Q3 2022 TDCX Inc Earnings Call
Hello, and welcome to the T. D. C X Q3 2022 results announcement my name is Alex that'll be course, Nathan the coach day, if you'd like to ask a question at the end of the presentation. You can press star one on your telephone keypad.
If you'd like to destroy your question you May press Star, Let's say.
I'll now hand over to your host Jason Lee head of Investor Relations. Please go ahead, Hello, everyone and welcome to <unk> third quarter earnings Conference call. My name is Jason Lee head of Investor Relations allow me to introduce management on the call. We have our executive chairman founder and CEO , Mr. <unk> unit.
Our CFO , Mr changed Rooney, and our EVP of corporate development Mr.
Cool.
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 realized in the future you should not place undue reliance on any forward looking statements.
This call includes the discussion of certain non <unk> financial measures such as adjusted EBITDA and adjusted net income.
For a reconciliation of the non <unk> measures to the closest I've already some measures.
Please refer to our press release on form 6K, which is available on our web site.
We have provided a convenient translation for the translation of the Singapore dollar to the U S. Dollar. This was done at a rate of one U S dollar to $1 43 for the whole Singapore dollars.
This should not be construed as representation to any Singapore dollar mall can be converted to USD at this or any other REIT.
With that let me hand over to Paul to Longhorn the whole piece.
Hello, everyone and welcome to our results briefing for the third quarter of 2022.
We've delivered a strong quarter driven by the solid execution of the television six team.
I want to take this opportunity once again to recognize and to thank them.
Once again has been an interesting year, but the teams continued to do their very best.
It shows in the results I'm happy to share that.
Our global expansion plans continues with the addition of two new campuses one in Iloilo in the Philippines and another one in Istanbul, Turkey.
This brings us to a total of 27 campuses globally as we continue building our network.
We're seeing greater contributions from all four newer geographies, namely Columbia, India, Romania, and South Korea, which made up close to 10% of the year on year growth in revenue for Q3 2022 against Q3 2021.
In Asia Pacific Europe , and Latam was strategically plan with the objective of positioning ourselves well to emerge stronger and meet the changes in the CX outsourcing space and I am confident.
Hence footprint will provide us with a competitive edge going forward.
During the quarter. We're also proud to have had our industry leading practices recognized we were named a leader.
Global Technology research and advisory firm ISG in their contact centers, Singapore, Malaysia 2020 to report the report our knowledge our capabilities positioning us at the top of the quadrants.
On the ESG front.
We deepened our commitment to bringing positive transformation to the community with the launch of the TV Shakes foundation through the.
The foundation, we will be able to help drive greater social impact is at vintage communities.
Let me next cover some highlights of our financial performance.
We delivered robust revenue growth in Q3 2022 as revenue Rose 16, 1% to $120 million in U S dollars, all 173 million Singapore those.
This was driven by strong contributions from clients across key verticals in particular, the travel and hospitality space as well as from our new geographies as mentioned earlier.
Growth was broad based cons outside the top five continued to grow rapidly.
That's more than twice the pace of our group revenue growth in Q3 2022.
This has helped diversify our client concentration.
Top two clients stood at 56% for Q3 compared to 63% last year, while the top five stood at 82% compared to 85% last year.
In terms of revenue contribution from verticals travel and hospitality continued its strong growth trajectory and was up 29% compared to Q3 2021.
On top of higher contributions from existing clients.
The performance was boosted by new and exciting clients that we added in this vertical.
Quarterly revenues for travel and hospitality are now back to the pre pandemic levels. However, there is still room for us to grow in particular, when the North Asian travel starts to reopen.
The digital advertising and media vertical remains our top vertical driven by our strength in the sales and digital marketing services as well as the acquisition of new key clients. The leading short form video social media platform that we recently on boarded has started to contribute meaningfully in Q3 and we have.
To be able to deliver even more services for them moving forward.
Despite some recent turbulence the global digital advertising market remains an attractive high growth segment over the long term.
According to the latest report by research and markets the global market for digital advertising and marketing is estimated that.
477 billion in U S dollars in 2022 and is projected to reach 786 billion U S dollars by 2026, drawing at the CAGR of 13, 9% over the period.
The fintech vertical posted strong double digit percentages growth year on year and remains our third largest vertical.
Our plants in this space include payment gateways, crypto exchanges and other fintech companies.
<unk> makes up a small contribution to group revenues around less than 1%.
Although then these three verticals, we will continue to try to add clients across different verticals, such as E Commerce and gaming.
In terms of earnings and quality growth our numbers show that we continue to deliver quality earnings growth adjusted net income, which strips out the performance shift on costs for a like for like basis comparison rose, 15% year on year to $24 million or $35 million Singapore.
Yeah.
Our adjusted EBITDA margin remains at industry, leading levels of 31, 8% for Q3 2022 once again the quality of our earnings growth has translated into strong cash flows Q3 2022 net cash from operating activities was nine.
$90 million up 53, 1% year on year, our CFO will share more details on the numbers in the later sections.
In terms of geographies as mentioned earlier, our strategic geographic expansion initiatives are starting to show up in the numbers or new geographies are starting to pull their weight and we are building strong pockets of revenue contribution from parts of the world that TD shifts didn't used to be in such as North Asia and Latin America.
With our expanding footprint TD shakes is able to provide clients for the full range of solutions across different services and different geographies.
During the quarter, we launched our third key campus spending 3000 square meters. This strengthens our capability of.
Third patient or uptake in addition to European languages, such as German.
<unk> will also be able to better the growing middle east market on the back of strong demand from brands.
We completed the restructuring of our Hong Kong associated company into a wholly owned subsidiary this will allow us to better tap into opportunities into greater China area.
Moving forward, we plan to expand into Indonesia, Vietnam, and Brazil, Vietnam, and Indonesia as further flexibility to offer key southeast Asian languages in the multilingual centralized model as well as a decentralized model.
Brazil is an exciting geography with a huge population as well as opportunities to serve the broader Latin American market.
On the business development front, we have continued our business development momentum setting up a total of 31 logos for the first nine months of 2022 up 55% against the 20, we signed back in the first nine months of 2021.
It was a quarter, where we focus on executing our delivering for all signed logos and we launched a total of 12 clients in Q3.
Our client count now stands at 72 as of 30 of September 2022, compared to 60 as of 30 June 2022, compared to a year ago. The client count is now 50% higher.
Now I'll hand over to Mr. Chen to cover the financials in detail as well as to provide an update on the guidance.
Thank you Laura.
Let me first present, some details on our Q3 2022 financial performance.
Revenue Rose 16, 1% to $107 million driven by growth across the Omnichannel CX sales in digital marketing SaaS content Trust and safety 70 sites.
Adjusted EBITDA Rose three 9% and 30, thank you guys.
As margin declined from 35, 5% from 31, 8%.
The adjusted EBITDA margin of 35, 5% for Q3 last year was exceptionally high.
What you saw that comparison.
The adjusted EBITDA margin of 31, 8% for Q3. This year is more in line with what we have achieved throughout 2022.
And also in line with the guidance we had provided.
This was actually an improved performance on a sequential quarter basis compared to Q2, 2020 twos margins of 31%.
If we were to annualize it on a year on year basis. There are four key reasons for the margin differential.
Firstly Q.
Q3, 2020, once agent productivity from key projects in Omnichannel, CX, and CFO and digital marketing service lines was higher as thesis volumes increased significantly during this year.
The preceding two quarters.
Secondly.
Q3, 2022 group revenue was lower by a catch up of revenue reduction following the execution of the Airbnb warrant agreement in September 2022.
Yes, we had to account for the accumulated.
The start of our Master service agreement in 2021 on top of current quarter.
Certainly with.
We strengthen our management structure in 2022.
This expansion and increasing camping requirements.
So.
<unk> be a listed company for the past year, some increase in corporate was incorrect.
Lastly, we instituted compensation adjustments in response to rising talent competition that began in Q4 to anything any one that continued into the current year.
Let me next move onto adjusted net income.
Our adjusted net income rose, 15% to $24 million.
Net profit for the peanut those at a lower two 3% on a reported basis due largely to the implementation of the performance share plan.
In the same period last year.
Next we share some insights on our Q3 revenue performance by the <unk> slides.
Revenue from Omnichannel CX solutions was up 13% with $70 million due mainly to higher business volumes driven by the expansion of existing campaigns in a fintech and technology verticals.
In addition, this as volumes of our key travel and hospitality clients continued to gain recovery momentum arising from the reopening of modest throughout this year.
Revenue from sales of digital marketing services increased by 32% to $30 million with the expansion of existing campaigns from our key digital advertising and media clients.
Revenue from content Trust and safety services rose by 6% to $20 million due to an increase in business service volumes.
In Q3, 2022, Omnichannel CX made up 58% of our total business while sales in digital marketing contributed 25% and content Trust and safety at 16% respectively.
Let me elaborate on our operating expenses.
For Q3, 2022 operating costs as a percentage of revenues stood at 83%.
Excluding TSB costs on a like for like basis.
At 78, 1%.
This was higher than 73, 2% for Q3 last year due to the reasons I gave earlier on the adjusted EBITDA margin.
Our employee benefit expense increased by 30% to $70 million for Q3.
Excluding PSC costs for a like for like basis employee benefit expense would have increased by 25% due to higher employee count quite on campaign and management funds.
Adjustments due to the talent market dynamics that we operate in and increased cost of living.
Our depreciation expenses declined slightly by 2% largely due to certain officers resolution SSD in Singapore with pilot and flip is being fully depreciated.
With no big ticket capital expenditure.
All other expenses rose, 35% for Q3, 2022, driven by higher recruitment telecommunication and technology.
Other operating expenses.
This volume expansion demand.
Nick Let me share some details on our nine months 2000, <unk> financial performance.
Revenue Rose 21, 7% to 340 million U S dollars similarly, driven by growth across all three business service lines.
Adjusted EBITDA Rose 16, 6% to $170 million.
<unk> declined slightly from 31, 4% within our guidance range for the year.
Adjusted net income rose by 27% to 66 million U S. Dollar our net income rose at a lower six 6% due mainly to the performance share plan expense, which did not appear in the same period last year.
For the nine months revenue front.
Revenue from Omnichannel, CX solutions rose, 18% to $199 million.
Revenue from sales and digital marketing services increased by 47% to $82 million.
While revenue from content Trust and safety services to those by 6% to $57 million.
For the nine months after anything to Omnichannel CX mixed up 59% of our total business while sales in digital marketing is at 24% and content Trust and safety, 17% respectively.
Let me next share some details on our nine months expenses.
Operating cost stood at 82% as a percentage of revenue for nine months 2022.
Excluding PSC costs. This stood at 77, 1%.
Employee benefit expenses increased by 33% to $234 million and finished sanded up PSC cost you mean.
Two higher employee count requirement on campaign and management of funds higher wage costs and increased competitive landscape of the Italian market conditions.
Our depreciation expenses declined by 4%.
Lastly, due to certain reservation SSD fully depreciated with lesser major capital spending.
All other expenses rose by 23% driven by recruitment telecommunications and technology.
Other operating expenses to cope with this volume increase.
Lastly, let me provide an update on our full year 2020 to outlook.
We are reiterating the full year to anything to revenue outlook at the midpoint, while narrowing the range as we come closer to the end of the financial year.
Our full year 2022 revenue guidance has been narrowed from the 655 to 670 million Singapore dollars from 650 to 675 million interesting about all this previously.
The midpoint remains unchanged at $662 5 million sitting about dollars, representing 19, 3% growth.
The narrow range of revenue represents gross range of 18% to 27% compared to the full year 2021.
The company's financial information is steady in Singapore dollars.
However, we provide convenience transmission to help me just understand the approximate context and quantum of the numbers in U S dollars.
At the approximate rate in effect at September 30 of 2022.
One U S dollar to think about dollar $1 43 for the revenue guidance above would be 457 to 467 million U S dollars.
Applying the approximate and in fact as of June 2022 of one U S. Dollar to Singapore dollars. One 390, <unk> this would be $471 million to $481 million.
With our continued emphasis on cost management and employee productivity.
Maintain our full year 2022, adjusted EBITDA margin to be approximately 30% to 32%.
With that let me hand over back to Jason.
Yes.
Thank you Mr. Jean let us now open the floor for Q&A.
Request that each of you keep yourself to three questions. Please. Thank you operator please.
As a reminder, if you'd like to ask a question you compress down one on your telephone keypad.
Good luck.
Your question you May press Star two.
Sure Amit.
When asking a question.
First question for today comes from Casey.
C&I NBC GFS Casey your line is now open.
Hi, Good evening. Thanks for taking my question I have two questions. Firstly I saw that your.
Our revenue guidance for FY 'twenty.
Amit I'm just wondering what are you seeing in terms of client Nathan's volume projections.
Physician and.
And secondly can you provide any color on the outlook for <unk> in terms of top line and margin.
Hi.
Hi, Casey. Thank you for the question so well look we're looking at.
Now completing nine months, we have just completed all nine months.
Getting quite close to the end of the year, we have enough visibility. So we felt it was all duty to communicate.
<unk> narrowed guidance, rather than leaving it open for full transparency so.
We've narrowed it from.
650 to $75 to now 605 to $6 70 midpoint is unchanged.
Unchanged.
And that's really on the back of having enough visibility around the.
Order book from our clients now until the end of the year and pending any unforeseen circumstances, which.
Sometimes in the end of the year happened.
So we're quite quite set here.
And have a good visibility over the the.
The rest of the year.
Relating to your second question around the outlook.
It's really too early to give details for next year as we are in discussions with clients. We are working on their budgets.
And we will issue our formal guidance when we announce our Q4 results in March 2023.
However, just to give you a bit of color fundamentals have not changed.
We're still in the fastest growing region in the world in Asia.
New economy companies need our service on the bright side you've got.
The latest Google domestic report that shows 20% growth for the new economy.
Companies.
Moving forward in Southeast Asia.
At the same time, you've got a bleaker outlook.
With the recent stuff.
Offs that we've heard from a number of new economy clients on new economy companies.
So I think those two forces are in play assuming macro backdrop stabilizes our long term growth outlook does not change.
So we will get back to truckload.
On our growth plans, so basically we remain confident on our long term growth.
We've made good progress in our business development momentum.
We've also added new geographies. So we have a number of.
<unk> solutions in our Arsenal for.
For next year.
So we're looking at a double digit growth in 2023.
Yeah.
Got it thank you.
Thank you Casey.
Thank you.
Our next question comes from a Pang of Goldman Sachs Hang Your line is now open.
Alright, Thank you very much for taking the P and good evening, everyone three questions from my side Firstly.
Could you help us provide some color in terms of what have been impacting your business post global Internet slow it down we have seen some lumpier.
Unlike me Pat on the head count reduction program in cell lines that the holidays.
Holidays Paas impacted delayed.
Interact with TD bank at that one of the main outsourcing partner is that any risk in term of your life.
And your exposure to Nektar, calling into next year. So that's question number one question number two is related to the new Omnichannel, let's say why has growth been in.
One quarter, despite travel continue to return to its pre COVID-19 level.
Segment of your customer has been a drag and what type of growth.
Can we expect going forward as well.
Lastly income.
Martin.
Thank you Martina all that 31% over the last few quarter and new risk going into the next year any implication from nuance question Huh.
<unk> are potentially cutting it.
Our contracts.
Alright, thank you.
Nice to see you again.
Regarding our clients I cannot really comment on specifics.
Around the clients.
Maybe look at the whole day.
Digital advertising industry as a whole.
Because I think the impact is at that level.
For a number of clients, who are announcing layoffs as well.
Of course, the concern is therefore for us.
We're watching that very closely.
On the bright side we.
We can imagine that.
Clients are reducing their labor costs that frees up some.
Some money too well then to investing in drove an unusually.
Possibility they could consider outsourcing is an alternative so.
Don't want to sell in the optimistic.
But we.
We have to watch this very closely with a lot of caution.
Yes.
We see this to see this as a potential opportunity again, all digital advertising business has made us more than just one client we have some clients who have a strong growth profiles moving forward.
It's a place to watch again, let's not.
Look at the World of digital advertising on the on the global basis.
It's where we operate the most of it for <unk>, which is in Asia and this is still a growing.
Area in general for most of our digital advertising clients.
On the <unk> front.
We've seen growth.
In the digital.
Travel industry quite significant growth.
On the travel 29% up.
We expect this to continue to grow.
And next year, we'll see whether China comes into play.
For us as well as a possibility no new indications as we all know.
Fintech was.
Growing at double digit growth in our <unk> space.
We have a number of our clients in that space at all growing at double our growth.
And Thats also a bright spot so I'm still very confident.
CX next year will grow.
Still.
Good pace and so the addresses this from a margin point of view and your third question.
I would say once again that our business model has not changed.
So.
Yes.
Probably a reminder, that <unk> and all of its revenue from business to business and engagement.
With working with the <unk>.
Companies rather than consumers.
We do more complex work as a result of that we derive a lot of our revenue from offshore and.
Engagements as well, so really doing more complex work tends to drive our margins up.
And we intend to continue to do this.
As a result of that we expect to maintain our margins. However.
We have also expanded in new geographies and.
We are in countries, where the average revenue per employee will be lower for some of them and thats to be taken into account, but all in all as long as we don't change our strategy.
Dramatically.
Margin profile should stay within a certain range.
We're reviewing on a regular basis.
Okay.
Thank you.
Thank you.
Thank you next question comes from Secret Quake from J P. Morgan. Your line is now open. Please go ahead.
Hi, good evening. Thank you very much for taking my questions I have three questions. The first question is sort of a follow up on this question.
Just wondering.
Matt.
Thanks, Paul and their own business and if yes, what would be the impact on <unk> and <unk>.
And my second question would be.
Could you tell us what Joe.
Employee count and maybe could you also share with us your latest attrition rate, perhaps if any by.
By three different metrics.
And lastly could you also describe the profile.
New logos lineup and.
Three main core business types, how long can that be something you would all be contributing to each category. Thank you.
Alright so.
Coming back to.
The first question again, I cannot really give you much details. Unfortunately as I cannot really comment on specifics around one particular clients and I'll go back to the same and so I think with the.
With pollen gear around the digital advertising industry.
Overall.
Look we're watching that space and.
Cautiously optimistic.
Around the <unk>.
The prospect of digital advertising as a whole for TD shakes for for next year as far as the employee count is concern.
I am not sure we should be giving this in detail, but it's in between 17 to 18000 employees.
At this point.
Actually 17400, plus to be a bit more precise.
Attrition.
<unk> gone up slightly.
It continues to trend.
Higher than it used to be pre pandemic.
Something we were looking at for sure.
On the voluntary and involuntary.
Side of things.
The good news is that we are able with all our recruitment teams to deliver.
The head count is required by our clients. So, although it's not getting easier to recruit we're able to deliver through.
Leveraging this technology, we have leveraging all management.
Systems, but also having made some.
Organizational changes to strengthen our talent acquisition capabilities. So attrition is higher than it used to be we still delivering.
The number of head count required.
Double edged toward if you'd like the harder it gets to.
To recruit the more clients need our services because they are experiencing the same kind of challenges yet we were able to deliver.
Leveraging what we have in terms of the new logos, we signed up.
Interesting business in the cloud.
So helping to sell cloud this is not the only clients we have in that space.
So our growth opportunity here.
We have an interesting clients in the automated food delivery.
That we run out of both India and Colombia.
Something.
Really a position.
Towards the future, we have a new economy such company as well.
And that's also interesting in our Malaysia operation, we've implemented 12, new logos.
In the past quarter. So we've been busy we've been busy also replying rfps from.
Existing clients. So there is a good momentum.
<unk> and <unk>.
Clients are starting to.
To pull their weight as well in our P&L.
Okay.
Yeah.
Thank you. Our next question comes from Jonathan Nobuo Phillip Securities. Jonathan Your line is now open.
Okay.
Okay.
Thanks for taking my question.
Okay.
Mentation.
I noticed in your last call you mentioned the implementation will be slower than what you want.
But given that you did.
12 launch thanks, Paul This is Paul.
Thanks.
The levels are kind of back out the way you would want it can you maybe just come back to live without that.
What were the factors that Paul.
First of all whether it's where you want it.
Paul what were the factors that kind of that two days.
No.
The increase in interest and other operating Paul.
Alright, thank Bob.
But I myself.
Nine months.
Thank you.
Hello.
Thank you.
Okay.
Jonathan we meet the second question do you mind repeating the second one.
Yes.
That was kind of a big increase in interest.
Interest income and other operating income for the first.
Quarter and for the nine months.
Compared to last year.
Yes.
Color on that.
Alright.
The team in.
In closing economy adopting common yes.
And I guess.
Conservatives on implementation.
About implementation all competes yes, okay.
Okay, Yes.
Correct.
We have the HUD to take the first question on implementation of camping, we implemented 12, new are new logos.
In the in the first quarter.
We've had quite a summer as well on the travel and hospitality.
<unk> with a significant increase here at 29% up so and some of the business experience.
100% growth on the trouble side.
As well so it was a challenging.
Challenging quarter in terms of delivering the head count delivering a 12 new implementations.
Completely new programs new clients.
I know the team has worked really hard.
But it's a good indication of our capability to scale quickly and to deliver.
The quality that all clients are looking for I'll hand over to Mr. Chin on the on the.
The second question around interest income.
Yeah.
Yes, Hi, Jonathan.
Interest income was.
He had a bump up.
Got it.
Primarily due to the.
More placement of the excess funds.
Especially coming from the.
The IPO funds that we ask you.
Keeping.
Into on top of that.
Operating cash flow from the.
Yeah.
This is Ed.
Solid uptick.
Calculate that.
Step two please.
Please them all in.
And just Barry instruments for this quarter.
Quanta is.
Opposed to last year.
You did have yet IPO five psi.
Because you've been IPO.
But on the front of the operating income is largely due to the lower.
Foreign exchange gain.
Culminating from.
X gene suite.
The key.
Currency, albeit main delivery sites.
Uh huh.
Primarily against U S dollars.
Various projects key projects that meet.
So yes.
Expect that from Davidson morphine the foreign exchange.
Significant.
John .
Yeah quite a too.
How many thing into.
Higher foreign exchange gain.
To get into the at the operating company.
Yeah.
Okay.
As a reminder, if you'd like to ask a question star one on your telephone keypad.
Next question comes from Robert <unk>.
Jeff from credit Suisse.
Your line is now open.
Thank you good evening management.
Congrats on a good set of numbers I've got three.
Three questions.
First Lauren.
I understand you mentioned about next year as you May you just see it to be.
Judy shifts to think about double digit growth.
But just to put more vertical perspective, when you look at it which it does see what because you think you have more excited about what that you think can.
Potentially set of plays on the upside that's number one.
Number two on the margin front, if you look at blended.
Blended margin of around 32% 31 point this quarter.
But if you look at that age is around 31% to 32%.
Two questions.
What do you feel.
Good locations.
It'd be much higher than your scale.
Opening up new offices, if you look at last two to three years, you have opened up new locations and they started to contribute revenue. So how should be think about the margin profile of those new locations. When do you think that will start contributing to the group margin.
They get not contributing positive margin so from a location perspective, how should we think about it and within that.
Got it looking to add more locations over the next two uncommitted.
Last question on the <unk>.
Many opportunities and cash utilization any update that you could provide on that and how should we think about.
Uh huh.
For the last 12 15 months looking at various M&A opportunities.
But given the.
Valuation blip that you're seeing in various technology side, how should we think about that going right now.
Right, well I know that you've been able to find the right fit as of now they just they choose the evaluation or the right. Thank you.
Thanks, you very nice to see you again.
Work.
Team of three four to answer your three questions I'll take the first one.
I'm excited about and really profile of growth next year, where do I see the growth.
<unk> pretty steady.
We know again next year for US, we think will be SDM sales and digital marketing.
So you can see that we still have.
Good thought around digital advertising overall.
Because.
Some of it coming from there also from cloud services that are part of this.
Sales in digital marketing.
And then pulled venmo duration trust and safety should have.
Sandy.
Limited growth once again.
For full next year the industries I'm excited again about.
Really our travel and hospitality.
And Thats again pending.
Potential recession and slowdown so that's still a question.
On our mind, whether it's going to materialize at what stage until went off them win.
Into next year Fintech is still featuring nicely together with digital advertising gaining.
Could be an interesting play for us next year as well.
So there's a number of things happening.
Where we're strong as well so it's a it's easier for us to deliver on this area.
Maybe Phil do margins I'll defer to Mr. Chin and then for the third question I'll ask Ed to.
Over that Mr. Jin on the margins.
Yes sure.
Talking about demand genius blended.
In terms of the new sites contribution.
Yes.
This year, the new sites that we setup.
A couple of years ago until even last year are beginning to deliver.
Revenue.
On margin wise, they are still finding their feet.
Showing size of exaggerating.
Is that a rating.
In terms of productivity.
Yet to reach the level of the mature units that you talked about default units largely because of the scale that they are still lagging the skill and.
<unk>, probably be a bit of experiential which are the mature units steel.
Lending support.
Sure.
To bring up to speed the efficiency of each business unit. So.
We are actually.
Booking.
Quite hot on bringing them up.
As to the level that we hope to be.
Maybe that's.
That's one of the.
The <unk>.
Business unit that was set up.
Yes.
It's coming the closest to our margin.
Yes.
Asia Pac.
Obviously issue.
Well the rash asked you probably be doing at.
Infancy.
Margin level.
We have yet to use.
Fully utilize that capacity.
It was.
Designed for them.
Whilst the revenue on the revenue side.
Going through the motions of.
That's stabilizing.
Uh huh.
Especially you probably that notable improvement is probably in Q2.
In.
This probably breaking it into during Q3.
The pace of Q1, all the way back to last year I can give you quite a bit.
A bit behind.
Yep.
That is the part that I would see.
Going forward into the into next year.
We will continue our efforts to bring them up to speed to the level that we are having.
Mature units.
Okay.
Hey.
At.
Sorry.
As of June .
Would you want to finish it.
No.
To introduce you to the question Okay.
Thank you Mr <unk>.
The topic of M&A.
We are continuing with the.
Review and building up off the pipeline that we have.
<unk>.
<unk>.
Sort of obviously quite keen to do something but.
We have to be selective as well.
We think we're in a good position I think we understand that the cash build up.
But in current environment.
That's rising set up.
Cost of credit.
Thank the financial profile that we have puts us in a good position.
To act when the right target.
It's available I think where valuation is concerned.
<unk> as adjusted from last year, but.
I think that set up for this the quality companies out there.
That.
Steel continues to have certain views on the evaluations. So we are sort of staying very close to some of these opportunities.
And we'll update.
When this development.
On that front.
The cash utilization I think.
As Mr. Chen mentioned I think.
Beginning to see sort of interest income.
And I think the plan is we need to have a more proactive approach.
Cash management to enhance the you on.
On that front.
So that's sort of our current view on the capital allocation.
Thank you.
Yeah.
Thank you. Our next question comes from a Pang of Goldman Sachs. Your line is open.
Oh, thank you.
Follow up yeah.
Barclay I recall, you brunson about IP in the boardroom.
Hum.
So bundling that is concerned.
Color around bar Lev.
The price associated with the borrowings.
Are there any change in macro.
Cleveland weekly cost through borrowing so I'm wondering whether you can start.
Hello.
So that's question number one question number two just wondering whether it is Amit we're holding firm on.
Hum monetization.
<unk> invested.
In Colombia, so wondering whether or not.
It should be worry at all are looking alcohol and the content.
Hi, Tom maybe I'll take the first question on the warrant.
So you're right I think you would've seen that announcement in our 6K filing so.
So we are quite pleased that we have finally reached a conclusion to the discussions.
With <unk>.
This agreement.
Basically cements the relationship with Airbnb I think it further aligns the interests between the two companies.
With shirt in our 6K that debt.
The agreement basically involve.
Up to 490000.
Laurent which allows <unk> to convert.
Into underlying aid yeses.
Subject to certain volumes being met.
In each of their respective measurement periods.
I am not at Liberty to disclose more than that but I can also share that in terms of the.
<unk>.
Accounting for it it will be in line with the ifr extend it.
Thank you.
Hum relating to content moderation, we've read the article obviously, but just in case some have not looked at it a provider decided to stop.
Stop providing content moderation services.
On the back of some.
Challenges with the authorities in Colombia.
Relating to.
Some labor disputes and challenges so.
First of all TD shakes it doesn't provide currency content moderation services in it.
In Colombia.
We do.
In other parts of Asia. This is a business that we like very much.
To carry on in two do we have a very specific approach to delivering these services.
With a lot of care and.
For the employees, who deliver those services and we've built a whole infrastructure around it.
And we I'll just read us trade experiencing the Lois is tough to know for of all the programs in the world.
And these are services that we deliver because we've really design and approach to wellness and care with a great locations infrastructure management training and whatnot that may.
This business.
Business, which we find is really necessary.
In today's society.
To be able to deliver it in a way that is very very oh.
Careful with our employees. So at this point I do not see.
Concern.
<unk> in general and providing our content moderation in trust and safety.
Yeah.
Okay.
Yeah.
Thank you. Our next question is a follow up question from Tracy Young of C. O M B Cts.
Your line is now open.
Hi, Thanks for taking my question.
Just a few questions.
Question a.
Housekeeping question.
Firstly do you hedge.
Exchange given the volatility.
Alright.
Later part of this year secondly on tax rate.
Our goal this year is probably yes.
No that would be.
Quite a bit.
Our tax rate because of Covid.
How should we think about tax rate.
And the next year.
And let me.
Again on Airbnb.
And one of your prepared remarks, you did mention something.
Revenue offset by revenue reduction from Airbnb.
Uh huh.
Can you just provide us a bit more color on this.
How would you book we don't.
All right.
Yes, Hi, Casey.
Yes.
On the Forex side of things yes.
You did the recent.
Jean <unk>.
I need the Forex.
It has not.
Uh huh.
Execute any.
Hedging position.
Primarily due to the trend.
Uh huh.
Cost of hedging is pretty steep.
In recent times quite naturally.
Going forward.
Revising or revisiting our.
Forex position given data.
Trending off the.
Forex situation.
Looking into next year and so on.
I'm going to revisit and device.
Forex position in relation to our exposure and device.
Our new satellites.
Plants election plant.
To mitigate any risk.
Possibly.
Yes, Hi, this is Tony.
Tony.
The other direction.
Tax rate wise.
Your tax rate.
From the.
2023 perspective.
Yeah.
Is that possible.
Reduction off the street in Philippines.
You too.
This development in the Philippines.
On the.
Is that incentive breaks for the company our pizza unit slippage.
And could you give me a consultants and connecting with them closely to met our niche strategy too.
Our sales to the.
Thanks.
Incentive going into next year as for the Malaysian unit.
Sure.
Prosperity text.
Can.
This current year.
Due to the budget proposal.
By the previous government help venetia.
David What's an absence of prosperity tech side going into next year.
Of the current political situation it remains to be seen how the new.
We will look at this situation.
I'll follow with my future so.
We can't comment much on the outflow of the tech situation acuity political institution is cleanup.
And on the Airbnb Warren.
Yes. It is that's what at what mentioned just now.
He has devoted has.
A link to the Master service agreement.
Prescribed.
Yes.
Setting.
The business volumes.
The conditions are and.
And because the master services agreement.
<unk> lost you.
Yes, the board agreed that it was executed.
September this year so be it.
The catch up reduction.
Was that in alignment with the Master service agreement for the volumes that was.
Awarded by Airbnb to TD CX for them.
Measurement peanut.
The first one.
And which was concluded.
Before the one of the invoice.
Wassa executed so this catch up.
In essence reflects that.
The spirit of the warrant agreement in correlation with the muscle.
<unk> given on the commercial sites.
There was a bit off a catch up from.
Quarter to quarter treat business.
So July to September .
Post the first measurement period.
That was the catch up that was.
It was reflected in Q3.
Financials.
Got it thanks.
When you mentioned.
Is that more of a revenue impact.
Market impact.
<unk>.
Not because that revenue.
Revenue impact.
Okay got it thanks.
Yeah.
Thank you.
Our next question comes from a secret to Queen from J P. Morgan Secret. Your line is now open.
Hi, Thank you for answering my questions previously I have three follow up questions. So firstly you thought our CX.
I wanted to understand on the aggregate level, what's the onshore and offshore.
Seven years or so.
It looks like it was on Paas aten.
And the second question.
Oh teach service domestic business.
And just to put clients that yourself and also some fifth largest client.
And Christian I missed that.
Yes.
If that customer support offshore do you see this I'm trying not just to take change.
Secondly, could you share with us and how do you determine the level of compensation.
The employees.
On the high or low a site. That's contact you got passed in the industry and lastly, I think one of your biggest clients are in the process.
Sex vendor consolidation. So do you see yourself take up a bigger share.
In this process. Thank you.
Yeah.
Thank you all I'll start probably in the reverse.
Thank you for the questions vendor consolidation I think it's something that we're watching closely and that we're very happy to be able to oh.
Positively participate in and that's.
Really the reason we went to the market a year ago, We said we wanted to.
<unk> global strategy.
That we have in our footprint to be one of the top vendors of all big clients and quite happy to say, we've made it to a number of those clients.
Clients.
B.
Fisheries of the future consolidation that is going to happen.
So we're there.
In that space and I'm.
Quite happy to see that happening this year.
On the compensation versus our peers.
We don't have.
Comparison to our peers. So that they can offer should be mentioned that you would've had to be audited.
But.
Confident to say that we are in the market.
Good levels of compensation.
And as a result of that the last time.
Official study.
Indicated that TD shakes attrition is lower than its peers.
The kind of total bill rates.
Compensation, which is benchmark regularly against the market not just the peers.
No.
Good enough to attract employees and again, we are delivering the head count.
US too to deliver now on the ratio of onshore versus offshore we've been thriving on delivering offshore work and as a result of that.
The amount of offshore work, we do is 90%.
Only 10% is delivered out of Japan, and China are.
Primarily but all the work we do in the Philippines do what we do in Singapore and Malaysia.
Thailand.
Even in Europe in Barcelona in Colombia, covering North America.
Offshore and so.
That's not to say that as our clients are looking for lower cost locations, there won't be an impact to TD. She actually eventually by reducing essentially either revenue per employee.
The good news is we've designed our network to accommodate the future, which could be a decentralization future where.
Through centralizing, maybe in Malaysia may need to do the work locally in Indonesia or in Vietnam. Good News is we've set up in Indonesia, We've set up in Vietnam, We've set up in Korea, we've set up in Turkey.
Pending in Colombia, So we have a number of products to offer in our solution our clients requirements. If they were to migrate from onshore to offshore offshore to onshore.
And that's I hope answering your question.
Got it thank you very much.
Thank you.
Thank you we have life out of the questions for today, So I'll hand, it back to Jason for any further remarks.
Well, thanks, everybody for spending time with Us Tonight.
Any follow on just feel free to reach out to me.
Wishing you all a very happy holiday season.
Thank you guys.
Yeah.
Thank you for joining <unk> you may now disconnect your lines.
Yeah.
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