Q2 2025 TELUS International (Cda) Inc Earnings Call

The conference is now being recorded.

Good day. Welcome to TELUS International's Q2 2025 investor call. I would like to introduce your speaker, Miss Elaina Lebac. Please go ahead.

Thank you, Carl. Good morning, everyone. Thank you for joining us today for the TELUS International (Cda) Inc. second quarter 2025 investor call. Joining me today are Jason Macdonnell, our Acting CEO, COO, and President of Customer Experience; Tobias Dengel, President of Digital Solutions; and Gopi Chande, our CFO. We'll begin with prepared remarks from Jason Macdonnell and then open the line for your questions at the end. Jason will offer his closing remarks.

For our cautionary statements and further details on certain non-gaap measures used during today's call. Please refer to the earnings release issued this morning and Regulatory filings available on Ceda plus and Edgar with that. I'll pass the call over to Jason.

Thank you very much, and good morning everyone. In the second quarter of 2025, TELUS Digital delivered positive incremental revenue improvement, both sequentially and year-over-year, primarily driven by our existing client base, including talents.

Our parent company represents 26% of our year-to-date revenues.

What these results including our performance in the large language model, workstream of our Ai and data solution service line as well as other sales funnel activity. This quarter, we are reiterating our Outlook

At the same time, we also continue to work on protecting our margins, which remain pressured due to the overall competitive pricing and environment in our industry, labor inflation. And some goes and some of the more complex work requirements that we see coming through.

We see this. I

Margin pressure is persisting alongside some contraction within our Legacy Services, while we are able to modestly grow revenues. These persistent pressures further emphasize the need for more pronounced and accelerated advancement of our operational methods, AI capabilities, and overall efficiency programs.

Both items later on in this call.

Our leverage ratio was elevated, as of the quarter end, when compared to previous quarters, this was primarily due to measurement reflecting on a lower adjusted. EBA on a trailing 12-month basis. In addition to a non-cash increase in derivative liabilities

As of June 30th we remain in compliance with our credit facility Covenant. We are confident in our parent companies. Continued support as they have demonstrated over the prior quarters to help us stay compliant with the Covenant over the course of ahead.

We will also partner with our banking syndicate.

Further, we performed and completed our Goodwill assessment and have subsequently recorded an impairment charge on Goodwill in Q2 as a result of our latest financial modeling.

Now turning to our commercial highlights for the quarter, we welcomed several new clients across diverse industry verticals, including healthcare, cloud communications, gaming content, development radar, technology, and many others. In terms of existing client growth, we've deepened our relationships with several key accounts, including our top three clients, focused on the diversification of existing work for them and further improving product intensity. We also enhanced our partnership with a major automotive player in our AI and Data Solutions service line and broadened our engagement with another major tech company for customer support services.

As I alluded to at the start, our Ai and Data Solutions, business continues to show momentum where increasingly recognized by our clients as a partner of choice. For high-quality data infrastructure, our capability, span foundational model development, computer, vision and responsible AI implementation while the size of this work is still modest relative to say our CX portfolio. We look forward to continued growth and focus and investment in this area, in light of recent industry. Competitive news, we're gaining further, trust from our clients, by being a neutral, and independent vendor in the AI space.

This recent industry development is created. Immediate opportunities for us resulting in expanded wallet, share and potential near-term. Growth with several existing clients particularly in the automotive and Tech sectors.

Our position as a trusted independent partner will continue to differentiate Us in this highly competitive Marketplace and we look forward to this growth area, making larger contributions larger contributions to our data. Services work mix.

overall, for

Presidents are focused remains on ensuring key priorities of business. Evolution service quality excellence and talent are all aimed at driving sustainable Revenue, growth and improved margins incremental upside we've seen on Revenue growth so far this year is a good sign, where progress progressing on these priorities. However, we need to find further levers to mitigate pressures on our profitability. Margins. And we have

Concrete plans in place.

That said service call Excellence is a non-negotiable element of our business success. Our teams continue to prioritize, operational excellence and more specifically attaining. The number 1 position in the services. We provide, we are moving with speed, focus and purpose, leveraging data, and analytics and our depth of operational, knowledge Elevate our customers experience every day.

We continue to work on improving our proactive approach to identify.

Performance opportunities and actions to evolve our services through the implementation of advanced methods fostering quality differentiated talent and applying new AI and technology solutions to our operational environments. As we assess our performance, we prioritize the sustainability of improvements, focusing on long-term, fundamental changes instead of one-off temporary patches.

As of Q2 and we have experienced over 80 existing clients. Recognize our differentiated service with the most important complement of awarding us new program wins.

But then that we have our Global teams full commitment to prioritize, operational excellence and drive us towards becoming the number 1 vendor across our product and service lines. And

Incredible thought, partner for innovation, and I want to commend our team on their excellent progress in elevating the customer experience to the benefit of our clients.

Overall, we remain excited about our future prospects and the market potential ahead. And with that, I'll now turn it over to Tobias.

Thank you, Jason.

Um, I'll spend a little time talking about the Digital Solutions area, specifically where we're seeing strong climate engagement driven by both a recovery of our core digital product.

Experience and transformation work and our clients continued demand for cost optimization and automation Solutions.

Our Q2 performance reflects this positive momentum, with year-over-year revenue growth and current sales funnels.

Out to ensure we're well staffed and rapidly higher the needed talent to meet the demand that we're seeing ahead.

Our commercial success in Q2 was marked by both new logo acquisition and existing client growth, with approximately 10% of our new bookings coming from new logos, including one notable client across various industry verticals, including Financial Services, Communications and Entertainment Technology, Retail, and Healthcare.

We're seeing continued momentum. In discretionary spend, we're turning over the next two quarters, particularly across our data and AI consulting services and our CX portfolios within digital solutions, where we are investing in an expanded footprint and capability suite across all our clients, including in our work with our parent company, TELUS.

Here, we are leveraging a blend of our strategy, engagement technology, delivery and implementation expertise, as well as homegrown product solutions to add value.

Specifically, we utilize our Smart CX framework to identify high-impact opportunities for successful growth and value creation for our clients.

By partnering with them to draw strategy and Technology conclusions based on their deep customer data and interaction history. Let me share a few notable success stories.

For a leading Global retailer, our CX strategy audit identified key, AI opportunities to enhance, buyer and seller experiences, solidifying our position, as their primary Outsource CX partners and leading to Geographic expansion.

In another example, with a major payment platform, we implemented AI-powered improvements in IVA routing, knowledge-based updates, and agent assist tools, resulting in the transfer of eight additional lines of business to TELUS Digital.

We completed it. Complemented that with early Pilots of our newly launched fuel ex agent trainer addressing underperforming agents where we transformed agent performance and ranking from bottom quartile to top. Quartile in 30 days for 80% of the agents in the trial and driving an overall customer satisfaction score uplift of 16% across channels.

Similarly, ongoing implementation of Fuel Ex powered agent tooling at a global digital marketplace drove a sustained 13% improvement in average handle time and a 7% (or 400 basis point) improvement in customer satisfaction.

As another external recognition in June, our teams were thrilled that Felix Co-Pilot's platform was selected as the winner of the Chatbot Platform of the Year award in the annual AI Breakthrough Awards program that recognizes the top companies, technologies, and products in the global artificial intelligence marketplace.

We continue to enhance our suite of services in the CX space, complementing our DTX services with equally deep technology capabilities from CST Technologies and CRM, such as Salesforce, bolstered by our J. Acquisition to Zendesk through our partnership and initial client implementations. These wins are driving client re-engagement and momentum from our ongoing investments. Furthermore, they illustrate our progress in positioning TELUS Digital as a strategic partner at the C-suite level, uniquely positioned to drive insights from our CX work that inform our technology deployments.

with that, I'll hand it over to you Gopi.

Thank you for this, and good morning, everyone.

I'd like to address the goodwill impairment upfront and then move on to our usual review of the financial statements.

At the end of Q2, informed by our most recent financial model, refresh we reported an impairment of Goodwill.

The key assumptions that we updated during the latest model review included a higher weighted average cost of capital, a lower perpetual growth rate, and lower cash flow forecasts arising from pressures on margins.

You can find the details related to the impairment and assumptions. Underlying it in our notes to the financial statements.

Moving on to the financial performance review. In the second quarter, digital generated revenue of $699 million, an increase of 7% year-over-year or 6% on a constant currency basis. Furthermore, revenue from our top 10 clients in Q2 grew by 10% year-over-year.

To continued momentum in digital Solutions.

8% in the second quarter.

With Google, the year-over-year revenue comparison continues to reflect a higher 2024 comparison base.

Similar to the prior year, we've achieved growth in our overall revenue in the AI and Data Solutions space. As we work to diversify across more clients in this service line.

Revenue with a leading social media client, who remains within our top 3x revenue, grew year-over-year in the second quarter.

Earlier this year, we rebalanced our footprint in Europe, and as a result of that, we are expecting a lower run rate of Trust Safety and Security volumes.

But so far, we've seen it partially offset by our diversification with this client, particularly in AI and Data Solutions and the CXM service lines.

Across our industry, verticals in tech and games, our largest and absolute dollar contribution revenue increased 11%, driven by growth with certain social media clients and other technology clients.

Tell us primarily drove growth in our communication and media and healthcare industry verticals which grew 11 and 9% respectively.

Revenue in the BFSI industry vertical grew by 8% through certain North American and global financial services clients.

On the flip side in e-commerce and fintechs are Revenue. Decreased 14%, year-over-year due to due to a decline is service volumes, which in turn reflects an overall consumer demand. Moderation for our clients business.

Among our geographies, we delivered revenue growth in the Americas and Europe, while revenue generated in the Asia Pacific segment was softer year-over-year.

in line with expected fluctuations in service volume demand across our regions,

In the second quarter, our adjusted EBITDA margin was 13.4%, reflecting a year-over-year decrease due to several factors.

As we previously discussed in the second quarter of 2024, our adjusted Eva included other income generated from changes in business combination related Provisions, meaning an unfavorable year-over-year comparison for the second quarter and the first half of the year.

The operational components were impacted by an increase in salary and benefits, as well as goods and services purchased outpacing revenue growth for the period.

Some examples of specific operational pressures we are seeing include wage inflation in some geographies, as well as more complex customer requirements.

With the development of large AI and technology, tool implementations for workforce management, we hope to release some of these pressures.

Our leverage, defined as net debt to adjusted EVA leverage ratio as per our credit agreement, was at 3.75 times as of June 30, 2025.

This level is elevated compared to previous quarters, primarily due to lower adjusted EBITDA on a trailing 12-month basis, and in addition due to a non-cash increase in derivatives liabilities attributed to a stronger euro exchange against the US dollar in the second quarter.

As Jason noted, we remain in compliance with our credit facility covenant, and we are confident in our parent company's continued support, as demonstrated over the prior quarters, to help us stay compliant. We are also further engaging with the banks in our facility on forward-looking resolutions.

In the second quarter, we generated free cash flow of $33 million. The year-over-year decline was primarily due to increases in operating expenses outpacing revenue growth. Additionally, there was a negative non-cash impact in the quarter from foreign currency swaps due to a stronger euro exchange against the US dollar. This also reflected higher capital expenditures due to incremental investments in site builds in Asia-Pacific and Europe, as well as investments in our digital service solutions.

For the full year 2025, we are reiterating our outlook for revenue growth of approximately 2% on a constant currency and organic basis.

Adjusted EBITDA of $400 million and adjusted diluted EPS of approximately $0.32.

We are working towards achieving our targets for investments of approximately $67 million and efficiencies of approximately $50 million for the year.

Controls over indirect costs should help us move closer to our profitability target for the year.

With that, let's move on to questions. I asked you to please keep it to one question. And as a reminder, we are not able to comment on the TELUS proposal, which is currently under review by the special committee of the TELUS digital board of directors.

With that, Carl, over to you.

Thank you for those who would like to queue up to ask a question at this time. Please press star 1 on your phone's keypad if you wish to withdraw from the question queue; press star 2.

The first question is from Stephanie Price from CIBC. Please go ahead, Stephanie.

Good morning.

I was hoping you could dig a little bit deeper into the margin pressures that you're seeing here.

Um, maybe talk a little bit about what lines of business had the biggest impact and how you're working to offset that. Um, and then related, can you talk a little bit about the restructuring you carried out in the quarter? It looks like it's larger than we've seen in the past, and how should we think about restructuring for the rest of the year? Thank you.

Thank you. Good morning Stephanie. Um maybe I'll just take a crack at the the the pressures that we're seeing in the environment and then go be you can speak to the latter part. Uh when when you look at, you know, areas of the business that are that are coming under pressure. Um I think there's 2 ways to look at it 1 at certain service lines. So obviously the customer experience service line is 1 that is always under

Constant cost pressures as companies and clients look to drive as much efficiency as possible. Those that...

That pressure comes from a couple of different sources or or areas, uh, 1 is on just Topline pricing itself. Um, as as our clients have their own, their own, budgetary pressures. Uh, obviously, they look to us as being a source of of savings.

And then, of course, just in the, um, the general geographic differences that we see. So, for example, um, pressures in Europe around labor costs, um, or definitely.

Things that we have to address or sometimes even in our, uh, us-based Services. Labor costs have risen. So you know what we need to do to uh offset that is improved workforce management capabilities. Um bring in new technology including AI capabilities to drive efficiency and making sure that it's from a at a pricing perspective. We're being very disciplined uh, around the prices that we take forward and be an opportunistic with our clients and looking at win-win opportunities on outcome outcome based pricing. So uh, the CX spaces is 1 space. The other space that you see it in is in content. Moderation. Um, and content, moderation, I think it's well known is is an area that's coming under increased scrutiny and pressure, um, relative to a lot of the simpler work being um in

Substituted with AI capabilities, um, that being said, again, the more complex work that we do, um, gives us an opportunity to make sure that we are, uh, securing a more premium price, um, for for that work and making sure we use our skill and expertise, uh, to make that as as valuable as possible for clients.

Um, maybe go be able to turn the second part of the question over to you.

Thanks, Jason. Um, good morning, Stephanie. So with regards to AIO, a few different factors this quarter. Um, one item, uh, that was more unusual in the quarter was, you would have read in April. We, um, made mention of a rebalancing with one of our customers in Europe. So included in this balance are the related garden leaves and severance costs. Um, also included in this balance are continuous efficiency programs that we look to undertake both with regards to our processes and our people, as well as real estate consolidation. Uh, so you have a combination of Q2. Um, to your question in terms of how to think about this going forward. Um, we are not, uh, expecting any, uh, major other rebalances that we're aware of currently. But we do expect our routine processes around focusing on efficiencies and agile operations to continue to drive efficiency programs and some dollars into our restruct.

Structure balance. Um, so hopefully that gives you a sense of both the routine and non-routine in that balance.

Thank you for the color.

Uh, thank you.

The next question is from, please go ahead.

To learning through human feedback. I’m wondering if there’s any change in the market dynamics versus some of the more AI space feedback. And if you can provide an update in general on your AI solutions line of business. Thank you.

Sure, uh, to be a, why don't you take that 1, and I'll just top up with some of the work we're doing.

Yeah. So

AI hits our business in multiple different ways. Um, obviously our AI consulting business, um, which is on the digital solution side of the house, is evolving quite strongly. I think the trend that, um, we're all looking at right now is most of the last year was heavily based on proof of concept, and now we're actually going into full deployment. So, um, on the AI consulting and implementation business, aided by our Fuel platform, um, we are seeing much stronger growth, and I think that will really start hitting in 2026 and 2027 as companies start doing um production-level AI deployments.

Um, and Jason, I'll add it to you to talk about the, uh, um, solution side of it. After the Q2, the annotation side of the house. Sure. So when you look at the large language model work that we're doing, um, you know, there's a variety of work in that space. As you know, these are projects that usually involve anywhere from short-term to long-term sprints. Um, and we're really.

Really pleased with what we've seen especially, uh, with, you know, some of the recent competitive announcements that have happened. Um, we're increasingly being seen as, you know, a a, the next trusted advisor if you will or or developer of these large language models, um the type of work that we're seeing there uh, is is really promising as well when when I look at um some of the agentic AI data sets um that we're doing. And we're evaluating authentic AI model performance uh versus you know ground truth expectations. Those are those are really key. I think for some of the leading platforms that are out there um other work we're doing is uh working on identifying and validating sources of information returned in response to you know user queries uh whether it's from large documents or other sources. And we're also doing uh work around Q&A pairs from, you know, conference transcriptions

Um our computer vision work in that space to help uh in the advancement of Automotive. Uh industry is also been uh, quite popular. So you know I I think it's a, it's a great opportunity for our team to Branch out and continue to scale and and offset. Perhaps some of the

Some of the, uh, the flattening of of work that we see in something like search relevance, which is the more simpler, um, aspect in the data and and AI space. Um, and then, you know, for us, in terms of how we capitalize on that even more as we move forward. Uh, we have some great platforms that, that helped him manage these projects, and manage things like expert sourcing, um, and crowdsourcing. Uh, but we want to see those Investments also uh, turn to larger scale capabilities, uh, that allow us to ramp faster, uh, with more agility and to simplify and streamline uh the management of these processes.

Awesome. Uh, that. That's good to hear. And then second for me, uh, just wondering about the, the impact of the, uh, scale AI acquisition by meta. Uh, wondering if if there's maybe an impact, uh, on your relationship with uh, with meta that you could be seeing or on the contrary uh if that increased other opportunities with former Scalia clients.

Uh, yeah, we absolutely saw, um, you know, immediate interest, uh, if you will, in, you know, partnering with some of the clients that perhaps, uh, perhaps were looking for an alternate partner, um, with the advent of that, uh, development. And so that has been, uh, a great, uh, a great opportunity for us, and we're taking full advantage of.

Of that. Um, as of yet, uh, right now, I've not, we've not seen, uh, a big impact on the meta side, but certainly, um, as we move forward here, we're looking, we're looking forward to cultivating even better and deeper relationships with the companies that are looking for alternative Source. Uh, support in large language model development,

Thank you.

Okay. Uh, thank you. The next question is from Puny Jane from JP Morgan. Please go ahead. Great.

Uh, I wanted to follow up on, uh, a question around competition, but for your, uh, digital, uh, customer care segment. Uh, are you seeing like more IT services or technology vendors, uh, becoming increasingly competitive for you in that segment?

and we don't necessarily see it, you know, more in terms of the

The quantity of competitors entering the market. Uh, I think the, you know, the competitors in our industry, especially around customer experience and business process outsourcing, are fairly well known. Um, I think where the competitive pressure comes in is, uh, is in terms of being able to advance.

Capabilities beyond what I would call like a c or classic, uh, customer experience work and ensuring that we're embedding. You know, thought leadership in uh, efficiency productivity gains um, within our uh, traditional traditional work. So I think we're doing a really good job at differentiating, uh, our technology services with human in the loop.

Capabilities and experience. Um, and so to the extent that, you know, I'm seeing more competitors or uh, differentiation to us uh, in that space. It it, it really hasn't been prevalent. Um, I think, what's, what's more prevalent is? Just the the sheer competitiveness and the intensity uh for of the companies uh fighting for market share in the space.

Doctor, are you seeing any differences across verticals in AI adoption?

Specifically, like I'm thinking about say, for example, Tech in games, especially the tech, vertical versus like, say Financial Services or Healthcare.

To be a, why don't uh, why don't you you take that 1 and we'll pop up. Yeah.

Yeah. Um I think you're seeing significant differences um in especially how AI has applied um, consumer facing and user facing based on regulation, based on pii, Etc. And based on whether um, you know, companies have a deep Tech

History and mindset and, um, a willingness to take in their minds, at least more risk. So I think you'll see a variety of different, you know, velocities of implementation, um, based on industry for external, use cases. For internal use cases, we actually see a very consistent adoption of AI.

Across the board. Um, because I think everyone's well aware right now of the um of of the cost management capabilities and the efficiency and the improvements in customer set. Um and it's a unique technology in that I think. Historically, when you've deployed Technologies, you're either going for cost reduction or you're going for improvements in customer satisfaction or quality and AI somewhat unique and that you're able to do both of those things at once. Um, but the trick is doing it at um, a scale production level capability, uh, where you are controlling, you know, you have guard rails, you're controlling um, unwanted responses, um, and you're working on a velocity of response, which we all know in our use of, uh, AI. Our Lives is not always there yet. So I think we're, we're very, very well positioned to be the partner of choice to our clients using all the data from their contact centers. And the processes that we use every day um to help them optimize those processes.

Over time.

Thanks, if I could quickly.

If I could quickly follow up. Uh, so for external use cases, which verticals are ahead of others in adoption?

Yeah. I mean, I think the, what you you you hit on some of them, um, right out of the gate, um, gaming is 1. Um, that is a very natural space and again, it's always with humans in the loop, um, at this point. Um, but those are kind of very standard. I think when you look at um,

Things like, um, content moderation, kind of those supported by AI is a very obvious use case.

Um and then you get into ones that are less um you know lower much lower velocity are are things like Financial Services, anything with DPI. Um, that's where things will will move much more slowly, I think.

Talk to you, I appreciate it. Thank you.

Okay, thank you.

The next question is from Jonathan Lee from Guggenheim. Please go ahead, Jonathan.

Interesting that you highlight an expectation for discretionary spends or return over the next 2 quarters. Especially as peers may not necessarily be seeing that. Can you talk about some of the verticals you may be seeing this in, you know how that's contemplating the Outlook and how pricing is trended in that type of work considering this environment.

Sure. Go go. You want to take a shot at that?

Sure. And then uh, to be a fall, I'll pass to you in terms of some of the specifics that you're seeing in, uh, in digital Solutions. So overall, um, as CVS mentioned, uh, earlier in the call what we're seeing is the focus on Cost Containment cost transformation is where we're seeing the demand increase. Um so that's a very positive to see. We were in some um, just maybe paralysis of decision and and we're seeing that turn around which is, which is nice to see in our digital Solutions space. Um uh with the supply and demand Dynamic of that business. Uh, we do expect that will help us keep some of the price competitive nature, uh, and utilization of our team. But to be as maybe I can pass to you to speak more to where you're seeing, uh, some of that, the demand recover and stabilize.

Yeah, and I think on a go forward basis, we're we're really seeing this in the digital Solutions space. Um, and as goby said, um,

Projects around cost optimization cost control. Um, often using AI are out you know they're they're coming in rapidly every client and is is virtually talking to us about that. Um but we're also seeing a rebound in some of our more classic digital business of helping our clients, build apps build, um, rebuild websites build, um, multimodal experiences. Um, so I think in the in, you know, and it's it, this is purely based on our pipeline continuing to increase. Um, our road map with our clients continuing to increase that we've now, um, kind of crossed back over to a space where, um, our biggest challenge, frankly is hiring fast enough to keep up with, um, some of the demand we're seeing on the digital solution side. Um, I would also say that it's broad-based, I don't, I I it's not industry specific in the case of digital Solutions, we're seeing it across

Most of our industry is now in some Industries there might be more of an emphasis on um cost optimization types of projects and in other Industries, it's more um, Revenue creation um you digital experiences. Um, but I think with the Advent of AI, most of our clients are looking at the fact that they have to rebuild their apps and their websites over the next 2 to 3 years to take full advantage of multimodal AI.

I appreciate that context. Thank you.

Thank you.

Question at a time. If you have additional questions, please queue up. Um, a second time, the next question is from Dia Goyal from Scotia Bank. Please go ahead.

Good morning everyone. I wanted to get a little bit more color in terms of your, um, key clients beyond the top 3 clients. So there was a pretty sizable growth that was, um, noted in terms of the others client segments. So, almost 8% based on our math here, could you help us understand what were some of the products or Solutions? I know you've talked about it a little bit here uh that are driving that growth. And then also if you could help us understand

What exactly is going on with Google as a client? I know Gopi mentioned that Google obviously is getting back to the 2023 levels, but in Q3 2023, the revenue lines cleared up quite significantly. I'm just wondering where we should expect Google as a client to go going forward from a product positioning standpoint. Thank you.

For example, and more traction in our health, in our health based companies. Um, as we are, you know, as the work we do for Talus. Uh, also makes us a very credible and authentic source of of work to support, uh, Employer Solutions, as well as uh, Health Solutions. Um, we see, uh, you know, some improvements in and interests as well as more contracts across our our comms and Media Group. And so we're seeing a lot of the clients that we've been working with in comms and media, over the last over the last year, starting to be in a place where they want to invest and get moving. Now, on implementations and some of those, uh, some of those pilots and proof of Concepts that to be just mentioned, are now coming into play. Um, we're seeing more and expanded work on the, you know, video content platforms. Um, from various companies, uh, Automotive suppliers.

So, if that that's expanding, um, for us as well, um, we're also seeing uh, work even in the agricultural Workforce Solutions. Um, that's that. That's another area. That that is really come into play. Um, and then, of course, uh, when you look at financial institutions, uh, that that's an, that's an area that we're also seeing uh, more whims. And

So, you know, it's it really is a diverse set of clients which I think is a good thing for us given our client concentration. Um and it has been a great highlight for us in, in Q2 quite frankly,

Yeah thanks. Hi Dia so Dia with Google in particular. Um as as you noted we we are seeing a decrease year-over-year. Um but that really is because of the height of some of the work we took over last year overall. What I would say on that customer is the evolution is progressing as we hope and as we expected um there is a change in that industry definitively. Uh, we want to continue to partner with Google, be a strategic partner and move up the chain on the complexity of the work we do with them. So as expected, we are seeing some of the more basic work or the search work decline, but that's being offset by, um, more complex work or large language model work. Um, so that evolution is as expected. Um, and the added benefit is the work that we do in this space. Um, our excellent attorney, uh, test case, uh, test beds for us, in terms of

Of just picking up on what Jason mentioned earlier, about moving into various different Industries with our skill set in this area and then the volume of work we've done with Google. So, overall, a bit of a shift here over year but strategically on plan.

Thank you.

Okay. Uh, thank you.

The next question is from Arava galipata gate. Please go ahead from kanakuri,

Good morning. Thanks for taking my questions. Uh, oh, my question. Um, maybe just help us sort of think through this site. And as I read through the press release on your and hear your comments, I mean, clearly, AI Data, Solutions, uh, um, grew it appears quite nicely. Um, and it seems like digital Solutions was also up there, though that wasn't clear. Um, you, you know, when I think of the overall 6% constant currency growth, how should I think of that mix? Uh, as we kind of also talk about CX and the trust and safety where the declines in some of the other segments or was it a case of more balanced growth across the, uh, across all 4 segments here?

So, I've been, we've been really pleased with, you know, the balance of growth. Uh, when you look across, when you look across the segments, however, you know, certainly, um, there are some areas that were were down year-over-year more than others, right? So, you know, um, I'll I'll let go be touch on the details but, you know, the e-commerce and

Fintech for example is is an area that uh, was down, uh, year-over-year. Um, for, for some very, you know, clear reasons but definitely seeing areas like healthcare, uh, banking financial services and insurance moving up. Um, when you look at the, the service lines themselves, go be, I'll let you just speak to that. Um, and you know, when I, when I look at the service lines, there's been some great uh improvements if you will on product and density across service lines as well, especially with digital Solutions.

Come in alive and we're seeing so much more interest in uh, our our entire client base uh, implementing these these AI capabilities and Technology capabilities. So that's something we need to keep in mind. As we as we look at the balance, um, product intensity and overlap between the, the various, uh, vertical groups or the service line groups, um, will be really key for us.

Gopi. Thanks Jason. And, and so picking up on, uh, Jason's comment. Comments, there are vendor. We really are starting to see that interlap overlap between our service lines. Um, but if we look in the quarter, um, you, you picked up the main themes. So, in Ai and Bs, seeing that diversification, the growth, seeing the growth in the work we're doing, uh, with, uh, auto companies and other Tech, sectors to be a spoke to some of the, uh, quarter and year-over-year as well as forward-looking on what we're seeing in digital Solutions. So, those are coming in strong, um, on both CX and trust and safe safety as we've noted throughout this call some variability. Um, and, and we expect to continue to see that we spoke about the rebalancing in, trusted safety. Uh, and so we will see some, uh, shifts there. We are again, seeing, um, success in, in offsetting that, in our other service lines with similar clients and we find this stickiness when our customers,

Customer has multiple service lines with us. And we have multiple relationships with that much better. Um and and again on CX it's a theme, we've been talking to you about regularly in terms of their is a geo shift that's going on occasionally. It's part of our strategy with our customers, for both CX and trusted safety. So uh, seeing growth there, seeing some new logo seeing growth to existing, but more volatility currently on the CX, trusted safety side, uh, and then more growth and stability currently on the AIDS and Bs side.

Thank you.

Thanks.

As a reminder, if you like to ask a question at this time, please dial Star 1 on your phone's keypad. The next question is from Matt desort from William Blair, please go ahead, Matt.

Hi team. This is Matt on for Maggie Nolan. Thanks for taking a question, following up on the earlier question on margins. I think you noted multiple moving pieces, pressuring those margins, including higher wages, tasks complexity and and maybe some churn. Can you just discuss?

The actions you're putting in place to protect margins and how we should think about those 3 drivers and and what's embedding guidance. Are you are you assuming that they stabilize or maybe deteriorate further? Thanks

So obviously our our goal is to make sure they stabilize and improve over oh over time. I think it will take some time to do that. Um these are some structural changes that we're seeing in the industry itself in terms of price intensity and and and some of the labor cost inflation. So specifically, let's let's tackle those, uh, in turn from a pricing perspective. Um, our opportunity is to make sure that we are pricing, um, accurately for the, for the full, um, expectations and capabilities that we want to, uh, achieve. So if you want to be number 1 in customer experience, you want to make sure that you have the best talent. Uh, sometimes you have to, you know, you have to pay a little bit more to get that Talent. Uh, sometimes you have to train a little bit longer to achieve that, but in the long run, what it does is it makes sure that you have lower lower turnover and better attrition. Uh, it makes sure that you have

Uh, team members that are ready sooner and can be, uh, fully billable, uh, at an earlier date. So, there's a lot of things that are going into pricing accuracy, making sure that we are, um, we are quoting and evaluating the opportunity, uh, fully. Um, and that then we have, uh, effective workforce management and recruitment, uh, that ensures that we've got, uh, you know, the right, the right.

Talent. That is optimized for the project.

Uh, similar to that.

Allow us to be more productive and more efficient everywhere from recruitment to training all the way through to, uh, to tasks and making sure that those that those work environments are running as efficiently as possible and then also being creative and and a thought partner and a leader in performance-based outcomes. So, taking advantage, for example, of our capabilities and inbound and outbound selling excellence, and, and really putting forward, uh, you know, outcome based, uh, propositions to our clients, that make it a win-win for both. And those, those capabilities in particular are quite excited about because, you know, we have a lot of efficacy in the sales, uh, in the sales capabilities. So those would be some very specific elements, um, you know, Workforce technologies that are that are helping to improve things. Um, you know, we've got AI helping us with next best action on.

On sales, uh, opportunities. We've got AI working uh, to help simplify and streamline uh, the administrative processes. So and everything from quality control to training which which reduces the the management that we need to do that. You know there's there's a ton of uh activities that are being put into place both for indirect costs as well as direct labor cost efficiency. Hopefully that gives you a bit of a flavor

Excellent, thank you.

Thank you. Our final question is from James faucet. From Morgan Stanley, please. Go ahead James.

Thanks, guys. It's Antonio on for James faucet. Thanks, thanks for taking our question. I wanted to ask more on your gen, AI investment strategy. What, what types of Investments are you trying to make? And maybe any any signs of early Roi on those Investments. Thanks again.

Yeah, the great thing about the Genai space is it moves so quickly that you get fairly quick Roi on, uh, on on any uh, incremental or transformational Improvement. So, uh, we do see it every time, you know, with, in a, in an agile environment in the world. Now, every time you make an improvement, um, and it means you can accelerate the projects that you're doing, um, or improve the efficiency and efficacy of those projects. Um, it's certainly something that, uh, you know, we're very comfortable investing in from an Roi perspective. Um, when you in terms of the types of Investments, there's probably 3 types of investment. Uh, that are quite specific relative to platform and capability. Uh, 1 would be in managing the managing the workforce, or the, or the talent that is behind a lot of the larger language model training. So your uh, you know, your your crowd

Sourcing platforms as an example and managing everything from uh, how people are sourced recruited, um, how how they are, uh, how they're paid, making sure that's highly efficient. And you want to be able to do that on mass at scale very quickly and effectively. Um, and so there's always more you can do to improve that. So that's that would be 1 area investment. The other area of investment is how the projects are run, how they're managed, how we, how we uh, you know, uh execute against against the tasks.

That are involved in this space and and making sure that those are run with high degrees of efficacy with strong reporting and insights on everything from quality to productivity to to outcomes, uh, making sure that those insights are something that you can, uh, inculcate into uh, more effective higher quality higher outcome, uh, results on behalf of our clients.

And then the third level of investment is really around the talent.

You know, ensuring that we have the best talent to run and manage these projects to work with our clients. So that we are a strong partner at the table helping to, uh, shape and inform, uh, and advance their projects.

And we also need to, uh, invest more and more into data sets and being a source of quality data sets that that help support, uh, the learning of the models, uh, that, that that our clients are pursuing. So those are probably some of the, the big investment areas.

Great, that's helpful.

There are no further questions in the queue.

Well, thank you very much. Everyone for joining us today. And as always, we appreciate your time and your engagement and as we move forward to deliver on our financial objectives for the year underpinning, that is our focus on driving operational improvements shaped by our key priorities of business. Evolution service quality excellence and talent development with the goal of driving further, Revenue growth and improving margins. We remain committed to providing you with timely updates, over the coming months and into our next quarterly reporting in early November. I hope you all enjoy the rest of the summer. Thank you and goodbye for now.

Ladies and gentlemen, this concludes the TELUS International (Cda) Inc. Q2 2025 earnings call. Thank you for your participation, and have a nice day.