SINGAPORE--(BUSINESS WIRE)--TDCX Inc. (NYSE: TDCX) (“TDCX” or the “Company”), an award-winning digital customer experience (CX) solutions provider for technology and blue-chip companies, today announced its unaudited financial results for the third quarter ended September 30, 2023.

Third Quarter 2023 Financial Highlights¹

• Total revenue of US$119.8 million, down 5.4% year-on-year, including a 5.3% point negative impact of foreign exchange rates compared with the prior year period, and down 0.1% in constant currency terms²
• Profit for the period of US$23.2 million, up 2.3% year-on-year, primarily driven by cost optimization efforts, lower tax and higher interest income

Mr. Laurent Junique, Chief Executive Officer and Founder of TDCX, said, “Our focused approach to growing our business continues to yield results. There remain bright spots in select sectors amid market uncertainties. This quarter, we welcomed new clients including a leading global airline based out of Asia and one of the world’s most popular mobile messaging apps. Such wins are testament to the sector expertise we have built in travel and hospitality and social media platforms.

“We are also seeing results from our efforts to diversify our client base. Our revenue from clients outside the top five has increased 51 per cent year-on-year. I am confident that the steps we have taken to enhance our value to our clients and to increase our efficiency will position us strongly for the long term.”

Q3 23 Business Highlights

Continued strong client growth

• Client count^4,5 up 31% year-on-year, bringing total client count to 94 as of September 30, 2023, compared with 72 as of September 30, 2022
• Newly launched clients include one of the world’s most popular mobile messaging apps and a leading global airline based out of Asia

Improved revenue diversification

• Revenue from clients outside the top five rose 51% year-on-year⁵
• Revenue mix from top five clients lowered to 71% in Q3 23, from 82% in Q3 22

Contribution from new geographies

• Revenue from new geographies⁶ was five times in Q3 23 versus Q3 22

Full Year 2023 Outlook

For the full year 2023, TDCX expects its financial results to be:

Detailed Financial Information on the Form 6-K

Please refer to https://investors.tdcx.com/financials/quarterly-results/default.aspx for the detailed financial information contained in Form 6-K.

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¹ FX rate of US$1 = S$1.3648, being the approximate rate in effect as of September 30, 2023, assumed in converting financials from SG dollar to U.S. dollar.

² For a discussion of the use of non-IFRS financial measures, see “Non-IFRS Financial Measures”.

³ The reported amounts for Adjusted EBITDA and Adjusted Net Income for the three months ended September 30, 2023 include adjustments for certain items (i.e., acquisition-related professional fees and net foreign exchange gains or losses) which were not included in similar non-IFRS financial measures previously reported for the corresponding period last year. The amount of adjustment for net foreign exchange gain previously reported in prior periods did not include unrealized losses or gains resulting from change in fair value of derivatives. In order to place the current disclosure in the appropriate context and enhance its comparability, similar adjustments have been made for net foreign exchange gain, Adjusted EBITDA and Adjusted Net Income for the three months ended September 30, 2022.

⁴ “Client count” refers to launched campaigns that are revenue generating.

⁵ Includes additional clients attributable to our Hong Kong subsidiary.

⁶ Refers to sites in Colombia, India, Romania, South Korea, Hong Kong, Türkiye, Vietnam, Brazil and Indonesia.

⁷ We have not reconciled non-IFRS forward-looking revenue growth at constant currency to its most directly comparable IFRS measure, as permitted by Item 10(e)(1)(i)(B) of Regulation S-K. The revenue growth outlook indicated for 2023 is calculated and presented at constant currency, as it would require unreasonable efforts to predict factors out of our control or not readily predictable, such as currency exchange movements over the course of an entire year.

Webcast and Conference Call Information

TDCX senior management will host a conference call to discuss the third quarter 2023 unaudited financial results.

A live webcast of this conference call will be available on TDCX’s website. Access information on the conference call and webcast is as follows:

Participant Access Code: 704387

A replay of the conference call will be available at TDCX’s investor relations website (investors.tdcx.com). An archived webcast will be available at the same link above.

About TDCX INC.

Singapore-headquartered TDCX provides transformative digital CX solutions, enabling world-leading and disruptive brands to acquire new customers, to build customer loyalty and to protect their online communities.

TDCX helps clients achieve their customer experience aspirations by harnessing technology, human intelligence and its global footprint. It serves clients in fintech, gaming, technology, travel and hospitality, digital advertising and social media, streaming and e-commerce. TDCX’s expertise and strong footprint in Asia has made it a trusted partner for clients, particularly high-growth, new economy companies, looking to tap the region’s growth potential.

TDCX’s commitment to delivering positive outcomes for our clients extends to its role as a responsible corporate citizen. Its Corporate Social Responsibility program focuses on positively transforming the lives of its people, its communities and the environment.

TDCX employs more than 17,800 employees across 30 campuses globally, specifically in Brazil, Colombia, Hong Kong, India, Indonesia, Japan, Malaysia, Mainland China, Philippines, Romania, Singapore, South Korea, Spain, Thailand, Türkiye, and Vietnam. For more information, please visit www.tdcx.com.

Convenience Translation

The Company’s financial information is stated in Singapore dollars, the legal currency of Singapore. Unless otherwise noted, all translations from Singapore dollars to U.S. dollars and from U.S. dollars to Singapore dollars in this press release were made at a rate of S$1.3648 to US$1.00, the approximate rate in effect as of September 30, 2023. We make no representation that any Singapore dollar or U.S. dollar amount could have been, or could be, converted into U.S. dollars or Singapore dollar, as the case may be, at any particular rate, the rate stated herein, or at all.

Non-IFRS Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with IFRS, we use the following non-IFRS financial measures to help evaluate our operating performance:

“EBITDA” represents profit for the year/ period before interest expense, interest income, income tax expense and depreciation and amortization expense. “EBITDA margin” represents EBITDA as a percentage of revenue.

“Adjusted EBITDA” represents profit for the year/ period before interest expense, interest income, income tax expense, depreciation and amortization expense, acquisition-related professional fees, net foreign exchange gains or losses and equity-settled share-based payment expense (or net reversal) incurred in connection with our Performance Share Plan. “Adjusted EBITDA margin” represents Adjusted EBITDA as a percentage of revenue.

“Adjusted Net Income” represents profit for the year/ period before acquisition-related professional fees, net foreign exchange gains or losses and equity-settled share-based payment expense (or net reversal) incurred in connection with our Performance Share Plan, net of any tax impact of such adjustments.

Revenue at constant currency is calculated by translating the revenue of our local subsidiaries in each period in the respective local functional currencies to the Company and its subsidiaries’ presentation currency, using the average currency conversion rates in effect during the comparable prior period, rather than at the actual currency conversion rates in effect during that period.

We believe that EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Revenue at Constant Currency and Revenue Growth at Constant Currency help us to compare our operating performance on a consistent basis by removing the impact of items not directly resulting from our core operations, and thereby help us to identify underlying trends in our operating results, enhancing our understanding of past performance and future prospects.

We exclude items from Adjusted EBITDA and Adjusted Net Income, including acquisition-related professional fees, net foreign exchange gains or losses and equity-settled share-based payment expense (or net reversal) incurred in connection with our Performance Share Plan, as they are not indicative of our ongoing operating performance, and adjusting for such items is meaningful and useful to readers to understand the underlying performance of the business by eliminating the impact of certain items that may obscure trends in the underlying performance of the business.

The above non-IFRS financial measures have limitations as analytical tools and should not be considered in isolation or construed as an alternative to revenue, net income, or any other measure of performance or as an indicator of our operating performance. The non-IFRS financial measures presented here may not be comparable to similarly titled measures presented by other companies because other companies may calculate similarly titled measures differently. For more information on the non-IFRS financial measures, including full reconciliations to the nearest IFRS measure, please see the form 6-K section captioned “Non-IFRS Financial Measures” or the presentation slides.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “predicts,” “intends,” “trends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Among other things, the outlook for the full year, the business outlook and quotations from management in this announcement, as well as the Company’s strategic and operational plans, contain forward-looking statements. The Company may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the performance of TDCX’s largest clients; the successful implementation of its business strategy; the continued service of its founder and certain of its key employees and management; its ability to compete effectively; its ability to navigate difficulties and successfully expand its operations into countries in which it has no prior operating experience; its ability to maintain its pricing, control costs or continue to grow its business; its ability to attract and retain enough highly trained employees; its compliance with service level and performance requirements by, and contractual obligations with, its clients; its exposure to various risks in Southeast Asia; its contractual relationship with key clients; clients and prospective clients’ spending on omnichannel CX solutions and content, trust and safety services; its ability to successfully identify, acquire and integrate companies; its spending on employee salaries and benefits expenses; and its involvement in any disputes, legal, regulatory, and other proceedings arising out of its business operations. Further information regarding these and other risks is included in the Company’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and the Company undertakes no obligation to update any forward-looking statement, except as required under applicable law.

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⁽¹⁾ We reported foreign exchange gains or losses, as applicable, on a net basis for the relevant period under the “other operating expense” line item.

⁽²⁾ Basic and diluted earnings per share

The translation of Singapore Dollar amounts into United States Dollar amounts (“USD”) for the unaudited condensed interim consolidated statement of profit or loss and other comprehensive income above are included solely for the convenience of readers outside of Singapore and have been made at the rate of S$1.3648 to US$1.00, the approximate rate of exchange at September 30, 2023. Such translations should not be construed as representations that the Singapore Dollar amounts could be converted into USD at that or any other rate.

Comparison of the Three Months Ended September 30, 2023 and 2022

Revenue. Our revenue decreased by 5.4% to S$163.5 million (US$119.8 million) for the three months ended September 30, 2023 from S$172.8 million for the three months ended September 30, 2022 primarily driven by a 29.9% decrease in revenue from content, trust and safety services followed by a 2.8% decrease in revenue from omnichannel CX solutions services rendered partially offset by a 3.5% increase in revenue from sales and digital marketing services.

• Our revenue from omnichannel CX solutions services decreased by 2.8% to S$98.1 million (US$71.9 million) from S$100.9 million for the same period of 2022 primarily due to lower volumes requirement by existing clients in the digital advertising and media and fintech verticals, partially offset by a higher demand for our services by existing clients in the travel and hospitality, gaming, fast-moving consumer goods, financial services, technology and e-commerce verticals.
• Our revenue from sales and digital marketing services increased by 3.5% to S$44.3 million (US$32.4 million) from S$42.8 million for the same period of 2022 primarily due to the expansion of existing campaigns by key digital advertising and media clients, fast moving consumer goods, technology and scaled up contributions from new clients secured during 2022.
• Our revenue from content, trust and safety services decreased by 29.9% to S$19.7 million (US$14.4 million) from S$28.1 million for the same period of 2022 primarily due to the contraction of volumes requirement by the digital advertising and media vertical client but mitigated partially by higher volumes in the travel and hospitality vertical.
• Our revenue from our other service fees increased by 47.1% to S$1.5 million (US$1.1 million) from S$1.0 million for the same period of 2022 primarily due to an expansion of existing campaigns.

The following table sets forth our service provided by amount for the three months ended September 30, 2023 and 2022.

^#Other service fees comprise revenue from other business process and other services.

Employee Benefits Expense. Our employee benefits expense decreased by 4.4% to S$107.4 million (US$78.7 million) from S$112.3 million for the same period of 2022 primarily due to lower equity-settled share-based payment expenses resulting from changed expectations of the remaining awarded tranches reflecting the changing business and operating climate and recalibration of employee headcount and costs of several key operating units in response to business volume changes but offset partially by the presence of the acquired Hong Kong subsidiary that was completed on October 13, 2022 and commencement of greenfield operations of Türkiye, Brazil and Vietnam. For the quarter ended September 30, 2023, the equity-settled share-based payment expense decreased to S$0.8 million (US$0.6 million) as compared to the corresponding quarter in 2022 of S$3.8 million.

Depreciation and Amortization Expense. Our depreciation and amortization expense increased by 5.0% to S$10.7 million (US$7.9 million) from S$10.2 million for the same period of 2022 primarily due to the shift to leased office spaces in Türkiye and South Korea, take up of additional office space by the Philippines operations and the presence of the Hong Kong unit that was acquired on October 13, 2022 to become a wholly-owned subsidiary of the Group.

Rental and Maintenance Expense. Our rental and maintenance expense increased by 15.9% to S$3.1 million (US$2.2 million) from S$2.6 million for the same period of 2022 primarily due to the set-up of the new Brazil operation and higher office upkeep costs at the Philippines site.

Recruitment Expense. Our recruitment expense decreased by 52.5% to S$2.1 million (US$1.6 million) from S$4.5 million for the same period of 2022 primarily due to lower hiring and work permit renewal activities of largely foreign talents in Singapore and Malaysia.

Transport and Travelling Expense. Our transport and travelling expenses remained stable during the two comparative periods.

Telecommunication and Technology Expense. Our telecommunication and technology expense increased by 15.3% to S$3.6 million (US$2.6 million) from S$3.1 million for the same period of 2022 due to software and telecommunication requirement of campaigns of certain existing and new sites.

Interest Expense. Our interest expense increased by 39.4% to $0.6 million (US$0.4 million) from $0.4 million for the same period of 2022 primarily on the back of higher lease liability interest arising mainly from the shifting to leased office spaces in Türkiye and South Korea sites, additional office spaces taken up by the Philippines operations and the presence of the Hong Kong unit that was acquired on October 13, 2022 to become a wholly-owned subsidiary of the Group.

Other Operating Expense. Our other operating expense increased by 370.8% to S$3.1 million (US$2.3 million) from S$0.7 million for the same period of 2022 primarily due to lower net foreign exchange gain but partially offset by lower professional and advisory engagement fees.

Share of Profit from an Associate. This relates to our share of profit from an associated company in Hong Kong which later became a wholly-owned subsidiary on October 13, 2022 following the acquisition of the controlling shares in that business.

Interest Income. Our interest income increased by 166.8% to S$3.3 million (US$2.4 million) from S$1.2 million for the same period of 2022 primarily due to higher placements of liquid funds in interest earning deposits and an uptrend in deposit interest rates during the period.

Other Operating Income. Our other operating income decreased by 15.8% to S$1.6 million (US$1.1 million) from S$1.8 million for the same period of 2022 primarily due to lower government grants received by our Singapore subsidiaries. This is partially offset by the fair value gains on the financial assets measured at fair value through profit or loss.

Profit Before Income Tax. As a result of the foregoing, we achieved a profit before income tax of S$37.5 million (US$27.5 million) for the three months ended September 30, 2023 (S$41.7 million for the corresponding period of 2022).

Income Tax Expense. Our income tax expense decreased by 46.1% to S$5.8 million (US$4.3 million) from S$10.8 million for the same period of 2022 primarily due to the reinstatement of tax incentive in the Philippines that was temporarily suspended in 2022, lower profitability of a few key operating units and non-recurrence of the one-off ‘prosperity tax’ in Malaysia that was implemented in 2022.

Profit for the Period. As a result of the foregoing, our profit for the period increased by 2.3% to S$31.6 million (US$23.2 million) from S$30.9 million for the same period of 2022.

Exchange differences on translation of foreign operations. Exchange differences on translation of foreign operations recognized in other comprehensive income decreased by 90.

Contacts

For enquiries, please contact:

Investors / Analysts:

[email protected]

Media: Eunice Seow

[email protected]

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