Q4 2023 TELUS International (Cda) Inc Earnings Call

Okay.

Jonathan: Good morning, ladies and gentlemen, welcome to the Telus International Fourth Quarter 2023 Investor Call. My name is Jonathan, and I will be your conference facilitator today. At this time, all lines have been placed on mute to avoid background noise.

Good morning, ladies and gentlemen, welcome to the Telus International fourth quarter 2023, Investor call. My name is Jonathan and I will be your conference facilitator today at this time all lines have been placed on mute to avoid background noise. After the Speakers' remarks, there will be a question and answer period.

Operator: After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, please press star one on your telephone keypad. If you would like to remove yourself from the queue, simply press star one again.

I'd like to ask a question. During this time. Please press star one on your telephone keypad, if you would like to remove yourself from the queue simply press star one again.

Jason Meyer: I would now like to introduce Jason Meyer, Head of Investor Relations and Treasurer at Telus International. Mr. Meyer, you may begin the call. Thank you, Jonathan. Good morning, everyone.

I would now like to introduce Jason.

Jason: Jason Miner head of Investor Relations and Treasurer at Telus International Mr. Meyer you may begin the call.

Jason Miner: Thank you Jonathan Good morning, everyone. Thank you for joining us today for Telus International's Q4, 2023 investor call.

Jason Meyer: Thank you for joining us today for Telus International's Q4 2023 investor call. Hosting our call today are Jeff Puritt, President and Chief Executive Officer, and Vanessa Canu, our Chief Financial Officer. As usual, we'll begin with some prepared remarks, where Jeff will provide an operational and strategic overview of the quarter and year, followed by Vanessa, who will provide some key financial highlights. We'll then open the line to questions from pre-qualified analysts before turning the call back to Jeff for his closing remarks.

Jason Miner: Our call today are Jeff <unk>, President and Chief Executive Officer, and Vanessa commands, our Chief Financial Officer.

Jeff: As usual, we will begin with some prepared remarks, where Jack will provide an operational and strategic overview of the quarter and year.

Jeff: Led by Vanessa who will provide some key financial highlights.

Speaker Change: Open the lines of questions from pre qualified analysts before turning the call back to Jeff for his closing remarks.

Jason Meyer: Before we begin, I'd like to direct your attention to slide two of the supplementary presentation available for download on this webcast and also available on our website at telusinternational.com slash investors. The statements made during this call may be forward-looking in nature, including all comments reflecting expectations, assumptions, or beliefs about future events or performance that do not relate solely to historical periods. These forward-looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from our current projections. We assume no obligation to update any forward-looking statements.

Before we begin I'd like to direct your attention to slide two of the supplementary presentation available for download on this webcast and also available on our website Telus International Dot Com Slash inductors.

Speaker Change: The statements made during this call may be forward looking in nature, including all comments, reflecting expectations assumptions or beliefs about future events or performance that do not relate solely to historical periods.

Speaker Change: These forward looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from our current projections.

Speaker Change: We assume no obligation to update any forward looking statements.

Jeff Garrett: Jeff and Vanessa will also discuss certain non-GAAP measures that the management team considers to be gap measures, and the reconciliation to the comparable gap measures can be found in the appendices of today's supplementary presentation, along with the earnings news release issued this morning and regulatory filings available on CDAR Plus and EDGAR. I'd also like to remind everyone that all financial measures we're referencing on this call and in our disclosure are in US dollars unless specified otherwise and relate only to Telus International results and measures. With that said, I'll now pass the call over to our President and CEO, Jeff Garrett. Thank you, Jason. Good morning, everyone.

Speaker Change: Jonathan Vanessa will also discuss certain non-GAAP measures that the management team considered to be.

Speaker Change: GAAP measures and a reconciliation to the comparable GAAP measures can be found in the appendices of today's supplementary presentation, along with the earnings news release issued this morning, and regulatory filings available on SEDAR and Edgar.

Speaker Change: I'd also like to remind everyone that all financial measures were referencing on this call and in our disclosure are in U S dollars unless specified otherwise and relate only to Telus international results and measures.

Speaker Change: With that I'll now pass the call over to our President and CEO Jack Garrett.

Jack Garrett: Thank you, Jason and good morning, everyone.

Jeff Puritt: Telus International performed well to close what was a very challenging year for our industry. In the fourth quarter, CI grew revenues 10% year over year and, importantly, saw a continued improvement in our adjusted EBITDA margin to exit the year at 23.7%, demonstrating the efficacy of our cost efficiency programs that we discussed over the past two quarters. Despite the continuing challenging macroeconomic environments, PI secured several new client wins this past quarter, including a North American customer engagement software and analytics company, Western Canada's premier heavy-duty truck and bus dealership, and a German research institution focused on innovative visual services. Additionally, our team at Willowtree also welcomed several new clients in the quarter, including a personal finance company, a U.S. wireless provider, and an American biotech company. We also continue to grow business with our existing clients, including our largest client, Telus Corporation, supporting their ongoing digital evolution in multiple areas, including Telus Health in particular.

Jack Garrett: Telus International performed well to close what was a very challenging year for our industry in the fourth quarter <unk> grew revenue, 10% year over year, and importantly saw a continued improvement in our adjusted EBITDA margin to exit the year at $23, 7% demonstrating the efficacy of our cost efficiency programs that we did.

Jack Garrett: Because over the past two quarters.

Jack Garrett: Despite the continuing challenging macroeconomic environment secured several new client wins, this past quarter, including a north American customer engagement software and analytics company Western Canada's Premier heavy duty truck and bus dealership and a German research institution focused on innovative visual systems. Additionally, our team.

Jack Garrett: Willow tree also welcomed several new clients in the quarter, including a personal finance company, our U S wireless provider and an American biotech company.

Jack Garrett: We also continue to grow our business with our existing clients, including with our largest clients Atlas Corporation supporting their ongoing digital evolution of multiple areas, including Telus health in particular.

Jeff Puritt: As well, we've secured new engagements with other existing clients, such as the Canadian Multinational Banking and Financial Services Corporation and Google, our second largest client. Moreover, our team at Willowtree continues to gain incremental market share in the financial services vertical, where we already count numerous Fortune 500 brands as clients. And I'll share more details about one of these clients in particular in a case study shortly. During the quarter, the Willowtree team also grew our business with existing clients, including an American hotel company and the world's largest brewing company that owns multiple global brands. Although macroeconomic conditions continue to constrain the full potential of our cross-selling efforts, TI and WillowTree are making progress in fostering our fully integrated go-to-market strategy with several proposals and various stages of review with clients in the logistics, e-commerce, financial services, and technology industries. Stay on Willowtree for a moment.

Jack Garrett: Well, we've secured new engagements with other existing clients such as a Canadian multinational banking and financial services Corporation, and Google Our second largest client.

Jack Garrett: Moreover, our team in Willow tree continues to gain incremental market share in the financial services vertical in which we already count numerous fortune 500 brands as clients and I'll share more details about one of these clients in particular in a case study shortly.

Jack Garrett: During the quarter. The military team also grew our business with existing clients, including an American Hotel company and the world's largest brewing company that owns multiple global brands.

Jack Garrett: Although macroeconomic conditions continue to constrain the full potential of our cross selling efforts Ti and military are making progress in fostering our fully integrated go to market strategy with several proposals in various stages of review with clients in the logistics E Commerce financial services and technology industries.

Stay on military for a moment last week. Some of you may have tuned into a segment of the today show it covered the highly anticipated release of Apple's vision probe virtual reality headset.

Jack Garrett: Prominently during the show segment was the three D volumetric capture studio located at Nova Southeastern University in Florida.

Jack Garrett: That studio was built by our team at Willow tree for Sony and it runs on our virtual reality capture and render platform that enables three D modeling used in virtual and augmented reality.

Jeff Puritt: Last week, some of you may have tuned into a segment of the Today Show. It covered the highly anticipated release of Apple's Vision Pro virtual reality headset, and featured prominently during the show segment was the 3D volumetric capture studio located at Nova Southeastern University in Florida. That studio was built by our team at Willowtree for Sony, and it runs on our virtual reality capture and render platform that enables 3D modeling used in virtual and augmented reality. Specifically, our engineering team built the software platform and the camera interface for the studio. We took the project from early stage proof-of-concept to production-ready within three months. Our team also built additional tools that ensured the successful integration of hardware and software, including a new cloud render pipeline to leverage remote computing resources to produce 3D graphics and animation.

Jack Garrett: Typically our engineering team built the software platform and the camera interface for the studio. We took the project from early stage proof of concept and production ready within three months. Our team also built additional tools that ensure the successful integration of hardware and software, including our new cloud render pipeline to leverage remote compute.

Jack Garrett: <unk> resources to produce three D graphics and animation.

Speaker Change: As an update on fuel I Act, while it's still early days, we're encouraged by the engagement with clients and the contracts that are in various stages of negotiation. We believe our suite of journey II offerings as a great enablement platform that provides enterprises with secure access the large language models, which would otherwise be too costly and time consuming of an investment for them.

Speaker Change: Many companies, especially those that are just getting started on their journey a journey in fact.

Speaker Change: <unk> recently featured our journey I Jumpstart accelerator program as an example of a successful journey II implementation customer care business process services.

Jeff Puritt: As an update on Fuel IX, while it's still early days, we're encouraged by the engagement with clients and the contracts that are in various stages of negotiation. We believe our suite of Gen-AI offerings is a great enablement platform that provides enterprises with secure access to large language models, which would otherwise be too costly and time-consuming of an investment for many companies, especially those that are just getting started on their Gen-AI journey. In fact, IDC recently featured our Gen-AI Jumpstart Accelerator Program as an example of successful Gen-AI implementation in customer care business process services. This specific use case featured WillowTree's engagement with one of North America's leading banks. Over the span of eight weeks, our team developed a proof of concept to validate the feasibility and viability of a trustworthy AI-powered chatbot for this banking client's customer experience.

Speaker Change: The specific use case featured willow trees engagement with one of north America's leading banks over the span of eight weeks our team developed a proof of concept validate the feasibility and viability of a trustworthy AI powered chatbot banking clients customer experience as a starting point or will it treating facilitated audience workshop.

Speaker Change: <unk> determined best practices for AI technical and UX design conducted product design and research around business outcomes and presented functional solutions and prototype education to project stakeholders upon finalization of the proof of concept.

Speaker Change: Through user interviews testing strategy risk analysis, and reporting we were able to not only understand users need mental model expectations and desires related to AI powered chatbot. We also established U S guidelines and added to the bank bought experience knowledge base simultaneous with the.

Speaker Change: The solution our military team worked on demonstrates the power of journey, II and enhancing customer service and empowering customers with a robust conversational financial literacy tool across all of our client discussions on Gen. II of key concern is the security and confidentiality of their data with our fuel.

Speaker Change: IX platform, we insured client data stay separated from the core LLM models. Moreover, our clients can choose the right LLM tool for any given application optimizing cost and reducing the risk of vendor lock in within the rapidly evolving ecosystem.

Jeff Puritt: As a starting point, our Willowtree team facilitated audience workshops, determined best practices for AI, technical, and UX design, conducted product design and research around business outcomes, and presented functional solutions and prototype education to project stakeholders upon finalization of the proof of concept. Through user interviews, testing strategy, risk analysis, and reporting, we were able to not only understand users' needs, mental models, expectations, and desires related to AI-powered chatbots, but we also established UX guidelines and added to the bank's bot experience knowledge base simultaneously.

Speaker Change: As the fuel IX platform is deployed with clients, we work with them to launch specific module for example, our CX agent support bought based on each client dataset and current IQ tools and infrastructure.

Speaker Change: Platform enables clients to deploy orchestrate and administer multiple Jennie O applications quickly offer the same foundation to deliver value for clients, while maintaining the ability to scale up our status as the client needs.

Speaker Change: <unk> provides the flexibility and resiliency to avoid application obsolescence as the foundational model space rapidly evolves. Indeed, degenerative AI space remains very active with regulatory oversight a top priority to continue development and adoption in a responsible manner in early December the European Parliament and count.

Jeff Puritt: The solution our WillowTree team worked on demonstrates the power of GenAI in enhancing customer service and empowering customers with a robust conversational financial literacy tool. Across all of our client discussions on GenAI, a key concern is the security and confidentiality of their data. With our Fuel ix platform, we ensure client data stays separated from the core LLM models.

Speaker Change: Some of the EU reached an agreement on the shape and content to the EU regulation on artificial intelligence AI Act, which among other provisions restrict spatial recognition and deep fakes and define our businesses can use AI, while the detailed in a final form of the act are still a work in progress bonus as an industry.

Speaker Change: Fence to establish their own AI governance programs and processes to ensure compliance.

Jeff Puritt: Moreover, our clients can choose the right LLM tool for any given application, optimizing costs and reducing the risk of vendor lock-in within the rapidly evolving AI ecosystem. As the Fuel iX platform is deployed with clients, we work with them to launch specific modules, for example, a TX agent support bot based on each client's data set and current IT tools and infrastructure. Our platform enables clients to deploy, orchestrate, and administer multiple GEN-AI applications quickly off of the same foundation to deliver value for clients while maintaining the ability to scale up as fast as the client needs. ULIX provides the flexibility and resiliency to avoid application obsolescence as the foundational model space rapidly evolves. Indeed, the generative AI space remains very active, with regulatory oversight a top priority for continued development and adoption in a responsible manner. In early December, the European Parliament and the Council of the EU reached an agreement on the shape and content of the EU Regulation on Artificial Intelligence, the AI Act, which, among other provisions, restricts facial recognition and defakes and defines how businesses can use AI.

Speaker Change: We anticipated this event and proactively adopted data practices consistent with the Draft Act. For example, we have already established governance processes for new technologies, including AI to continuously assess the compliance of our revolving solutions with regulatory requirements and industry standards our globe.

Speaker Change: Security and risk policy features and expanded segment on the acceptable use of AI tools, specifically, including a dedicated section regenerative AI with a focus on guardrails used in our approach to new technologies.

Speaker Change: Elsewhere within our AI data solutions line of service, we're leveraging our scale from our 1 million plus crowdsource AI community to serve clients with their generative AI development.

Speaker Change: Build upon this in December we launched experts engine.

Speaker Change: Fully managed tech enabled experts on demand sourcing solution for degenerative AI model builders to help them more quickly more accurately and more cost effectively secure the high quality training data set that they need to build the most demanding foundation models, including large language models at the core of expert engine is Ti proprietary machine.

Speaker Change: Seen learning model conceived and built in house here at Ti.

Speaker Change: Based on our clients' specific project requirements expert Tien tsin programmatically matches the tasks to be performed such a data creation collection annotation and validation.

Speaker Change: Best qualified individuals and assigned the correct quality control workflows to the project.

Speaker Change: Specifically for large scale data projects experts engine eliminates the over allocation of expertise to simpler task by ensuring the right contributors are working on the right test at all times. Ultimately this enables us to better address more complex and customized data set requirements for our clients we've been seeing solid MAU.

Jeff Puritt: While the details and the final form of the Act are still a work in progress, the onus is on industry participants to establish their own AI governance programs and processes to ensure compliance. At TI, we anticipated this event and proactively adopted data practices consistent with the draft Act. For example, we have already established governance processes for new technologies, including AI, to continuously assess the compliance of our revolving solutions with regulatory requirements and industry standards. Furthermore, our global security and risk policy features an expanded segment on the acceptable use of AI tools. Specifically, including a dedicated section for generative AI with a focus on guardrails used in our approach to new technology. Elsewhere, within our AI data solutions line of service, we're leveraging our scale from our million plus crowdsourced AI community to serve clients with their generative AI development.

Speaker Change: And working with Hyperscale, such as Google in particular, and supporting the development of their large language models to enhance their respective gen. AI products and services is playing a central role in the reinforcement learning from human to human feedback loop and supervised fine tuning, which thanks to our scale and resource management enabled.

Speaker Change: Our AI crowd community to be more efficient and effective among other engagements. Our AI data solutions team is currently supporting the development of an automatic speech recognition for pre trade language models owned by our Santa Clara based company in the chip industry. It is also at the forefront of AI.

Speaker Change: On a similar note our computer vision team continues to work with several clients to advanced autonomous driving technologies as well as to provide dataset to help them develop and enhance various vehicle features such as automated driving.

Jeff Puritt: To build upon this, in December, we launched Experts Engine, a fully managed, tech-enabled, experts-on-demand sourcing solution for generative AI model builders to help them more quickly, more accurately, and more cost-effectively secure the high-quality training data sets they need to build the most demanding foundation models, including large language models. At the core of Experts Engine is TI's proprietary machine learning model, conceived and built in- Based on client-specific project requirements, Experts Engine programmatically matches the tasks to be performed, such as data creation, collection, annotation, and validation, to the best qualified individual and assigns the correct quality control workflows to the project. Specifically, for large-scale data projects, Experts Engine eliminates the over-allocation of expertise to simpler tasks by ensuring the right contributors are working on the right tasks at all times.

Speaker Change: Collision avoidance systems auto braking lane departure warning and parking assistance systems to assist with development of the hands free system for urban and suburban driving as well as three way automation with an eye on continuous improvement and efficiency. Our team uses semi automated type data tagging and selection algorithms.

Speaker Change: Some cases for more than a dozen metadata parameters and we equip our data labeling platform with three labels to facilitate the optimization of computer vision annotation.

Speaker Change: And a case study that spans both trust and safety and AI is incredibly important work, we do for our clients Zorn, an international organization committed to addressing the role of technology in the facilitation of human trafficking and child sexual exploitation.

Speaker Change: Founded in 2012, Thorne is data science and engineering teams focused solely on developing new technologies to use across the child safety ecosystem to accelerate victim identification prevent re victimization and proactively prevent abuse.

Jeff Puritt: Ultimately, this enables us to better address more complex and customized dataset requirements for our clients. We've been seeing solid momentum in working with hyperscalers, such as Google, in particular, in supporting the development of their large language models to enhance their respective Gen AI products and services. PI is playing a central role in the reinforcement learning from human feedback loop and supervised fine-tuning, which, thanks to our scale and resource management, enables our AI crowd community to be more efficient and effective.

Speaker Change: Telus International successfully completed an interim facility data annotation projects with born Annotating 90000 images and texturing from the clients' confidential database and the dark web over an eight week period. The labeled data was used to train one of their machine learning AI models to identify online social harnessed the children as this project required yet.

Speaker Change: You should have highly sensitive material, we selected a team of Annotators based on a number of key criteria, including seniority skill profile and emotional maturity. The classification of work required the annotators to determine which offensive material category image, our texturing belonged to due to the sensitive nature of the project the teamwork insecure.

Jeff Puritt: Among other engagements, our AI Data Solutions team is currently supporting the development of an automatic speech recognition for pre-trained language models owned by a Santa Clara-based company in the chip industry that is also at the forefront of AI. A similar note, our computer vision team continues to work with several clients to advance autonomous driving technologies, as well as to provide data sets to help them develop and enhance various vehicle features, such as automated driving. Collision avoidance systems, auto braking, lane departure warning, and parking assistance systems to assist with development of the hands-free systems for urban and suburban driving, as well as freeway automation, and Aravinda Galappatthige, Richard Tse, Telus Intl Cda and Aravinda Galappatthige, Richard Tse, Telus Intl Cda, In a case study that spans both trust and safety and AI, there's incredibly important work we do for our client, THORN, an international organization committed to addressing the role of technology in the facilitation of human trafficking and child sexual exploitation.

Speaker Change: Rooms out of Telus International facility using our in house annotation platform for heightened security, we set up a secure API and file transfer system. So that the images were not stored locally our team members, who worked on a reduced schedule, but it will pay to mitigate the impact of prolonged exposure to the material. These team members also had access to.

Speaker Change: Our robust wellness program that included custom counseling and regular wellness check ins our team delivered the project on time and with minimal revisions required achieving a 93% accuracy rate.

Speaker Change: Client noted OTI consistently demonstrated a dedication to both the wellness <unk> and the quality of the project delivery as both aspects are critical for a successful agitation project.

The final case study I'll share today I'll focus on tell us our parent company as.

As you likely know Lisa tell us across hundreds of programs, helping to augment and digitize their customer experience ecosystem, leveraging technology and talent to help them outpaced their competition.

Speaker Change: To start let me illustrate oti's homegrown AI enabled classification system is helping to manage tell us as customers inquiries historically customer inquiries or tickets are subject to a labor intensive and rather inefficient process, and which tickets where red categorized in triage manually by humans.

Speaker Change: With Ti being a digital enabler for tell us we developed a proprietary and customized solution for them that automate this process leveraging AI to allow technology to tackle most of this work. We've built a classification system, which is a combination of multiple customized model and then internally use language model I'd like to stress here.

Jeff Puritt: Founded in 2012, THORN has data science and engineering teams focused solely on developing new technologies to use across the child safety ecosystem to accelerate victim identification, prevent re-victimization, and proactively prevent abuse. Telus International successfully completed an in-facility data annotation project for THORN, annotating 90,000 images and text strings from the client's confidential database and the dark web over an eight-week period. The labeled data was used to train one of their machine learning AI models to identify online sexual harms to children. As this project required the annotation of highly sensitive material, we selected a team of annotators based on a number of key criteria, including seniority, skill profile, and emotional maturity. The classification work required the annotators to determine which offensive material category an image or text string belonged to. Due to the sensitive nature of the project, the team worked in secure rooms at a Telus International facility using our in-house annotation platform. For heightened security, we set up a secure API and file transfer system so that the images were not stored locally.

Speaker Change: We're not using chat GPT in this particular instance, but rather a ti solution that has been trained on user specific data to improve the accuracy and understanding of the client data.

Speaker Change: Each incoming ticket as analyzed by our AI model, which then categorizes the ticket into a specific topic bucket and then take the appropriate actions without involving humans. The classification is not limited solely to topic, but also includes parameters such as urgency of response sentiment for trend to formation with a large.

Speaker Change: Groups of customers language translation and ticket closer success, whereas the model identifies and retained for future use the most successful resolution cases.

Speaker Change: Any issue where ticket that is beyond the model's classification parameters is automatically routed to an administrator of human manually assign just to the correct category. This human in the loop process helps train our model so that theres no need for human intervention for similar tickets in the future.

Speaker Change: Beauty of the solution is that it can adapt and start understanding the nuances and language of our clients' business. In this case tell us in a matter of just a few hours not months or days, but ours reliable and specific sample data and the variety of this data for trading our model are critical elements to ensure that.

Speaker Change: Classification accuracy.

Speaker Change: Our deep partnership and history would tell US has certainly enabled <unk> to develop expertise within the telecommunications space in particular, and indeed helped us better engage with some of the world's leading communications and media companies with AI enabled <unk> solutions, a suite of network optimization solutions and of course robust digital transformation capabilities.

Jeff Puritt: Our team members worked on a reduced schedule but at full pay to mitigate the impact of prolonged exposure to the material. These team members also had access to our robust wellness program that included custom counseling and regular wellness check-ins. Our team delivered the project on time and with minimal revisions required, achieving a 93% accuracy rate. The client noted how TI consistently demonstrated a dedication to both the wellness of annotators and the quality of the project delivery, as both aspects are critical for a successful annotation project. The final case study I'll share today is Telus, our parent. As you likely know, we serve Telus across hundreds of programs, helping to augment and digitize their customer experience ecosystem, leveraging technology and talent to help them outpace their competition. To start, let me illustrate how TI's homegrown AI-enabled classification system is helping to manage Telus customers' inquiries. Historically, customer inquiries, or tickets, were subject to a labor-intensive and rather inefficient process in which tickets were read, categorized, and triaged manually by customers.

Speaker Change: In the fourth quarter Telus International was once again recognized externally with industry Awards.

Speaker Change: To being featured in the IDC report on <unk> applications in CX that I mentioned, a moment ago Ti was named a leader in the IDC market scale for worldwide data labeling software for 2023. This global assessment evaluated vendors offering data labeling software technologies and capabilities, including Telus International's proprietary AI.

Speaker Change: Data labeling platform.

Speaker Change: Earlier this week five nine our strategic partner for our intelligent cloud Native contact center as a service application platform recognized <unk> as its Canadian partner of the year and notably global partner of the year for 2023 with five nine we're working to <unk> in the cloud with Ti agile and scalable.

Speaker Change: Harnessing the power of generative AI to deliver for our clients and their customers end to end CX experiences and innovation and at the same time drive better performance and cost efficiencies and to start the new year U S. Recruitment platform ripple match selected Willow tree is a 2024 campus Port Award winner.

Jeff Puritt: Being a digital enabler for TELUS, we developed a proprietary and customized solution for them that automates this process, leveraging AI to allow technology to tackle most of this work. We built a classification system, which is a combination of multiple customized models and an internally used language model. I'd like to stress here that we're not using CHAT GPT in this particular instance, but rather a T.I.

Speaker Change: While our unwavering commitment to recruiting and hiring early career tech talent and the investments we continue to make in nurturing and retaining the next generation of diverse talent.

Speaker Change: Offering opportunities for advancement and career growth.

Speaker Change: Within our global footprint of inspiring facilities will continue to play a meaningful role in our team member satisfaction engagement and retention <unk>.

Speaker Change: Increasingly environmental impacts of our footprints are top of mind in November of 2023, we announced our new site in Casablanca, Morocco, where the capacity for 800 team members, providing AI data solutions and CX services completed in three phases. The construction of our state of the art facility combines cutting edge technology with our.

Jeff Puritt: solution that has been trained on user-specific data to improve the accuracy and understanding of client data. Each incoming ticket is analyzed by our A.I. model, which then categorizes them into a specific topic bucket and then takes appropriate action without involving the user. The classification is not limited solely to topic but also includes parameters such as urgency of response, sentiment, or trend formation within larger groups of customers, language translation, and ticket closer success, whereas the model identifies and retains for future use the most successful resolution cases. Any issue or ticket that is beyond the model's classification parameters is automatically routed to an administrator, a human, who manually assigns it to the correct category.

Speaker Change: Environmentally friendly ethos. The building was constructed to triple Green certification standards and designed with numerous sustainable features integrating the use of renewable energy through 2000 square meters of solar panels on the roof.

Speaker Change: More energy than the building consumes and with more than 11000 square meters of Green space.

Speaker Change: Elsewhere at <unk> in the fourth quarter, our team members kept their commitment to give back to communities, where we live and work for example in October our team in Essen, Germany hosted their first Telus days of giving where our team refurbished a transitional refugee home for women and children, while our U S team members in Las Vegas refurbished Gray Elementary school. Meanwhile, in Ireland.

Speaker Change: Volunteers established the first community garden, and Mohan and areas of the southern East side of core <unk>.

Jeff Puritt: This human-in-the-loop process helps train our model so that there's no need for human intervention for similar tickets in the future. The beauty of the solution is that it can adapt and start understanding the nuances and language of our client's business, in this case, Telus, in a matter of just a few hours. Not months or days, but hours. Reliable and specific sample data and the variety of this data for trading our model are critical elements to ensure classification accuracy.

Speaker Change: <unk> I had the great pleasure of attending one of our data getting it ends in Central America in November where more than 800 team members rolled up their sleeves to build our 13th school in Guatemala City.

Speaker Change: Over the course of just eight hours, we built nine classrooms, two principal offices of computer lab at kitchen, <unk> bathroom, and a multi sports court that will benefit <unk> 950 students as.

Speaker Change: As well in El Salvador, our more than 1100 volunteers refurbish the Sos children's village Child Development Center in Santa Tesla.

Jeff Puritt: Our deep partnership and history with Telus has certainly enabled TI to develop expertise within the telecommunications space, in particular, and indeed, helped us better engage with some of the world's leading communications and media companies with AI-enabled CX solutions, a suite of network optimization solutions, and, of course, robust digital transformation capabilities. In the fourth quarter, Telus International was once again recognized externally with industry awards. In addition to being featured in the IDC report on Gen AI applications in CX that I mentioned a moment ago, PI was named a leader in the IDC market scape for worldwide data labeling software for 2023. This global assessment evaluated vendors offering data labeling software technologies and capabilities, including Telus International's proprietary AI data labeling platform.

Speaker Change: These tangible contributions by our team members in making our communities better truly inspires me and are foundational to our differentiated culture at Ti and reflect our broader approach to sustainability.

Speaker Change: And we plan to release, our second sustainability report in the spring, but you can learn more about our teams and companies progress towards our goals and achievements in 2023 as well as our priorities in 2024 and beyond to continue to address the environmental social and governance aspects of our business global operations and stakeholder engagement.

Speaker Change: <unk>.

Speaker Change: And finally as you will have seen in our earnings release issued this morning, our Chief Financial Officer, Vanessa Canoe is made the.

Speaker Change: Decision to leave Telus International at the end of March.

Speaker Change: Before I turn the call over to our this morning, I'd like to take a moment to acknowledge and thank her for her many contributions to our company since she joined in 2020.

Jeff Puritt: Earlier this week, Five9, our strategic partner for our intelligent cloud-native context center as a service application platform, recognized TI as its Canadian Partner of the Year and, notably, its Global Partner of the Year for 2023. With Five9, we're working to reimagine CX in the cloud with TI's agile and scalable solutions, harnessing the power of generative AI to deliver end-to-end CX experiences and innovation for our clients and their customers, and at the same time, drive better performance and cost efficiency. And to start the new year, U.S. recruitment platform RippleMatch selected WillowTree as a 2024 Campus Forward Award winner for our unwavering commitment to recruiting and hiring early career tech talent and the investments we continue to make in nurturing and retaining the next generation of diverse talent. Offering opportunities for advancement and career growth set within our global footprint of inspiring facilities will continue to play a meaningful role in our team member satisfaction, engagement, and retention.

Speaker Change: It's difficult to summarize our achievements in the short time I have now.

Speaker Change: Vanessa is going to pivotal member of my executive team.

Speaker Change: <unk> us navigate a period of rapid growth for Telus international including our successful IPO in February 2021.

Speaker Change: I was honored substantial there to shoulder with her and many of our senior leaders last year is we finally have the opportunity to ring. The closing Bell at the New York stock exchange to commemorate the accomplishment.

Speaker Change: Greatly appreciated Vanessa counsel and support as we develop iterate and executed upon our strategy.

Speaker Change: <unk> global macroeconomic conditions.

Speaker Change: Just as importantly, I've admired Vanessa is indefatigable work ethic exceptional intellect expertise and insights as well as our ability to forge and sustained excellent relationships with our stakeholder community and.

Speaker Change: It goes without saying, but I'll say it anyways you will indeed be missed here at Ti.

Speaker Change: Now over to you Vanessa to share the details of our financial results.

Vanessa Canoe: Thank you very much very much I appreciate it.

Vanessa Canoe: And good morning, everyone. Thank you all for joining us today.

Vanessa Canoe: In the fourth quarter, we delivered revenue of $692 million up 10% year over year on a reported basis and 9% in constant currency.

Jeff Puritt: Increasingly, the environmental impacts of our footprint are top of mind. In November of 2023, we announced our new site in Casablanca, Morocco, with a capacity for 800 team members providing AI data solutions and CX services. Completed in three phases, the construction of our state-of-the-art facility combines cutting-edge technology with our environmentally friendly ethos. The building was constructed to triple green certification standards and designed with numerous sustainable features, integrating the use of renewable energy into 2,000 square meters of solar panels on the roof to produce more energy than the building consumes, and with more than 11,000 square meters of green space.

Vanessa Canoe: On an organic basis, our quarterly revenue grew 3% year over year.

Vanessa Canoe: For the full year, we generated revenue of $2 7 billion up 10% on a reported basis and also 9% in constant currency and up 2% on an organic basis.

Vanessa Canoe: Taken in the context of a very challenging year. This is a solid result supported by the expansion in services provided to existing clients lifestyle Corporation, and Google amongst others and the addition of new clients.

This growth was tempered by meaningfully lower revenues from one of our largest clients a leading social media company as well as a global financial institution clients.

Vanessa Canoe: Looking at our top three clients.

Vanessa Canoe: Revenue from telephone, Google increased 31% and 32% respectively. In Q4, while revenue from our third largest clients a leading social media network declined 31% year over year.

Vanessa Canoe: For the full year revenue from telecom, Google increased 31% and 20% respectively, while revenue from our third largest clients declined 22%.

Jeff Puritt: Elsewhere at TI in the fourth quarter, our team members kept their commitment to give back to the communities where we live and work. For example, in October, our team in Essen, Germany hosted its first Telus Days of Giving, where they refurbished a transitional refugee home for women and children, while our U.S. team members in Las Vegas refurbished Gray Elementary School. Meanwhile, in Ireland, our volunteers established the first community garden in Mahon, an area on the southern east side of Cork.

Vanessa Canoe: Excluding impacts from that pushed some media network clients. Our total revenue on an organic basis grew 9% in Q4 and 7% for the full year.

Vanessa Canoe: Looking at our revenue by vertical.

Vanessa Canoe: The fourth quarter and for the year overall, the reported revenue growth with my critical were not materially impacted by foreign currency movements.

Vanessa Canoe: Our largest vertical second game grew 1% year over year, while on a full year basis, <unk> grew 3% with growth from Google driven by strong momentum in AI data solutions work offsetting revenue declines from our third largest client.

Jeff Puritt: Personally, I had the great pleasure of attending one of our Native giving events in Central America in November, where more than 800 team members rolled up their sleeves to build our 13th school in Guatemala City. In just 8 hours, we built 9 classrooms, 2 principal offices, a computer lab, a kitchen, 2 sets of bathrooms, and a multi-sports court that will benefit 950 students. As well, in El Salvador, our more than 1,100 volunteers refurbished the SOS Children's Village Child Development Center in Santa Tecla.

Vanessa Canoe: Excluding again disposal, leading social media network clients our revenue in the second game vertical grew by approximately 16% year over year in both Q4 and for the full year.

Vanessa Canoe: Revenue from the E Commerce, and Fintech vertical increased 4% year over year, driven by higher volume.

Vanessa Canoe: For the full year E Commerce, and Fintech revenue decline due to a decline in service during the first half of the year, which subsequently improved during the second half of the year.

Our parent company Pillar Corporation continues to drive growth in our communications and media vertical with quarterly revenues, increasing 21% year over year, while growing at 11% for the full year.

Jeff Puritt: It's these tangible contributions by our team members and making our communities better that truly inspire me and are foundational to our differentiated culture at TI and reflect our broader approach to sustainability. To that end, we plan to release our second sustainability report in the spring, where you can learn more about our team's and company's progress towards our goals and achievements in 2023, as well as our priorities in 2024 and beyond, to continue to address the environmental, social, and governance aspects of our business, global operations, and stakeholder engagement. And finally, as you will have seen in our earnings release issued this morning, our Chief Financial Officer, Vanessa Canu, has made the decision to leave Telus International at the end of March. Before I turn the call over to her this morning, I'd like to take a moment to acknowledge and thank her for her many contributions to our company since she joined us in 2020. It's difficult to summarize her achievements in the short time I have now.

Vanessa Canoe: <unk> also continues to drive year over year growth in our healthcare vertical which was up 83% in the quarter and an impressive 174% for the full year.

Vanessa Canoe: Banking financial services, and insurance or BSI was largely flat year over year in Q4, reversing a declining trend seen over the prior two quarters as the impact of the volume reduction from a global financial institution client has now lapped starting this quarter.

Vanessa Canoe: For the full year revenue declined 6% due to a reduction in traffic volume from the aforementioned client.

Vanessa Canoe: Finally, our revenue from all other vertical which includes travel and hospitality energy and utilities retail and consumer packaged goods amongst others grew 8% year over year in Q4, and 24% for the full year.

Vanessa Canoe: Looking at our revenue by geography.

Vanessa Canoe: Revenues in North America grew by 27% year over year in Q4, and 28% for the full year driven by growth in Google expanded volume from our parent company tell US Corporation and its business units as well as the addition of Willow tree clients across several industry vertical.

Vanessa Canoe: We also saw strong growth in Central America, where revenues increased 26% in Q4, and 24% and 23% rather for the full year driven by tell us along with certain technology clients and growth in AI data solution.

Jeff Puritt: Vanessa has been a pivotal member of my executive team, helping us navigate a period of rapid growth for Telus International, including our successful IPO in February 2021. I was honoured to stand shoulder-to-shoulder with her and many of our senior leaders last year as we finally had the opportunity to ring the closing bell at the New York Stock Exchange to commemorate the accomplishment. I greatly appreciated Vanessa's counsel and support as we've developed, iterated, and executed upon our strategy amidst challenging global macroeconomic conditions. Just as importantly, I've admired Vanessa's indefatigable work ethic, exceptional intellect, expertise, and insights, as well as her ability to forge and sustain excellent relationships with our stakeholder community. Vanessa, it goes without saying, but I'll say it anyway: you will indeed be missed here at TI.

Vanessa Canoe: In Asia Pacific, our revenue grew 5% and 7% in Q4 and the full year of effectively the contribution from again tell us and across several other industry verticals and clients.

Vanessa Canoe: Finally, and as expected we saw a year over year decline in revenue from Europe.

Vanessa Canoe: Percents in Q4, and 7% on a full year basis.

Vanessa Canoe: Moving on to operating expenses.

Vanessa Canoe: Salaries and benefits in the fourth quarter were $406 million and for the full year one.

Vanessa Canoe: <unk>, six 6 billion up 16% and 19% respectively year over year.

Vanessa Canoe: The increase in both periods was due to increased average employee salaries wages and higher team member count <unk>.

Vanessa Canoe: Including additional team members from our acquisition of military as well as previously discussed.

Vanessa Canoe: Earlier in the year, particularly Europe.

Vanessa Canoe: These increases were offset by the positive impact of our cost efficiency efforts initiated in the second quarter of 2023, including aligning our team member count that service demand and adjustments to variable compensation accruals based on operating performance metrics.

Vanessa Canu: And now it is over to you, Vanessa, to share the details of our financial results. Thank you very much, Jeff. I very much appreciate it. And good morning, everyone.

Vanessa Canoe: Our goods and services projects were $122 million in the fourth quarter, a decrease of 2% year over year, while him well for the full year and goods and services decreased by 1% to $461 million due to the lower use of higher external.

Vanessa Canu: Thank you all for joining us. In the fourth quarter, we delivered revenue of $692 million, up 10% year over year on a reported basis and 9% in constant currency. On an organic basis, our quarterly revenue grew 3% year over year. For the full year, we generated revenue of $2.7 billion, up 10% on a reported basis, also 9% in constant currency, and up 2% on an organic basis.

Vanessa Canoe: External contractor digital solutions business and the reduction of certain sales tax return based on our recent collection experience, which were partially offset by additional goods and services purchased in relation to military.

Vanessa Canoe: Share based compensation expense in the fourth quarter was zero for the full year it decreased by 4 million to $21 million.

Vanessa Canoe: This decrease was due to lower expense associated with awards granted in relation to our acquisition.

Vanessa Canu: Taken in the context of a very challenging year, this is a solid result, supported by the expansion of services provided to existing clients like Telus Corporation and Google, amongst others, and the addition of new clients. This growth was tempered by meaningfully lower revenues from one of our largest clients, a leading social media company, as well as a global financial institution client. Looking at our top three clients, revenue from Telus and Google increased 31% and 32%, respectively, in Q4, while revenue from our third largest client, a leading social media network, declined 31% year-over-year. For the full year, revenue from Telus and Google increased 31% and 20%, respectively, while revenue from our third largest client declined 22%. Including impacts from that social media network client, our total revenue on an organic basis grew 9% in Q4 and 7% for the full year.

Vanessa Canoe: And a downward revision in the estimated performance achievements on certain non market performance conditions, which are both partially offset by the prior year benefiting from a downward mark to market adjustments, resulting from the decrease in our share price.

Vanessa Canoe: Acquisition integration and other charges in the fourth quarter were $7 million a decrease of 70% for the full year were $55 million up 38%, primarily due to expenses associated with our cost efficiency efforts, which include a staff reduction.

Vanessa Canoe: Lower volume and acquisition and integration cost incurred in connection with our recent acquisition.

Vanessa Canoe: Depreciation and amortization expense was $84 million in Q4, and $324 million for the full year up 24% and 26% respectively, primarily due to capital any tangible asset arising from our acquisition of military as well as additional organic capital investments over the year.

Vanessa Canoe: In the fourth quarter, we recorded a gain of $20 million related to changes in business combination related provision.

Vanessa Canoe: This gain was due to a downward revision of our estimate of certain performance based criteria tied to the military business.

Vanessa Canoe: A reduction of our provision from written put options related to the acquisition.

Vanessa Canoe: Our interest expense for the fourth quarter was $37 million, an increase of $25 million in the same quarter last year and for the full year interest expense increased $103 million to $144 million.

Vanessa Canu: Looking at our revenues by vertical in the fourth quarter and for the year overall, the reported revenue growth rates by vertical were not materially impacted by foreign currency movements. The largest vertical, Second Game, grew 1% year over year, while on a full year basis, Second Game grew 3%, with growth from Google driven by strong momentum in AI data solutions, offsetting revenue declines from our third largest, including again this leading social media network client. Our revenue in the tech and games vertical grew by approximately 16% year-over-year in both Q4 and for the full year. Revenues from the e-commerce and FinTech vertical increased 4% year over year, driven by higher volumes. For the full year, e-commerce and FinTech revenue declined due to a decline in service volumes during the first half of the year, which subsequently improved during the second half of the year.

Vanessa Canoe: These increases were primarily due to higher average debt levels facility higher average interest rates and noncash interest accretion recognized on the provision for written put option arising from the Willow tree acquisition.

Vanessa Canoe: In Q4, our income tax expense of $14 million and our effective tax rate was $26 9 million compared with a negative ETR of $9 7 million percents, rather in the same quarter of the prior year, primarily due to a change in the foreign tax differential.

Vanessa Canoe: Income tax expense for the full year with $5 million, resulting in an effective tax rate, our ETR up eight 5% compared with 26, 8% in the prior year with the decrease primarily due to a change in income mix as proportionately less income was earned in higher tax jurisdictions.

Vanessa Canoe: Also saw a reduction in adjustments recognized in the current period income tax of prior period related to a favorable income tax settlement.

Vanessa Canoe: These were partially offset by an increase in withholding taxes at the proportion of net income before tax.

Speaker Change: Moving on to profitability.

Speaker Change: Adjusted EBITDA was $164 million in the fourth quarter, a year over year increase of 4% benefiting from the favorable impact of our cost efficiency effort and certain other favorable items, including vendor quality rebate lower variable incentive and favorable customer mix in the quarter.

Vanessa Canu: Our parent company, Telus Corporation, continues to drive growth in our communications and media verticals, with quarterly revenues increasing 21% year over year, while growing at 11% for the full year. Telus also continues to drive year-over-year growth in our healthcare vertical, which was up 83% in the quarter and an impressive 174% for the full year. Banking Financial Services and Insurance, or BFSI, was largely flat year-over-year in Q4, reversing a declining trend seen over the prior two quarters as the impact of the volume reduction from a global financial institution client has now lapped, starting this quarter.

Speaker Change: Further there were increased volume in AI data solutions, namely, Google and digital enablement with talent.

Speaker Change: This helped to more than offset the impact of reductions in service demand principally in Europe wage inflation and accelerated ramp up cost in the quarter with certain clients.

Speaker Change: Correspondingly, our adjusted EBITDA margin in the fourth quarter was $23, 7% expanding by 200 basis points quarter over quarter, while contracting 120 basis points year over year.

Speaker Change: For the full year adjusted EBITDA was $583 million, a decrease of 4% primarily due to the increase in salaries and benefits outpacing revenue growth, resulting from lower utilization of team members in certain regions and changes in our revenue mix.

Speaker Change: Adjusted EBITDA margin for the year was 21, 5% a contraction of 310 basis points from the prior year due to the previously mentioned cost and balances, which were partially offset by cost efficiency efforts initiated in Q2 2023 and realized during the second half of the year.

Vanessa Canu: For the full year, revenue declined 6% due to a reduction in service volume from the aforementioned client. Finally, our revenue from all other verticals, which includes travel and hospitality, energy and utilities, retail, and consumer packaged goods, amongst others, grew 8% year-over-year in Q4 and 24% for the full year. Looking at our revenues by geography, Revenues in North America grew by 27% year-over-year in Q4 and 28% for the full year, driven by growth in Google, expanded volume from our parent company Telus Corporation and its business units, as well as the addition of WillowTree clients across several industry verticals. We also saw strong growth in Central America, where revenues increased 26% in Q4 and 23% for the full year, driven by Telus, along with certain technology clients and growth in AI data.

Speaker Change: Adjusted net income in the fourth quarter was $72 million a decrease of 24%.

Speaker Change: While adjusted diluted earnings per share was 26% a decrease of 26% year over year, largely as a result of the higher operating expenses interest expense and tax expense outpacing revenue growth.

Speaker Change: For the full year adjusted net income decreased by 24% to 252 million, while adjusted diluted earnings per share was <unk> 91, a decrease of 26%.

Speaker Change: As an update to our cost efficiency efforts that I discussed with you in prior quarters.

Speaker Change: This program, which again targeted in Q2 of 2023, and primarily encompass team member count reductions in line with demand rationalization of certain facilities and a reduction in certain third party vendor costs have generated $104 million annualized savings.

Speaker Change: From the $96 million that I reported last quarter.

Speaker Change: Approximately 46 million was recognized during the year, while the remaining $58 million will accrue to our benefit in 2024.

Speaker Change: More on that later.

Speaker Change: Now turning to the balance sheet and cash flow.

Speaker Change: At the end of the fourth quarter constant cash equivalents were $127 million and our total available liquidity was $609 million.

Speaker Change: We generated free cash flow of $150 million up 92% year over year, driven by lower income tax payments and higher net inflows from working capital in the quarter.

Speaker Change: For the full year free cash flow of $405 million up 22%, primarily due to higher net inflows from working capital, which included higher cash receipts from Terex Corporation as well as lower income tax payments and share based compensation payments.

Vanessa Canu: In Asia-Pacific, our revenue grew 5% and 7% in Q4 and the full year, respectively, with contributions from, again, Telus and across several other industry verticals and clients. Finally, and as expected, we saw a year-over-year decline in revenue from Europe of 8% in Q4 and 7% for the full year. Moving on to operating expenses, salaries and benefits in the fourth quarter were $406 million, and for the full year, $1.66 billion, up 16% and 19%, respectively, year over year.

Speaker Change: These items were partially offset by lower operating profit and cash expenditures for transaction cost associated with the military acquisition.

Speaker Change: As a percentage of revenue free cash flow was approximately 15% in 2023.

Speaker Change: Capital expenditures for the year decreased 11% to $93 million, primarily due to the deferral of noncritical sustaining spend.

Speaker Change: Spent and the rationalization of our facilities footprint and that's part of our cost efficiency efforts mentioned earlier for.

Speaker Change: For the year capital expenditures as a percentage of revenue were three 4%.

Speaker Change: We also continued to reduce our leverage in Q4, lowering our net debt to adjusted EBITDA leverage ratio as defined by our credit agreement to two eight at the end of December and improvements from Teed up My next I thought the end of September 2023.

Vanessa Canu: The increase in both periods was due to increased average employee salary wages and higher team, including additional team members from our acquisition of WillowTree, as well as previously discussed cost imbalances earlier in the year, particularly in Europe. These increases were offset by the positive impact of our cost efficiency efforts initiated in the second quarter of 2023, including aligning our team member counts with service demands and adjustments of variable compensation accruals based on operating performance metrics. Our goods and services purchased were $122 million in the fourth quarter, a decrease of 2% year-over-year, while for the full year, goods and services decreased by 1% to $461 million due to the lower use of higher cost external contractors in our digital solutions business and the reduction of certain sales tax reserves based on our recent collection experience, which were partially offset by additional goods and services purchased in relation to Willow, Share base compensation expense in the fourth quarter was zero, while for the full year, it decreased by $4 million to $21 million.

Speaker Change: We believe our robust customer profile will continue to drive further deleveraging through 2024.

Speaker Change: Speaking of 2024, let's turn to our outlook.

Speaker Change: Much like our industry peers, we remain cautious given the ongoing challenging demand environment with delayed decision, making expect that to continue contributing to headwinds in Q1 and Q2 in particular, while we are hopeful to start seeing broader demand improvement in the second half of 2024.

Speaker Change: Our outlook for revenue for 2024 is in the range of $2 79 to $2 85 billion, which represents revenue growth of 3% to 5% on a reported basis.

Speaker Change: We do not currently expect year over year foreign currency impact on revenue to be material.

Speaker Change: Within the outlook range, we continue to assume near term softness in revenue from our third largest client offset by continued expansion of revenue with telecom operation and further momentum with other large clients, including Google.

Speaker Change: As you may have seen in our earnings release.

Speaker Change: Beginning in the first quarter of 2024, we will no longer exclude share based compensation expense and changes in business combination related provision and the tax effect of these items in our presentation of adjusted EBITDA and adjusted diluted earnings per share.

The two target, which largely offset in 2023 and are expected to also largely offset in 2024 are currently expected to create a minimal net impact on adjusted EBITDA or adjusted EBITDA margin.

Vanessa Canu: This decrease was due to lower expenses associated with awards granted in relation to our acquisition and a downward revision on the estimated performance achievement on certain non-market performance conditions, which were both partially offset by the prior year benefiting from a downward market adjustment resulting from a decrease in our share price. Acquisition, integration, and other charges in the fourth quarter were $7 million, a decrease of 70%, while for the full year they were $55 million, up 38%, primarily due to expenses associated with our cost-efficiency efforts, which included staff reduction to address lower service volume, and acquisition and integration costs incurred in connection with our recent acquisition. Depreciation and amortization expense was $84 million in Q4 and $324 million for the full year, up 24% and 26%, respectively, primarily due to capital and intangible assets arising from our acquisition of WillowTree, as well as additional organic capital investments over the years.

Speaker Change: However, the tax effect of such adjustments will impact adjusted net income while our weighted average diluted share counts has also been updated to reflect these adjustments.

Speaker Change: Accordingly, the range it I'm about to share with you for these metrics are aligned with a modified presentation.

Speaker Change: For more information regarding this change, including a reconciliation of the previous and current presentation. Please see the non-GAAP section of our earnings release we.

Speaker Change: We will also be posting additional quarterly reconciliation to assist with your modeling to our Investor Relations website.

Speaker Change: For adjusted EBITDA, we expect a range of $623 million to $643 million, representing 7% to 10% year over year growth with adjusted EBITDA margin of 22, 3% to 22, 6%.

Again. This includes the expectation of minimal net impact from the inclusion of both share based compensation expense and changes in business combination related provision to adjusted EBITDA.

Speaker Change: Adjusted EBITDA growth to outpace revenue growth in 2024 in part due to the significant cost efficiency program, we executed upon last year.

Speaker Change: While those executed programs will generate tailwind going into 2024 as I referenced earlier, we also plan to invest in our business in a meaningful way this year in two key areas.

Vanessa Canu: In the fourth quarter, we recorded a gain of $20 million related to changes in business combination-related provisions. This gain was due to a downward revision of our estimates of certain performance-based criteria tied to the Willow Tree business and a reduction of our provision for written put options related to the FDA. Our interest expense for the fourth quarter was $37 million, an increase of $25 million in the same quarter last year, and for the full year, interest expense increased $103 million to $144 million.

Speaker Change: First we are investing meaningfully in our sales and marketing functions to the tune up $25 million in year by hiring of additional sales and sales enablement personnel to increase our geographic footprint account coverage and political coverage as well.

Second we are investing $6 million of opex, not including the Capex investment in internal transformation of our service delivery capabilities to enhance service quality and optimize our global cost of service, enabling us to further reduce our cost to serve on a longer term basis.

Speaker Change: Normalizing for this meaningful investments of $31 million were making this year, our adjusted EBITDA margin for the year would have otherwise been 23, 5% at the midpoint of our guide.

Vanessa Canu: These increases were primarily due to higher average debt levels on our credit facility, higher average interest rates, and non-cash interest accretion recognized on the provision for written good options arising from the Willow Tree acquisition. In Q4, our income tax expense was $14 million, and our effective tax rate was $26.9 million, compared with a negative ETR of 9.7 million percent, rather, in the same quarter of the prior year, primarily due to a change in the foreign tax differential. Income tax expense for the full year was $5 million, resulting in an effective tax rate, or ETR, of 8.5% compared with 26.8% in the prior year, with the decrease primarily due to a change in income mix. As proportionately less income was earned in higher tax jurisdictions, while we also saw a reduction in adjustments recognized in the current period for income tax of the prior period related to a favorable income tax settlement. These are partially offset by an increase in withholding taxes as a proportion of net income before tax.

Speaker Change: We believe these investments while significant in 2024 are critical to our future revenue growth and indeed profitability trajectory well beyond 2024.

Speaker Change: Our outlook calls for an adjusted diluted EPS range of 93 to 98, representing growth of seven 7% to 13%.

Speaker Change: Our outlook assumes a weighted average diluted share counts of approximately $292 million for the year.

Speaker Change: And finally for the full year 2024, we expect our effective tax rate to be in the range of 22% to 26%, reflecting the expected jurisdictional mix of our earnings.

Speaker Change: While we do not provide quarterly guidance I would like to highlight certain seasonality factors that should be helpful. In modeling quarterly cadence.

Speaker Change: We expect revenue seasonality of approximately 48% in the first half and 52% in the second half of 2024 and.

Speaker Change: And adjusted EBITDA seasonality of approximately 45% in the first half and 55% in the second half.

Speaker Change: The EBITDA Q the second half of the year reflects the aforementioned new investments to support growth and efficiency being incurred starting in the first half when the associated benefit ramping up throughout the year and beyond.

Vanessa Canu: Moving on to profitability, adjusted debit was $154 million in the fourth quarter, a year-over-year increase of 4%, benefiting from the favorable impact of our cost efficiency effort and certain other favorable items, including vendor volume rebates, lower variable incentives, and favorable customer mix in the quarter. Furthermore, there were increased volumes in AI data solutions, namely with Google and digital enablement with Telus. This helps to more than offset the impact of reductions in service demand, principally in Europe, wage inflation, and accelerated ramp-up costs in the quarter for certain clients. Correspondingly, our adjusted EBITDA margin in the fourth quarter was 23.7%, expanding by 200 basis points quarter over quarter while contracting by 120 basis points year over year. For the full year, adjusted EBITDA was $583 million, a decrease of 4%, primarily due to the increase in salaries and benefits, outpacing revenue growth, resulting from lower utilization of team members in certain regions and changes in our revenue. Adjusted EBITDA Adjusted net income in the fourth quarter was $72 million, a decrease of 24%.

Speaker Change: As a reminder, our annual wage increases also kick in during the first half of year consistent with previous years.

Speaker Change: Both revenue and EBITDA Skus reflects what we expect for our business with the effect being more pronounced in the first quarter in particular, as we don't foresee the demand environment improving.

Speaker Change: Until later in the year.

Speaker Change: Finally, our effective tax rate is also subject to seasonality being higher in the first half of the year and lower in the second.

Speaker Change: Lastly, before we move on to questions.

Speaker Change: Thank you Jack for your kind words earlier.

Jack Garrett: It has been an absolute honor to serve as CFO of Telus International for the last three and a half years and so and to have helped to guide its resilient financial profile.

Jack Garrett: Our compound annual growth rate from 2020 to 2023 has been remarkable and I'm honored to have been part of that while further building our foundation for the future.

Jack Garrett: I have tremendous confidence in the company's leadership team its strategy and future prospects and wish everyone. A ti continued success.

Jack Garrett: Will indeed be rooting for the team from afar.

Speaker Change: With that let's move on to questions I kindly ask you to please keep it to one question at a time so everyone can participate Jonathan.

Speaker Change: Certainly.

Speaker Change: One moment for our first question.

Speaker Change: And our first question comes from the line of Tien Tsin Huang.

Speaker Change: From Jpmorgan your question please.

Speaker Change: Okay.

Speaker Change: Thank you so much all the best to Vanessa.

Speaker Change: From here.

Speaker Change: I wanted to ask maybe if you don't mind, let's start with margin I know youre going to get a lot of questions on revenue just just a little bit more detail on the margin outlook and what levers you might be pulling to drive that second half improvement of coffee and investments, but also heard things like this.

Some ramp up costs I want to make sure Thats, just typical and I.

Vanessa Canu: While adjusted daily net earnings per share was $0.26, a decrease of 26% year over year, largely as a result of higher operating expenses, interest expense, and tax expense outpacing revenue. For the full year, adjusted net income decreased by 24% to $252 million, while adjusted diluted earnings per share was $0.91, a decrease of $0.26, as an update to our cost efficiency efforts that I discussed with you in prior quarters. These programs, which again started in Q2 of 2023 and primarily encompass team member count reductions in line with demand, rationalization of certain facilities, and a reduction in certain third-party vendor costs, have generated $104 million in annualized savings, up from the $96 million that I reported last quarter. Approximately $46 million was recognized during the year, while the remaining $58 million will accrue to our benefits in 2024. More on that later.

Speaker Change: Subcontractor usage things like that utilization any other any other call us there. Thank you.

Speaker Change: Thanks, Tien tsin absolutely.

Speaker Change: I think I've called out the main items and I think youre absolutely right. So our ramp up costs are typically higher, particularly in Q1, and we're actually starting to see some of that in Q4.

Tien: Nothing unusual there that's our typical seasonal cadence when we start to see that build up through the year and of course, the revenue generation front to accelerate so we incur the ramp up costs starting early and then the revenue starts to materialize and hit sort of.

Tien: Run rate, our proficiency levels, the EBITDA margin start to pick up as a result of that so all of that very normal.

Tien: Part of our typical cadence I think what I would call out as being <unk>.

Tien: The difference this year indeed is the.

Tien: $31 million of investments that I called out.

Tien: As mentioned in the prepared remarks, as we went through our planning for the year.

Tien: We do recognize that we want to get back to our 23% plus EBITDA margin. It was also critically important that we set aside investment for future growth and future profitability. We do have a very strong and robust markets as we've discussed many times in the past so whilst we're talking about macroeconomic headwinds in 2023.

Vanessa Canu: Now turning to the balance sheet and cash flow. At the end of the fourth quarter, cash-in-cash equivalents were $127 million, and our total available liquidity was $609 million. We generated a pre-cost flow of $115 million, up 92% year-over-year, driven by lower income tax payments and higher net inflows from working capital in the quarter. For the full year, free cash flow was $405 million, up 22%, primarily due to higher net inflows from working capital, which included higher cash receipts from Telus Corporation, as well as lower income tax payments and share-based compensation. These items were partially offset by lower operating profits and cash expenditures for transaction costs associated with the Willowtree acquisition. As a percentage of revenue, free cash flow was approximately 15% in 2023. Capital expenditures for the year decreased 11% to $93 million, primarily due to the deferral of non-critical sustaining, Aravinda Galappatthige, Richard Tse, Telus Intl Cda. For the year, capital expenditures as a percentage of revenue were 3.4%.

In short term first half 'twenty 'twenty four we do think the market will recover.

Tien: Through the balance of 2024 and beyond and so making those critical investments in our sales and marketing functions now will position us in a better way to be able to participate in that growth and similarly, making the investments in our operations transformation will similarly enabled us to have better agility to manage our delivery cost structure in the long term.

Speaker Change: Understood. Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you one moment for our next question.

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

Speaker Change: Thanks.

Dan Perlin: Morning, and all the best as well.

Speaker Change: Again, just thank you for all the support.

Speaker Change: Through this process, but.

Dan Perlin: The question that I have is the sales and marketing investment that you're calling out here I am wondering how much of that if any is influenced by some of the year end budget discussions that youre, having with your clients and specifically here I'm kind of I'm kind of tailoring and away from the top three so if we exclude those for the moment and just think about the remainder and some of the new client wins.

Dan Perlin: Yes.

Speaker Change: Thanks, Dan So we.

Speaker Change: We don't we don't include.

Speaker Change: <unk> tell us as a recipient of our sales and marketing activity.

Speaker Change: As you might expect given the nature of the relationship whilst we certainly work as hard if not harder in some cases to win and keep and grow tellers business.

Vanessa Canu: We also continue to reduce our leverage in Q4, lowering our net debt to adjusted EBITDA leverage ratio as defined per our credit agreement to 2.8x as of the end of December and making improvements from 2.9x as of the end of September 2023. We believe our robust cash flow profiles will continue to drive further increases in leveraging through 2021. Speaking of 2024, let's turn to our. Much like our industry peers, we remain cautious given the ongoing challenging demand and variance, with delayed decision making expected to continue, contributing to headwinds in Q1 and Q2 in particular, while we're hopeful to start seeing broader demand improvement in the second half of 2024. Our outlook for revenue for 2024 is in the range of $2.79 to $2.85 billion, which represents revenue growth of 3% to 5% on the reported revenue. We do not currently expect European or European foreign currency impacts on revenue to be material.

Speaker Change: Given the proximity where we're not using traditional sales activity was certainly not commissioning salespeople in connection with that works, leaving aside the other top two so we continue to see an exciting and robust landscape for growth, particularly around Nexgen AI enabled solutions in particular in our.

Speaker Change: Significant.

Speaker Change: Increase in investment in sales marketing solution.

Speaker Change: The entire ecosystem, but to grow our capability is really.

Speaker Change: It's a bit of a.

Speaker Change: Push me pull you in terms of our belief and our confidence in our observation that this is going to be a target rich fertile environment for growth, we just need more feet on the street to go out and capture those those opportunities.

Speaker Change: And cautiously optimistic that has been as I mentioned, a few moments ago by the second half of the year.

Speaker Change: This.

Speaker Change: Elongated pause caused by uncertainty in the macro whether it's winter if interest rates finally plateau, some hopefully better geopolitical global stability et cetera will unlock more meaningful transformational decision, making amongst our existing and targeted customer base in particular.

Speaker Change: Great. Thank you.

Speaker Change: Thank you Sir.

Speaker Change: Q1 moment for our next question.

Speaker Change: And our next question.

Vanessa Canu: Within this Outlook range, we continue to assume near-term softness in revenue from our third largest client, offset by continued expansion of revenue with Telus Corporation and further momentum with other large clients, including Google. As you may have seen in our earnings, Beginning in the first quarter of 2024, we will no longer exclude share-based compensation expense and changes in business combination-related expenses and the tax effect of these items in our presentation of Adjusted EBITDA and Adjusted Deleted Earnings per Share. The two charges, which largely offset in 2023 and are expected to also largely offset in 2024, are currently expected to create a minimal net impact on adjusted EBITDA or adjusted, However, the tax effects of such adjustments will impact adjusted net income, while our weighted average and leadership accounts have also been updated to reflect these adjustments. Accordingly, the ranges I am about to share with you for these metrics are aligned with a modified presentation. For more information regarding this change, including a reconciliation of the previous and current presentations, please see the non-GAAP section of our earnings report.

Comes from the line of Ramsey El <unk> from Barclays. Your question. Please.

Ramsey El: Hi, guys. Thank you for taking my question.

Ramsey El: Echoing the same sediments Vanessa it's been a real pleasure.

Ramsey El: I wanted to ask about the large social media customer and and how we should think about eventually growing over the headwind. There do you have visibility to sort of anniversarying pointer period, or do they continue to kind of ramp down or delay or not.

Ramsey El: Not engage with incremental projects such that it sort of just pushing out that anniversary line into the future.

Speaker Change: I'm just trying to think through that thanks.

Speaker Change: Great question Ramsey nice to hear your voice I can tell you that we are all hands on deck trying to address that very issue.

Speaker Change: And continue to be cautiously optimistic that we are indeed at sort of.

Speaker Change: Call it the bottom and looking to improve and turnaround the opportunity.

Speaker Change: Candidly a bit frustrated in that regard, but we understand both the responsibility and the opportunity associated with that engagement in particular and.

Speaker Change: We're working as I say all hands on deck to see if we can't find a way to unlock and tap into what we see is continued significant opportunity there but.

Speaker Change: But right now it is still a challenge and so what's reflected in our outlook for 2024 is sort of a.

Vanessa Canu: We will also be posting additional quarterly reconciliations to assist with your modeling on our investor relations website. For adjusted EBITDA, we expect a range of 623 to 643 million, representing 7% to 10% year-over-year growth, with adjusted EBITDA margins of 22.3% to 22.6%. Again, this includes the expectation of minimal net impact from the inclusion of both share bid compensation expense and changes in business combination-related provisions to adjusted evidence.

Speaker Change: The conservative view.

The current run rate.

Speaker Change: Got it thank you very much.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from the line of Stephanie price from CIBC. Your question. Please.

Stephanie Price: Good morning, Vanessa echoing everybody else, it's been great working with you.

Stephanie Price: Good luck in the future.

Stephanie Price: I just wanted to hone in on AI.

Stephanie Price: A few weeks ago happened in that philosophy, the Google contract. It sounds like you've been broadening your relationship with Google, hoping you can talk a bit about Google on the AI side, and maybe more broadly your customer base, what youre seeing around AI.

Vanessa Canu: We have stepped adjusted EBITDA growth to outpace revenue growth in 2024, in part due to the significant cost efficiency program we executed last year. While those executed programs will generate tailwinds going into 2024, as I referenced earlier, we also plan to invest in our business in a meaningful way this year in two key areas. First, we're investing meaningfully in our sales and marketing functions to the tune of $25 million a year by hiring additional sales and sales enablement personnel to increase our geographic footprint, account coverage, and vertical coverage as well. Second, we're investing $6 million of OPEX, not including the COPEX investment, in an internal transformation of our service delivery capabilities to enhance service quality and optimize our global cost of service, enabling us to further reduce our cost to serve on a longer term basis.

Stephanie Price: So we too saw that.

Arpin: <unk> from Arpin.

Arpin: We've been the beneficiary of continued growth and.

Arpin: Opportunity in serving Google indeed around helping them on the generative AI front as I mentioned in my prepared remarks earlier Stephanie.

Arpin: The previously Bard now Gemini where.

Arpin: We're quite proud of and excited about the participation rule that we had there and continue to us.

Arpin: And again as Vanessa suggested.

Arpin: Just similar from our.

Arpin: Competitor.

Arpin: We anticipate continued growth and opportunity serving them and we continue to be the recipient of.

Arpin: Accolades and complements for the quality and timeliness of our support for them.

Arpin: And we're excited about not just continuing to grow that relationship but the.

Arpin: <unk>.

Arpin: The repurposing the follow on opportunities.

Arpin: What we're learning in serving them and helping them to build their large language model and looking for Repurposing those applications into a enterprise centric.

Arpin: Private cloud base large language model that gives enterprise clients like tell us for example.

Vanessa Canu: Normalizing for this meaningful investment of $31 million we're making this year, our adjusted EBITDA margin for the year would have otherwise been 23.5% at the midpoint of our guide. We believe these investments, while significant in 2024, are critical to our future revenue growth and, indeed, profitability trajectory well beyond 2024. Our outlook calls for an adjusted diluted DPS range of 93 to 98 cents, representing growth of 7% to 13%. Our outlook assumes a weighted average of approximately 292 million for the year.

The opportunity to leverage the functionality and the.

Arpin: Overall efficiency productivity profitability find experience enhancement benefits of generative AI capability without having to run the risk of putting their confidential proprietary customer information into the public domain, but we see that as a very very exciting opportunity going forward and again, a source of competitive advantage and differentiation.

Arpin: <unk> for us given there are not a lot of us out there who have the kind of credentials and experience helping to build these hyper scaler centric Hello, Ms. At first instance.

Arpin: Yeah.

Speaker Change: Thank you very much.

Speaker Change: Thank you one moment for our next question.

Vanessa Canu: And finally, for the full year 2024, we expect our effective tax rates to be in the range of 22% to 26%, reflecting the expected jurisdictional mix of our earnings. While we do not provide formal quarterly guidance, I would like to highlight certain seasonality factors that should be helpful in modeling quarterly cadence. We expect revenue seasonality of approximately 48% in the first half and 52% in the second half of 2024, and adjusted EBITDA seasonality of approximately 45% in the first half and 55% in the second half. The EBITDA skew for the second half of the year reflects the aforementioned new investments to support growth and efficiency being encouraged starting in the first half, with the associated benefits ramping up throughout the year and beyond.

Speaker Change: And our next question comes from the line of <unk> <unk> from Scotia Bank. Your question. Please.

Scotia Bank: Good morning, everyone, all the best with <unk>.

Scotia Bank: Things in future.

Scotia Bank: Moving onto some of the questions here, Justin Vanessa I wanted to actually get some color.

Scotia Bank: Revenue growth across all of these clients.

Scotia Bank: And Google were very strongest clients you did mention good traction on Willow tree.

Scotia Bank: From a modeling standpoint, how should we expect Google and tell us to continue to grow given meta is shrinking and how should we expect that others revenue segment. Other than these three client segments to continue to grow over the over the next few quarter.

Scotia Bank: Longer term.

Speaker Change: Hi, Danielle.

Danielle: It's a good question I think we are going to refrain from guiding by clients.

Vanessa Canu: As a reminder, our annual wage increases also kick in during the first half of the year, consistent with previous. Both revenue and EBITDA skews reflect what we expect for our business, with the effect being more pronounced in the first quarter in particular, as we don't foresee the demand environment improving, especially in the area. Finally, our effective tax rate is also subject to seasonality, being higher in the first half of the year and lower in the second half of the year.

Speaker Change: I think we also want to be cognizant of that the more granular we get on a client by client basis. Some more disclosures out there some of it is obviously competitive.

Speaker Change: Obviously, not the telecom piece, but Google and others.

Speaker Change: I think all we can offer at this point is really good with the midpoint of our guide we don't expect.

Speaker Change: The growth in and tell us to slow down we expect that to continue.

Speaker Change: We expected growth in Google frankly to continue.

Vanessa Canu: Last but not least, before we move on, thank you, Jeff, for your kind words. It has been an absolute honor to serve as CFO of Telus International for the last three and a half years and to have helped to guide its resilient financial profile. Indeed, our compound annual growth rate from 2020 to 2023 has been remarkable, and I'm honored to have been a part of that while further building our foundation for the future. I have tremendous confidence in the company's leadership team, its strategy, and future prospects and wish everyone at TI continued success. I will indeed be rooting for you from afar.

Speaker Change: As we just said and as I said in my prepared remarks, we are expecting a bit of a decline.

Speaker Change: And not in that surcharges client.

Speaker Change: A particular client.

Speaker Change: Clients are stepping down a little bit from the Q4 exit rate, but we think there may be a bit more softness there.

Speaker Change: And then apply whatever is left for the balance of the client accounts.

Speaker Change: I don't think we can offer more much more specificity than that without getting into individual clients.

Speaker Change: Client by client guidance.

That's helpful. Thank you.

Speaker Change: Thank you Dahlia.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from the line of <unk> <unk> from Canaccord. Your question. Please.

Operator: With that said, let's move on. I kindly ask you to please keep it to one question at a time, so that everyone can participate. Jonathan or Richard?

Canaccord: Good morning, Thanks for taking my questions.

Operator: Certainly. One moment for our first question, and our first question comes from the line of T'en Hsien Huan, from J.P. Morgan.

Speaker Change: All the best to Vanessa toy to working with you at the time we had.

Canaccord: My question is actually on.

Aravinda Suranimala Galappatthige: Your question, please. Aravinda Galappatthige, Richard Tse, Telus Intl Cda, Thank you so much. All the best to you, Vanessa. Thanks for all the help here.

Canaccord: On the cash flow you generate pretty good free cash flow of $400 million, which is meaningful but it was a bit of a bump in terms of EBITDA conversion to free cash flow.

Canaccord: Given that you are looking for 7% to 10% EBITDA growth and Thats on top of that even with the definitional changes there.

Vanessa Canu: I wanted to ask, maybe if you don't mind, let's start with margin. I know you're going to get a lot of questions on revenue. Just a little bit more detail on the margin outlook and what levers you might be pulling to drive that second half improvement. I heard about the investments, but I also heard things like, you know, some ramp-up costs. I want to make sure that's just typical.

Canaccord: Is it fair to assume that free cash flow can also grow in 2024.

Canaccord: Recognizing that there can be some timing issues around working capital.

Canaccord: Higher ultimately.

Canaccord: We exited our free cash flow as a percentage of revenue was 15% in not in 2023 I expect it to be in that range in 2024, if not even slightly better.

Vanessa Canu: And, you know, I think subcontractor used to do things like that utilization. Any other any other call outs there? Thank you. Thanks, Tingen. Absolutely. I think I've called out the main items, and I think you're absolutely right. So our ramp-up costs are typically higher, particularly in Q1, and we actually started to see some of that in Q4. Nothing unusual there.

Speaker Change: You are absolutely the right ballpark.

Speaker Change: Thank you.

Speaker Change: This is a very critical.

Speaker Change: Already for us for deleveraging reasons and as we've talked in the past, we've got a number of initiatives around improving working capital et cetera. So we're not slowing down on those and part of that free cash flow digit contributes a significant deleveraging in 2024.

Vanessa Canu: That's our typical seasonal cadence, but we start to see that build up through the year. And, of course, revenue generation starts to accelerate. So we incur the ramp-up costs starting early, and then as the revenue starts to materialize and hit sort of run rate or proficiency levels, the EBITDA margin starts to pick up as a result of that. All that is very normal as part of our typical cadence.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: And our next question comes from the line of Cathy Chan from Bank of America. Your question. Please.

Cathy Chan: Hey, guys as well, but I'll pause on a pleasure and best of luck just wanted to ask I mean around the broader demand improvement that you're expecting in the back half.

Cathy Chan: Are you expecting that come from specific vertical like high tech or specific regions like gear up and does that also 24 outlook does that include any material impacts on specific AI related personnel.

Vanessa Canu: I think what I would call out as being different this year, indeed, is the $31 million of investments that I mentioned. And as mentioned in the preferred remarks, as we went through our planning for the year, whilst we do recognize that we want to get back to a 23% plus EBITDA margin, it was also critically important that we set aside investment for our future growth and future profitability. We do have a very strong and robust market, as we've discussed many times in the past. So whilst we're talking about macroeconomic headwinds in 2023 and the short-term first half of 2024, we do think the market will recover through the balance of 2024 and beyond. And so making those critical investments in our sales and marketing functions now will position us in a better way to be able to participate in that growth. And similarly, making the investment in our operations transformation will enable us to have better agility to manage our delivery cost structure in the long term. Understood, thank you. Thank you.

Cathy Chan: Or.

Speaker Change: It says that you guys have booked this year. Thank you.

Speaker Change: Hey, guys. Thanks for the question.

We're sort of anticipating.

Speaker Change: Uplift across the board the only area of continued softness through 2024 that is reflected in our guide is really Europe.

Speaker Change: We have work to do frankly.

Speaker Change: In terms of rebuilding our sales and marketing capability there.

Speaker Change: Finding a better way to.

Speaker Change: Tap into the opportunity they're challenging for sure, but we have seen others out there that are successfully finding a way to grow their European.

Speaker Change: <unk> revenues and frankly, we have to do better in that regard save for Europe.

Speaker Change: We're anticipating healthy growth across the board geographically and in terms of service line again, we think all four service lines will see meaningful improvement, particularly in the back half of the year and for sure.

Operator: One moment for our next question. And our next question comes from the line of Dan Perlin from RBC Capital Markets. Your question, please. Thanks. Good morning. And Vanessa, all the best as well.

Speaker Change: It's going to be the standout for us.

Speaker Change: <unk> through the entirety of 2024 and beyond not just in the back half.

Speaker Change: In terms of industry verticals.

We're seeing really exciting growth in health care.

Speaker Change: Those of you who've been following our story since our IPO debut will remember that I have been lamenting our failure to have better success and the growth there and I am so excited about what we derived last year, not just exclusively but in fairness significantly off the back of enabling Telus health and we then being able to repurpose.

Jeff Puritt: And again, just thank you for all the support in this process. But the question that I have is, you know, the sales and marketing investment that you're calling out here. I'm wondering how much of that, if any, is influenced by some of the year-end budget discussions that you're having with your clients. And specifically here, I'm kind of, I'm kind of tailoring it away from the top three, you know, so let's exclude those for the moment and just think about the remainder and some of the new client wins. Thank you. Thanks, Dan. We don't include Telus as a recipient of our sales and marketing activity, as you might expect given the nature of the relationship, whilst we certainly work as hard, if not harder in some cases, to win, keep, and grow Telus business, given the proximity.

Speaker Change: That experience and expertise on behalf of other health care providers as well I think we will recognize that technology and patient experience excellence is going to be how we sold the world's challenges around affordability and access for health care.

Speaker Change: And the EAP solutions that <unk> provides in particular via its Lifeworks acquisition.

Speaker Change: We think he is going to be a fantastic engine for continued growth.

Speaker Change: Across the board so again I think in totality.

Speaker Change: We're not sort of singling out one area in particular, we think it's going to be across the board.

Speaker Change: Thank you.

Speaker Change: Thanks, guys. Thank.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from the line of Daniel Chan from TD Cowen Your question. Please.

Jeff Puritt: We're not using traditional sales activity; we're certainly not commissioning salespeople in connection with that work, leaving aside the other top two. We continue to see an exciting and robust landscape for growth, particularly around next-gen AI-enabled solutions, and our significant increase in investment in sales, marketing, solutioning, the entire ecosystem, to grow our capability is really a bit of a... Push me, pull you in terms of a belief and confidence and an observation that this is going to be a target-rich, fertile environment for growth. We just need more feet on the street to go out and capture those opportunities, and I am cautiously optimistic that, as Vanessa mentioned a few moments ago, by the second half of the year, this, elongated pause caused by uncertainty in the macro, whether it's when or if interest rates finally plateau, some, hopefully, better geopolitical global stability, etc. will unlock more meaningful transformational decision making amongst our existing and targeted customer base, in particular. Thank you. Thanks, Seth.

Daniel Chan: Hi, good morning.

Daniel Chan: Some of your large customers talking about implementing more AI to drive efficiencies is there a risk of a structural change to some programs like search quality ratings content moderation that there'll be completely displaced by AI. I guess this is a question related to the Apple Google Disengagement I just want to make sure. It's a vendor consolidation play rather than let's say.

Daniel Chan: Structural shift in some of the work that they that they provide them.

Speaker Change: Good question I mean, I can tell you, we certainly not heard.

Gives me from Google in particular, others, suggesting that the spend is going away.

Speaker Change: So to that point, specifically you just raised about the competition.

Speaker Change: We've enjoyed already some of that work from from them.

Speaker Change: Maps program in particular for example that had been supported by them is now supported by US and based on the conversations that we have and as you can imagine given the magnitude complexity and tenure of the relationship we have regular ongoing daily weekly conversations with them.

Speaker Change: We're seeing upside there is no question that technology disruption is a risk across the landscape, whether it's in legacy data annotation for search activity or for content moderation.

Operator: Thank you. One moment for our next question. And our next question comes from the line of Ramsey Ellis from Barclays. Your question, please. Hi guys, thank you for taking my question and echoing the same sentiments. It's been a real pleasure.

Speaker Change: We obviously have a bit of an achilles' heel around our third largest client and as I said before working diligently to find a way to mitigate that but outside of that we continue to believe in the thesis that underpinned our investment back four years ago now.

Operator: I wanted to ask about the large social media customer and how we should think about eventually growing over the headwind there. Do you have visibility to some sort of anniversarying point or period, or do they continue to kind of ramp down or delay or sort of, you know, not engage with incremental projects such that it sort of is pushing out that anniversary line into the future? Just trying to think through that.

Speaker Change: That got us into content moderation at scale with tools and platforms and capabilities.

Speaker Change: We continue to see meaningful upside opportunities there and goodness.

Speaker Change: Can't read a news article today without seeing someone somewhere we're talking about the shifting regulatory landscape.

Speaker Change: Understandable sensitivity and concern about the impact of content on the audience not just for the use of the world, but for all of US and we continue to believe that we have a meaningful opportunity to participate in that ecosystem.

Jeff Puritt: Thanks. A great question, Ramzi. Nice to hear your voice. I can tell you that we are all hands on deck trying to address that very issue and continue to be cautiously optimistic that we are indeed at sort of, let's call it the bottom, and looking to improve and turn around the opportunity. It's been, candidly, a bit frustrating in that regard, but we understand both the responsibility and the opportunity associated with that engagement in particular. And we're working, as I say, all hands on deck to see if we can't find a way to unlock and tap into what we see as continued significant opportunities there. But right now, it is still a challenge, and so what's reflected in our outlook for 2024 is sort of a conservative view of the current situation. I got it.

Speaker Change: As a consequence of our skills experience scale and in particular.

Speaker Change: Our bifurcated, but concurrent focused not just on.

Speaker Change: The efficacy of the outcomes, we can produce through the use of our digital first responders, but our focus on the wellness of that digital first responder community as well, which again I think as a source of differentiation and competitive advantage.

Speaker Change: Thanks, guys and best of luck Vanessa.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from the line of Richard <unk> from National Bank Financial markets. Your question. Please.

Operator: Thank you very much. Thank you. One moment for our next question. And our next question comes from the line of Stephanie Price from CIBC. Your question, please. Morning, Vanessa, echoing everybody else.

Richard: Yes, and thank you all of US here and thanks for all your help.

Richard: With respect to the competitive environment I.

Richard: I think a few quarters ago, you talked about sort of the pricing environment or intimated that it was more competitive perhaps you can sort of update us in terms of where that stands today.

Jeff Puritt: It was great working with you. Good luck in the future. I just want to hone in on AI.

Jeff Puritt: So a few weeks ago, Appen announced the loss of the Google contract. And it sounds like you've been broadening your relationship with Google. Hoping you can talk a bit about Google on the AI side and maybe more broadly throughout your customer base, what you're seeing around AI. So we too saw that announcement from Appen.

Speaker Change: Sorry, one more time I am not sure I understood the question.

Speaker Change: Yes, I think a few quarters ago, you sort of suggested that the pricing environment from a competitive standpoint, and becoming a little bit more fierce and im not sure. If you have any updates on that but just kind of curious to see where that would stand today.

Jeff Puritt: We've been the beneficiary of continued growth and opportunity in serving Google, indeed in helping them on the generative AI front, as I mentioned in my prepared remarks earlier, Stephanie, and previously Bard, now Gemini; we're quite proud of and excited about the participation role that we had there and continue to have. And again, as Vanessa suggested, dissimilar from our competitor. We anticipate continued growth and opportunity serving them, and we continue to be the recipient of accolades and compliments for the quality and timeliness of our support for them, and we're excited about not just continuing to grow that relationship but the spin-offs, the repurposing, the follow-on opportunities where what we're learning from serving them and helping them to build their large language models and looking for repurposing those applications into an enterprise-centric We see that as a very, very exciting opportunity going forward. And again, a source of competitive advantage and differentiation for us, given, you know, there are not a lot of us out there who have the kind of credentials and experience helping to build these hyperscaler-centric LLMs in the first instance. Thank you very much.

Yeah. Thanks for the reminder, indeed, I think that continues to be the case, so I don't see sort of.

Speaker Change: An exacerbation of worsening of that if you will but I'm certainly not seeing.

Speaker Change: Safety valve or a relaxation of that sensitivity I think what I was referencing before continues to.

Speaker Change: The VA for <unk>.

Speaker Change: Base of feature across the landscape, whether it's hyperscale or enterprise or.

Speaker Change: Or even down markets somewhat I think we are well and truly in a world where everybody is expecting more slash better for less.

Speaker Change: Therefore, it's incumbent upon re service providers.

Speaker Change: To find a way to step up to that challenge and that's again why I continue to be optimistic about our opportunity.

Speaker Change: Given the credentials we have the experience we have in <unk>.

Speaker Change: Headstart, we garnered in terms of investing in tools and technology, where again, you've heard me say this before drinking our own champagne eating our own gourmet cooking.

It's been as I pointed out the ongoing investments inside Ti to continue to enhance and amplify our ability to serve our customers.

Speaker Change: Just in terms of quality, but to do it in a way that creates the headroom we need to continue engendering. The the profitability returns that we're looking for.

Speaker Change: Again, I think it's a sign of the times and I don't see that changing anytime soon.

Speaker Change: Thank you.

Speaker Change: And that's all the time that we have for questions.

Speaker Change: This concludes the question and answer session I would like to hand, the program back to Jeff for any further remarks.

Jeff: Thanks, Jonathan.

Jeff: As always I appreciate all the thoughtful questions and continued engagement.

Jeff: The team at <unk> has worked diligently over the past two quarters to improve our performance in the second half of 2023 and as we said we would we exited the year with a margin profile much closer to our historical average with improved cost base that sets us up much better for the year ahead.

Operator: Thank you. One moment for our next question. And our next question comes from the line of Divya Goyal from Scotiabank. Your question, please. Good morning, everyone.

Jeff: The macro environment remains challenging and the sentiment across our industry is still cautious we will continue to deliver strong profitable growth and free cash flow yield as the demand environment recovers before.

Vanessa Canu: All the best, Vanessa, with the next things and future. Building on to some of the questions here, Jeff and Vanessa, I wanted to actually get some color briefly on the revenue growth across all these clients. So Telus and Google were very strong as clients. You did mention good traction on WillowTree.

Speaker Change: Before we end our call I would like to provide some additional detail regarding our CFO transition.

Speaker Change: I am thankful, indeed that Vanessa has agreed to remain at Ti until the end of March to help ensure a smooth handover to her successor, Gopi Chon, who will officially assume the role of CFO beginning on the fourth of March.

Vanessa Canu: I'm thinking from a modeling standpoint, how should we expect Google and Telus to continue to grow, given meta is shrinking? And how should we expect the others' revenue segments, other than these three client segments, to continue to grow over the next few quarters, not longer term? Hi Divya, it's a good question.

Speaker Change: Over the past 14 years <unk> has proven herself a trusted leader advisor and advocate it tell us with an evolving portfolio of responsibilities as vice President Finance and controller. She contributed significantly to transformative projects such as Telus is $7 billion multiyear rollout of its award winning pure fiber network across Canada and <unk>.

Vanessa Canu: I think we are going to refrain from guiding by client. I think we also want to be cognizant of, you know, that the more granular we get on a client-by-client basis, the more disclosures out there. Some of it is obviously competitive, obviously not the Telus piece, but, you know, Google and others. I think all we can offer at this point is, you know, really go with the midpoint of our guide. We don't expect the growth in Telus to slow down.

Speaker Change: Supported the operational and financial transformation of Telus is customer service delivery and customer experience teams.

Speaker Change: Most recently as senior Vice President and Treasurer, <unk> comprehensive portfolio of cross sells as Treasury corporate development Investor Relations pension and sustainability teams prior to Telus Dolby developed 10 years of experience with KPMG working in Vancouver, and the Silicon Valley I look forward to welcoming <unk>.

Vanessa Canu: We expect that to continue. We expect the growth in Google, frankly, to continue. And as we just said, and as I shared in my prepared remarks, we're expecting a bit of a decline continuing in that third largest client. For that particular third largest client, I would step it down a little bit from the Q4 exit rate because we think there will be a bit more softness there. And then apply whatever is left to the balance of the client. I don't think we can offer much more specificity than that without getting into individual client-by-client guidance. That's helpful.

The executive team she brings a wealth of experience as we continue to drive growth and diversification across Telus international with an ongoing focus on profitability and industry, leading free cash flow yield in 2024 and beyond we look forward to meeting many of you in the near future.

Speaker Change: Mr conferences or other opportunities and otherwise we'll be back to reporting our progress in early may when we release, our first quarter 2024 results. Thank you all for your continued interest in and support of Ti and for those of you celebrating it happy lunar new year and the year, the drag and bring all of us and our families good health and happiness.

Vanessa Canu: Thank you. Thank you, Divya. Thank you. One moment for our next question. And our next question comes from the line of Aravinda Galappatthige from Canaccord. Your question, please. Good morning.

Speaker Change: Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.

Vanessa Canu: Thanks for taking my questions and all the best to Vanessa. I enjoyed working with you during the time we had. My question is actually about cash flow. I mean, you generated pretty good free cash flow, $400 million, which is meaningful.

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Vanessa Canu: It was a bit of a bump in terms of EBITDA conversion to free cash flow. Given that you're looking for 7% to 10% EBITDA growth, and that's even with the definitional changes there, is it fair to assume that free cash flow can also grow in 2024, recognizing that there can be some timing issues around working capital? Hi Aravinda, absolutely.

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Vanessa Canu: Um, you know, we exited, you know, our cash flow, the percentage of revenue was 15% in 2023. I expect it to be in that range in 2024. It's not even slightly better.

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Vanessa Canu: So you are absolutely in the right ballpark. Thank you. As you know, this is a very critical priority for us for deleveraging reasons. And as we've talked in the past, you know, we've got a number of initiatives around improving working capital, etc. So we are not slowing down on those. And part of that free cash flow is indeed going to contribute to significant deleveraging in 2024.

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Vanessa Canu: Thank you. One moment for our next question, and our next question comes from the line of Cassie Tan from Bank of America. Your question, please. Hey guys.

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Jeff Puritt: As well, Vanessa. It's been a pleasure and best of luck. I just wanted to ask, you know, around the broader demand improvement that you're expecting in the back half, are you expecting that to come from specific verticals like high tech or, you know, specific regions like Europe? And does that also, the 24 Outlook, include any material impact from specific AI-related bookings or services that you guys have booked this year? Thank you. Hey Cassie, thanks for the question.

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Jeff Puritt: I'm sort of anticipating, uplift across the board, the only area of Aravinda Galappatthige, Richard Tse, Telus Intl Cda, finding a better way to tap into the opportunity there. Challenging for sure, but we have seen others out there that are successfully finding a way to grow their European-derived revenues, and frankly, we have to do better in that regard. Save for Europe, we're anticipating healthy growth across the board geographically, and in terms of service line, again, we think all four service will see meaningful improvement, particularly in the back half of the year, and for sure, AI is going to be the standout for us going through the entirety of 2024 and beyond, not just in the back half. In terms of industry verticals, again, we're seeing really exciting growth in healthcare, and those of you who have been following our story since our IPO debut will remember that I have been lamenting our failure to have better success in the growth there, and I am so excited about what we derived last year, not just exclusively, but in fairness, significantly off the back of enabling Telus Health, and we then being able to repurpose that experience and expertise on behalf of other healthcare providers as well.

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Jeff Puritt: I think we well recognize that technology and patient experience excellence is going to be how we solve the world's challenges around affordability and access for healthcare, and the EAP solutions that Telus provides, in particular via its LifeWorks acquisition, are going to be a fantastic engine for continued growth across the board. So again, I think, in totality, we're not sort of stingling out one area in particular. We think it's going to be across the board.

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Jeff Puritt: Thank you. Thank you. One moment for our next question. And our next question comes from the line of Daniel Chan from TD Cowan. Your question, please. Hi, good morning.

Jeff Puritt: Uh, with some of your large customers talking about implementing more AI to drive efficiency, is there a risk of a structural change to some programs like search quality ratings, and content moderation that they'll be completely displaced by AI? I guess this is a question related to the app and Google disengagement. Just want to make sure it's a vendor consolidation play rather than, let's say, a structural shift in some of the work that they do that they provide. Good question.

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Jeff Puritt: I mean, I could tell you, we've certainly not heard, excuse me, from Google, in particular, or others, suggesting that the spend is going away. So to that point, specifically, just raised about the competition, we've enjoyed already some of that work from them. The MAPS program, in particular, for example, that had been supported by them is now supported by us.

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Jeff Puritt: And based on the conversations that we have, and as you can imagine, given the magnitude, complexity, and tenure of the relationship, we have regular, ongoing, daily, weekly conversations with them, we're seeing upside. There's no question that technology disruption is a risk across the landscape, whether it's in legacy data annotation for search activity or for content moderation. We obviously have a bit of an Achilles heel around our third largest client.

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Jeff Puritt: And, as I said before, we are working diligently to find a way to mitigate that. But outside of that, we continue to believe in the thesis that underpinned our investment back four years ago now, that got us into content moderation at scale with tools, platforms, and capabilities. And we continue to see meaningful upside opportunities there, and goodness, you can't read a news article today without seeing someone somewhere talking about the shifting regulatory landscape, the understandable sensitivity and concern about the impact of content on the audience, not just for the youth of the world, but for all of us. And we continue to believe that we have a meaningful opportunity to participate in that ecosystem as a consequence of our skills and experience scale. And in particular, our bifurcated but concurrent focus, not just on the efficacy of the outcomes we can produce through the use of our digital first responders, but our focus on the wellness of that digital first responder community as well, which again, I think is a source of differentiation and competitive advantage. Thanks, Jeff, and best of luck, Vanessa. Thank you.

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Operator: One moment for our next question. And our next question comes from the line of Richard Tse from National Bank Financial Markets. Your question, please. Yes, thank you. All the best, Vanessa, and thanks for all your help.

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Operator: With respect to the competitive environment, I think a few quarters ago you talked about the pricing environment or intimated that it was a little bit more competitive. Perhaps you can sort of update us in terms of where that stands today.

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Jeff Puritt: I'm not sure I understood the question. Yeah, I think a few quarters ago, you sort of suggested that the pricing and environment from a competitive standpoint had become a little bit more fierce. And I'm not sure if you have any updates on that, but I was just kind of curious to see where that would stand today. Yeah, thanks for the reminder. Indeed, I think that continues to be the case. I don't see sort of an exacerbation, a worsening of that, if you will, but I'm certainly not seeing a safety valve or a relaxation of that sensitivity.

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Jeff Puritt: I think what I was referencing before continues to be a pervasive feature across the landscape, whether it's hyperscalers, enterprise, or even downmarket somewhat. I think we are well and truly in a world where everybody is expecting more slash, better for less. And therefore, it's incumbent upon us service providers to find a way to step up to that challenge. And that's, again, why I continue to be optimistic about our opportunity, given the credentials we have, the experience we have, and the... head start we garnered in terms of investing in tools and technology, where, again, you've heard me say this before, drinking our own champagne, eating our own gourmet cooking. As Vanessa pointed out, the ongoing investments inside TI to continue to enhance and amplify our ability to serve our customers, not just in terms of quality, but to do it in a way that creates the headroom we need to continue engendering the profitability returns that we're looking for. Again, I think it's a sign of the times, and I don't see that changing anytime soon.

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Jeff Puritt: Thank you. And as that's all the time that we have for questions, let's conclude the question and answer session. I'd like to hand the program back to Jeff Puritt for any further remarks.

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Jeff Puritt: As always, I appreciate all of your thoughtful questions and continued engagement. The team at CI has worked diligently over the past two quarters to improve our performance in the second half of 2023. And as we said we would, we exited the year with a margin profile much closer to our historical average, with an improved cost base that sets us up much better for the year ahead. While the macro environment remains challenging, and the sentiment across our industry is still cautious.

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Jonathan: We will continue to deliver strong, profitable growth and free cash flow yield as the demand environment recovers. Before we end our call, I'd like to provide some additional details regarding our CFO transition. And thankful indeed that Vanessa has agreed to remain a TI until the end of March to help ensure a smooth handover to her successor, Gopi Chand, who will officially assume the role of CFO beginning on the 4th of March. Over the past 14 years, Gopi has proven herself a trusted leader, advisor, and advocate at Telus with an evolving portfolio of responsibilities. Vice President of Finance and Controller. She contributed significantly to transformative projects such as Telus' $7 billion multi-year rollout of its award-winning PureFibre network across Canada and supported the operational and financial transformation of Telus' customer service delivery and customer experience teams.

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Jonathan: Most recently, as Senior Vice President and Treasurer, Scopey led a comprehensive portfolio across Telus' treasury, corporate development, investor relations, pension, and sustainability. Prior to joining Telus, Gopi developed 10 years of experience with KPMG, working in Vancouver, Budapest, and the Silicon Valley. I look forward to welcoming Gopi to my executive team. She brings a wealth of experience as we continue to drive growth and diversification across Telus International, with an ongoing focus on profitability and industry-leading free cash flow yield in 2024 and beyond. We look forward to meeting many of you in the near future, be it at investor conferences or other opportunities; otherwise, we'll be back to report on our progress in early May when we release our first quarter 2024 results.

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Jonathan: Thank you all for your continued interest in and support of TI, and for those of you celebrating it, Happy Lunar New Year. May the year of the dragon bring all of us and our families good health and happiness. Thank you ladies and gentlemen for your participation in today's conference. This does conclude the program. You may now disconnect. Good day. Thank you. Aravinda Galappatthige, Richard Tse, Telus Intl Cda, ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Aravinda Galappatthige, Richard Tse, Telus Intl Cda Aravinda Galappatthige, Richard Tse, Telus Intl Cda Aravinda Galappatthige, Richard Tse, Telus Intl Cda Aravinda Galappatthige, Richard Tse, Telus Intl Cda Aravinda Galappatthige, Richard Tse, Telus Intl Cda Aravinda Galappatthige, Richard Tse, Telus Intl Cda Aravinda Galappatthige, Richard Tse, Telus Intl Cda Aravinda Galappatthige, Richard Tse, Telus Intl Cda Aravinda Galappatthige, Richard Tse, Telus Intl Cda Aravinda Galappatthige, Richard Tse, Telus Intl Cda Aravinda Galappatthige, Richard Tse, Telus Intl Cda Aravinda Galappatthige, Richard Tse, Telus Intl Cda Aravinda Galappatthige, Richard Tse, Telus Intl Cda Aravinda Galappatthige, Richard Tse, Telus Intl Cda Aravinda Galappatthige, Richard Tse, Telus Intl Cda Aravinda Galappatthige, Richard Tse, Telus Intl Cda ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Aravinda Galappatthige, Richard Tse, Telus Intl Cda Aravinda Galappatthige, Richard Tse, Telus Intl Cda Aravinda Galappatthige, Richard Tse, Telus Intl Cda

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