Q1 2022 TDCX Inc Earnings Call
[music].
Ladies and gentlemen, thank you for standing by welcome and thank you for joining the T. D. C X incorporated first quarter 2022 results conference call throughout today's recorded presentation. All participants will be in a listen only mode presentation will be followed by a question and answer session if you'd like to ask a question.
You May press Star followed by one on your Touchtone telephone. Please press the star key followed by zero for operator assistance.
Like to turn the conference over to management. Please go ahead.
Hello, everyone and welcome to <unk> first quarter earnings Conference call <unk>, Investor Relations and allow us to introduce management on the call.
We have all executive chairman founder and CEO .
And our CFO , Mr Chen zoning.
Before we continue I would like to remind you that we will be.
These statements, which are subject to risks uncertainties and may not be realized in the future.
You should not place undue reliance on any forward looking statements.
Well I'll just call it close to a discussion of certain non <unk> financial measures adjusted EBITDA adjusted EBITDA margins adjusted net income and adjusted net income or.
A reconciliation of the non <unk> measures to the closest <unk>.
Please refer to our press release on form 6K, which are available on our website.
We have provided a convenient translation for the translation of U S dollar.
Right.
When you add all of that to one <unk> for sandbox.
All of this.
This should not be construed as representation.
Of that about budgets into.
Diesel engines.
Our management will now share our views on operating and financial performance. This will be followed by a Q&A session.
With that let me handle that part of the hot spot.
Thank you, Jason and welcome to our results briefing for the first quarter of 2022.
Happy to report a strong set of Q1 results despite the volatile operating environment.
<unk> team has demonstrated great resilience and execution, despite so much disruption and uncertainties.
Big Thanks to them for their incredible contributions.
I also want to thank our clients for putting that faith and trust in us.
And for a change I would like to start highlighting the good work that was done by our teams climate change and corporate social responsibility to begin with.
We believe the business is playing an important role in promoting and accelerating sustainability.
Given the impact of climate change, we made it a priority to reduce our carbon footprint across our operations globally. So I'm happy to share that carbon neutrality has now been independently verified by a third party.
We have received a satisfactory opinion statements, yes, hi, our carbon footprint.
The ISO criteria.
Achieved carbon neutrality by taking a two pronged approach first of all by reducing our carbon output.
Setting what we are currently unable to reduce through the United Nations climate neutral now initiate it.
So collaborate very closely with our clients on their sustainability initiatives.
In addition, during the quarter, we launched our women's empowerment network, we met our key part of <unk> success make up 58% of our workforce with healthy representation in leadership positions.
So the network, we aim to continue to build a diverse quintuple workforce to empower our female colleagues to pursue that career goals and to uplift women in marginalized communities.
Digital literacy.
Let me now cover some highlights of our financial performance as a result of a joint team I first of all.
One 2022 revenue Rose 26, 9% to 113 million U S dollars, all 152 million Singapore dollars.
Adjusted EBITDA was $75 million of 48 million Singapore dollars.
It's up by 27, 6% year on year.
<unk> maintained our EBITDA margins at 31, 3% for Q1 2022 compared to 31, 1% in Q1 2021.
Adjusted net income, which strips out the performance share plan cost for like for like basis comparison.
Up 34, 9%.
$2 million $30 million in Singapore dollars.
We continued to generate very strong cash flows.
One 2022 net cash from operating activities was $77 million up 188, 1% year on year.
Now for contribution from verticals.
We continue to see strong contributions across key verticals travel and hospitality stage of a rebound was up 19% compared to Q1 2021. However, this was still 30% below Q1, 2020.
While the <unk> orders grew it takes time to train and hold bulk talents before the revenue impact flows through for us.
Fintech rose up triple digit percentages year on year. It has become our third largest vertical.
Around 15% of group revenues for Q1 2022.
Surf payment gateways, crypto exchanges and other fintech companies, requiring a high level of complexity. The crypto space is still only a small part of our business currently and we are happy with this space and as mentioned before we're keeping a close watch, especially for market risks around it.
On the digital advertising.
<unk>.
With a growth very strong growth trajectory and we are happy to announce a major new client win with a leading short form video sharing social media company.
The spacing our total number of clients in this space full.
Market leaders this reaffirms our leadership in this particular space, helping digital advertisers or grow their customer base.
All in all revenue from new economy constituted 93% of total revenue in Q1.
New client wins, we have continued our business development.
Mental with 10, new logo wins compared to fall.
In Q1 2021, we've won another leading southeast Asia E Commerce, thus fall sectors within these new logos into the E Commerce fashion Tag Fintech and digital advertising as mentioned earlier.
Our client count stands now at 55 as of 31st March up 41% compared to 39 a year ago.
Now if I look at performance by services just to recap for those who are joining our call for the first time our business comprises three key service offerings, one omnichannel CX solutions to sales of digital marketing services and three combat training animal durations services.
The market opportunities for each of these services remains significant over the medium to long term as indicators of the sites.
<unk> training and motivation service represents a single business team for a single client and as a subset of the larger trust and safety market and for trust and safety related work.
<unk> already talked in around $4 million of product, which is currently classified uncertainty Omnichannel Jackson Street. This includes data on location, where we helped enable machine learning listing verification to ensure authenticity and accuracy of these things.
Rental sale as well as the GIC procedures for Onboarding of new trading accounts, such business is not growing up over 50% year on year, and we are now reaching into grouping them into a wider trust and safety service grouping.
Moving forward. So what's helpful. This in the next earnings call.
Geographic expansion from the quick recap of our geographic presence. We are now in 11 geographies. The <unk> addition, Spain, Romania, India and South Korea. This year, we are planning to expand into Indonesia, and Vietnam, and we will share more details over time.
As our clients start to look into Decentralising desktop visitors into new markets. Our regional expansion will help us capture these new businesses.
Now on our growth strategy I would like to reiterate the growth that we have for the longer term.
One continued opportunities to expand business and service offerings with our existing clients.
Strengthening our business development and marketing efforts to accelerate new client growth three a third pillar, we'll be prudent expansion into new geographic markets.
Strategic M&A that will complement.
Capabilities geographies all client coverage.
Last but not least continued discipline on operational cost efficiencies as well as productivity.
Now on the current economic environment, we all know the near term environment remains uncertain as the global economy faces many headwinds such as based on the ongoing war and continuing supply chain issues concepts become more cautious about where you are committing some of them are slower than expected.
In implementing projects as much as our long term prospects remain intact and our fundamentals are solid we have decided to make some adjustments to our FY 2020 guidance to reflect the current macroeconomic uncertainties and I will now hand over to Mr. Jim to cover the financials in detail.
As well as to provide an update on the guidance.
Over to you.
Thank you Aloha.
Let me first share some details on our Q1 2022 financial performance.
Revenue Rose 26, 9% to 113 million U S dollar.
This was driven by growth across.
The Omnichannel CX and sales at digital marketing segments.
Just to recap we implemented the farmer check that or PSP in November 2021, as a long term employee incentive program.
Therefore, the adjusted EBITDA and adjusted net income metrics exclude the charge from the share based plan expense to facilitate a like for like comparison.
With the same period last year.
Accordingly, adjusted EBITDA Rose 27, 6% to 35 million U S dollars.
The EBITDA margin rose marginally to 31, 3% for Q1 2022.
Compared to 31, 1% in Q1 2021.
Net profit for the period declined <unk>, 6% on a reported basis due largely to the implementation of the PSP, which did not appear in the same period last year and to a lesser extent.
Income tax expense.
On a like for like basis, excluding PST costs.
Net income would have visited by 34, 9% to 22 million U S dollars.
Adjusted net income margin would have been 19, 8% compared to 18, 6% in Q1 2021.
Next.
We share more details on our Q1 revenue performance by the services, we offer and by the geography.
Operator.
Revenue from Omnichannel CX solutions those.
25% to $69 million deal, mainly to higher business volumes driven by the extension of existing campaigns.
This is volumes of our two travel and hospitality clients benefited from the gradual recovery from the impact of the Colgate active pet Debbie.
That'd be from sales in digital marketing services increased by 60% to 26 million U S. Dollar.
With the expansion of existing campaigns for key clients in the digital advertising and political.
Revenue from content monetary and moderation services declined by 3% to $50 million, primarily due to lower revenue per agent in our digital advertising and media Politico.
Omnichannel CX now makes up 61% of our business.
While sales in digital marketing is at 23% and content moderation and 14% respectively.
In terms of revenue contribution by key geographies.
Singapore Rose, 7% to $26 million, Philippines rose, 23% to $27 million.
In Asia Rose, 44% and 34 million U S dollar.
<unk> rose, 37% to $60 million U S dollars.
Malaysia continues to be the key lending point for many clients in the region.
And we will continue to apply our land and expand strategy to broaden coverage for these claims to the various other geographies.
<unk> contribution to the group revenues stood at 30% for Q1.
Philippines, and Singapore contributed 24% and 23% respectively.
Highlights at 14%, followed by Japan at 4% and China at 2%.
Revenue from new economy clients stood at 93% for Q1 2022.
As launch we added 10 logos in Q1 compared to follow both in the same period last year.
Buying counts stood at 55 as of 30 <unk> March 2022.
41% increase compared to the 31st much 2021.
That mean next share some details on our expenses.
For Q1, 2022 operating cost as a percentage of revenues stood at 81, 3%.
Excluding TSB costs.
76, 1% marginally lower at 78, 6% for the same period of 2021.
Employee benefit expense remains the largest portion of our total operating cost base.
Our employee benefit expense.
Increased by 39% to 77 million U S dollar for Q1.
If we exclude the PSD costs.
Employee benefit expense would have increased by 28%.
Actually internal revenue growth of 27%.
Our depreciation expense declined by 4% largely due to set a renovation assets in Singapore pilot being.
Being fully depreciated during the period.
All other expenses.
Such as recruitment transport at telecommunication expenses rose, 8% for Q1, 2022, lower than our revenue growth, which demonstrates our focus on cost management.
Lastly, let me provide an update on our full year 2022 outlook.
While we have achieved a solid Q1 performance the current business outlook remains uncertain.
With the current environment, there is not a wider range of scenarios and possible downside.
In particular, some clients are holding off on their earlier plans the Midlands and delayed projects.
Given this uncertainty we are being practical about the current environment and earning on a set of caution in terms of our outlook.
As such we are reducing our FY 2022 revenue growth guidance to $650 million to $675 million of 480 to 499 million U S dollars.
This is down from 60 189 to 702 million Singapore dollars.
To find a $19 million previously.
FY 2022.
Revenue growth at midpoint is expected to be at 19, 3% compared to 25, 3% previously.
This takes into account lower assumptions of revenue growth from our top clients in the digital advertising and media Fintech at E Commerce, particularly.
This was partly offset by slightly higher growth expectations in the travel and hospitality vertical.
With a continued focus on cost efficiencies and productivity.
Turning our full year 2022, adjusted EBITDA margins to be approximately 30% to 32%.
With that let me hand over back to Johan.
Thank you Mr. Chen for taking us through the financials, we're now ready for Q&A.
Okay. Thanks, a lot and we are now going for Q&A can I.
Just.
Each of you keep yourself.
Three questions each lease operator, please take over.
Ladies and gentlemen at this time, we will begin the question and answer session anyone who wishes to ask a question.
Star followed by one in there.
Telephone.
If you wish to remove yourself from the question queue. You May press star followed by two if you're using speaker equipment today. Please lift the handset before making your selections.
And you and who has a question.
You May press Star followed by one at this time one moment for the first question. Please.
First question is from the line of Jonathan <unk> from Philips Securities. Please go ahead.
Hi, Nathan.
In the call.
Yes.
Two questions for me.
On your two kind of big.
Clients are big load.
Hum.
Global a softball.
So media platform as well as you know E Commerce platform I'm, just wondering how how big.
Yes, the initial hit council for each operation than what countries are they operating in.
Youre welcome.
Kevin.
The second question many of you on the <unk>.
Outlook.
The revised revenue guidance.
Can you shed a bit more color on.
Why.
The revised guidance are there any specific verticals that you expect to slow down and also maybe just add a little bit of color on airbnb pulling out of China.
That affects your business in China.
Thank you.
Thank you, Jonathan and hi, everyone.
So look the.
The new logo, we're very very excited about for sure and on U a e-commerce client from.
Southeast Asia as well on the.
So from a video platform.
I think.
It's a high growth.
<unk>.
That's been very successful.
And disrupting the.
Advertising business.
Proud and happy to have been selected thoughtful their expansion plans.
Interesting about this client is that we are covering them.
Yes.
First off both in Singapore and in Barcelona.
Simultaneous launch.
Across two and actually now three adobe's lines of business, which will eventually get into a third geography fairly quickly as well.
Starting.
Small, but steady it's got a great potential growth.
For especially 2023, so it's really.
Reaffirming or confirming TD jakes expertise.
Expertise.
<unk> sales support and more.
For this client and all the other plants, we have and that's.
It's exciting for sure.
E Commerce clients will give us also options to expand in the new geographies that we are working also so thats great.
So that's for that now on the revised.
Guidance.
But theres no real specific.
Industry, all clientele that.
As been singled out here.
A bit of a drop in the number of clients we have.
On the back of.
Micro environment uncertainty to begin with that things move.
They are moving very fast.
Hello.
Markets are behaving.
And how quickly things are happening with the prospect of inflation on.
Going wall and escalation.
Possible recession next year, the impact on supply chain, China comp.
<unk>, we feel have become more cautious they are holding back decisions that taking a bit longer than expected and thus reduced our visibility as well.
So it's across vertical to answer your question, Jonathan but it's in general an overall feeling of softness.
But that's caused us to make that decision to reduce our guidance.
Being on the side of caution and we'll continue to work through.
Sure.
Targets for sure we will.
Wanted to make sure that.
We are aligned with the market conditions.
And just to play into your next question around Airbnb in China.
One of these unforeseen.
Situations.
Spec thing is that all <unk>.
And then your warning I don't think anybody there either.
Received such warnings.
That was the first year of a setback.
But in the Grand scheme of things.
Small part of our business in China is more bulk of our business. So we will be able to weather that.
But it's.
So a disappointment for sure and I'm sure for many in general, but we'll ride through this and.
It doesn't alter our commitment to China in general despite the challenges that China is encountering.
Beyond just that specific challenge that challenges everywhere.
Currently in China, with the pandemic, which we understand that <unk> committed to China.
In the us.
I described it in the past.
It's really very focused strategy working with international clients, which are an extension of our network eating some very specific work and that's working well for us.
We know it's not a very large piece of our business and I hope that answers the question Jonathan.
Thank you, yes it does.
Next question is from the line of Pang fit from Goldman Sachs. Please go ahead.
Yes.
When you look at April and thank you for the opportunity two questions from me Firstly on <unk> Avenue with train Pittsburgh too.
Better understanding kind of what you heard about the new project.
Victor E&P notice.
Let me try nonetheless.
And secondly, the content monetary Nashville, just want to understand why the train because even told me at the speed of recovery in travel Hickman, what has been the reason and particular need for that.
I noticed that one of the reason why we see this low like train in rapid new is because of the bathroom Aiken from geological shell media clients, how much know what I'm talking about is this part of that renewal bucket on track, where we continue to see pressure through the rest of it yes, well that's question number one.
Question on materials that going back to the guidance with you.
Just wanted to I guess that right how should we think about the growth still on a segment by segment basis.
With your new guidance and at the same time like I said no change in market pricing have you been building at this point.
Inflation to your guidance. Thank you.
So for the content moderation.
Decline.
However, you want to confirm is that this is a single business line is not coming back from a from a cost.
<unk> reduction or a new contract.
Since two b.
A.
Seasonal and the business adjustment.
I would say for that program, but.
Maybe I take this opportunity to mention that.
Content moderation as part of that and we've spoken about this before but again, the bigger trust and safety.
The work that we do.
Is classified on the Ocs Omnichannel CX solutions.
And thats cooking up about $4 million a quarter.
Right. So what we see here is actually a classification.
Copper duration for that single product line that should actually be.
Taking in.
The overall trust and safety at work that we do which is key.
Oh I see.
Machine learning support.
And that's if I lump it together grows up about 50% a year.
Year on year, so it's a fast growth.
A segment of a sub segment of the <unk> and we mentioned.
I mentioned in the.
The call just now that we will be reclassifying in the next quarter or so.
Youll see maybe a better representation of that particular sector. So it's easier for you to look at as a tack on it because it's not just desktop.
Volume.
Now on the coming back on the guidance.
<unk>.
So the question was around.
So <unk> yeah.
As analogy.
On to guidance.
Sorry seasonality.
The Q1 results.
So from Q4 to Q1 results I think similar to Q.
Three which was a big bump in our.
Q.
Q1, and Q4 fairly different in general Q1 is.
Awesome.
First of all in Q1.
<unk>.
Geographies you have.
Paul.
Q4, we also have.
Some.
Some bonuses we have some over time. So these are different.
Third quarters, so it's not unusual that you.
We'll see in Q1 that is software.
Paul.
I missed the part of your question I Couldnt hear very well if you can.
Sure.
Sure last question is about guidance in particular, how to think about the guidance on a segment by segment basis.
Not likely will grow faster.
Rich countries as well and get though with that have you built in any increase in wages inflation in your margin guidance I noticed that there is no change in guidance on that front.
The margins.
Funds between the different segments in the different segments in the guidance, where you expect that in a crisis, we expect that sales in digital marketing, we will do better and we expect omnichannel CX to do a bit less.
Because that's a support function and if our clients, let's say in fintech or in digital advertising.
Receiving less request less volume than we will have a reduction but what we see in general is seldom digital marketing comes into play.
And it helps too.
To counter that.
It's been kind of forecast that way.
Guidance and as you can see we have.
Thanks for any margin reduction.
Right now if I look at Q1 as an indicator, we don't see a very big impact on inflation, yet and we have to be.
To see that happen.
Quarters, but this is.
Factored that in at this point is in our guidance.
That inflation will be mitigated.
The way, we run our operations and operational efficiency in some cases, some price increases in some for some clients.
All in all we have.
We've funded such that it doesn't impact our margins at this point.
Thank you.
As a reminder, if you'd like to ask a question. Please press star followed by one on your Touchtone telephone.
Next question is from the law.
<unk> <unk> from credit Suisse. Please go ahead.
Yeah, Hi, good evening management and thanks for the opportunity a few questions from me I wanted to touch back on the seasonality Bob I remember you mentioning <unk>.
That's a seasonally weak quarter and al I understand you're kind of left in Q1 is a seasonally weak quarter. So just wanted to understand.
These two or more skus, maybe weak quarters for you and then we should expect to ramp up.
On the revenue front.
That's number one.
Number two I just wanted to understand on the travel part I missed your comment I think you mentioned something on the table. If we can get back data on that front, but overall, how do you see your travel contribution as its opening up and up.
Obviously, you've got quite a lot of new clientele, social how do you marry that with the guidance.
Im trying to figure out is the existing client more specific meal lodge to clients.
Maybe the largest client is some pressure there, but youre seeing some kind of.
Our reluctance of a cautious view on that sudden because the expectation is some of the new client would have started to ramp up so that your award added over the last 12 months or so.
That's number two.
Yeah, just on number.
Geography expansion.
Now given the current macro backdrop are you going to open up more offices like let's say the I know you've been should do with Nam in Indonesia, but do you have plans to continue to expand it.
Al.
Cautious mode are you still on the same expansion mode and is it because what happens and if it doesn't that's what that's it. Thank you.
Great. Thank you.
Hi.
Talking about the quarter seasonality I think.
A good point that you are bringing year I think Q3 is where we are.
Probably can see the impact of the travel.
Recovery.
As much as Q1 is a bit more muted Q3.
Where the impact of <unk>.
Travel recovery as it happens.
We received.
Very decent orders for ramping up and we have ramped up we're starting to see the effects, but they will really truly come in.
At Q3, so that's that.
The season seasonality, if you'd like Q4 end of the year Q1.
Many of the region will be a bit more muted Q3 will pick up on the on the travel side.
Thus linking to your second question on the travel.
And yes, we do see some.
Some impact.
Line works.
Significant but it's a small part of our business.
Our large.
Hospitality business. It's also.
Nice.
Pick up as well and that's been our.
Putting that in our forecast.
But the other clients which are.
And fintech or in digital advertising.
Probably a more muted growth for the.
Following quarters.
Uh huh.
By the same token.
The new business that we brought in is taking a little slower than.
The unexpected.
You realize whether it's e-commerce, whether this is.
Short form video platform launching.
It was supposed to launch much earlier to be honest, it's about to launch we're doing training right now.
I was hoping you would have started earlier so there's been some some delays in general.
All of these contribute to that.
<unk> guidance.
Now on the geography cooler expansion.
Whether we want to stay the course, yes. The objective 14 ships is to expand in more geographies as we said before.
In a prudent manner, but we need them, we need those geos to attract.
More business from our clients at Atlanta, and expand strategies already.
We don't ever before it also provides us a hedge.
To provide also more competitive services to do so and to grab more market share in those expanding markets.
75.
So where we are.
Staying the course, we've revised our guidance is 19, 3% is a good guidance is a good growth number.
Not what I want, but it's what it is.
Sure.
Can I ask two more questions. There are no question on the queue.
Get back into the queue.
Yeah, we do have a couple of I'll call it on the Q.
He showed that that back into the queue. Thank you.
Next question is from the line of Sean yet from <unk> capital. Please go ahead.
Hi, Thanks management for giving the opportunity, giving me the opportunity to ask questions.
A few questions and I'll go one at a time for your convenience.
Two new clients that gets added.
Two large clients that are actually get hanukkah correct this quarter.
Called material.
Our business.
Today, and how do you see.
That business in the U S.
So with.
Thank you, Sean we've added 10 new clients.
And in the quarter in Q1.
Two a 10 10 10, new logos.
And the two are those two.
Two clients that you're saying are significant.
Will contribute this year.
But they will really start.
Putting that weight.
In $2023 2024.
The other eight logos as well.
Show up a bit more in 2023.
Already mid year.
So it's not going to have a massive impact on this year.
But we have factored that in.
In our forecast.
Understand.
On the hospitality and travel.
Vertical.
Earlier about seeing a recovery in Q3 as things reopen what.
How large is that segment today.
What kind of recovery trajectory.
2019.
Expect in Q3.
Looking in Q1.
It was 19% up from.
That too.
Last year, but he was still lower by 30% compared to 2000.
Yes.
<unk> 2019.
Alright.
Through one pre COVID-19.
Pre COVID-19.
There's still potential to grow.
So it's a it's a good recovery but.
Once again I would have hoped for.
So it's not.
No that's a massive as I was anticipating.
But we had taken a conservative stance anyway, you know in our forecast.
So where we want them to be on the on the side of caution as well.
I understand you correctly the 19%.
19% of Q1 revenue is the hospitality and travel.
No it grew by 19% compared.
Compared to 2021.
For us.
Got it.
And my last question.
Have you seen this trend whereby pet.
Tech companies your clients, who are cost cutting in this environment today.
Shifting workforce will cross from from internally to outsource.
When it's.
Like any cheaper for them to outsource functions.
Guys like yourself and the industry I use.
Trend.
Yourself in this region.
So the trend of outsourcing to cut cost.
I'm just trying to tell me some time to come down.
Yeah from Tech companies.
I think it's not new they've been doing that for quite some time.
So the possible trend that may come up as.
The rise of.
CPI in North America.
And as a result labor inflation.
Cause more clients to consider offshore shoring to mitigate that.
As labor tension as well difficult to define.
To find the people to do the job.
Is assigned to the comps may be looking for these options, it's not a new trend I just think it may accelerate.
We don't see it immediately.
On our on our forecast at this point, but this is a trend that could be developing for sure.
Understood. Thanks, a lot thanks.
Uh huh.
Okay.
As a reminder, if you'd like to ask a question. Please press star followed by one on your Touchtone telephone.
The next question is from hand Khan from HSBC. Please go ahead.
Hello, Good evening can I just ask two questions. The first question.
Uh huh.
Have you seen an increase in churn as a result of the macro situation.
And can you share a little of the latest retention rate.
Revenue hauled by clean coal.
Yes.
So what we've seen since 2021, you will see an increase in attrition.
Can you hear me.
We saw an increase in attrition.
And that's continued so far through the first quarter of 'twenty to 'twenty two we.
We see a bit of tapering in April .
But we're not crying victory.
There's different reasons for this the first one that we believe is a work from home.
It's very easy for someone to switch jobs.
And.
And they don't need to have a consideration of whether this office is near my home for example.
And.
You can switch off very quickly and have a laptop delivered to their home so that.
Ease of transferring as appealing not to mention the demand and some of the shifts that youre going to see some people out.
Whereas in the travel they lost their job.
Then they moved into.
A company like ours for example, and then now the hoteliers recruiting they're gonna be tempted to go back.
So there's going to be some some demand April demand, that's causing staff turnover. So there are many options available mouthful employees work for all types of organizations. Fortunately we are in the higher end more complex type of work we hire our people.
Many of our people.
It's Patrick.
On an offshore basis, so that helps mitigate we believe we were tracking below.
Some of our peers, we don't have I cannot confirm those numbers.
Pendency confirmed but we're still able to manage and.
Able to manage with those.
The attrition numbers and were able to deliver the head count that we're looking for it's not getting easier that's for sure and it's not unusual for our clients. Our clients are also telling us the same having challenges.
And we.
We've taken steps to address this from a structural point of view.
The global head of talent acquisition, and we're pushing ahead further measures.
The measures and actions to make sure that we still are able to deliver the important.
Quality resources I'll call. It all are trusting us to deliver for them.
Thanks, very much I had a question on <unk>.
On the <unk> expense do you expect this to be fun.
The first quarter or should we expect a similar amount in the Mexico.
The share based expense.
Yeah PSP costs.
Mr Chin isn't as Apollo.
Yes.
So Jim can add some discretion.
It is.
It is effectively amortize.
Yes.
The gift it was launched.
So that was the two months.
Hoping for PTSD.
Those two or three months in Q1, so it is some of the issues.
Thanks.
What are these few quarters equal people adapt.
Hum.
And also due to there were a.
Few conscious of the PSP.
Yes.
So in the next few quarters thought it would be one.
Handel as opposed to.
Sure.
Tranches.
Before.
Q4 and Q1.
Okay. Thank you I think just taking the final question I want to add.
Uh huh.
Expand outside of Tech client so.
Is this something you might consider doing that.
Sort of the short term trend.
Within the.
Traditionally economy.
Much better than that guidance is there something you.
Do you think you might might be.
Yes for sure I mean, we were not.
We're not turning down any of any particular clients on some of them are from the.
More traditional our economy in the region.
All right.
Looking at those clients as well.
Where were they are looking for digital transformation, where they're looking for high quality services.
We've on boarded.
Our expanded on some existing traditional economy logos recently in Thailand. For example, we required a client in that field and in Colombia in quarter, one as well.
So yes, absolutely.
I think there was a question earlier on that I didn't.
I believe it was about the client retention so maybe I address this quickly.
Client retention has increased from Q to Q Q1, similar to Q1, 2020, one Q1 2022.
And the 125%.
By our net revenue retention rate.
Versus it was about 113%.
Prior year.
No.
We are retaining our clients we are retaining our revenue.
The business is solid.
Okay. That's very helpful. Thanks, so much.
So I think next up we have a call a question on the webcast from Central Genco, how big in terms of sales was travel and hospitality and <unk> 22.
I think we can I can take this I think is <unk> is around 19% of revenues drive about all these things.
Well I think that's all actually all the questions we have on the webcast as well as the call.
I think we will just hold.
So we'll see if there's any questions coming in.
The next meeting also in Boston.
Oh, sorry, I should have asked it.
Right. So the next question.
Operator, please take although we have a question.
Okay. Thank you we have a question from the line of Casey hung from C. G. S. C. I M. B. Please go ahead.
Hi, Thanks for taking my question is I feel pretty question.
Firstly on your new car.
Regarding the short form video platform.
Come from which segments will they be contributing.
Is it <unk> or is it the sales and digital.
Marketing segment it.
It will be both.
That's what's interesting about it because if I compare them to the other clients. We had acquired in 2012 in 2015, we started with just one product line in Guangzhou.
One we're studying two product lines into Joe's expanding into a third one so it's interesting how the pace of expansion is.
It's different a few years later.
Yes.
So the question.
Okay. Okay. Thank you.
Our exciting.
Secondly, I.
I think you had some youre lowering your revenue guidance because of some uncertainties regarding.
Some customers may be pulling back a bit in terms of making decisions.
Maybe can you comment a bit more on <unk>.
Do you see your medium to longer term growth profile.
Yeah any comments would be helpful.
Thank you for this question really.
Really no.
The fundamentals have not changed we were in the faster growing regions.
New economy companies need all service.
So these are exceptional circumstances.
Yes, all of it as we thought we were going to come about to come out of it.
Back again.
With the prospect of a recession. So this is not a normal environment. So assuming the macro backdrop stabilizes our long term growth outlook does not change.
So we will be back with our growth plans.
So.
It's a it's pretty much what we are.
Anticipated that is going to happen if the macro backdrop stabilizes in terms of our group outlook. So that theres no changes for the long term 2023 2024.
And that's where we stand at this point and the fundamentals are good we're doing well, we're acquiring new customers expanding geos, we're performing well our margins are holding up.
We just have to bear with the short term.
Blip.
And we will be able to write in this room.
Okay I understand so so nothing structural I guess as I mentioned previously.
Customers are still continuing to outsource part of our work.
Yes.
Is that still ongoing.
Ongoing.
Lindsay completely okay.
Got it and last question.
I guess it's.
Recent stock market weakness.
Just wondering if you had seen private company evaluations, that's also come down.
Are we closer to acquiring any company.
Yeah, because we do have a very strong cash Paul.
Yes, absolutely I mean, we want to make this a put it to work, but yes, our pipeline is growing with very interesting targets.
A nice range of targets that we're talking to.
As you know M&A takes time.
We have to make sure that the price will adjust to the markets.
Unavoidably.
A question of time, but we're looking for quality targets profitable companies that really add to our story.
The AD too strategic.
Position and so our team is really you work really hard on.
I'm very confident of the.
Of the opportunities.
And we will announce when we have.
Closed the deal, but right now we're still building the pipeline.
Got it. Thank you just a quick question.
Thank you.
We have a follow up question from the line of Maroon who you from credit Suisse. Please go ahead.
Yes. Thanks, just wanted to follow up on this capital allocation thing.
No when I talk about a little bit different dividend Tonight.
Have you changed your thought process around it since IPO.
You have interacted with so many investors now.
And.
Looking at the free cash flow you'd be so strong.
Maybe.
Thinking about it or rod that I wish about what would kind of make you pay dividend, but what other data points that youre looking at from that perspective, I know, there's that many things that the capital allocation.
Judging by your own go for a big Bang in minutes. So just wanted to hear your thoughts on that and lastly, one other thing I wanted to check is up.
What have you obviously global Theotokos is kind of mentioning they are seeing pressure.
They've been offshoring some of the U S work to low cost location and then.
The revenue and costs.
Correct.
You have a high cost location of Singapore are you seeing some kind of talks with your clients about this thank you.
No great question on the dividends of Arun.
Luke.
The plan has not changed.
We went to market on the first of October it still feels like yesterday from yogurt.
Yeah.
The numbers are very different.
We speak but the companies are as high growth.
Even up 19, 3%.
One of the fastest growing in our sector.
That comes fastest growing with these kind of numbers.
We have a plan for M&A.
And.
I don't think it would be wise at this moment given the current market situation.
Jumping to giving dividends so early in our history.
It's not immediately on the.
And the story that you were mentioning about offshoring from a high cost location in the U S into lower cost locations of India.
<unk> is an interesting trend that we watch on where we are ready to do business has.
Becoming increasingly difficult to do in North America.
The expense savings.
Singapore is a different world in a way, where we're doing multi lingual.
Work off of very high end.
All are very domestic work for funds from the government for example, which need to be operating from Singapore.
So.
We have a bit of it.
Some of our all work that has been moved into our other locations.
And that's why we have a moderate growth outlook into Singapore, which we had planned and anticipated.
Growing our network, but it's not.
Severe.
Severe pain.
At this point.
Thank you very much.
There are no further questions at this time and I would like to turn it back to management for any closing comments. Please go ahead.
Well. Thank you everyone. Okay. Thanks, everybody for dialing in and spending time with us.
Any other questions nice youll see that we talked to us.
And you don't have a good evening or morning wherever you are.
Bye bye.
Ladies and gentlemen, the conference has now concluded and you may disconnect. Your telephone. Thank you for joining and have a pleasant day goodbye.
Yeah.
Yes.
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