Q1 2024 TELUS International (Cda) Inc Earnings Call

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Jonathan: Good morning, ladies and gentlemen. Welcome to the TELUS International First Quarter 2024 Infestor 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, and welcome to the Telus International first quarter 2024, Investor call. My name is Jonathan and I will be your conference facilitator today.

Jonathan: After the speaker's remarks, there will be a question and answer period. If you'd like to ask a question during this time, please press star 11 on your telephone keypad. If you'd like to withdraw your question, simply press star 11 again.

Jonathan: At this time all lines have been placed on mute to avoid background noise. After the Speakers' remarks, there will be a question and answer period, if you'd like to ask a question. During this time. Please press star one on your telephone keypad, if you'd like to withdraw your question simply press Star One again as a reminder, today's program is being.

Jonathan: As a reminder, today's program is being recorded. I would now like to introduce Jason Mayr, Head of Investor Relations and Treasurer at TELUS International. Mr. Mayr, you may begin the call. Thank you, Jonathan. Good morning, everyone.

Jason Mayr: <unk> recorded I would now like to introduce Jason Miner head of Investor Relations at <unk>.

Jason Mayr: And treasurer at Telus International Mr. Meyer you may begin the call.

Jason Mayr: Thank you for joining us today for Telus International's Q1 2024 investor call. Hosting our call today are Jeff Puritt, President and Chief Executive Officer, and Gopi Chande, 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, followed by Gopi, 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 Mayr: Thank you Jonathan Good morning, everyone. Thank you for joining us today for Telus International Q1, 2024 Investor call.

Jason Mayr: Hosting our call today are Jeff <unk>, President and Chief Executive Officer, and <unk>, <unk>, our Chief Financial Officer as.

Jason Mayr: As usual I will begin with some prepared remarks, where Jeff will provide an operational and strategic overview of the quarter, followed by <unk>, 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 Mayr: 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 invest. 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 statement.

Jason Mayr: 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 web site at Telus International Dot Com slash investors.

Jason Mayr: 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.

Jason Mayr: 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.

Jeffrey D. Puritt: Jeff and Gopi will also discuss certain non-GAAP measures that the management team considers to be useful in assessing our company's underlying business performance. An explanation of these non-GAAP measures and a reconciliation to the comparable GAAP measures can be found in the appendices of today's supplementary presentation, along with the earnings news release issued this morning and regulatory filings available on CDAR Plus and EDGAR. I would also like to remind everyone that all financial measures we're 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. With that, I'll now pass the call over to our President and CEO, Jeff Puritt. Thank you, Jason. Good morning, everyone.

Jason Mayr: Jonathan <unk> will also discuss certain non-GAAP measures that the management team considered to be useful in assessing our company's underlying business performance.

Jeffrey D. Puritt: Explanations of these non-GAAP measures and a reconciliation to comparable GAAP measures can be found in the appendices of today's supplementary presentation, along with the earnings news release issued this morning, and Reg and regulatory filings available on SEDAR and Edgar.

Jeffrey D. Puritt: I would 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.

Jeffrey D. Puritt: With that I'll now pass the call over to our President and CEO Jeff period.

Jeffrey D. Puritt: Thank you, Jason and good morning, everyone.

Jeffrey D. Puritt: In the first quarter of 2024, Telus International delivered results that were on track in terms of our expectations and what we see as a continued path to recovery. While the operating and macroeconomic environment remains pressured for the first half of the year with inflation and higher for longer rate narratives dominating the market sentiment, we anticipate demand starting to recover in the latter part of the year. We continue to center our efforts on what we can control, and with our meaningful global cost efficiency programs executed over the past nine months, we're maintaining our focus on profitability.

Jeffrey D. Puritt: In the first quarter of 2024, Telus International delivered results that were on track in terms of our expectations and what we see is a continued path to recovery.

Jeffrey D. Puritt: While the operating and macroeconomic environment remains pressured for the first half of the year with inflation and higher for longer rate narratives dominating the market sentiment, we anticipate demand starting to recover in the latter part of the year and continue to center our efforts on what we can control with our meaningful global cost efficiency programs executed over.

Jeffrey D. Puritt: For the past nine months, we're maintaining our focus on profitability.

Jeffrey D. Puritt: Our outlook for 2024 is unchanged, and it remains prudent based on our current view of client demand and our assumptions around macroeconomic conditions in the near term. Gopi will share more details on this topic later in the call.

Jeffrey D. Puritt: Our outlook for 2024 is unchanged and it remains prudent based on our current view of client demand and our assumptions around the macroeconomic conditions in the near term <unk> will share more details on this topic later in the call with our third largest client a leading social media network. We are encouraged by recent volume stabilization our team is working.

Jeffrey D. Puritt: With our third largest client, a leading social media network, we're encouraged by recent volume stabilization. Our team is working to surface incremental opportunities for further rejuvenation in the account through a potential expansion in our service line offerings and geographic diversification, although these efforts will likely play out over the medium and longer term. Carrying over from last year's results, our momentum continues in AI data solutions, driven by the strength of our relationship with Google in particular, while we're also working diligently on pilots and opportunities with many major foundational AI model developers.

Jeffrey D. Puritt: Surface incremental opportunities for further rejuvenation in the account through a potential expansion in our service line offerings and geographic diversification. Although these efforts will likely play out over the medium and longer term.

Jeffrey D. Puritt: Carrying over from last year's results. Our momentum continues in AI data solutions, driven by the strength of our relationship with Google in particular, while we're also working diligently on pilots and opportunities with many major foundational AI model developers in this regard the progression of our fuel IX Gen AI client engagements led by our <unk>.

Jeffrey D. Puritt: In this regard, the progression of our Fuel iX Gen AI client engagements, led by our WillowTree team, is accelerating, and I'll share more details shortly regarding our most recent beta launch last month. This launch positions us favorably as we endeavor to become the AI-fueled customer experience partner of choice for our clients and across the industry. To start the year, our global sales team won several new clients, including a multinational hospitality company, a Canadian-based global e-commerce powerhouse, a leading provider of wind loss analysis services and technology, and a financial technology company in the U.S., among others.

Jeffrey D. Puritt: <unk> team is accelerating and I'll share more details shortly regarding our most recent beta launch last months. This launch positions us favorably as we endeavor to become the AI fueled customer experience partner of choice for our clients and across the industry.

Jeffrey D. Puritt: The year, our global sales team won several new clients, including a multinational hospitality company.

Jeffrey D. Puritt: Adrian based global E Commerce powerhouse, a leading provider of win loss analysis services and technology and a financial technology company in the U S. Among others.

Jeffrey D. Puritt: To highlight a few wins by our team at Willowtree, they secured mandates with a multinational consumer credit reporting agency, an American biotechnology company, a movie theater chain that operates the second largest theater circuit in the United States, and a global fashion house, Coke. For the latter, well-recognized name in particular, our team at Willowtree will lead a transformative project involving strategy development, research, design, and advice on technical architecture to envision a seamless, single-pane-of-glass employee retail experience.

Jeffrey D. Puritt: To highlight a few wins by our team in Willow tree.

Jeffrey D. Puritt: Secured mandates with a multinational consumer credit reporting agency in American Biotechnology Company, a movie theater chain that operates the second largest theatre circuit in the United States and a global fashion house coach for the latter well recognized name in particular, our team at Willow tree will lead a transformative project.

Jeffrey D. Puritt: <unk> strategy development research design and advice on technical architecture to envision a seamless single pane of glass employee retail experience.

Jeffrey D. Puritt: Importantly, we also continue to deepen our relationships across our existing client base. In the first quarter, we expanded work for many of our long-tenured clients, including one of the largest global logistics providers focused on transportation, e-commerce, and business services, a leading ride-hailing services company, an American telecommunications and media conglomerate, and a leading information services provider of financial property and consumer information and analytics. We also continue to be a beneficiary of steady growth serving Telus Corporation, our parent company and anchor client, including further growth within their Telus Health Division that we expect to continue throughout 2024.

Jeffrey D. Puritt: Fortunately, we also continue to deepen our relationships across our existing client base in the first quarter. We expanded work for many of our long tenured clients, including one of the largest global logistics providers focused on transportation E Commerce and business services, a leading ride hailing services company in America in telecommunications and media can do.

Jeffrey D. Puritt: One rate and a leading information services provider of financial property and consumer information and analytics.

Jeffrey D. Puritt: We also continued to be a beneficiary of steady growth serving tell US Corporation, our parent company and anchor clients, including further ramp up within their Telus Health Division that we expect to continue throughout 2024.

Jeffrey D. Puritt: Similarly, WillowTree secured an AI innovation win with an American consumer financial services company and saw incremental expansion with clients across diverse industries, including retail, fast food restaurants, energy, and insurance. Specifically as it pertains to Fuel iX, our WillowTree team also continues to drive new client engagements, including two well-established US financial services companies. I'll share details of one of these engagements, namely Inspire a Financial, in a case study in just a moment.

Jeffrey D. Puritt: Similarly, Willow tree secured an AI innovation win with an American consumer financial services company and saw incremental expansion with clients across diverse industries, including retail fast food restaurants energy and insurance.

Jeffrey D. Puritt: Specifically as it pertains to fuel IX, our Willow tree team also continues to drive new client engagements, including two well established American financial services companies I'll share details of one of these engagements mainly inspire a financial and a case study in just a moment.

Jeffrey D. Puritt: Last month, we announced the beta release of Fuel iX as part of the ongoing growth and refinement of our enterprise-grade AI engine, structured now as two main solution layers, core and app. Fuel iX Core offers orchestration, integration, and administration as a backbone for enterprise AI, while Fuel iX Apps includes templated Gen AI applications across customer and employee experiences.

Jeffrey D. Puritt: Last month, we announced the beta release of fuel IX as part of the ongoing growth and refinement of our enterprise grade AI engine structured now has two main solution layers core and apps fuel IX Corr offers the orchestration integration and administration as a backbone for enterprise AI.

Jeffrey D. Puritt: While fuel IX apps includes Templated Gen applications across customer and employee experiences think of these as add on solutions and tools, including third party applications, along with our own consulting and design services. For example, our eight week journey II Jumpstart accelerator program.

Jeffrey D. Puritt: Think of these as add-on solutions and tools, including third-party applications, along with our own consulting and design services, for example, our eight-week Gen AI Jumpstart Accelerator Program. Key divisions of our parent company, Telus, are part of both the Jumpstart and the Fuel iX client roster. Across multiple business areas and corporate support functions at Telus, we've designed, built, and delivered AI solutions supporting an IT service desk, field service, and internal team member knowledge solutions, an in-store retail associate co-pilot, a customer service agent assistant, and a public-facing consumer website.

Jeffrey D. Puritt: Key divisions of our parent company tell us are part of both the jumpstart and fuel IX client rosters across multiple business areas in corporate support functions at tell US we designed built and delivered AI solutions supporting an it service desk field service and internal team member knowledge solutions and <unk>.

Jeffrey D. Puritt: In store retail associate copilot, a customer service agent assistance.

Jeffrey D. Puritt: And our public facing consumer website. These solutions have delivered tangible outcomes for tell us already helping them achieve a lower cost to serve and support their focus on driving a higher average margin per user our AI capabilities are expanding opportunities with tell us charting a path to an additional differentiated service revenue stream.

Jeffrey D. Puritt: These solutions have delivered tangible outcomes for Telus already, helping them achieve a lower cost to serve and support their focus on driving a higher average margin per user. Our AI capabilities are expanding opportunities with Telus, charting a path to an additional differentiated service revenue stream. In fact, we currently have several more pilots underway, as well as over 30 requests for new applications.

Jeffrey D. Puritt: In fact, we currently have several more pilots underway as well as over 30 requests for new applications or Ti sales team is also taking a successful real world implementation to tell us on the road to demonstrate the value of fuel IX to enterprise clients across multiple industries.

Jeffrey D. Puritt: Our TI sales team is also taking the successful real-world implementation at Telus on the road to demonstrate the value of Fuel iX. We also continue to foster strategic technology partnerships to complement our capabilities and broaden the scope of our. In March, TI announced a partnership with LocalMeasure, which is an out-of-the-box GenAI-enabled contact center solution powered by AWS Amazon Connect. This addition to our FuelIX platform provides our clients with even more choice and greater flexibility in implementing GenAI.

Jeffrey D. Puritt: We also continue to foster strategic technology partnerships to complement our capabilities and broadened the scope of our offerings in March <unk> announced the partnership with local measure, which is an out of the box Gen. AI enabled contact center solution powered by AWS Amazon connect. This addition to our fuel IX platform.

Jeffrey D. Puritt: Provides our clients with even more choice and greater flexibility in implementing journey II and.

Jeffrey D. Puritt: In April, we announced an expansion of our strategic partnership with Appian, a company name spelled A-P-P-I-A-N and not to be confused with another similar sounding company name out of Australia. The key focus of this partnership is to offer clients an intelligent automation as a service platform with low code automation solutions accessible on demand and based in the cloud, with all elements and tools coming together to create a unified AI-powered IT ecosystem.

Jeffrey D. Puritt: In April we announced an expansion of our strategic partnership with Appian a company named spelled AEP.

Jeffrey D. Puritt: And and not to be confused with another similar sounding company name out of Australia.

Jeffrey D. Puritt: The key focus of this partnership is to offer clients, an intelligent automation as a service platform with low code automation solutions accessible on demand and based in the cloud with all elements and tools coming together to create a unified AI powered <unk> ecosystem, we successfully tested this value proposition by deploying it for.

Jeffrey D. Puritt: We successfully tested this value proposition by deploying it for our anchor client, Telus Corporation, within their core telecom business. Telus employees were able to develop network build tools with a wide variety of functionalities, such as network design, configuration, deployment, and optimization. All of this at a pace five times faster than conventional methods, and already resulting in savings of over $5 million.

Jeffrey D. Puritt: Our anchor client tell US corporation within their core telecom business employees are tell us we're able to develop network build tools with a wide variety of functionalities such as network design configuration deployments and optimization all of this at a pace five times faster than conventional methods and already resulting in savings of over.

Jeffrey D. Puritt: $5 million.

Jeffrey D. Puritt: Turning to case studies, one of the Willowtree client wins in the quarter I mentioned a moment ago is Inspira Financial, a financial services company based in the U.S., providing custody solutions for alternative assets and retirement services, including self-directed individual retirement accounts and 401k rollovers. Having acquired another player focused on providing health savings and spending account solutions, our client needed to undergo extensive rebranding as they brought the offerings of the two companies together under one portfolio to transform the combined company into a comprehensive health, wealth, retirement, and benefit solution provider for institutional business partners, employers, and individuals.

Jeffrey D. Puritt: Turning to case studies, one of the Willow tree client wins in the quarter I mentioned, a moment ago is inspire our financial our financial services company based in the U S providing custody solutions for alternative assets and retirement services, including self directed individual retirement accounts and 401, K rollovers, having acquired another play.

Jeffrey D. Puritt: We're focused on providing health savings and spending account solutions, our client needed to undergo extensive rebranding as they brought the offerings of the two companies together under one portfolio to transform the combined company into a comprehensive health wealth retirement and benefit solution provider for institutional business partners employers and.

Jeffrey D. Puritt: To achieve this strategic goal, the client partnered with our team at WillowTree to expand the new brand through digital channels, including web and product platforms, creating impactful illustrations, animations, and content that resonated with users. We then applied these new digital brand guidelines to the product portals to support the enterprise-wide brand rollout.

Jeffrey D. Puritt: Individuals to achieve this strategic goal the client partnered with our team at Willow tree to expand the new brand through digital channels, including web and product platforms, creating impactful illustrations animations and content that resonated with users. We then apply these new digital brand guidelines to the product portals to support the enterprise.

Jeffrey D. Puritt: <unk> brand rollout, we also strategize and implemented marketing operations workflows to support the brand rollout and maintenance using tools like Adobe work front and brand portal. In addition to developing a web strategy for the new brand with key focus on designing and building an intuitive public web experience for the updated portfolio.

Jeffrey D. Puritt: We also strategized and implemented marketing operations workflows to support the brand rollout and maintenance using tools like Adobe Workfront and Brand Portal. In addition to developing a web strategy for the new brand, with a key focus on designing and building an intuitive public web experience for the updated portfolio, our team migrated the client systems and operations to Adobe Experience Cloud. Excitingly, we've also implemented an AI-powered navigational assistant to guide users through the new portfolio of offerings and reduce support costs by offering self-service solutions. The AI assistant we built for the client is a hybrid LLM and rule-based chatbot with a secure intent classifier augmented by LLM function calls to deliver optimal solutions for user queries.

Jeffrey D. Puritt: Our team has migrated the client systems and operations to Adobe experience cloud Excitingly. We've also implemented an AI powered navigational assistant to guide users through the new portfolio of offerings and reduced support costs by offering self service solutions. The AI assistant we built for the client.

Jeffrey D. Puritt: As a hybrid LLM and rule based chatbot with a secure intent classifier augmented by LLM function calls to deliver optimal solutions for user queries.

Jeffrey D. Puritt: It adeptly handles various needs such as FAQs, login inquiries, and guiding users to the next step in the journey with Inspira. Chatbot engagement surpasses search usage by 5x, with a notable 53% conversion and engagement rate achieved to date. Moreover, insights collected from the chatbot logs and site analytics fuel continuous optimization aimed at reducing the client's call center volume. Another Willowtree client from a completely different industry, Mercury Marine, is a global leader in marine manufacturing, offering, excuse me, offering a comprehensive range of engines.

Jeffrey D. Puritt: Definitely handle various needs such as faqs logging inquiries and guiding users to the next step in the journey with inspire us.

Jeffrey D. Puritt: The chat bots engagements surpasses search usage by five X with a notable 53% conversion and engagement rate achieved to date. Moreover, insights collected from the chatbot lawns and site analytics fuel continuous optimization aimed at reducing the clients call Center volume.

Jeffrey D. Puritt: Another willow tree client from a completely different industry Mercury marine as a global leader in Marine manufacturing operate excuse me offering a comprehensive range of engines the client thought our expertise in digital transformation when they recognize the need to harness technology to improve their multichannel offerings and deepen their.

Jeffrey D. Puritt: The client sought our expertise in digital transformation when they recognized the need to harness technology to improve their multi-channel offerings and deepen their direct engagement with customers. In less than 10 months of engagement, our team at Willowtree introduced a brand new, engaging design and modernized website for this client. The enterprise-grade website and e-commerce experience was developed on Adobe's cloud platforms, decentralizing the authoring model and allowing for regionally relevant and timely campaigns across 36 websites in 14 language combinations. Mercury Marine has seen growth in leads in the quarter following the launch of our solutions compared to the same time in the previous year.

Jeffrey D. Puritt: Direct engagement with customers and less than 10 months of engagement our team at Willow tree introduced our brand salient engaging design and modernized website for this client the enterprise grade website and E. Commerce experience was developed on Adobe's cloud platforms, decentralizing, the authoring model and allowing for regionally relevant.

Jeffrey D. Puritt: And timely campaigns across 36 websites in 14 language combinations Mercury Marine has seen growth in leads in the quarter. Following the launch of our solutions compared to the same time in the previous year.

Jeffrey D. Puritt: Meanwhile, a better user experience enabled by our solutions has improved discoverability, driving increased customer interest and dealer profitability. In 2024, our team at WillowTree continues to work with Mercury Marine on improving their online presence through more targeted search engine optimization and feature enhancements to create even better customer experiences. We believe this will enable further opportunities to drive additional revenue for the business, both through our clients and our engagement with them. Next, I'll share a case study update from our computer vision group within our AI data solutions team.

Jeffrey D. Puritt: Meanwhile, better user experience enabled by our solutions has improved discover ability driving increased customer interest and dealer profitability for 2024 hour team at Willow tree continues to work with Mercury Marine on improving their online presence through a more targeted search engine optimization and feature enhancements to create.

Jeffrey D. Puritt: Even better customer experiences. We believe this will enable further opportunities to drive additional revenue for the business both out of our clients and our engagement with them.

Jeffrey D. Puritt: Next I'll share a case study update from our computer vision group within our AI data solutions team. We continue to work with a long tenured client and American Robotics company based in California, who develop the autonomous delivery vehicles. If you from the San Francisco Bay area or Houston, Texas, you may have seen their delivery vehicles in your neighborhood.

Jeffrey D. Puritt: We continue to work with a long-term client, an American robotics company based in California who develops autonomous delivery vehicles. If you're from the San Francisco Bay Area or Houston, Texas, you may have seen their delivery vehicles in your neighborhood.

Jeffrey D. Puritt: Loyal listeners of our investor calls may also recall I spoke about this client and our work for them back in 2021 during one of our earlier earnings calls. In addition to creating training datasets for this client's computer vision perception models, we've expanded our scope to include fine tuning of the client's LLMs built for real-time explainability of the autopilot's decisions. Our team's goal is to teach LLMs based on the expertise of a human driver with actions or preferences across various driving scenes, including complex and rare scenarios, as well as generate and explain resulting motion plans, depending on a wide range of very specific traffic conditions.

Jeffrey D. Puritt: Loyal listeners of our Investor calls May also recall I spoke about this client and our work for them back in 2021 during one of our earlier earnings calls in addition to creating training datasets for this client's computer vision perception models. We've expanded our scope to include fine tuning of the clients <unk> built for real time.

Jeffrey D. Puritt: Explain ability of the auto pilots decisions. Our team's goal is to teach LLM based on the expertise of the human driver with actions or preferences across various driving themes, including complex in rare scenarios as well as generated explained resulting motion plans, depending on a wide range of very specific traffic.

Jeffrey D. Puritt: Conditions, the workflow starts with several English speaking and qualified drivers rating detailed and clear descriptions of various traffic scenarios. They see in a given image or video annotating. The edge cases in the image or video followed by selecting their motion decisions for the given scenario.

Jeffrey D. Puritt: The workflow starts with several English-speaking and qualified drivers writing detailed and clear descriptions of various traffic scenarios they see in a given image or video, then annotating the edge cases in the image or video, followed by selecting their motion decisions for the given scenario. As you can imagine, the universe of potential scenes and traffic scenarios is very close to infinite.

Jeffrey D. Puritt: Imagine the universe of potential seems in traffic scenarios is very close to internet, yet the client and our team need to generate categorized structure annotate and ensure the quality of all of these data points and permutations. Thanks to Ti proprietary multimodal annotation and fine tuning platform we're able.

Jeffrey D. Puritt: Yet the client and our team need to generate, categorize, structure, annotate, and ensure the quality of all these data points and permutations. Thanks to TI's proprietary multimodal annotation and fine-tuning platform, we're able to automate many of the steps involved, using AI-assisted description generation and video labeling. This is a great example to illustrate how TI is able to combine deep human insights and nuances with high accuracy of input data for LLMs, and with speed at scale to build adoptable and safer Gen-AI models for our clients.

Jeffrey D. Puritt: To automate many of the steps involved using AI assisted description generation and video labeling drivers then edit descriptions and annotations applying their driving expertise knowledge of traffic rules and using their best judgment. This is a great example to illustrate how ti is able to combine deep human insights and nuances.

Jeffrey D. Puritt: With high accuracy of input data for <unk> with speed at scale to build adoptable and safer Gen AI models for our clients.

Jeffrey D. Puritt: In the spirit of continuously refining our own capabilities, and particularly in relation to AI, just two weeks ago, we launched TI's Finetune Studio, part of our broader AI data solutions proprietary platform. It's a task execution module designed to create high-quality, fine-tuning datasets for LLMs and Gen AI models. While our experts engine can algorithmically match tasks with best-fit experts from our global crowdsourced AI community of more than one million contributors, the Finetune Studio goes further in enabling contributors to create high-quality datasets for LLM fine-tuning in more than 100 languages deployed across domains where specialized responses are required, including STEM disciplines, healthcare, finance, and more. Our Finetune Studios allows for native AI integrations, including real-time assessments of possible plagiarism, tone analysis, spelling, and grammar checks, features that improve output accuracy and facilitate users' task completion with increased productivity and efficiency.

Jeffrey D. Puritt: In the spirit of continuously refining our own capabilities and particularly in relation to AI. Just two weeks ago, We launched Ti's fine tunes studio part of our broader AI data solutions proprietary platform.

Jeffrey D. Puritt: Task execution module designed to create high quality fine tuning datasets for <unk> and Gen. AI models, while our experts engine can algorithmically match tasks with best fit experts from our global Crowdsourced AI community of more than 1 million contributors to fine tune studio goes.

Jeffrey D. Puritt: Further enabling contributors to create high quality datasets for LLM fine tuning in more than 100 languages deployed across the means where specialized responses are required including stem disciplines healthcare finance and more are fine tuned studios allows for native AI integrations, including real time assess.

Jeffrey D. Puritt: <unk> a possible plagiarism cone analysis spelling and grammar checks features that improve output accuracy and facilitate users' task completion with increased productivity and efficiency. Our team presented the fine tunes studio during the 2024 World Summit, AI, which took place in Montreal, a couple of weeks ago with a.

Jeffrey D. Puritt: Our team presented the Finetune Studio during the 2024 World Summit AI, which took place in Montreal a couple of weeks ago, with a great reception from industry participants. One last case study I'll share today illustrates our deep capabilities to serve telecom. As you might expect, Telus is a meaningful source of opportunities within our media and telecommunications industry vertical. And over the years, it's opened doors as a reference for other telecom businesses, notably in the US.

Jeffrey D. Puritt: Great reception from industry participants.

Jeffrey D. Puritt: One last case study out here today illustrates our deep capabilities to serve telecom clients as you might expect tell us as a meaningful source of opportunity within our media and telecommunications industry vertical and over the years, it's opened doors as a reference for other telecom businesses, notably in the U S. On.

Jeffrey D. Puritt: On our investor call a couple of quarters ago, I shared with you an example of one such client, a large service provider of pay television and retail wireless services. One acquired a mobile network operator and turned to TI, who then, excuse me, helped them reimagine and assemble a comprehensive cloud infrastructure.

Jeffrey D. Puritt: On our Investor call a couple of quarters ago I shared with you. An example of one such client a large service provider of pay TV and retail wireless services, one acquired a mobile network, operator and turned to Ti within excuse me to help them excuse me re imagine and assemble a comprehensive cloud infrastructure as an update on that.

Jeffrey D. Puritt: As an update on that engagement, after we successfully helped the client to set up their infrastructure, TI was then tasked to manage a complicated network migration of the client's entire customer base, a process that also necessitated the introduction of additional functionalities for customers, a customization of the user interface and experience, integration with numerous application programming interfaces, a robust logging and exception handling framework, and a complex porting process for account management Our team collaborated across several squad groups within TI's enterprise platform services, working in the AWS cloud environment to deliver exactly what the client needed while ensuring network compatibility, managing customer data, and overcoming technical integration obstacles, all while maintaining a positive customer experience.

Jeffrey D. Puritt: Engagement faster, we successfully helped the client to set up their infrastructure Ti has been tasked to manage a complicated network migration of the client's entire customer base a process that also necessitated an introduction of additional functionality for customers a customization of user interface and experience integration with numerous application.

Jeffrey D. Puritt: Grabbing interfaces are robust logging and exception handling framework and a complex porting process for account management.

Jeffrey D. Puritt: Our team collaborated across several squad groups within <unk> enterprise platform services working in the AWS cloud environment to deliver exactly what the client needed, while ensuring network compatibility managing customer data and overcoming technical integration obstacles, all while maintaining a positive customer experience among the outcomes delivered.

Jeffrey D. Puritt: Among the outcomes delivered for the client, our team put together self-service tools that enabled customers to migrate seamlessly and independently. Our solution enhanced account management capabilities, providing customers with increased control and better insights. We streamlined support operations, reducing the time spent troubleshooting and tracking telephone numbers across different networks and data models.

Jeffrey D. Puritt: For the client our team put together self service tools that enabled customers to migrate seamlessly and independently our solution enhanced account management capabilities, providing customers with increased control and better insights, we streamline support operations, reducing the time spent troubleshooting and tracking telephone numbers across different networks and data.

Jeffrey D. Puritt: And we added new sales and service reporting capabilities, providing valuable insights for performance analysis and decision-making. This example illustrates the continuity we enjoy with some of our clients; having done good work and shown value on the first engagement, we're often rewarded with more and more complex work in the future. It also shows how TI solutions address critical business needs for our clients, addressing both ends of successful customer experience management, cost efficiency, and growth enablement.

Jeffrey D. Puritt: Models, and we added new sales and service reporting capabilities, providing valuable insights for performance analysis and decision, making this example, not only illustrates the continuity we enjoy with some of our clients having done good work and showing value on our first engagement, we're often rewarded with more and more complex work in the future. It also.

Jeffrey D. Puritt: Shows OTI solutions address critical business needs for our clients addressing both ends of successful customer experience management cost efficiency and growth enablement.

Jeffrey D. Puritt: We've also started the year on a positive note with several industry awards and rankings, which reflect our global team's continuing commitment to excellence in everything we do. Following on from our leader ranking in IDC's marketscape for worldwide data labeling software last December, this year TI was recognized as a leader in Everest Group's peak matrix for data annotation and labeling solutions for AI and machine learning. Truly notable here is that TI was the only provider ranked in the top two for both these assessments, highlighting the unmatched leadership of our AI Data Solution Division's vision, strategy execution, innovation, and client satisfaction.

Jeffrey D. Puritt: We've also started the year on a positive note with several industry awards and rankings, which reflect our global teams continuing commitment to excellence in everything we do.

Jeffrey D. Puritt: Following on from our leader ranking in Idc's market scale for worldwide data labeling software last December this year <unk> was recognized as a leader in Everest group's peak matrix for data annotation and labeling solutions for AI and machine learning what's truly notable here is that <unk> was the only provider ranked in the top two.

Jeffrey D. Puritt: For both of these assessments highlighting the unmatched leadership of our AI data solution divisions vision strategy execution innovation and client satisfaction.

Jeffrey D. Puritt: Additionally, for the eighth consecutive year, TI was named on the Global Outsourcing 100 list, once again placing us amongst the best outsourcing providers for size and growth, customer references, awards, and certifications, programs for innovation, and corporate social responsibility. Also, for the eighth year in a row, our global team's efforts were recognized by Business Intelligence Group with the 2024 Excellence in Customer Service Award within the Organization of the Year category. This award duly recognizes those who are transforming the customer experience in today's online-driven economy. Further, at this year's Webby Awards, known as the internet's highest honor, our team at WillowTree and several of our clients were recognized among nearly 13,000 entries from 70 countries.

Jeffrey D. Puritt: Additionally for the eighth consecutive year Ti was named on the global outsourcing 100 list once again, placing us amongst the best outsourcing providers for size and growth customer references awards and certification programs for innovation and corporate social responsibility also for the eighth year in a row our global teams.

Jeffrey D. Puritt: We're recognized by business Intelligence group and a 2020 for excellence in customer Service award within the organization of the year category.

Jeffrey D. Puritt: The award duly recognizes those who are transforming the customer experience in today's online driven economy.

Jeffrey D. Puritt: Further at this year's Webby awards known as the Internet highest honor our team at Willow tree in several of our clients were recognized among nearly 13000 entries from 70 countries. You may recall among the case that as I shared with you on our Investor call in November last year, where bright line trains and Mcgraw Hill.

Jeffrey D. Puritt: You may recall among the case studies I shared with you on our investor call in November last year were Brightline Trains and McGraw-Hill. Both of these clients won the awards. Brightline Trains secured recognition as an honoree in two categories with their mobile app and enterprise website developed by WillowTree, excelling in the travel and travel and lifestyle sector. McGraw-Hill's Access app, also developed by WillowTree, was honored in the Education, Science, and Reference categories.

Jeffrey D. Puritt: Both of these clients won new awards Brightline trained secured recognition as an honoree in two categories with their mobile App and enterprise website developed by Willow tree excelling in the travel and travel and lifestyle sectors.

Jeffrey D. Puritt: Excuse me Mcgraw Hill access App also developed by Willow tree was honored in the education science and referenced category.

Jeffrey D. Puritt: Additionally, WillowTree's Vocable app won the Trailblazing Techquity, which stands for Tech and Equity Innovation Award, a much-deserved recognition for the team's groundbreaking initiative that redefines healthcare through digital innovation. Vocable was applauded as a healthcare initiative helping to close the digital divide in underserved or marginalized communities. If you haven't already done so, I encourage you to read my colleague, Tobias Dengel's bestselling book, The Sound of the Future, which reveals how voice technology powered by the latest AI advancements is poised to drastically alter the way we live and how companies do business.

Jeffrey D. Puritt: Additionally, willow trees Vocable App, one the Trailblazing <unk>, which stands for tech and equity Innovation Award a much deserved recognition for the team's groundbreaking initiative that redefines healthcare through digital innovation Bookable was applauded as a health care initiatives, helping to close the digital divide.

Jeffrey D. Puritt: In underserved or marginalized communities.

Jeffrey D. Puritt: Haven't already done so I encourage you to read my colleague to be dangled best selling book the sound in the future, which reveals our voice technology powered by the latest AI advancements is poised to drastically alter the way, we live and how companies do business speaking of interesting reading material Telus International's second.

Jeffrey D. Puritt: Speaking of interesting reading material, Telus International's second standalone sustainability and ESG report was published on April 5th this year, providing an update on our progress against our four pillars and 23 commitments. I'd like to highlight some of the encouraging results achieved in 2023. We volunteered over 90,000 hours, the equivalent of 12,000 days, in the communities where we operate around the world. This included building schools, refugee centers, and homes, planting trees and community gardens, and building beehives, as well as providing mentorship and employment opportunities to historically marginalized communities across the Philippines, India, Guatemala, and El Salvador.

Jeffrey D. Puritt: We provided over $1.6 million in cash and in-kind donations to communities around the world. Additionally, our five international community boards allocated $2.5 million to fund 67 projects spanning our priority areas of health, employment, education, and the environment.

Jeffrey D. Puritt: Standalone sustainability and ESG report was published on April 5th this year, providing update on our progress against our four pillars in 'twenty three commitments I'd like to highlight some of the encouraging results achieved in 2023, we volunteered over 90000 hours the equivalent of 12000 days.

Jeffrey D. Puritt: And in the communities, where we operate around the world. This included building schools refugee centers in homes planting trees in community gardens, and building beehives, as well as providing mentorship and employment opportunities to historically marginalized communities across the Philippines, India, Guatemala, and El Salvador, we provide.

Jeffrey D. Puritt: Over $1 $6 million in cash and in kind donations to communities around the world. Additionally, our five international community Board allocated $2 5 million to fund 67 projects spanning our priority areas of health employment and education and the environment.

Jeffrey D. Puritt: We know that diversity, equity, and inclusion are integral to our ongoing success. As such, we have set targets to ensure that there is appropriate representation of women at all levels of the organization. In 2023, we surpassed those targets, with women representing 36% of board members and 44% of the executive team. Since 2012, we've also been developing programs to hire and provide career development opportunities to people in economically disadvantaged and or marginalized communities around the world.

Jeffrey D. Puritt: The diversity equity and inclusion are integral to our ongoing success as such we set targets to ensure that there would be appropriate representation of women at all levels of the organization in 2023 weeks surpassed those targets with women, representing 36% of board members and 44% of the executive team.

Jeffrey D. Puritt: Since 2012, we've also been developing programs to hire and provide career development opportunities for people and economically disadvantaged and we're marginalized communities around the world. These powerful life changing impact sourcing programs have a dual benefit they provide training meaningful work coaching and development while providing.

Jeffrey D. Puritt: These powerful, life-changing impact sourcing programs have a dual benefit. They provide training, meaningful work, coaching, and development, while providing Telus International with a deeply engaged, highly skilled workforce. For example, we run a training and employment initiative in India called Project Sakima, providing opportunities for women from economically challenged communities.

Jeffrey D. Puritt: Telus International with a deeply engaged highly skilled workforce for example, we run a training and employment initiative in India called project sarcoma, providing opportunities for women from economically challenged communities and last but certainly not least as climate change remains one of the most challenging issues of our time, we're committed to continue to.

Jeffrey D. Puritt: And last but certainly not least, as climate change remains one of the most challenging issues of our time, we're committed to continue to work in tandem with our parent company to achieve net zero operations through a combination of emission reduction and emission removal by our 2030 target. With that, I'll now invite our CFO, Gopi Chande, who's had a great, fast-paced start to her role here at TI, to share details of our financial results, and I'll return to answer your questions. Gopi, over to you. Thank you, Jeff. And good morning, everyone.

Gopi Chande: Work in tandem with our parent company to achieve net zero operations through a combination of emission reduction and emission removal by our 2030 target with that I'll now invite our CFO <unk> <unk>, who has had a great fast pace start to her role here at Ti to share details of our financial results and I'll.

Gopi Chande: Our return to answer your questions <unk> over to you.

Gopi Chande: Thank you, Jeff and good morning, everyone. Thank you for joining us today.

Gopi Chande: Thank you for joining us today. As usual practice, in my review of the financial results, I will refer to some items that are non-GAAP measures. For descriptions and the reconciliation of our GAAP to our non-GAAP measures, please see our earnings release and regulatory filings from earlier this morning. Up front, I'd like to highlight that in the first quarter of 2024, our top line results reflected a tough year-over-year comparison due to the macroeconomic environment and the impact on our clients since the summer of 2023.

Gopi Chande: As per usual practice in my review of the financial results I will refer to some items that are non-GAAP measures for a description and reconciliation of our GAAP to our non-GAAP measures. Please see our earnings release and regulatory filings from earlier this morning.

Gopi Chande: Upfront I would like to highlight highlight that in the first quarter of 2024, our topline results reflected a tough year over year compare due to the macroeconomic environment and the impact on our clients.

Gopi Chande: Of 2023 however.

Gopi Chande: However, we anticipated this and set our targets and our outlook accordingly. Our first quarter results are very much in line with our expectations and the views we shared back in February. In the first quarter, Telus International delivered revenues of $657 million, down 4% year over year, which was expected, knowing the impact on the revenue trajectory from our third largest client, a social media network.

Gopi Chande: However, we anticipated this and set our targets and our outlook Accordingly, our first quarter results are very much in line with our expectation and the views we shared back in February.

Gopi Chande: In the first quarter Telus International delivered revenues of 667.

Gopi Chande: Down 4% year over year, which was expected and the impact on the revenue trajectory from our third largest client a social media network.

Gopi Chande: We mitigated this headwind in part by growing and diversifying our revenues with other existing large clients, namely Telus Corporation and Google, as well as adding new clients over the past year. In fact, we've seen an accelerating trend of new customer acquisitions across several verticals. And while not yet materially contributing to near-term revenue, it does provide better visibility for the balance of the year as these new clients ramp up. With Google in particular, over the past 12 months, we've successfully broadened our relationship across several lines of service and deepened our engagement in the fast growing area of AI, which drove Google to become our second largest client by total revenue.

Gopi Chande: Not a total.

Gopi Chande: Part by growing and diversifying our revenues with other.

Gopi Chande: Large clients normally tell us corporation until call as well as adding new clients over the past year.

Gopi Chande: In fact, we have seen an accelerating trend of new customer acquisition across several verticals and while not yet materially contributing to near term revenue. It does provide better visibility for the balance of the year I think new clients ramp up.

Gopi Chande: We still go in particular over the past 12 months, we have successfully broadened our relationship across several lines of service and deepened our engagement in the fast growing area of AI, which drove Google to become our second largest client by total revenue.

Gopi Chande: As a result, our revenues with Google in the first quarter of 2024 grew 30% year over year, and momentum remains strong with this key client. With our parent company, TELUS Corporation, we grew revenues by 22% year over year in the first quarter. TI remains a key enabler of digital transformation at TELUS, with hundreds of programs underway across all business divisions, with particular acceleration year over year with TELUS Health, as well as supported by the strength of capabilities at WillowTree, not least in our ability to design, build, and deliver Gen AI solutions for TELUS.

Gopi Chande: As a result, our revenues with Google in the first quarter of 2024 grew 30% year over year and momentum remains strong with key clients.

Gopi Chande: With our parent company <unk> Corporation, we grew revenues by 22% year over year in the first quarter.

Gopi Chande: <unk> remains a key enabler of digital transformation at palace with hundreds of programs underway across all business divisions, with particular acceleration year over year with Telus health as well as supported by the strength of capabilities that will not trade not least in our ability to design build and deliver Johnny.

Gopi Chande: Our solutions for talent.

Gopi Chande: From a sequential quarter perspective, revenue from the social media client is showing signs of stabilization. I echo what Jeff shared at the start of today's call. We are encouraged by this volume of stabilization, and our team is hard at work to surface incremental opportunities for further rejuvenation of this account. I also wanted to highlight that the leading social media company still remains our third largest client, but has now dropped to just below 10% of revenues in the quarter.

Gopi Chande: From a sequential quarter perspective revenue from the social media clients showing signs of stabilization.

Gopi Chande: I Echo what Jeff said at the start of today's call. We are encouraged by this volume stabilization and our team is hard at work to surface incremental opportunities for further evolution of this account.

Gopi Chande: I also wanted to highlight that the leading social media companies still remains our third largest clients, but has now dropped to just below 10% of revenues in the quarter.

Gopi Chande: Moving on to revenue by vertical, while we faced a similar challenge of a strong comparison base in the tech and games vertical, our momentum with Google was a positive offset. In fact, excluding the impact from the social media client, our revenue in the tech and games vertical grew by approximately 7% year over year. Our games clients, in particular, performed very well. Looking at the rest of our key verticals, we're seeing sequential quarter improvement, a positive reading this early in the year.

Gopi Chande: Moving on to revenue by vertical while we faced a similar challenge of a strong comparison base.

Gopi Chande: <unk> vertical our momentum with Google with a positive offset in fact, excluding the impact from the social media social media clients. Our revenue checking those vertical grew by approximately 7% year over year, our <unk> clients in particular performed very well.

Gopi Chande: Looking at the rest of our key verticals, we're seeing sequential quarter improvement a positive readout that's early in the year.

Gopi Chande: For example, with clients in the banking, financial services, and insurance vertical, or BFSI vertical, revenues decreased by approximately 3% from the fourth quarter, driven by a ramp-up with a couple of clients, one of Canada's largest banks, and one of the financial clients at Willowtree.

Gopi Chande: For example, with clients in the banking financial services.

Gopi Chande: Services and insurance or deemphasize vertical revenues decreased by approximately 3% from the fourth quarter driven by a ramp up with a couple of clients one of Canada's largest bank and one of the financial clients that will not change.

Gopi Chande: Meanwhile, the communications and media vertical continues to deliver growth, increasing 5% year over year due to expanded digital engagements with TELUS. And finally, are revenues in the healthcare vertical decreased 23%, or, to put it mildly, increased 23% year-over-year, also primarily driven by an expansion of services provided to Telus Health? Turning to our revenue performance by geography, as we expected, Europe remains our most challenging delivery region, partly due to the aforementioned year-over-year dynamics with the leading social media clients that we primarily serve from that region. That said, on a sequential quarter basis, revenues generated in Europe were flat.

Gopi Chande: Meanwhile, the communications vertical continued to deliver growth, increasing 5% year over year by expanded digital engagements with palace.

Gopi Chande: And finally, our revenues in our healthcare vertical decreased 23% increased 23% year over year also primarily primarily driven by an expansion of services provided to Telus health.

Gopi Chande: For further context, the year over year changes for certain other geographic regions also reflect our efforts to optimize both our clients' cost to serve and our own cost of delivery. For example, revenues in North America reflected increased offshoring, with the beneficiary being our Central America delivery region, along with growth in South America and Africa, with revenues generated from these offshore locations increasing 13% year over year. Meanwhile, in Asia Pacific, revenues were relatively flat year over year with reductions in service volumes with certain technology, BFSI, and e-commerce clients, offset by higher volumes delivered for our clients in communications and media, as well as healthcare.

Gopi Chande: Turning to our revenue performance by geography.

Gopi Chande: We expected Europe remains our most challenged delivering.

Gopi Chande: Partly due to the aforementioned year over year.

Gopi Chande: Alex with the leading social media client that we primarily serve that region.

Gopi Chande: That said on a sequential quarter basis revenues generated in Europe was flat.

Gopi Chande: For further context, the year over year changes for certain other geographic regions also reflect our efforts to optimize both our clients' cost to serve on our own.

Gopi Chande: All costs of delivery.

Gopi Chande: For example revenue from North America reflected increased offshore with the beneficiary.

Gopi Chande: Our Central America delivering like.

Gopi Chande: Along with the growth in South America Africa with revenues generated from offshore locations.

Gopi Chande: 13.

Gopi Chande: Yeah.

Gopi Chande: Meanwhile, in Asia Pacific revenues were relatively flat year over year with reductions in surface falling leaves with certain technology.

Gopi Chande: Si e-commerce clients offset by higher volumes delivered for our client communications and media as.

Gopi Chande: As well as health care.

Gopi Chande: Moving on to our operating expenses, salaries and benefits expense in the first quarter were $416 million, a year-over-year decline of 3%, reflecting a lower average team member count, which also declined by 3% year-over-year as a result of our cost efficiency efforts taken in 2023 to align our supply levels with changes in service demand from certain clients. This was partially offset by higher training costs to measure it with a typical ramp-up earlier in the year and expectedly higher average salaries and wages in the first quarter of 2024. However, as a percentage of revenue, we kept salary and benefits relatively flat at 63% in the first quarter, compared to 62% in the same quarter last year.

Gopi Chande: Moving onto our operating expenses.

Gopi Chande: Salaries and benefits expense in the first quarter was $416 million.

Gopi Chande: Year over year decline of 3%, reflecting a lower average chimbonda account, which also declined by 3% year over year as a result of our cost efficiency efforts taken in 2023 to align our supply levels with changeable service demand from certain clients.

Gopi Chande: This was partially offset by higher training costs commensurate with the typical wrapped up earlier in the year.

Gopi Chande: Expectedly higher average salaries and wages in the first quarter of 2024.

Gopi Chande: As a percentage of revenue, we kept salary and benefits relatively flat at 63% in the first quarter compared to 62% in the same quarter last year.

Gopi Chande: Our goods and services purchased were $116 million, an increase of 13% due to higher external contractor costs from growth in our AI data solutions service line, as well as a reduction of sales tax reserves we realized in the first quarter of the prior year that did not recur in the first quarter of this year. For additional context, as part of our ongoing efforts to improve efficiencies, we continue to consolidate and optimize our physical footprint as appropriate, with a net impact of slowing our facility's growth and related costs in the quarter.

Gopi Chande: Our goods and services purchased were $116 million an.

Gopi Chande: An increase of 13% due to higher external contractor costs from growth in our AI.

Gopi Chande: Data solutions service line as well as the reduction of certain sales tax reserves, we realized in the first quarter of the prior year that did not recur in the first quarter of this year.

Gopi Chande: For additional context as part of our ongoing efforts to improve efficiencies, we continue to consolidate and optimize our physical footprint is appropriate with a lot of impact of slowing our facilities growth and related cost in the quarter.

Gopi Chande: Share-based compensation in the first quarter was $1 million, a decrease of $13 million year-over-year, reflecting an expense recovery due to a downward revision of the estimated achievement of certain performance-based restricted share award units and a further expense recovery on award forfeitures, as well as lower expenses associated with share-based compensation awards granted in relation to our acquisitions in the past.

Gopi Chande: Share based compensation in the first quarter was one.

Gopi Chande: A decrease of 13.

Gopi Chande: Over the year, reflecting expense recovery due to a downward revision of the estimated achievement of certain performance based restricted share awards.

Gopi Chande: And a further expense recovery on award forfeitures as well as lower expense associated with share based compensation awards granted in relation to our acquisitions from the past.

Gopi Chande: <unk>.

Gopi Chande: Our acquisition, integration, and other charges in the first quarter were $7 million, a decrease of $9 million year-over-year, primarily due to lower personnel-related efficiency program costs. Depreciation and amortization expense held steady at $79 million for the quarter due to higher depreciation and amortization associated with our investment in capital assets over the past 12 months, which were partially offset by the timing of fully depreciated or amortized capital assets. Changes in business combination-related provisions increased by $29 million in the first quarter of 2024 compared with the same quarter of the prior year.

Gopi Chande: Our acquisition integration and other charges in the first quarter was $70 million a decrease of nine year over year, primarily due to lower personnel related efficiency program costs.

Gopi Chande: Depreciation and amortization expense held steady at $79 million for the quarter due to higher depreciation and amortization associated with our investment and capital assets over the past 12 months, which were partially offset by timing of fully depreciated or amortized capital assets.

Gopi Chande: Changes in business combination related provision increased by $29 million in the first quarter of 2024 compared with the same quarter in the prior year.

Gopi Chande: This was due to a downward revision to our estimates of certain performance-based criteria associated with the willow tree business, resulting in a reduction of our provisions for written options. However, the thoughtful design of our transaction at first instance provided good alignment of incentives that ensured that there was an appropriate linkage between expected performance and future payout. Interest expense in the first quarter of 2024 was $35 million, an increase of $2 million, primarily driven by higher interest accretion on lease liabilities due to higher average interest rates and balances.

Gopi Chande: This was due to a downward revision to our estimates of certain performance based criteria associated with the Willow tree business, resulting in a reduction of our position is.

Gopi Chande: Put options.

Gopi Chande: The thoughtful design our transaction at first instance, provided good alignment of incentives, but ensured that there was an appropriate hedge between expected performance and future payout.

Gopi Chande: Interest expense in the first quarter of 2024 was 35.

Gopi Chande: An increase of $2 million, primarily driven by higher interest accretion on lease liabilities due to higher average interest rates and balances.

Gopi Chande: In the first quarter of this year, our income tax expense was $9 million with an effective tax rate of 24.3% compared with an income tax recovery of $2 million and a negative DPR of 16.7% recorded in the same quarter of the prior year. These year-over-year changes were primarily due to a change in income mix, whereby proportionately more income was earned in higher-tax jurisdictions in the current year's quarter, and an increase in the foreign tax differential, partially offset by a decrease in withholding tax.

Gopi Chande: In the first quarter of this year, our income tax expense was $9 along with an effective tax rate of 24, 3% compared with an income tax recovery of $2 million and a negative ETR of $16, 7% recorded in the fourth quarter of the prior year.

Gopi Chande: Year over year changes were primarily due to a change in mix whereby proportionately more income was earned a higher tax jurisdiction.

Gopi Chande: Quarter, and an increase in foreign tax differential partially offset by a decrease in withholding taxes.

Gopi Chande: Moving on to profitability, in the first quarter, our adjusted EBITDA was $153 million, an increase of 9% year over year, primarily due to other income arising from business combination related provisions and lower share-based compensation expense, which were partially offset by lower revenue. Adjusted EBITDA margin was 23.3% in the quarter, an improvement of 270 basis points year-over-year due to the factors I've just described, as well as changes in our revenue mix across industry verticals and geographic regions.

Gopi Chande: Moving on to profitability in the first quarter, our adjusted EBITDA was 153 million an increase of 90% year over year, primarily due to other income arising from business combination related traffic.

Gopi Chande: And lower share based compensation expense, which were partially offset by lower revenue.

Gopi Chande: Adjusted EBITDA margin was 23, 3% in the quarter, an improvement of 270 basis points year over year due to the factors I've just described as well as changes in our revenue mix across the industry vertical and geographic regions.

Gopi Chande: If not for the favorable impact from the business combination related provisions and share-based compensation expense, our adjusted EBITDA declined and the margin compressed year over year, reflecting lower revenue flow through as well as higher service delivery costs from increasing complexity of work, variability, and utilization levels based on customer demand volumes, along with an overall increase in average salaries and wages. As discussed on our investor call in February, this year we're making further investments in our sales and marketing organization and internal transformation.

Gopi Chande: If not for the favorable impact from the business combination related positions and share based compensation expense, our adjusted EBITDA declined and the margin kind of question over here.

Gopi Chande: Reflecting lower revenue closer as well as higher service delivery costs from increasing complexity of work I think variability in utilization levels based on customer demand volumes, along with an overall increase in average salaries and wages.

Gopi Chande: As discussed on our Investor call in February this year, and we're making further investments in our sales and marketing organization and internal transformation strategic.

Gopi Chande: Strategic initiatives to position our business for success in the near and long term that we've started to implement during the first quarter. Adjusted net income was $65 million in the current year's quarter, an increase of 3% year-over-year, whereas our adjusted diluted EPF of $0.22 declined slightly compared with $0.23 in the same quarter of the prior year due to an increase in the weighted average number of diluted equity shares outstanding during the first quarter of the current year arising from the dilutive effect on the provision for written prep options.

Gopi Chande: Our strategic initiatives to position our business for success in the near and long term and that we started to implement during the first quarter.

Gopi Chande: Adjusted net income was $65 million.

Gopi Chande: Current year's quarter increased 3% year over year.

Gopi Chande: Whereas our adjusted diluted.

Gopi Chande: P F F 'twenty, two stents declined slightly compared with 23.

Gopi Chande: The same quarter of the prior year.

Gopi Chande: An increase in weighted average number of diluted equity shares outstanding during the first quarter currently are arising from the dilutive effect on the proposal.

Gopi Chande: Put option.

Gopi Chande: Turning to the balance sheet and cash flow, the balance sheet remains strong with cash of $154 million and available capacity under our credit facility of $504 million. We generated robust free cash flow of $107 million in the quarter, a year-over-year increase of 65%, driven by higher net inflows from working capital, which included higher cash receipts and lower income taxes paid, partially offset by lower operating profits and higher capital expenditures. As a percentage of revenue, free cash flow was 16% in the quarter.

Gopi Chande: Turning to the balance sheet and cash flow the.

Gopi Chande: Our balance sheet remains strong with cash of $154 million and available capacity under our credit facility of 500 and format.

Gopi Chande: We generated robust free cash flow of $107 million on a quarter of year over year increase of 65% driven by higher net inflows from working capital, which included higher cash receipts and lower income taxes paid partially offset by lower operating profit and higher capital expenditures.

Gopi Chande: Yes.

Gopi Chande: As a percentage of revenue free cash flow was 16% from the quarter.

Gopi Chande: Our capital expenditures were $19 million in the quarter, an increase of $4 million year over year, primarily due to facility buildouts in our newest delivery centers in Africa, as well as additional investments in our digital solutions and AI businesses. As a percentage of revenue, our capital expenditures in the quarter were approximately 3%. Our leverage ratio as of March 31st was 2.95, a slight increase when compared with the prior quarter, driven mainly by headwinds when comparing the 12-month rolling EBITDA in the calculation of the ratio, which overshadowed debt repayments in the quarter.

Gopi Chande: Our capital expenditures were $19 million.

Gopi Chande: <unk> increased $4 million year over year, primarily due to facility build outs and our newest delivery centers in Africa as well as additional investments in our digital solutions and <unk> businesses.

Gopi Chande: As a percentage of revenue capital expenditures in the quarter were approximately 3%.

Gopi Chande: Our leverage ratio as of March 31 was <unk> nine times, a slight increase when compared with the prior quarter driven mainly by headwind when comparing the 12 month rolling EBITDA and the calculation of the ratio, which overshadowed debt repayment.

Gopi Chande: That said, the ratio remains within our communicated steady state range, and we believe our strong cash flow generation will enable further meaningful debt repayment and leverage ratio improvements throughout the remainder of 2024. Turning to our outlook, we are reaffirming our full-year outlook today. For 2024, we continue to expect revenue in the range of $2.79 to $2.85 billion, which represents revenue growth of 3 to 5% on a reported basis. We do not currently expect year-over-year foreign currency impacts on revenue to be material.

Gopi Chande: <unk>.

Gopi Chande: That said the rich ratio remains within our communicated steady state range and we believe our strong cash flow generation will enable further meaningful debt repayment and leverage ratio improvement throughout the remainder of 2024.

Gopi Chande: Turning to our outlook, we are reaffirming our full year outlook today for.

Gopi Chande: For 2024, we continue to expect revenue in the range of $2 79 to $2 85 billion, which represents revenue growth, 3% to 5% on a reported basis.

Gopi Chande: Do not currently expect year over year foreign currency impact on revenue to be material.

Gopi Chande: Within this Outlook range, we assume near-term stabilization in revenues from our third-largest client, with any softness offset by continued expansion of revenue with Telus and further momentum with other large clients, including Google. As I mentioned earlier, we are seeing an acceleration in new client additions that we expect will have more meaningful revenue contributions in the quarters ahead and something that is already reflected in our outlook range. Our funnel remains robust at circa $2 billion.

Gopi Chande: Within this outlook range, we're still near term stabilization in revenues from our third largest clients with any softness offset by continued expansion of revenue with Telus as further momentum with other large clients.

Gopi Chande: No.

Gopi Chande: As I mentioned earlier, we are seeing an acceleration of new client additions that we expect will have more meaningful revenue contribution in the quarters ahead and something that is already reflected in our outlook range.

Gopi Chande: Funnel remains robust at circa $2 billion.

Gopi Chande: For Adjusted EBITDA, we expect a range of $623 to $643 million, representing 7 to 10% year-over-year growth, and Adjusted EBITDA margins of 22.3 to 22.6%. We expect adjusted EBITDA growth to outpace revenue growth in 2024, in part due to the significant cost efficiency programs we executed in the past nine months as well as our current year in-flight initiatives that address our service delivery capabilities to enhance service quality and optimize our global cost of service. Our outlook continues to call for an adjusted diluted EPS range of 93 to 98 cents, representing growth of 7 to 13%. We assume a weighted average diluted share count of approximately $292 million for the year.

Gopi Chande: For adjusted EBITDA, we expect a range of $623 million to $643 million, representing 7% to 10% year over year growth with adjusted EBITDA margins of $22 three to 23, 6%.

Gopi Chande: We expect adjusted EBITDA growth to outpace revenue growth in 2024 in part due to the significant cost efficiency program, we executed upon and the top line as.

Gopi Chande: As well as our current year in flight initiatives that address our service delivery capabilities to enhance service quality and optimize our global cost to service.

Gopi Chande: Our outlook continues to call for an adjusted diluted EPS range of 93 to 98, representing growth of 7% to 13%.

Gopi Chande: We are still a weighted average diluted share count of approximately $292 million for the yet.

Gopi Chande: 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 needs. While we do not provide formal quarterly guidance, I would like to reiterate certain seasonality factors to help you model our quarterly K-dates. We continue to 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. 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.

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

Gopi Chande: While we do not provide formal quarterly guidance I would like to reiterate certain seasonality factors to help you model our quarterly cadence.

Gopi Chande: We continue to expect revenue seasonality of approximately 48% in first half and 52% in the second half of 2024.

Gopi Chande: Adjusted EBITDA seasonality of approximately 45% in the first half at 55% in the second half.

Gopi Chande: 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.

Gopi Chande: We believe this outlook remains prudent, even though we're mindful of continued uncertainty in the market, with evolving forecasts around interest rates and resulting caution in IT spend. At the same time, we still expect to see demand starting to recover in the latter part of the year. With that said, let's move on to questions. I would kindly ask that you keep it to one question at a time so that everyone can participate. Jonathan, it's over to you.

Gopi Chande: We believe this outlook remains prudent even though we're mindful of continued uncertainty in the market with a volatile forecast around interest rates and the resulting caution it just started at.

Gopi Chande: At the same time, we still expect to see demand starting to recover.

Jonathan: Part of the year.

Gopi Chande: With that let's move onto questions I kindly ask that you keep it to one question at times, so that everyone can participate Jonathan over to you.

Jonathan: Certainly, in one moment for our first question. Our first question for today comes from the line of Ramsey LSL from Barclays. Your question, please. Hi, thanks for taking my question this morning. I wonder if you could comment a little bit further about the signs of stabilization that you're seeing at the leading social media partner. I think you mentioned that some of the recovery dynamics could take place over the medium to long term. I guess I'm just wondering sort of what's giving you confidence that you're seeing stabilization, and also if you could comment on the shape of an eventual recovery.

Jonathan: Certainly in one moment for our first question.

Jonathan: Our first question for today comes from the line of Ramsey El <unk> from Barclays. Your question. Please.

Ramsey Clark El: Hi, Thanks for taking my question this morning.

Jonathan: I Wonder if you could comment a little bit further about the signs of stabilization that you are seeing at the leading social media partner I think you mentioned that some of the recovery dynamics could take place over the medium to long term I guess I'm, just wondering sort of what's giving you confidence that youre seeing stabilization and also if you could comment on the shape of an event.

Jonathan: <unk> recoveries is a long gradual multi multi cycle recovery or could you see something a little bit more of a like a snap back at some point.

Jeffrey D. Puritt: Is this a long, gradual, multi-cycle recovery, or can you see something a little bit more of a snap back at some point? Hey, Ramsey. How are you? Thanks for the question. We suffered some pretty significant deterioration in spend with that client, really starting in the back half of 2022 and throughout 2023, as you'll recall, and so the performance in 2024 is still, on a year over year comparison basis, rather disappointing.

Speaker Change: Hey, Ramsey how are you thanks for the question.

Jeffrey D. Puritt: We we suffered some pretty significant deterioration in spend with that client really starting in the back half of 2022 throughout 2023 as youll recall and so.

Jeffrey D. Puritt: The performance in 2024 is still on a year over year compare basis rather.

Jeffrey D. Puritt: The good news that we're alluding to is, you know, we have now seen a stabilization and some meaningful green shoots in terms of incremental business. So our outlook for 2024 already reflects that, as I said, as you heard from Gopi as well, stabilization, so no further shrinkage, reduction, deterioration in spend, and we are already sort of turning that around. We don't want to get too over our skis here and assume that all of a sudden we start to recover in terms of growing back to the 2023 or 2022 levels of total spend, but we do anticipate, and what's reflected already in 2024 is, sort of, that flattening of the historical curve in the previous decline and going into, hopefully, 2025 with meaningful positive improvement. Thank you. Thank you.

Speaker Change: Disappointing the good news that we're alluding to is we have now seen a stabilization and.

Jeffrey D. Puritt: Some meaningful green shoots in terms of incremental business and so our outlook for 2024 already reflects that as I said as you heard from <unk> as well as the stabilization so no further.

Jeffrey D. Puritt: Shrinkage reduction deterioration and spanned in already.

Jeffrey D. Puritt: Turning that around we don't want to get over our skis here and assume that all of a sudden we start to recover in terms of growing back to the 2023 or 2022 levels of total spend but we do anticipate and what's reflected already in 2024 is sort of that flattening of the historical curve.

Jeffrey D. Puritt: In the previous decline going into hopefully 2025 with.

Jeffrey D. Puritt: Meaningful positive improvement.

Speaker Change: Thank you.

Jeffrey D. Puritt: Yes.

Speaker Change: One moment for our next question.

Jonathan: One moment for our next question. And our next question comes from the line of Tin Chin Frank from J.P. Morgan. Your question, please? Hi, thank you. Good morning. Just just curious about conviction in the second half recovery versus 90 days ago. It feels like you mentioned green shoes.

Speaker Change: And our next question comes from the line of Tien Tsin Huang from Jpmorgan. Your question. Please.

Jonathan: Okay.

Speaker Change: Hi, Thank you. Good morning, just curious on conviction on the second half recovery versus 90 days ago. It feels like you mentioned green shoots you like <unk>.

Speaker Change: <unk> is tracking.

Speaker Change: Tracking quite well you just answered on on Ramsey's side with the social media call just curious im conviction versus 90 days ago for the second half.

Jeffrey D. Puritt: You know, Google is tracking quite well; he just answered on Ramsey's side with the Social Media Clutch's Curious Unconviction versus 90 Days Ago for the second half. I invite Gopi to add more, but I can tell you my conviction is as..., confident, if not more so based on, the new clients we've already signed, many of which I referenced in my opening comments. The challenge, of course, is just how quickly we can get deals signed and ramped up and start to realize the profitable revenue associated with them.

Speaker Change: I invite you to top up but I can tell you my conviction is as con.

Jeffrey D. Puritt: Confident if not more so based on the new clients, we have already signed many of which I referenced in my opening comments.

Jeffrey D. Puritt: The challenge of course is just how quickly we can get deals signed and ramped.

Jeffrey D. Puritt: Start to realize the profitable revenue associated with them, but.

Jeffrey D. Puritt: But, We spent a lot of time, as you can imagine, Tingen, discussing amongst ourselves and with our board the prudence of our guidance reaffirmation, given what's going on amongst our peers in the market more broadly and, admittedly, given what happened last year at TI. And I think where we've landed is reflective of our belief as to the prudence of this outlook we have for. Just So reiterating, our funnel is looking strong. Again, it's circa $2 billion.

Jeffrey D. Puritt: We spent a lot of time as you can imagine Tien tsin.

Jeffrey D. Puritt: Discussing amongst ourselves and with our board.

Jeffrey D. Puritt: <unk> of our guidance reaffirmation that given what's going on amongst our peers in the market more broadly and admittedly given what happened last year at Ti.

Jeffrey D. Puritt: I think where we landed is reflective of our belief as to the prudence of this outlook reaffirmation.

Jeffrey D. Puritt: Sure.

Jeffrey D. Puritt: Top out there Tien tsin, so reiterating our funnel with what they were strong again at $2 billion, we're seeing that new logo accelerate so sequentially from Q4 as well as Q1 last year.

Gopi Chande: We're seeing that new logo acceleration sequentially from Q4 as well as Q1 last year. We've mentioned the investment we've made in our sales and marketing organization, and that the investments we've made in our sales and marketing organization will continue to bear fruit throughout the year. And the recovery we're expecting is in the latter half of the year.

Gopi Chande: That's what we've made in our sales and marketing organization and that's bearing fruit.

Gopi Chande: To bear fruit throughout the year.

Gopi Chande: And the recovery were expected in the latter half of the year. So that reflects the seasonality we have reflected in our guidance of 48, 52%. So continue to feel that that's a prudent outlook for just 30 days 90 days ago.

Gopi Chande: And so that reflects the seasonality we've reflected in our guidance of 48% and 52%. So continue to feel that that's a prudent outlook for just as we did 90 days ago. Got it. Great, thank you so much for the thought.

Speaker Change: Got it.

Speaker Change: Great. Thank you so much for the thoughts.

Jonathan: Thank you. One moment for our next question. And our next question comes from the line of Stephanie Price from CIBC. Your question, please. Hi, good morning. Gopi, maybe, maybe this is one for you.

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

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

Stephanie Doris Price: Hi, Good morning. So can you maybe maybe this is one for you you noted on the call that excluding between 9 million add back around with luxury that margins were down year over year and they were below the full year guidance just trying to understand what margin should look like on a go forward basis factoring in the cockpit.

Stephanie Doris Price: Puts and takes you saw in the quarter.

Gopi Chande: You noted on the call that, excluding the $29 million add back around Willow Tree, margins were down year over year and they were below the full year guidance. Just trying to understand what margins should look like on a go forward basis, factoring in the cost savings and the puts and takes you saw in the quarter. Thanks, Stephanie. So maybe I'll start, Stephanie, with, I do think it's fair to continue to use our revised definition of EBITDA and the inclusion of the business combination provision. And I'll just spend a minute discussing why.

Stephanie Doris Price: Thanks, Stephanie so maybe I'll start suffering with I do.

Speaker Change: Do you think it's fair to continue to use our revised definition of EBITDA and the inclusion of the business combination prevention and I'll just spend a minute discussing why so first of all our outlook.

Gopi Chande: So first of all, our outlook and guidance is based on our estimates of those numbers, so keeping them in is an apples-to-apples comparison. Secondly, if you think about both of the items that we've added in or kept in Adjusted EBITDA in terms of the earn-out or stock-based compensation, they're both essentially a pay-for-performance arrangement where we're incentivizing management or, you know, through acquisition or internal management to deliver on expectations.

Gopi Chande: This is based on our estimates of those numbers. So keeping the name is an apples to apples to carrefour.

Gopi Chande: Secondly, if you think about both of the items that we've added are kept in adjusted EBITDA in terms of the earn out or stock based compensation. They are both essentially a pay for performance arrangements, where we're incentivizing management or through acquisition or our internal management to deliver on expectations.

Gopi Chande: And so to the extent that that doesn't happen, we do not want to overpay for underperformance. And effectively, you're seeing the true value of those amounts. So I do think they are reflective, ultimately, of our business operation. Now, having said that, Stephanie, we are seeing pressure on our margins and, essentially, still feel confident in the guidance that we've provided and the range we've provided of 22.3 to 22.6. I'll give you a bit of color on the pressure we're seeing and what we're doing to mitigate that.

Gopi Chande: And so to the extent that it's that that doesn't happen, we do not want to overpay for underperformance that it effectively youre seeing a true up those amounts like do you think they are reflective ultimately of our of our business operations.

Gopi Chande: Having said that Stephanie we are seeing pressure on our margins and essentially still feel confident in the guidance that we've provided the range. We've provided of 22% to 3% to $22 six I'll give you a bit of color of the pressure we're seeing in what we're doing to mitigate that so a bit of the pressure the late.

Gopi Chande: So, a bit of the pressure relates to the mix of business we're doing. So, we don't provide margin by service line, but we have said in the past that trust and safety is one of our higher-margin businesses, and AI data solutions, depending on the work, can be a bit below average.

Gopi Chande: The mix of business, we're doing it so we don't provide margin by service line, but we have said in the past that trusted safety is one of our higher margin businesses.

Gopi Chande: And AI data solutions, depending on the work can be a bit below average. So we're working through the adjustments of the mix of our work as I mentioned in my remarks, we are seeing some higher cost of delivery and then just as demand stabilizes we're seeing.

Gopi Chande: So, we're working through the adjustment of the mix of our work. As I mentioned in my remarks, we are seeing some higher costs of delivery, and then just as demand stabilizes, we're seeing the utilization of our team members vary. What we're doing to offset that, and we think that will help us keep in the range that we've guided on, is first of all, with our clients, optimizing the geography in which we're providing them services, and then second of all, doing that internally, really creating our centers of excellence and providing our internal delivery at optimal geos within TI.

Gopi Chande: The utilization of our team members Mary.

Gopi Chande: What we're doing to offset that and we think that will help us keep in that range that we've guided on.

Gopi Chande: It's first of all with our clients optimize the geography in which we are providing the service and then second of all doing that internally really creating our centers of excellence and providing our internal and some of them are each at optimal geologist with API and then the last comment I'll make is we've made some investments that I referred to.

Gopi Chande: And then the last comment I'll make is that we've made some investments that I've referred to both in sales and marketing, as well as in some of our cost transformation. That both has an effect on Q1, that is where we're making the investment, but we also believe that that will help stimulate gross margins throughout the year. Thanks for the color.

Gopi Chande: Also in sales and marketing as well as some of our cost transformation that both has an effect on Q1 models, where we're making investments, but we also believe that that will help stimulate the gross margins throughout the year.

Gopi Chande: Thanks for the color.

Jonathan: Thank you. One moment for our next question, and our next question comes from the line of Aravinda Galappatthige from Canaccord Genuity.

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

Aravinda Suranimala Galappatthige: And our next question comes from the line of <unk> from Canaccord Genuity. Your question. Please.

Gopi Chande: Your question, please. Hi, thanks for taking my question. I just wanted to go back to the EBITDA guide.

Gopi Chande: I know that the provision related to the business combination obviously boosted your EBITDA number. Was that foreseen when you kind of gave the guide, or should we sort of consider that to be incremental to sort of the number that you originally guided and you obviously maintained? Thank you. So Aravinda, I will confirm that we did anticipate this in our guide.

Aravinda Suranimala Galappatthige: Hi, Thanks for taking my question.

Speaker Change: I was just wanted to go back to the EBITDA Guide I know that.

Gopi Chande: The provision related to the business combination obviously boosted your EBITDA number was that foreseen. When you kind of gave the guide or should we sort of consider that to be incremental to sort of the number that you originally guided and you obviously maintained.

Gopi Chande: And effectively, it's aligned with what we're expecting with Willow Tree's performance and the recovery in the back half of the year. So this is anticipated within the guidance that we provided. Thank you, Thank you for 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.

Aravinda: So our agenda I will confirm that we did anticipate.

Divya S. Goyal: In archive and effectively it's aligned with what we're expecting with relative performance and the recovery in the back half of the year. So this is anticipated within our guidance that we provided.

Divya S. Goyal: Thank you.

Gopi Chande: Yes.

Divya S. Goyal: Thank you one moment for our next question.

Divya S. Goyal: And our next question comes from the line to be on coil from Scotia Bank. Your question. Please.

Gopi Chande: So Gopi, I wanted to actually get some color on the client concentration here. You did talk about Telus and Google being obviously two of the key clients that they currently have. I wanted to make sure the amount of revenue that the company generated from Telus at 24.3% included Telus Health revenue, number one. And I am just concerned with respect to the ongoing recurring revenue that you can continue to generate out of these two accounts if the concentration were to stay where it is today. So Jeff, maybe I'll start with Divya on that, and then I'll pass it to you. So lovely to hear from you, Divya. Yes, the Telus numbers we referenced do include Telus Health.

Divya S. Goyal: Good morning, everyone.

Divya S. Goyal: <unk> I wanted to actually get some color on the client concentration here.

Gopi Chande: Did talk about tell us and Google being obviously two of the key clients.

Gopi Chande: We currently have I wanted to make sure.

Gopi Chande: Amount of revenue that the company generated from tell us at 24, 3% includes Telus health revenue number one and I am just concerned with respect to the ongoing recurring revenue that you can continue to generate out of these two accounts.

Divya: The concentration where to stay where it is today.

Speaker Change: So Geoff maybe I'll start with you on that and then I'll pass to use the lovely to carefully.

Divya: Yes, the <unk> numbers, we referenced do include Telus health.

Gopi Chande: And, of course, client concentration is something that we're focused on. What we're very pleased to see with both Telus and Google is the diversification of the work that we're doing with both of them. So with Telus, it's Telus Health, as you mentioned, as well as some of our digital services with WillowTree.

Gopi Chande: And of.

Gopi Chande: Of course client concentration is something that we're focused on what we're very pleased to see with both tell us and Google is the diversification of the work that we're doing with both of them.

Gopi Chande: So with tell us.

Gopi Chande: Tell us how far as you mentioned as well as some of that as well as some of our digital services with Willow tree and with that one in particular, given the number of opportunities projects various business units.

Jeffrey D. Puritt: And with that one in particular, given the number of opportunities, projects, various business units, there really is no limit to the work we could continue to do with Telus. There are over 30 projects, you know, waiting with a favorable ROI that we need to work on at this moment in just the WillowTree digital business with Telus. Similar with Google, again, that is a diversification of the work on the AI front. And so we're encouraged by, while it is our larger client, the different work that we do with them. And Jeff, maybe I'll pass it to you to top up.

Jeff: There really is no limit to the work we can continue to do with tell US there is over 30.

Jeff: Leading with a favorable ROI that we need to work on at this moment in just the Wella treat digital business with tell us similar with Google again that is the diversification of the work on the AI front end somewhere at current.

Jeff: <unk> five while it is our larger clients different work that we're doing with them, which I think I'll pass to you to top up.

Jeffrey D. Puritt: Yeah, I share your concern, Divya, with respect to concentration risk, given we've already experienced the downside of what that could potentially, entail for us part of our expansion of our sales and marketing is reflective of our recognition of and our intention in the near term to do something meaningful to mitigate it by getting out there and winning more clients more quickly and growing them as quickly as we can so that we can reverse that trend of concentration. You know the history of TI way back from our origin was starting out dominated by the work we did for TELUS and you know I was quite pleased with the progress we made going into 2016, 2017, 2018 where TELUS's contribution to our revenues in totality was starting to diminish I think at our zenith down to about 14% of revenue and unfortunately as a result of our failure to be more successful in growing new other accounts and then scaling them more quickly but at the same time you know it's not entirely all bad news, it's a bit of a mixed outcome.

Jeff: Yes, I share your concern and DVR with respect to concentration risk given we've already experienced the downside of what that could potentially.

Jeffrey D. Puritt: Entail for US part of our expansion of our sales and marketing investments is reflective of our recognition of and our intention in the near term to do something meaningful to mitigated by getting out there and winning more clients more quickly and growing them as quickly as we can so that we can reverse that trend.

Jeffrey D. Puritt: Concentration.

Jeffrey D. Puritt: The history of Ti way back from our origin was starting out dominated by the work we did for Telus.

Jeffrey D. Puritt: He was quite pleased with the progress we've made.

Jeffrey D. Puritt: Going into 2016, 2017, 2018, where <unk> contribution to our revenues in totality was starting to diminish I think at our zenith down to about 14% of revenue and unfortunately as a result of our failure to be more successful in growing new other accounts and then scaling them more quickly.

Jeffrey D. Puritt: But at the same time.

Jeffrey D. Puritt: It's not entirely all bad news.

Jeffrey D. Puritt: Eight of our.

Jeffrey D. Puritt: Mixed outcome the opportunity to continue to enable Telus enabled Google across incremental service lines.

Jeffrey D. Puritt: The opportunity to continue to enable TELUS, and enable Google across incremental service lines, different geographies, different capabilities, that's a good news story, and you know, obviously not wanting to refuse the work for fear of exacerbating the concentration profile, but we well recognize the critical importance of turning that trend around, and we are cautiously optimistic that, before the year is out, we will have made a meaningful improvement in that regard. That's all, folks; thank you.

Jeffrey D. Puritt: Current geographies different capabilities, that's a good news story, and obviously not wanting to refuse the work for fear of exacerbating the concentration profile, but we will recognize the critical importance of turning that trend around and cautiously optimistic that before the year is out we will have made a meaningful improvement in that regard.

Speaker Change: That's helpful. Thank you.

Jeffrey D. Puritt: Yes.

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

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

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

Jeffrey D. Puritt: Just another question about diversification, but more on the opportunity side of things. Your data annotation business has been very focused on North American tech players, particularly cloud service providers. So, two parts of this: is the opportunity pipeline filling up with a more diverse group of customers? And secondly, do you need to modify anything in the business if enterprises start requiring your services for their AI efforts? Thanks, Dan. That's a good question. And it's not an if; it's already a when.

Daniel Chan: Hey, good morning, just another question about diversification, but more on the opportunity side of things Youre data annotation business has been very focused on North American Tech players, particularly with the cloud service providers. So two parts of this as the opportunity pipeline filling up with a more diverse group of customers and secondly, do you need to modify anything in the business if.

Jeffrey D. Puritt: Enterprises start requiring your services for their efforts.

Jeffrey D. Puritt: Although hyperscalers have indeed historically dominated the landscape in terms of data annotation demand, we're already seeing that move into the enterprise space more broadly. And, excuse me, that is absolutely part of our strategy in our sales and marketing activity to try and capture the opportunity and to leverage our credentials in being a meaningful part of helping the hyperscalers to build out their machine learning algorithms. And now they're large language models. And again, you're quite right in terms of the North America centricity of the customer base. But we've got teams in both Japan and Korea that are already starting to win new opportunities.

Jeffrey D. Puritt: Thanks, Dan Good question and it's not an if it's already a win although hyper scaler have indeed, historically dominated the landscape in terms of data application demand, we're already seeing that move.

Jeffrey D. Puritt: Into the enterprise space more broadly and excuse me that is absolutely part of our strategy on our sales and marketing activity to try and capture the opportunity and to leverage our credentials in being a meaningful part of helping the hyperscale is to build out their machine learning algorithms and now Theyre large language models.

Jeffrey D. Puritt: And we hope that that will continue to grow more quickly in the near term, given what we see is a pretty fertile target-rich environment for both data annotation and computer vision work, as well as general AI work there. Thank you. One moment for our next question, and the next question comes from the line of Cassie Chan from Biavera.

Daniel Chan: You are quite right in terms of the North America Centricity of that customer base, but we've got.

Daniel Chan: <unk> in both Japan and Korea.

Daniel Chan: That are already starting to win new opportunities.

Daniel Chan: We hope that that will continue to grow more quickly in the near term given what we see is a pretty fertile target rich environment for both data annotation computer vision work as well as Jenny I worked there.

Jeffrey D. Puritt: Yes.

Daniel Chan: Thank you one moment for our next question.

Daniel Chan: And our next question comes from the line of Cathy Chan from Bofa. Your question. Please.

Jeffrey D. Puritt: Your question, please. Hey, guys, I just wanted to ask. I think you guys talked about some acceleration and some new client additions that are included in your full year guidance. Just wanted to know what kind of offerings there are, you know, what's more interesting, which business segments, etc. And, in general, I guess, how much of your business is an existing client expansion versus sort of net new client additions. Thank you. The demand we're seeing now, Cassie, is really across all four service lines. And in terms of the mix, excuse me, I'll invite Gopi to reiterate sort of the percentages, if you will.

Jeffrey D. Puritt: Hey, guys I just wanted to ask I think you guys talked about some acceleration and some new client addition that is included in your full year guidance I just wanted to know what kind of offering there you know.

Jeffrey D. Puritt: More interesting.

Jeffrey D. Puritt: Which business segment et cetera.

Gopi Chande: In general I guess, how much of your business mix and existing client expansion versus sort of net new client addition, thank you.

Jeffrey D. Puritt: The demand we're seeing now KFC is really across all four service lines.

Gopi Chande: And in terms of the mix.

Speaker Change: Excuse me.

Gopi Chande: We invite you to reiterate sort of the the percentages if you will.

Gopi Chande: I'm sorry; I got a bit of a frog in my throat this morning here. I think it really is sort of the recognition that there are opportunities across these broad segments, and that's kind of been our overall strategic value proposition is not sort of just being in a single lane but being a single point end-to-end service provider across the design, build, and deliver continuum for our customers. That is sort of the source of our confidence and optimism about our ability to meet our guide.

Gopi Chande: I'm, sorry, I got a bit of a frog in my throat. This morning here.

Gopi Chande: <unk>.

Gopi Chande: I think it really is sort of.

Gopi Chande: The recognition that there is opportunities across these broad segments and that's kind of been our.

Gopi Chande: Overall strategic value proposition is not sort of just being in a single lane, but being a single point into and service provider across the design build deliver continuum for our customers.

Gopi Chande: That is sort of the source of our confidence and optimism about our ability to meet our guidance.

Gopi Chande: Okay.

Gopi Chande: Yeah, and Jeff, I'll reinforce that. So Cassie is really following our current service line breakout that we give annually. So following in each four of those categories, roughly at that equal percentage is still growing all four services.

Speaker Change: And Jeff I'll reinforce that so Kathy really following our current service line breakout that weekend annually. So following each four of those categories roughly at that equal percentage. So all in all four service lines.

Jonathan: Thank you. One moment for our next question. And our next question comes from the line of Bradley Clark from BMO Capital Markets. Your question, please? Hi. Thank you. This is Brad on for Keith Bachman. I want to go into the BFSI line a little bit. It's been under pressure for a couple of quarters now.

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

Bradley Reiss Clark: And our next question comes from the line of Bradley curve from BMO capital markets. Your question. Please.

Jeffrey D. Puritt: You know, you've been helpful calling out the impacts, you know, from Google and your large social media client. Are there any, you know, client-specific issues within this line segment that we should think about, even if it's below 10% of total revenues that would have an outsized impact on this line item? Or what are the industry trends that are sort of occurring in BFSI, and you know, how and why would they get better?

Bradley Reiss Clark: Hi. Thank you. This is Brad on for Keith Bachman I wanted to go into the BFS I line a little bit.

Jeffrey D. Puritt: It's been under pressure for a couple of quarters now.

Jeffrey D. Puritt: <unk> been helpful, calling out the impact from Google and your large social media clients.

Jeffrey D. Puritt: Are there any.

Jeffrey D. Puritt: Client specific issues within this line segment that we should think about you are going to pull out a temporary kind of total revenue that would have an outsized impact on that line item or what are the industry trends that are occurring in BSI, and how and why they get better.

Jeffrey D. Puritt: Thanks. So I think Brett Copey mentioned that, sequentially, quarterly, we're actually seeing positive growth in BFSI. Indeed, year over year, and over the last little over, I guess, a year or so, that segment was dominated by one of our BFSI clients in particular, and, as a consequence of them having a bit of a hiccup in terms of their customer growth, and by extension, their reliance upon us to support them. And that was really the source of the decline in that vertical for us.

Jeffrey D. Puritt: So I think Brett Cope you mentioned that sequentially quarterly we're actually seeing positive growth in BFS side.

Jeffrey D. Puritt: Indeed year over year and over the last little over I guess, a year or so that segment was dominated by one of our BFS clients in particular and as a consequence of Z, having a bit of a <unk>.

Jeffrey D. Puritt: Hiccup in terms of their customer growth and by extension their reliance upon we can support them and that was really the source of the decline in that <unk>.

Jeffrey D. Puritt: Vertical for us.

Jeffrey D. Puritt: That situation has now stabilized and indeed turned around, so we're anticipating improvement in the vertical in totality because of that situation, as well as continued growth coming not just from some of the sort of TI direct BFSI sales customer wins but again, as Gopi noted earlier, the WillowTree team continues to have strength in that segment as well. Thank you. Thank you. And please wait one moment for our next question. And our last question for today, due to time constraints, comes from the line of Maggie Nolan from William Blair. Your question, please. Hi, everyone. This is Kay Kronstein. I'm from Maggie.

Jeffrey D. Puritt: That situation has now stabilized and indeed turned around so we are anticipating improvement in the vertical in totality because of that situation as well as continued growth coming not just from some of the sort of Ti direct BSI sales customer wins, but again as <unk> noted earlier the willow.

Kathleen Mary Kronstein: The team continued to have strength in that segment as well.

Kathleen Mary Kronstein: Thank you.

Jeffrey D. Puritt: Yes.

Kathleen Mary Kronstein: Thank you.

Kathleen Mary Kronstein: And one moment for our next question.

Speaker Change: And our last question for today due to time constraints comes from the line of Maggie Nolan from William Blair. Your question. Please.

Kathleen Mary Kronstein: Hey, everyone. This does take from sign on for Maggie.

Kathleen Mary Kronstein: Quarter that team is really excited about the growth that you are seeing in the health care business and it looks like that trend is continuing this quarter. So is there any.

Kathleen Mary Kronstein: Incremental that you can share about the health and the health of this industry vertical.

Jeffrey D. Puritt: Last quarter, my team was really excited about the growth that you were seeing in the healthcare business, and it looks like that trend is continuing this quarter. So is there anything incremental that you can share about the health of the health of this industry vertical? (inaudible) Thank you for the question. Indeed, I am continuing to be quite encouraged by not just the progression in helping Telus Health but lots and lots of green shoots across the healthcare landscape more broadly outside of the Telus vertical.

Kathleen Mary Kronstein: Thank you for the question indeed.

Kathleen Mary Kronstein: I am continuing to be quite encouraged by not just the progression in helping Telus health, but lots and lots of green shoots across the healthcare landscape more broadly outside of the telecom vertical.

Jeffrey D. Puritt: Winning, supporting, and growing work with Telus Health has really kind of been a binary issue for TI. Despite our ambitions to leverage our meaningful capabilities, which I think have always been quite relevant for the healthcare sector, our inability to have successfully grown our capabilities serving Telus Health was almost a bit of a boat anchor in terms of our ability to successfully persuade non-Telus-related healthcare businesses to work with us because we didn't have the credentials, we didn't have the experience, we didn't have the capabilities.

Speaker Change: Winning supporting and growing work with Telus health is really kind of been.

Jeffrey D. Puritt: A binary issue for Ti despite our ambition to leverage our meaningful capabilities that I think have always been quite relevant for the healthcare sector. Our inability to have successfully grown our capability serving <unk> is almost a bit of a boat anchor in terms of our ability to successfully.

Jeffrey D. Puritt: Persuade nor one tell us related healthcare businesses to work with us because we didn't have the credentials. We didn't have the experience we didn't have the capabilities and indeed.

Jeffrey D. Puritt: And indeed, you know, when asked during the pursuit, you know, how much work you are doing for Telus Health, when the answer was not a particularly positive one, and not surprisingly, we were met with, well, I think we're going to take a pass. You know, if your own sister organization is uncomfortable and unwilling to work with you, why would we? Now that that's changed meaningfully, and we are at, I would suggest, materiality thresholds and then some, you know, closing in on $200 million a year of healthcare-specific related revenues, and not all of Telus, but much of that, we are now, I think, you know, have earned the right, so to speak, to be taken more seriously with other healthcare providers. And indeed, the opportunities are starting to come much more fast and furious as a consequence.

Jeffrey D. Puritt: When asked during the pursuit.

Jeffrey D. Puritt: How much work are you doing for telehealth when the answer was not a particularly positive one and not surprisingly we were met with well I think we're going to take a pass your own sister organization is uncomfortable and willing to work with you why would we know that thats changed meaningfully and we are at I would suggest materiality thresholds and then.

Jeffrey D. Puritt: Some.

Jeffrey D. Puritt: Closing in on $200 million, a year of health care specific related revenues and not all of the tell us but much of that.

Jeffrey D. Puritt: We are now I think you would have earned the right so to speak to be taken more seriously with other health care providers and indeed, the opportunities are starting to come much more fast and furious as a consequence so.

Jeffrey D. Puritt: So excited about what we hopefully will be able to post and talk about in the quarters ahead here on the healthcare front, in particular. Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Jeff Puritt for any further remarks. Thanks, Jonathan.

Jeffrey D. Puritt: Excited about what we hopefully will be able to post and talk about in the quarters ahead here on the healthcare front in particular.

Jeffrey D. Puritt: Hey, Jeff.

Jeffrey D. Puritt: Thank you. This does conclude the question and answer session of today's program I'd like to hand, the program back to Jeff for any further remarks.

Jeffrey D. Puritt: And thank you all for your questions and engagement today. To echo Gopi's commentary, we are indeed committed to driving growth and remain laser focused on profitability and efficiency in our operations. We believe clients will soon again return to a growth mindset and will look to leverage the best of technology and TI's expertise to create better outcomes through differentiated customer experiences. TI is very well positioned to go to market as an end-to-end AI-fueled customer experience partner of choice to capture this opportunity.

Jeffrey D. Puritt: Thanks, Jonathan and thank you all for your questions and engagement today to Echo <unk> commentary, we are indeed committed to driving growth and remain laser focused on profitability and efficiency in our operations. We believe clients will soon again return to a growth mindset and we will look to leverage the best of <unk>.

Jeffrey D. Puritt: Technology, and Ti expertise to create better outcomes through differentiated customer experiences.

Jeffrey D. Puritt: <unk> is very well positioned going to market as an end to end AI few.

Jeffrey D. Puritt: <unk> customer experience partner of choice to capture this opportunity.

Jeffrey D. Puritt: I'd like to remind you of our upcoming annual general meeting of shareholders taking place next week, May 17th, conducted in a user-friendly, digitally-enabled format. You can find all the details on how to participate as a shareholder or join as a guest on our Investor Relations website. Gopi and I also look forward to connecting with many of you across our investor and analyst communities over the weeks ahead. And, as always, our Investor Relations team is available for any further questions you may have.

Speaker Change: Like to remind you of our upcoming annual general meeting of shareholders, taking place next week may 17th.

Jeffrey D. Puritt: Ducting in a user friendly digitally enabled format you can find all the details on how to participate as a shareholder or joined as a guest on our Investor Relations website. <unk> also look forward to connecting with many of you across our investor and analyst communities over the weeks ahead and as always our Investor Relations team is available for any further questions you may.

Jeffrey D. Puritt: Our next quarterly investor call will take place in early August, and until then, please take good care and enjoy your summer. Bye all. Thank you, ladies and gentlemen, for your participation at today's conference. This does conclude the program. You may now disconnect. Good day. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? © The Ultimate Parody Site!

Jeffrey D. Puritt: Our next quarterly Investor call will take place in early August and until then please take good care and enjoy your summer bye all.

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

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