growth from acquisition.

Moving on to operating expenses.

Salaries and benefits expense was $282 million up 7%.

6% or 70.

76 million or 37%.

Thoughts on business growth.

This was on increasing in absolute dollars, but lower as a percentage of revenue.

56 per cent of revenue in Q1 day compared to 64% from revenue in the same quarter last year.

Would that decline being primarily due to the recently acquired.

Which is largely supported by contract net resources from which the expenses recorded in goods and services.

Speaking of goods and services purchased those costs were $94 million in the quarter, an increase of $46 million or 96% largely due to acquisition and again the AI crowd sourced workforce as I, just mentioned from which the contract.

On a record I think the goods and services line.

The balance of the cheaper that's on equally from the contract.

Our interest.

Digital footprint and enable topline growth.

Contract Labor represented approximately 17% on total direct labor in the first quarter of 2020, one compared to 9% from the same quarter a year ago.

On a combined basis salaries and benefits on goods and services purchased decreased from 17, 9% from revenue in Q1, 2020, So 74 per cent of revenue in Q1 2021.

As the growth in our revenue clearly outpaced the growth in operating expenses.

Moving down the P&L share based compensation expenses, the first quarter was $26 million, an increase of $24 million per year.

This increase was primarily due to the required mark to market adjustment on previously granted a war driven by the increase in our share price after our initial public offering.

Acquisition integration and other charges in the first quarter on 'twenty, one 5 million related from the integration of language.

Okay.

This compares to $19 million in the prior year, which related primarily to the acquisition of TTC.

Depreciation and amortization expenses quarter increased to $63 million, reflecting the incremental amortization of intangible assets recognized in connection with our acquisition.

And increased depreciation from capital asset additions as we continue to grow our business.

Income tax expenses in the quarter was $15 million up 3 million from the same quarter in the previous year.

Our effective tax rate increased from 52 on a 5% to 81, 8% due to an increase in non deductible items and.

And withholding on other topics.

Partially offset by a lower weighted average deposits on an income tax rate, resulting from a change in the income mix amongst jurisdictions.

The majority of the non deductible items in Q1, 2021 where we saw from our IPO.

Moving on to our profitability performance, we delivered adjusted EBITDA of 129 million for the corner posting strong year over year up 90%.

Our adjusted EBITDA margin was exceptional at 25 five per cent.

We expect this to begin to normalize starting next quarter, we anticipate a combination of increased hiring to support and serve our clients through the remainder of the year along with annual wage increases that we had already planned for Q2 and Q3 of this year.

More on adjusted EBITDA expectation, when we talk about outlook.

Adjusted net income for the Florida with $59 million up 293% year over year and adjusted diluted EPS was <unk> 23 up 229 per cent compared to the same quarter in the prior year.

Moving on to the balance sheet cash.

Cash equivalent 417 million at March 31st 2021.

Our total available liquidity was approximately 768 million as of quarter end up from 285 million December 31 2020.

This includes available borrowings under our revolving credit facility.

$651 million up from 132 million December 31, 2020.

We used the IPO proceeds of $493 million on cash generated from operations to pay down $530 million GAAP in the first quarter.

It's allowed us to Delever significantly, resulting in at March 31, net debt to adjusted EBITDA leverage ratio as defined per our credit agreement of two 7%.

This puts us well within our target range up to the free App.

Our proven ability to delever quickly and efficiently, but it will start out on liquidity and capacity to continue executing on a thoughtful M&A strategy.

This regard who will continue to flow opportunity focused on further augmenting our digital capability and scale.

Free cash flow in the first quarter of 2021 was 18 million compared with 21 million in the same quarter.

The prior year.

The key drivers of this change were $17 million cash settlement of previously granted share based award the pay myself, which was triggered by our IPO.

Working capital outflows, which were largely driven by came in on previously accrued M&A transaction costs relating to the line between acquisition amongst other things.

And higher capital expenditures.

Turning now to our team member accounts as of March 31st 2021.

Our strong team of just over 51000, an increase of 11% year over year.

And finally today, we have also released our full year outlook, which reflects the continued momentum in the business that we expect to see for the remainder of this year.

Please note that we have not assumed any placeholders for M&A.

Outlook.

For the full year 2020, one we expect revenues in the range of $2. One 5 billion to $2, one 9 billion, reflecting growth in the range of 36 to 38 per cent over the prior year.

Driven by the expected contribution from previous acquisition and continued robust organic growth benefiting from our unique positioning and growth vertical and well diversified.

So the topic.

We expect adjusted EBITDA in the range of 523 million from 533 million, reflecting growth in the range of 34% to 36% over the prior year.

We believe we can achieve the increasing profitability guided by a continuing expansion of our digital capabilities and a relentless focus on efficiency.

We expect to deliver adjusted diluted EPS in the range of 90 to 95 in 2021.

In summary, the key our management team is very proud of the robust revenue and earnings performance, we have delivered from Q1.

And it's confidence on our full year outlook. We have provided to date is well supported by the momentum that we have seen on continued to see in our business.

With that we will now open the line for question and I would tell me ask you to please keep it to one question at a time because on everyone to participate Jonathan.

Jonathan over to you.

Thank you once again, we kindly ask that you limit your questions to one and you may get back in the queue. If time allows we will pause a moment, while we compile the queue.

Our first question comes from the line of Tien Tsin Huang from Jpmorgan. Your question. Please.

Hey, good morning, Congrats on the first public call. Good results here just.

Wanted to ask about sort of the day outlook here and totally appreciate Jeff What you said that Telus is not seeking short term pandemic.

Driven business, but reopening as well like we have some mixed impact on your client base, so as youre thinking chain.

Changed on on how this will impact volume of work and the balance of the year I'd imagine travel might pick up some of them could become for instance, but would love to get your thoughts on this is it's a it's something certainly top line for us.

Hey, Tien tsin, thanks, very much for the question and thanks for your commentary note. Early this morning, you were up much earlier than I have seen.

We are we anticipate with obviously the exception of India now, we're obviously paying close attention given we've got almost 3000 team members there.

On that depend on Mike will continue to abate as vaccine distribution improves and becomes more ubiquitous.

Given the heterogeneity of our global Kabbalah Gee, we've got from very different views across the world as to whether or not the team members will want to return to traditional office set.

Setup, whether or not customers will want us to serve them back from traditional brick and mortar environment.

Taking a pause on.

Targeted thoughtful.

Measured approach in terms of demand in totality.

We continue to see terrific support for the capabilities that we have available and indeed, I think you're spot on.

I'm hearing on expression of revenge travel more and more of these days as I think folks are starting to book their holidays.

The ride sharing and.

Home sharing economy continues to prepare for I think and on slots have returned to pre pandemic levels and we're excited about what that potentially represents for our business.

But we haven't really seen a huge slow down.

Since the latter half of last year, and indeed, having successfully.

Shouldn't ourselves with capabilities around content moderation data annotation and digital enablement, we think we're well positioned to take advantage of what comes next.

Great. Thanks, so much.

Thank you. Our next question comes from the line of Ramsey on my phone from Barclays. Your question. Please.

Hi, Thanks for taking my question today and again congratulations on your first quarter out of the gate here.

I wanted to ask about.

The your M&A strategy and update their you know you've de Levered quite nicely I know, there's no M&A in our guidance, but what's the appetite now to content consummate more more deals.

Hey, Ramsey how are you thanks for joining.

I've joked a lot recently that I feel like our IPO was sort of getting this fancy red convertible sports car and now we're at the starting line of the Autobahn until we want to see how fast that baby can go but candidly, we're going to continue to be thoughtful and disciplined around when where and how to go shopping obviously were.

Very pleased with the success of the IPO and the proceeds being used to pay down leverage to create that incremental headroom. So we have that optionality that we have a very robust M&A funnel and the team is working diligently through opportunities that are both outreach and incoming.

You should indeed expect that we're going to be acquisitive prospectively, but you should similarly expect that we're going to do it in the same disciplined fashion that we have done historically to sort of extend our capabilities fill in gaps where we think we have them support our customers or prospective customers, where we think they wanted to be and to continue to progress.

Our digital evolution thesis and capability.

Okay, great. Thank you.

Thank you. Our next question comes from the line of Maggie Nolan from William Blair. Your question. Please.

Yeah.

Thank you and congrats from me as well.

Want to ask if they strong adjusted EBITDA on the quarter was in line with your expectations and can you elaborate on the impact of the favorable client mix on the margin.

Good morning, Maggie it's Vanessa.

Thanks for your question on Q1 was a great quarter are without a doubt obviously, we saw great momentum increased volume from both new and existing clients and all of that translated to the very strong adjusted EBITDA margin saw at that time, but we put it in the quarter the organic growth was really strong.

And you know we haven't found out that we had to discount part substantially.

To get to our growth rate.

He said as long as you can see from on our previous guidance and a point of items, we think a more representative full year adjusted EBITDA margin for us its about you know in that 24% Zip code.

Quarter by quarter. It may vary slightly Q1 was obviously very good but you.

You know as I mentioned in my in my.

Oh, Yeah remarks, we are going to be increasing the pace of hiring to support on our clients through the balance of the year. We already also have annual wage increases planned for our team members on.

All of those will come into our cost profile as well again very much part of our plan. So I think you know 24 per cent issue, which is what we've guided is that it's a range of course to think about adjusted EBITDA on a prospective basis.

Thank you.

Thank you. Our next question comes from the line of Jason Kupferberg from Bank of America. Your question. Please.

Hey, guys, just a calcium free gate than I do.

Ask a little bit about content moderation on you know.

How is it doing relative to your expectations and obviously with all the new capabilities and the cross sell opportunities you know breakdown on volume, but I you know.

What are your expectations for it.

This segment into the near and medium term.

Thanks for the question Cathy Please give Jason My regards I hope it's okay.

On content moderation in my view has become an essential tool for operating online.

The gravitational pull on social media on the World is just continuing to grow and it's got enormous consequences for businesses. So as I referenced in my remarks earlier that we see continued just meteoric growth and demand around here and we're excited about the opportunity ahead of us given that we've demonstrated.

Australia, we have the requisite capabilities in terms of the highly trained highly attuned digital first responders that are supported with an ecosystem that can ensure their success and supported as well by the requisite technology to deliver superior outcomes for our customers and as again as I.

Ted This is not just for the social media platforms. This is ubiquitous now and so we're quite excited about that and now in retrospect seemingly prescient approach that we took to.

Pending our content moderation capabilities.

Okay, Thanks, and congrats on the quarter guys.

Very much.

Thank you. Our next question comes from the line of Ken <unk> from Bank of Montreal. Your question. Please.

Hi, Thank you, it's Keith Bachman from bank of Montreal, Vanessa I wanted to direct this towards you your EBITDA margin guidance for 'twenty, one is pretty much in line with how we were thinking about it.

I was just wondering if you could comment on the puts and takes that we should be thinking about as we consider our free cash flow.

Expectations, whether it be GAAP free cash flow or adjusted free cash flow, but could you just kind of walk through that.

Puts and takes for 'twenty, one free cash flow. The reason I ask the question that the reported free cash flow was a little bit different than what we were thinking in the March quarter net EBITDA seems to be tracking nicely. So just if you could just speak to that.

How we should be thinking about that for 'twenty one many thanks.

Thank you.

Yeah that the EBITDA margins are very much in line on slide you mentioned from a free cash flow perspective, our Q1 free cash flow as I mentioned earlier was.

Impacted by some of our higher cash outlays that we're primarily triggered by you know the I P. L. A as well on accrued on that transaction fees for for Eylea.

So that was sort of a one time you know cash flow impact in the quarter normally you would see that kind of you know I'm hopping.

Hopping over time.

About the next three quarters I think that is actually going on look a lot more like what you've seen from us before so we've typically said overall free cash flow in the early to mid teens and I think that's what you should expect for the next day. The next few quarters.

Okay. Okay. Many thanks terrific.

Thank you.

Thank you. Our next question comes from the line of Tim Willi from Wells Fargo. Your question. Please.

Thank you good morning, and congratulations Jeff Vanessa and team.

My question is sort of I guess, it felt a little bit upon Tien tsin, but wanted to ask.

Terms of winning new business and expanding wallet share.

With existing customers as people are thinking about the prospect of some of the pandemic Serge maybe abating a little bit on their business do you see a change.

On sort of the conversations around their priorities and that is there more of a focus on emerging about retention and engagement and sounds like your verticals with the prospect of people, maybe not being inside all the time staring at a screen or whatever it is and so the retention on the engagement becomes on a little bit more of a priority versus.

Just help us deal with the surge of growth and on boarding customers and and things of that nature or anything you can just sort of think about their around the new business wins and wallet share expansion.

It's a good question Tim.

As you might imagine there was significant concern regarding engagement throughout the pandemic and that persists given that the vast majority of folks are working at home in a virtualized environment and mental health considerations have weight, even more heavily of late just given the.

The elongated nature of the pandemic I think retention is always a concern and whilst our business and as I've read and seen so many of our peers enjoyed some improved retention attribute frankly, because there was not the same optionality of alter.

Turning to the employment for them to consider as the pandemic abates, we absolutely anticipate that we will probably return to pre pandemic levels around attrition.

And so to our customers are thinking about the implications of what happens post pandemic do we really are all return back to brick and mortar delivery centers.

Do most folks stay at home now because we finally crossed the Rubicon and recognize that virtualization is fit for purpose. We can reliably without considerations concerns for privacy confidentiality productivity performance still support our customer expectations on a virtualized basis. So this is not.

Not new for US. This is kind of the this is what we do every day and have done is to be focused on attracting.

Attracting retaining inspiring engaging at the most talented work force and I think the ebb and flow of pre post pandemic dynamics I just part of the challenge.

Thank you.

Our next question comes from the line of Dan Perlin from RBC capital markets. Your question. Please.

Great. Good morning, everyone and congratulations on the on the first quarter out really good results here I had a I was maybe you're going to start with this the sales on all you guys talked about you know.

Over $2 billion $400 million up on a year over year basis.

I was hoping maybe you could talk a little bit about the nature of the business. It's inside the funnel and just how we should be thinking about that conversion into revenues over time, I know, you've mentioned trust and safety as a practice, that's really strong but any color there would be would be fantastic. Thank you.

So thanks, Dan as Vanessa share the growth that we saw on the first quarter was really across all of our targeted verticals.

Very very exciting for us to see that we were seeing progress across the board admittedly traveling hospitality still a little bit of a laggard, but you know as the earlier comments suggest I think all of US are anticipating that that's going to start to pick up in the latter half of this year, assuming we don't see it.

Fourth or fifth wave God forbid.

In terms of our funnel is similarly reflect of of that same dynamic, we're seeing a pretty exciting upside potential across all of our targeted verticals.

And in terms of from the sales effort to go and capture that in the conversion rate with respect to that.

Now that we've guided specifically to conversion rates, we talked a little bit about sort of being in the.

First third if you will or is it put a conversion, but it sort of once the opportunities in the funnel past 60 per cent tayo probability waiting right.

We're feeling pretty strong pretty excited about the opportunity to continue to convert at a similar or even better range prospectively and I'll talk a little bit in my closing remarks about.

Our sales capability in that regard.

Excellent. Thank you.

Thanks, Dave.

Thank you. Our next question comes from the line of Ashwin true Barker from Citi. Your question. Please.

Thank you.

Congratulations from me as well on your on.

On your first public earnings, Mitch, which have which are good ones.

I wanted to.

Ask about.

The new logo wins and the expanded relationships that you talked about is it possible perhaps to break those out on some.

Somehow quantify.

Along sort of the.

Design deliver build axes.

Is it does it.

Leaned towards any particular access or is it fairly evenly distributed how should one think of this.

So I'd like to offer more specificity for you Ashwin on this topic in particular.

You might imagine Vanessa and I and the team have spent a fair bit of time talking about when if and how we on that too.

From that.

So granularity we want to be.

It's possible.

But right now we think it's still early days and we preferred to Uh huh.

<unk> sort of a bit.

Higher level until.

Until we get a couple of quarters under our belt.

As a as a new public issuer I think again Vanessa comments provided you with good guidance it was fairly balanced.

On a little extra ordinary.

Growth on the tech and games sector in particular, but admittedly flattered in part by the Lionbridge AI contribution to that given where the predominance of its customer base.

It is located and in terms of what we're doing for our existing and prospective customers again.

You should expect that we're continuing obviously to see a lot more growth opportunities on digital enabled services.

Understood. Thank you.

Yes.

Thank you. Our next question comes from the line of Paul steep from Scotia Scotia Bank. Your question. Please.

Great. Good morning, Congratulations on your first public quarter, just maybe talk a little bit we've talked lots about reopening and other things, but your your internet and social media leaders they've commented in the last couple of quarters here, but increased focus on customer support. So maybe you could weigh in on your views on the opportunity for driving even.

Broader engagement on the tech sector by Ti.

Yeah.

I'm not sure I fully understand your question Paul can I trouble you to perhaps restate it for me.

Sure I guess, there's been a focus lots of focus on the call on people focused on content moderation I think we've had a couple of your clients and people on the market comment about moving beyond just content moderation moving you know trusting key but moving into other areas of customer support and building that out even further.

I guess I was.

Looking for you to expand on maybe the potential for you to even further deepen those relationships, where you've already got engagements.

So for us the obvious near term adjacency to content moderation as data annotation.

So to the extent that we're looking to extend our reach in supporting our customers.

More effectively.

Content moderation is more than just.

Identifying and removing objectionable content from the web content moderation is also curating AD content to ensure that it appeared proximate to appropriate content that it's served up to the right audience at the right time in the right way.

So the way, we believe there's more opportunity prospectively to expand and extend our capabilities supporting customers on the content mud front, it's true so ever more capable data annotation, which is really the underpinning that the data that's being used to train those AI algorithms that go into the machine learning that.

Optimized search results that optimize AD placement that ultimately ensure that you don't have a bias in your content.

It was being delivered up to your customer base. So you know for us that represents probably the most exciting next horizon for our business and it's still relatively early days, but boy Oh boy, we've already seen fantastic synergy realization between ourselves and L. A on whether it's <unk>.

Selling more together to share customers and winning new customers together because of this really potent one two punch of content moderation in data annotation.

Thank you.

Thank you. Our next question comes from the line of Stephanie price from CIBC. Your question. Please.

Good morning.

Congrats on the results my question kind of follows on pause a little bit around line biggest contribution on the corridor and how we should think about the integration of that business and the growth you're expecting in that business and you touched on a little bit uptick I think that you can extend it.

Hey, Stephanie nice to hear your voice. Thanks for the question as I said, we're pretty excited about the progress to date I mean as I think you may recall I shared previously, perhaps something I inherited from Midtown with solo a perpetual dissatisfaction with the status quo I always think we can go farther faster and do better but.

Early days and yet are really really pleased with the most importantly, the integration in terms of cultural alignment.

On the leadership community across the entirety of the LTI group. It just feels like a natural fit with the Ti family.

And the conversations we're having as I said before with our share customers very very exciting about what's coming next the wins already with new customers again equally exciting a thorium validating.

Validating our synergy thesis that underpinned the acquisition strategy at first instance, but.

But it's still early days and I'm I'm optimistic to see even better contribution coming from the data annotation part of our business prospectively.

Yeah.

Thank you. Our next question comes from the line of Daniel Chan from TD Securities. Your question. Please.

Oh, Hey, good morning, and congratulations on the good first quarter.

So now that you're a public company I'm just wondering if you've seen any changes in your discussions with existing customers any interest from new customers and maybe even your ability to attract talent to our team.

Good good question Dan.

Gives me.

I'm not sure I've had any conversations with our customer existing and perspective, where we talk specifically about our new public issuers status beyond just.

The niceties at the time of the IPO, which was obviously appreciated but we are absolutely seeing appetite from existing customers to go bigger with us I think not surprisingly as we expected.

There are obvious correlations between being a public issuer and vendor risk consideration and I think customers not surprisingly just have a higher level of confidence given higher levels of visibility and expectations around scale and ability to answer for.

Warranties for service delivery, so on and so forth and equally not surprising but no less appreciated we are a destination of choice for talent.

Again, we're pleased and grateful for that but you know a great example of that would be our chief commercial officer, who joined US just barely two months ago and although it was not long before the IPO I'm sure Vanessa would confess that it would be a near term likelihood of an IPO that attracted her in.

Part to joining the Telus International family as well. So we're excited about what that represented for us and prospectively, what that will continue to mean in terms of we being a more attractive destination for talent and for customers.

Great. Thank you.

Thank you. Our next question comes from the line of Matt Cabral from Credit Suisse. Your question. Please.

Okay.

Yeah. Thank you and good morning, everyone.

So Jeff you just mentioned that the higher the chief commercial officer in March I'm wondering if you could talk a little bit more about your ambitions with Maria now part of the team and maybe just speak to your go to market approach more broadly as you continue to target new logos going forward and just how we should think about the investment.

Needed to support growth been presumably some sales reps going forward relative to just the the strong EBITDA profile that you guys have been operating on historically.

Hey, Matt Thanks, very much for joining good question.

You may recall, we talked a bit about this during the IPO Road show as well and we absolutely recognize that there is both an opportunity and a need for <unk> to continue to.

To.

Amplify our direct sales capability as well as to augment that with a more robust.

Sales channel strategy, one of the reasons why Maria was so attractive to me in this role as her a really exciting experience her pedigree on credentials around our growing and scaling.

Sales organization, a consequence, particularly selling digital solution.

And we have already got both before and in the short time since from where you join started to materially increase our investment in feet on the street on sales hunters sales farmers solutions support inside sales support.

This is sort of a continuing effort on our part to recognize that.

We need to meet our growth expectations and the word of mouth dynamic that we've relied upon historically just insufficiently scaled to achieve that but I think prospectively. The plan, we have because of as you correctly point out the solid margin profile, we enjoy creates.

Net headroom to ensure that we can appropriately investing even more in our sales engine without adversely affecting the.

Overall profitability profile that we forecast.

Thank you and I would only add there mark that's how the guidance that we provided does already copter.

On the marketing investments that you can see that already in the numbers that we've provided.

Perfect. Thank you both.

Thank you. Our next question comes from the line of Dave Koning from Baird. Your question. Please.

Oh, Yeah, Hey, Thanks, guys and you know.

Maybe I could just ask you've done such a good job on when you make an acquisition.

You seem to grow it so well and I guess I was wondering you know lionbridge, specifically, maybe how fast is that growing right now how fast are they growing in Q1, and then I guess I realized you on Havent fully ran it yet right. You've just done just on the acquisition, but how do you expect that to grow once you take it over in line.

What do you do to make these acquisitions better how fast do you think lionbridge can grow kind of in the future.

So we haven't guided specifically around Lionbridge, nor did we around C. C. C. I mean part of the investment thesis for us because we integrate these businesses into the mothership. If you will as quickly as we can because we think customers prefer to have a single point of contact rather than having to deal with this spread.

Divisions of our business.

Because of the Adjacencies as I said before around the Lionbridge.

Patient offering with our content moderation offering we think it's that much more obvious than it ought to be integrated more quickly and on one of the obvious byproducts of effective expedited integration is it becomes more and more difficult to really identify what are the parameters of the old business versus the new business and again as I referenced earlier we're on.

Already realizing meaningful revenue synergies as a consequence of buying and integrating that business into the whole. We are selling successfully together a joint account planning to serve our existing shared customers and winning new ones together again as I mentioned earlier I'm pleased with the progress today.

But we can do better and we will do better in terms of continuing to amplify the growth trajectory of that capability prospectively in year, if not in the years ahead.

Alright, thank you.

Thank you. Our next question comes from the line of James Fawcett from Morgan Stanley. Your question. Please.

Hey, good morning, Jeff and Vanessa Thanks, a lot for all the color on commentary wanted to ask just on on and Jeff you've alluded to it a couple of times in terms of the ebbs and flows that we've seen on the pandemic, but the most recent surge how is that impacting if at all delivery and are you going to have to do some.

Things tend to move around where delivery is being sourced from to try to manage that and is that likely to cause any disruption or or or other things that we should be aware of thanks a lot.

Hey, James Thanks for the question.

So I don't think we're gonna have to do anything unnatural prospectively, obviously at the outset of the pandemic as we scrambled to Virtualized on our frontline team members in particular, we had some challenges initially, particularly for frontline team members that we're living in areas that were challenged in terms.

Infrastructure connectivity power et cetera.

You know six weeks or so into it I think we did a remarkably effective job of stabilizing that we'd been operating effectively like that for 14 months prospectively I think our only real area of concern right now is India.

And I think all of us are on tender hooks.

Hoping for the best but recognizing there is unfortunately, some potentially catastrophic implications if.

Things don't get.

Brought under control quickly for us Fortunately a as I said before were sub 3000 team members in total.

India every one of them has been successfully working productively and safely from their homes.

And we're hopeful that they can continue to do that and whilst obviously hope is not a plan. We are already aggressively proactively ensuring that we have the ability to.

To provide meaningful redundancy and business continuity support for all of our customers that are today being served by the circa 3000 team members from India, and we're reasonably confident in our footprint and delivery capability to ensure that continuity prospectively.

Good good good to hear thanks.

Thank you.

Thank you. Our next question comes from line of Ashwin treat bike or a follow up from Citi. Your question. Please.

Yeah.

Hi, So I had a second question so I jump back in the queue Hope you don't mind. This one is directed to two to two and I said.

Would you mind.

Shedding what your expectation is for the cadence of growth and margin through the year as he is below coke.

So I suspect you're asking for some kind of quarterly breakdown.

So where we're not at this time, where we've provided guidance for the full year, we're not guiding quarter by quarter.

This time Ashwin, we think the full year guidance is a good place to start we've all obviously had a tremendous start for the year on we're very bullish on what the next three quarters.

Hum soccer up.

The full year. Our view was also consistent with on the disposal process of our parent company Telus corporations, probably went up you know on there that as well.

I'm going to get more granular in terms of breaking down the full year quarter by quarter. We already have Q1, I think you know we can talk about you know potential seasonality, but you know I think if you kind of look at the year you know our thought is.

Probably you know 47 to 48 per cent in the first half on the balance in the second half and that's probably on as far as a.

Sure.

Was that for top line our bottom line.

Our top line.

Okay.

Thank you.

Thank you.

This does conclude the question and answer session of today's program I'd like to hand, the program back to Mr. Buran for any further remarks.

Thanks, very much Jonathan and thank you everyone for your questions and in closing I'd, just like to reiterate that I believe the resiliency and success of our business model is due in large part to the diversity of our digital capabilities and to the unparalleled commitment and creativity of our team members.

Our revenue growth continues to benefit from the tailwind of accelerating digital transformation more broadly and also as a result of our effort to expand our sales and marketing capability as I just mentioned in this regard we recently announced that Ria Party joined Telus International as our Chief Commercial Officer Maria brings a wealth of experience.

<unk> and leading commercial sales growth in digital transformation and we're so very excited to have her on board and her presence and impact is already palpable.

Our attractive client mix residing in some of the highest growth industries, notably tech and games and our position as a mission critical partner to these clients will continue to differentiate our diverse digital service offerings. We've.

We've proven once again to be able to delever quickly and efficiently ensuring we have the flexibility to increase debt for the right type of acquisition to enable further growth enhance our offerings and amplify our double digit organic revenue growth and profitability.

Once more thank you all for joining US today, our board of directors and I look forward to hosting you at our annual general meeting of shareholders, taking place virtually on May 27. Additionally.

Additionally, Vanessa and I look forward to meeting many of our shareholder at several upcoming Investor conferences. These events of course are also being held virtually for the near term.

Lastly, we very much look forward to hosting you all once again on our next quarterly results call at the end of July in the interim please keep yourselves and your family safe. Thank you and goodbye.

The conference call has ended thank you you may now disconnect.

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