Q2 2022 TDCX Inc Earnings Call

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome and thank you for joining the TDCX second quarter 2022 results conference call. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. If you would like to ask a question, you may press star followed by one on your touchtone telephone.

Press the star key followed by zero for operator assistance.

It's my pleasure, and I would now like to turn the conference over to the management. Please go ahead.

Hello everyone and welcome to TDCX's second quarter 2022 earnings conference call. I'm Jason Lim, the head of investor relations. Allow me to introduce management on the call. We have our executive chairman, founder and CEO Mr. Lahorn Junig, our CFO Mr. Chin Zhe Ning and our EVP of corporate development Mr. Edward Go. His agreement focused-" With root leader and CEO

Before we continue, I would like to remind you that we will make forward-looking statements which are subject to risks and uncertainties and may not be realised in the future. You should not place any reliance on any forward-looking statements.

Also, this call includes the discussion of certain non-IFRS financial measures such as adjusted EBITDA, adjusted EBITDA margins, adjusted net income and adjusted net income margins.

For reconciliation of the non-IFRS measures to the closest IFRS measures, please refer to our press release on the Form 6K which are available on our website.

We have provided a convenient translation for the translation of Singapore Dollar to US Dollar. This was done at the rate of US Dollar to 1.3918 SGD.

This should not be construed as representation that any Singapore dollar amount can be converted into USD at this or any other rate.

Our management will now share updates on the operating and financial performance.

With that, let me hand over the call to Lahon. Lahon, please.

Hello everyone and welcome to our results briefing for second quarter of 2022. We're happy to deliver another strong set of quarterly results. Once again.

The people of TDCx have put together another outstanding performance and have navigated through the market's overall macroeconomic challenges.

I am so proud of their determination, resolve, and I sincerely appreciate their tremendous efforts. A finishing emphasis on competency and building a wonderful working environment for all has paid off.

I would also like to thank all our clients for their support and putting their faith in us.

I'm also happy to report that during the quarter we had our carbon footprint reporting certified by British Standard Institute, ISO 14 064-1. For our corporate social responsibility initiative, we just incorporated the TDCX Foundation. Our focus here is on building long-term partnerships to uplift communities in Asia through digital empowerment. I'm also happy to report that during the quarter we had our carbon footprint reporting certified by British Standard Institute, ISO 14 064-1. For our corporate social responsibility initiative, we just incorporated the TDCX Foundation. For our corporate social responsibility initiative, we just incorporated the TDCX Foundation. For our corporate social responsibility initiative, we just incorporated the TDCX Foundation.

specifically the three key themes of digital access.

digital literacy and capability in terms of readiness for digital work and small business support.

Let me next cover some highlights of our financial performance.

We delivered robust revenue growth in Q2 2022 as revenue rose from 23.3% to US$117 million of US$162 million.

This was driven by strong contributions from clients across key verticals, including digital advertising and media, travel and hospitality, and especially from our X.5 clients.

who are growing at the fastest pace in Swiss things at twice the pace of our group revenue growth in Q2 2022.

Now in terms of revenue contribution from verticals, travel and hospitality, including our airline clients, continued its recovery trajectory and was up 25% compared to Q2 2021.

Our revenue from travel and hospitality is now higher compared to Q2 2021. We're still some 16% below our peak quarter in this space in 2019. There is still some room for us to grow and this will be dependent on the output for global and especially Asian travel. The prospect of North Asia travel reopening is an exciting one of course, but this is not confirmed yet. We're still some 16% below our peak quarter in this space in 2019.

as I speak. On the FinTech side, we continue to rise at high percentages year on year and it remains our third largest vertical.

To recap, we serve payment gateways, crypto exchanges and other fintech companies. And as shared before, we have always taken a careful approach to crypto. While we're happy with our progress in this space, the revenue contribution is around 1%, we feel the risks are manageable.

We are looking to add more FinTech clients and also to continue to bring in a variety of clients across different verticals such as e-commerce to grow with business.

On the digital advertising media vertical, we continue to deliver double digits percentage growth year on year, powered by our strength in the sales and digital marketing service and the acquisition of new clients.

We have onboarded the leading short on video social media platform and we started to contribute in Q2. As shared before it will take time for any new clients to start contributing meaningfully in terms of group revenue, but we are happy with the progress we've made here.

On our earnings and quality growth, even as we pressed on with our business expansion, we maintain our focus on quality growth. Adjusted net income, which strips out the performance share plan costs for a like-for-like basis comparison, rose 35.5% year-on-year to USD 22 million or USD 30 million.

We continue to deliver our industry-leading profitability with adjusted ETA margins of 31% in Q2 2022 and I want to take this opportunity to thank our CFO Mr. Chin and his team of incredible professionals for the continuous efforts in cost control and efficient planning.

The quality of our earnings growth is also shown in the strong cash flow conversions.

Q2 2022 net cash from operating activities was $76 million, almost doubling year on year. Our CFO will share more details on the numbers in the later sections.

From a business segment's point of view from Q2 2022, we have renamed our content monitoring and moderation services as content trust and safety services.

The change reflects the industry's broader view that content moderation services are part of a larger group of services that includes other trust and safety related services and helps enhance our ability to track our performance. The content trust and safety service comprises content moderation and monitoring. Trust and safety services such as those to ensure authenticity and accuracy of listings and that is.............................................

as well as data annotation services for machine learning.

Our total revenue from Southeast Asia stands at 91% of first half of 2022 revenues. In the latest edition of the Internet Economy Research Program by Google, Thomasa, Bain, Southeast Asia now has a total of 440 million internet users, while the Southeast Asian internet economy is expected to reach...

$360 billion by 2025, powered by e-commerce, food delivery and digital financial services. With our unique footprint, TDCx provides investors with strong exposure to Southeast Asia's fast-growing digital transformation.

Our plans to roll out Indonesia and Vietnam are on track and we aim to launch operations there before the end of the year. The new market adds further flexibility to offer key Southeast Asia languages in a multilingual centralized model as well as a decentralized model.

In addition, North Asia is gaining momentum with a contribution of 7% of revenue.

Our expansion in Asia Pacific, Europe and Latin America was strategically planned with the objective of positioning ourselves well to emerge stronger and meet the changes in the CX outsourcing space. This looks even more timely now with the rapid changes in the business environment and I'm confident our end screen will provide us with a competitive edge going forward.

Now, on client wins, we have continued our business development momentum, signing up a total of 25 logos for the first half of 2022, more than triple the eight we signed in the first half of 2021. This includes two Southeast Asian market leaders added in Q2, a leading regional airline, and one of the largest integrated car e-commerce platforms. Please demonstrate.

our strength, once again, in the travel and e-commerce verticals and confirms our leadership in this sector.

Our launch time count now stands at 60 as of 30 June 2022, up 40% compared to 43 a year ago.

Revenue from new economy clients stood at 93% for the first half of 2022. We've put in efforts to reduce our client concentration and our top two clients now represent 57% of Q2 2022 revenue compared to 63% in Q2 2021.

Now I'll hand over to Mr. Chin to cover the financials in detail as well as an update on the guidance.

Thank you Rahul.

Let me first share some details on our Q2 2022 financial performance.

Revenue rose 23.3% to USD $117 million, driven by growth across the omnichannel CX and sales and digital marketing business segments.

Adjusted EBITDA, which excludes share-based expense for a like-for-like comparison, rose 23% to US$26 million. Margins remain largely stable at 31%.

Adjustment net income, which similarly excludes share-based expense, rose 35.5% to US$22 million.

Net profit for the period rose at a lower 19.6% on a reported basis due largely to the implementation of the performance share plan which did not exist in the same period last year.

as well as higher income tax expense.

Next, we share more details on our Q2 revenue performance by the services type that we offer.

Revenue from omnichannel CX solutions grows 19% to US$68 million. You may need to hire business volunteers driven by the expansion of existing campaigns in the big tech and technology verticals.

In addition, business volunteers for our two travel and hospitality clients benefited from the gradual recovery from the impact of the COVID-19 pandemic.

Although, the recovery has yet to reach pre-pandemic levels.

Revenue from sales and digital marketing services increased by 54% to twent illagees.

This is a continuing volume expansion of existing campaigns by key digital advertising and media planning.

Commencing for Q2 2022.

Content monitoring and moderation service has been renamed as Content Trust and Safety.

Revenue for trust and safety releases services that were previously classified under Omnichannel CX Solutions and other service fees which can currently be reasonably identified and quantified will now be reported as content, trust and safety services.

In Q22022 revenue from content, trust and safety services rose by 6% to US$90 million primarily due to an increase in business warrants from a client in a travel and hospitality vertical Commemorating &

In Q2 2022, Omnichannel CX makes up 59% of our business, while sales and digital marketing is at 24%, and content trust and safety 70% respectively.

Let me next share some details on our expenses.

For Q2 2022 operating costs as a percentage of revenue stood at 77.5%.

Excluding PSE costs for a light basis, this stood at 75.3%, lower than 77.3% for the same period last year, largely due to lower depreciation expenses.

Employee benefit expenses remain the largest portion of our total operating cost base.

Our employee benefit expenses increased by 31% to US$75 million for Q2.

Excluding TSP costs for a right-for-life basis, employee benefit expense would have increased by 26%. Excluding TSP costs for a right-for-life basis, employee benefit expense would have increased

higher than revenue growth of 23%, pursuant to higher wage costs of our staff costs and the increased competition for talents in the respective markets that we operate in.

Our depreciation expense declined by 6%, largely due to certain obvious renovation assets in Singapore, Thailand and Philippines being fully depreciated during the period with no big ticket capital expenditure incurred.

All other expenses which include items such as equipment, transport and telecommunication expenses rose 1% for Q2 2022.

lower than our revenue growth, which demonstrates a continuing focus on proven cost management.

Next, let me share some details of our first half 2022 financial performance.

Revenue rose 25.1% to US$226 million, similarly driven by growth in the omnichannel CX and sales and digital marketing business segments.

Adjusted EBITDA rose 25.2% to US$17 million with margins stable at 31.1%.

Adjusted net income, which excludes the impact of share-based expense, rose by 35.2% to US$43m.

That's all for the period.

at a lower 9.5% on a reported basis due largely to the implementation of the performance share plan which did not appear in the same year last year.

In terms of performance by services we offer, revenue for Omnichannel CX solutions rose 21% to US$133 million due mainly to higher business volumes driven by the expansion ofwinter Hold procedureesh

everything can be.

Learning from sales and digital marketing services increased by 57% to $54 million.

with the expansion of existing campaigns from key clients in the digital, advertising and media vertical.

Revenue from content, trust and safety services rose by 6% to US$30 million primarily due to an increase in business loans from a trial in the travel and hospitality vertical.

The both halfough ways and zoes.

Only channel 6 makes up 59% of our business.

while sales and digital marketing is at 24% and content, trust and safety is 70% respectively.

Let me next share some details on our first half.

on our first half exercises.

The trends are largely similar to what I shared earlier for Q2 2022.

For 1st half 2022 operating costs as a percentage of revenue stood at 79.3%.

Excluding TSP costs, this took at 75.7% lower than 77.9% for the same period of 2021.

due to lower depreciation expense.

Employee Benefit Express

increased by 35% to $150M for the first half and would have increased by 27% excluding PSE costs due to higher wage costs and increased competitive dynamics of the talent market solutions.

Our depreciation expenses declined by 5% lastly due to student renovation assets due to depreciation.

All other expenses rose by 4% for CRSAP 2022, lower than our revenue growth, which illustrates our continuous student attention to cost management.

Lastly,

Let me provide an update on our two-year 2022 outlook.

We are reiterating the FY2022 outlook which we issued during our Q1 results announcement.

Our two-year 2022 revenue guidance remains unchanged at 650-675 million USD.

This represents the revenue growth range of 7.1% to 21.6% compared to FY 2021.

The company's financial information is paid in Singapore dollars.

However, we provide the convenience translation to help readers who are not familiar with the Singapore dollar currency to understand the approximate context and concept of the number in US dollars.

At the approximate rate in effect as of June 30, 2022 of $1.3918, this represents around $467 to $485 million US dollars.

Previously at the approximate rate in effect of March 2021 of $1 to $1.3534, which represented around $489 million.

Do note that there is no change to our guidance in Singapore dollar terms.

With a continued focus on cost management and employee productivity, we maintain our full year 2022 adjusted to VEDA margins to be approximately 30% to 32%.

With that, let me hand over back to Jason.

Thank you, Mr. Chin, for bringing us through the results presentation.

We are now ready for Q&A. Before we start, can I just make a request that you keep your questions to three at the maximum?

Thank you. Operator, Q&A please.

Ladies and gentlemen, at this time we will begin the question and answer session.

Anyone who wishes to ask a question may press star, followed by one on that touch-down telephone.

If you wish to remove yourself from the question queue, you may press star, followed by 2.

Anyone who has a question may press star followed by one at this time.

One moment for the first question, please.

We have the first question from Pang Vith from Goldman Sachs. Please go ahead.

Thank you very much for the opportunity to be here. And a question for me, please. Firstly, on the guidance, can you please explain why are you iterating the current guidance? What is the basis and assumption for this? What's the confident level that you can achieve? In particular, why do you expect the second half growth to defray the late chassis and first half level despite the return in travel industry? Have you also factored in any of the impact on inflation to margin guidance as well?

with existing customer. So that question number two. And last question, what is the management current view around the global slowdown in the global tech space and that comments around cutting costs, especially for your top social media clients, any further color you can provide. Thank you.

Hi, thank you very much for the question. Laurent-Voulnique here. So yes, on the guidance, very clearly we've reiterated our guidance for the full year as we had already revised it at the last quarter. In retrospect, we were one of the first to go out there and truthfully

revised guidance on new information we were having and the really quickly transforming macroeconomic and geopolitical landscape at the time which obviously has not improved much rather what was expected at the time has been confirmed. Now why did we reiterate our guidance? First of all the first strong half that we have is already

summer as well. They really delivered the results for us and we see the efficiency of our operations and our management and our business development. We mentioned about bringing new logos. In the first half we brought in three tons of new logos and we did last year with 25 new logos so that's helping us to

obviously bring some more growth to the business.

We're getting a bit closer every day to the end of the year. We hence have a bit more visibility although...

visibility can come with a number of possible challenges around attrition, challenges around inflation, challenges around the variability, seasonality. We're never completely shielded or protected from what may happen before the end of the year. Nonetheless, we have enough confidence at this moment to stick to our guidance. That's important to reiterate.

The new logo wins, which was your second question. So a bit more color here. So yes, 15 new logos on the second quarter. 25 in total for the first half.

You remember that in the first quarter we won this short form video platform. In the second quarter we brought in the regional airline from Asia.

an e-commerce car platform that is a very exciting A regional player we brought three fintech companies one insurance client

So a variety of plants in different sectors and not just new economy as well in the nutrition environment.

Hassa Ma softened with Lengthy

So a variety of logos. So our business development team has worked very well and has really performed a goal for our target here.

So the confidence is really building in our ability to bring new business. So the engine is working, we set it from the beginning. We came into listing with an objective to drive organic growth as our first entry point and we are delivering on that front. So our new logos are accelerating and the growth from these logos is really starting to stay up.

I wanted to point as well that there are now we have 16 files that have been launched.

But there are still 10 in that group that have not been launched yet. So there is some upside moving forward in the coming quarters.

So that's for the logo wins. Now your question relating to tech and how is that impacting us? We're looking not so much at the tech sector, but really the businesses that are the big sectors that are impacting us or driving us. So as you know we have quite a bit of business in the digital advertising space and we understand the digital advertising space is going through a bit of pressure. you

right now and what we think is going to happen is possibly depending on the types of product lines that we work in like omnichannel CX solutions could be under a bit of pressure for the digital advertising sector but the reverse is true of the sales and digital marketing where as the.

industry is getting more and more competitive. We think there's going to be more need for our sales and digital marketing services and we're seeing that in our numbers. It's growing at the fastest pace once again for TDCX. That's one area that we're watching and watching the impact. Trouble in hospitality are sectors that are picking up quite significantly as we speak.

the space. Not every client is equal in the face of economic slowdown. Some are more impacted than others and some are benefiting. So I don't want to generalize, I don't want to stereotype. So therefore, you have to beumacue yourself to change the of way and the type of structure

everybody in one bag, but when we do our forecasts and our plans, we take that into account and adjust accordingly. That's what I could share and I hope that answers your question.

The next question is from Varun Ahuja from Credit Suge. Please go ahead.

Hi, thanks for the opportunity. I've got 3 questions first. Lauren, if you could comment on the visibility that you may have on the business per se. In terms of when you talk to clients, you've got 3 months visibility, 6 months visibility. And compared to 6 months ago, 9 months ago, do you think that has reduced? I also would love to hear.

how much comfort do you have in the next 3 to 6 months in terms of growth and the revenue. And if you can in the same light comment about your views on 2023. I know it's still early, but how do you see it progressing given 2023 is there almost, and you are into the second half now. So I think Mark would like to know how you see view in 2023 as of now.

of unprofitable accounts. So it looks very high given you added 25 and there is a turn of 17 also. Is there anything we are missing here? What's happening on that Dynamics web tool here on that front? Third, if you can comment a little bit on the NMA site given how you are looking at it, the cash flow remains healthy.

And M&A is part of your growth strategy. And given in this environment, the valuations of a lot of companies may have come down, especially on the private side. So how are you looking at that space? That would be helpful. And lastly, just one more question. The accident has moved up this quarter. So Mr. Chen, if you can comment, how should we think about it, what has happened in this quarter, and what should we think about in the next few years? Thank you.

Thank you.

Thank you very much for the question. So regarding the visibility, if I understand correctly, on your question, so look, it's a bit early for us to tell for the visibility in terms of duration. We used to have maybe six to nine months of visibility. We've cut that to three to six months. We're still in this kind of

of a range of vision I would say in terms of where our clients are budgeting. I mean a few reasons, one of the uncertainty that the clients are facing in planning and budgeting and having to adapt in some occasions. The market volatility as well doesn't help very much. We're entering the budgeting process right now in the month of October with a number of our clients.

post that moment I think we'll have a clearer view as to what 2023 is looking like. So it's not unusual, it's quite common at this period of the year that clients are thinking, strategizing and you get involved in these discussions with thinking of ideas and how we're going to make the year next year and what kind of project we're going to be working on and what kind of bright ideas can we...

and maybe Jason later can talk maybe some of the very

detailed numbers but I think it's a question of calculation here. You did mention there was a high churn. I want to confirm that there isn't. It's a very very low churn. It has not really evolved in any way adverse to us. On the contrary we've got a very high revenue retention and time retention as usual and we're adding clients. It's just that in the numbers we've provided we just mentioned clients that were launched.

So we signed those that we've announced. We haven't launched them yet. That's what I was saying earlier on that we have an upside In this but maybe Jason if you want to provide a bit more color here Yeah, so in addition, I think I would you mentioned 52 clients as at December And although we added 25 for the half year

It doesn't add up into the total. We landed at 60 because there's still sort of over 10 clients. They are not launched yet

So the active launch client count is actually different from the logos that we have signed.

So I hope that helps.

helps.

Can we just have you repeat the sort of, I think the next question you have is on capital management cash flow and capital management, is that correct?

Yeah, it's more on the M&A side. What you were thinking is almost 6 months. More than that.

Yes, absolutely. I can touch on the M&A and then maybe later down the road we can talk about the...

management. So, we've worked very hard on that front. Edward Go and his team have reviewed about close to 100 targets.

if not more. Interesting situations here, some opportunities. Once again I just want to reiterate that we're looking for quality targets.

So obviously out of the 100 there were a number of those that didn't meet the criteria. We've studied from day one once again we're looking for targets, we know that we can leverage our organic growth to be a bit picky and choosy. And we absolutely are following these directions. But we have a nice pipeline, a nice portfolio, but as you know Verun it takes a bit of time to conclude. But we're quite set on time.

on a number of targets here that I hope will bring to your attention soon and that will be interesting. But it takes time and obviously we have some cash in the bank that we want to put to good use and that would be very useful. We have big growth targets, we want to accelerate our strategy so that's definitely working well for us at this stage and looking forward to telling you more about it.

Thank you. I think the last question was on the backside.

Mr. Ching, maybe on the tax...

What was the question on tax? May you repeat it? So this quarter the effective tax looks like around 29%. So I think the earlier discussion suggests that should be closer to 20% to 23% full year. So anything which is happening there and how should we think about the tax? Yeah, okay. The tax situation for the Malaysian tax is driven by two main factors. The first one is emulation of prosperity tax that was recommended.

by the government of Malaysia from last year's announcement of the budget. For the quarter of 2.02 we have the Philippines business unit that used to enjoy the budget.

Income tax breaks for quite a while. We will have the tax holiday suspended due to the implementation of the return to office tax.

status that is listed on all the VPO players in the Philippines to compel a certain number of

workers to be working in office as opposed to the work from home situation and because the Philippines unit were unable to

meet the target, there are still some hit-visits that get employees to come back to office. We had to incur this standard tax exposure for the Philippines unit effective from second quarter that was announced by the Philippines government and these are the two main...

practice to the higher tax expense for the group.

Okay. Okay. Thank you.

Thank you very much. Hi, sorry. So before we sort of go to the other question on the line, I think we have a couple of questions on the webcast asking us to clarify some data points during the call because I think the presentation was a bit much for voice.

So just to clear off the questions, the top two customer concentration now is 57% as of Q2 2022 versus 63%

In terms of travel and hospitality space, it grew at 25% versus Q2 last year. This is still some 16% of the highest ever peak quarter that we had in 2019.

So those are some of the data points that we are clearing up. Operator, please.

Next caller, next question on the line.

The next question is from Han Pan from HSBC.

Hey guys, congrats on those good results. My first question is, I know that you have been reading a lot of...

contracts with traditional non-tech companies. So how do you think about these contracts or the margin of growths with activities? Do you expect these new accounts to be in terms of margins?

Thank you.

Thank you for the question. We have a number of clients, the majority still remain very much in the new economy sector. We have a good range of clients and most of the range of our clients are in the new economy sector.

in Asia Pacific, so in a fast growth region as well. And although these are more traditional economy companies, we believe that they have a nice growth potential due to the fact that we're coming in early in the relationship as well as they are in the fast growing region.

The impact considering that still 93% of our business is a new economy and 91% of it is in Asia It's not really material at this point But we've also said that for quite some time as well We are absolutely interested in the non new economy sector as well. It's a good branch and

good deals that we can sign with them where they have a need. After all, they have a large

or potential as well where we can gain market share.

I was also wondering if you could share if you have seen any delays in any projects?

And you feel like you have sufficiently divvied your revenue guidance. So if there is a micro slowdown in the third quarter, would that impact you negatively?

Yes, I mean if there's some further slowdowns we may be impacted. We have revised our guidance in Q1 on the back of delays as well as lower visibility for some projects. So yes, some projects have been delayed for us in the past. We see still some slow implementation.

That's something we factored into the reiteration of our guidance at this point. We just watch cool and then watching the space all the time to see whether this is going to continue, is it going to accelerate or reduce. We don't have control unfortunately over client decisions to either accelerate or slow down. It depends on the sector as well. If you look at the travel right now it's the opposite of slow down.

It's really accelerating and plants are pushing us and it's nice to watch.

Thank you. My final question is on vendor consolidation. How much of that are you seeing and

Might this be a tailwind for growth?

Maybe for the second half of the next year.

When you need us, please. Thank you guys.

So you're talking about our competitors consolidating, right?

Yes, I'm a winning market share from your competitors.

So I mean, we've seen some mergers and we hear of maybe potential further mergers in the sector. So the business is becoming very, very scale focused.

This is something that we had anticipated. That's very much why we're going through the journey we're going through. The first one is expanding globally and having a global footprint is super important to us.

to remain competitive in the face of growing larger scale competition combined with clients who are getting bigger more global we want to contract with bigger global players so TDCX is racing to reach that goal and through two ways organic growth geographical expansion and the second one is the important M&A's we are pursuing right now to accelerate that objective

So, yeah, it's on our list of important strategic items that we want to progress as quickly as possible.

Thank you very much.

The next question is from Jonathan Wu. Please go ahead.

Yee Ting Management, thanks for taking my question. I have two. The first, I noticed there was almost a 10 million benefit from exchange differences from all foreign ops. Maybe could you elaborate a little bit on that and whether you expect this kind of benefit to continue moving into the second half of the year. And the second question is on share repurchasing. I noticed that

You've done about 10 million in share repurchases.

while you've got about 20 million in terms of allocation to go. How can we, maybe give us a little bit of color on that, how can we expect?

share repurchasing to continue moving forward for the rest of the year, given that there's only about slightly more than a quarter of that.

Thanks.

Jonathan, we are not sure where you got the 10 million FX benefit. I don't think we have that in our P&L. Maybe let us...

I know which line, which specific line

It's just the line right above comprehensive income.

other comprehensive income. Oh, other comprehensive income. Okay, okay. That relates to the translation effects of the foreign subsidiaries' net assets due to the movement of the currency, based on current assets, which are not related to our business or not related to the transactional event or above the profit before tax. So that is a translation effect.

due to the current transition of our net assets of our foreign subsidiaries in all the countries that we operate.

So it comes from many the Philippines.

Malaysia, the large units, if I may recall correctly, the bigger amounts come from those larger units as opposed to the smaller units as what the amount suggested.

So that has got nothing to do with the effect of our transaction loan as well.

Thanks for clarifying that.

Hey, Jonathan at here on the question around share buyback. Indeed for the last five months since we started the Share Buyback program, we've been guided by two key principles.

First one is sort of valuation and how we stack up against the peers in a broader market.

but mindful also on sort of the impact around liquidity and float.

So the management will continue to monitor based on these two guidelines and if need do, we will continue to implement this ShareBuy Back program given that we have announced a $30 million program and we've deployed around $10 million to date.

Thank you.

There are no further questions at this time, and I hand back to the manager for closing comments.

I think

I think that was a bit premature because I see there's a line on there's a KC on the line from CIMB and I have three questions coming in. Yes, I'll give them

Hi, thanks for taking me.

Hi, thanks for taking my question. I think just now you mentioned that most of your recent logo wins are from APAC. But just wondering if we could also be speaking to you about public 31st century flashy

seeing potentially some logo wins from the Western countries or potentially bigger campaigns, given that some of your peers are mentioning about some offshoring trend in the BPO space.

That's my question, thanks.

That's my question. Thanks.

Sorry, Casey, can you repeat the last line, just the very last line?

I'm just wondering if management is seeing some offshoring trends, for example, potentially from international, internet firms or...

companies from the Western countries potentially offshoring their BTO services to APEC.

Yes I think depending on how you look at offshore we work for a number and we've onboarded a number of those clients and those clients are quite a lot of Western companies in addition to Asia originated companies who work on an offshore basis by doing a centralized operation for example in Malaysia.

So it's a variety, there's a travel client that is based in the US to cover to offshore in Colombia for example. So yes, the regional airline is the one central location in Asia where we are covering all the languages for example. The offshore is still really at the center stage of what we do.

for the large majority of the work we do. If I got the question correctly.

Got it. Thank you.

So, let me just read out a couple of questions that we have from the webcast. For the new customer editions that we are getting, are they at the same margin profile or a different margin profile from existing customers?

Thank you for that question. There are a variety of margin profiles. We have a very strict ban that we apply depending on the strategy that we pursue. In general, the mix of clients that we brought on board are meeting our criteria and our financial criteria.

Absolutely, as I'll see it for, it's quite peaky about that.

Thank you. Next question from Benjamin Ng. Can you share more about which inflation, some colour, and how are we managing which inflation?

Do you want to cover it or? I can cover it. Mr Chien. Yes, wage inflation is a factor that is affecting our operations as well. But on the flipside, I think we also...

operating our resources more efficiently than ever before. I think in the case of cost.

escalation, efficient resources utilisation, enhanced productivity on our revenue is still crucial to help buffer against all these cost inflationary factors. On the flipside, on the non-wage overheads, as you can see, we are also placing some of our own waste as possible in the past year, especially on our

capacity side of things as the decision is lower to help address and buffer against all this wage pressure. So in a nutshell, I think these several moving parts kind of help to address our wage inflation adverse issues.

Thanks Mr Chin. Next question from Jin Leong. The growth of your top two customers seem to have slowed down. The growth of your top two customers seems to have slowed down.

So the

So top two clients are as you know quite important to us our concentration has come down which is also a good thing and and it's a mix back actually of situations we think that The one of the environment that is a kind of challenging in the digital advertising could very well impact us, but it's also mitigated by

the fact that we are quite strong in sales and digital marketing and we think, like I said earlier on, that as the digital advertising market has become more and more competitive, our clients have quite an appetite for engaging us to do sales and digital marketing. So we see that growing quite significantly. So I couldn't possibly call that a slow down, rather a significant increase.

So it's probably more of a rebalancing of the nature of the work we do for those clients that is important. And I'm talking about the digital advertising space in general. And as you know, we've brought in additional clients in the short-form video space. They're starting to, they've been implemented. They're starting to really show up on our P&L. So that's cool. The travel and the hospitality sector, which is another big sector for TDCX is actually cool. Thanks. Yes.

not slowing down the opposite. We've had the worst years behind us now. So it grew 25% year on year versus 22% in Q2 2020. But it's still behind actually the 2019 numbers. It's probably 16% behind what it used to be at its highest. So there's room for growth. Taking into account again that...

Asia has not reopened yet and we could be benefiting from that possibility. We just don't know when. Again, the two clients that we have is saying that we have a whole cohort of large clients that are becoming quite mature and yielding quite a lot of revenue for us. And then a whole new group of new logos that are bringing accelerated growth into the mix. So the plan of it all is this.

planning out for quite nicely for us. Thank you, Lohong. Next question, again from the webcast from Wilson Wong. Any update on the Airbnb warrants? Hey, Wilson, Ed here. Let me take this one. The discussions are still ongoing and we feel really good about where we are going with this. We hope that people share some further information with you.

as soon as possible. Obviously, I think as Laura just mentioned, on the fact that travel will be found very timely if we are able to further deepen that ties with this strategic client of ours. So, still working on it. Just bear with us a bit. Hope to be able to share something with you soon.

So last question on the line.

to two people asking the same questions actually. Have we been able or are we able to build wage inflation into our new contracts?

Yes, actually we are able to do this and we have some clients who have a cost of living adjustment.

But not all. So we cannot every time pass on that cost of living adjustment but we've been successful in quite a number of situations and occasions and the suggestion that you're having is actually maybe to take the opportunity of really this crisis to go back again to our clients in a very systematic manner and really...

ask for this to happen as a matter of protecting their interest, not just ours as well, to retain the employees that they so value. So thank you for the suggestion. We have a number of clients who have the COLA in the contract. Some don't and we are able to renegotiate when we are able to and in some cases when successful, sometimes we don't.

If you have any follow-on questions, you know you can reach out to me after this.

I would just like to, on behalf of management, thank you for your time. And we are signing off. Thank you everyone. Thank you.

I'd just like to, on behalf of management, thank you for your time. And we are signing off. Thank you everyone. Thank you. Thank you. Cheers. Your time has come.

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