Release Date: May 09, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TELUS International (Cda) Inc (TIXT, Financial) delivered operating and financial results in line with street expectations for Q1 2025.
- The company reiterated its full-year 2025 outlook, indicating confidence in its future performance.
- TIXT secured new clients across various geographies and industry verticals, enhancing its diversification strategy.
- Growth was observed with existing clients, particularly in AI and data solutions, and with a leading social media network.
- The company is leveraging AI tools to enhance client engagement and operational efficiency, driving superior client satisfaction and sustained growth.
Negative Points
- Adjusted EBITDA margin decreased to 13.4% year-over-year, reflecting increased salaries, benefits, and other operational costs.
- Revenue growth remains relatively low, with only a 2% year-over-year increase, or 3% on a constant currency basis.
- The company faces challenges in balancing revenue growth acceleration with margin improvement.
- There is ongoing competitive pressure in the market, impacting pricing and margin expansion.
- Headcount declined slightly on a sequential basis, with potential reductions in favor of AI, indicating workforce optimization challenges.
Q & A Highlights
Q: Can you explain the operating model when TELUS International engages with TELUS on AI-based solutions for their customers? How does this affect contract economics?
A: Jason Macdonnell, Acting CEO, explained that the partnership with TELUS allows for exploration of end-to-end journeys across their diverse business ecosystem. The process begins with an audit to identify opportunities, often involving upfront capital investment by TELUS. This leads to consulting and development services, followed by ongoing management. The economics involve strong margins from time and materials, consulting, engineering, and development services, all at competitive or better margins.
Q: What growth are you seeing with your third-largest customer, a leading social media provider, across geographies and service lines?
A: Jason Macdonnell noted that diversification efforts include expanding services such as trust and safety, AI, data annotation, and large language model development. Most expansions have been within Europe, leveraging their multilingual capabilities, with potential opportunities in Central America and Asia Pacific.
Q: How do you plan to execute on diversification and revenue growth while improving margins?
A: Jason Macdonnell stated that 2025 is an investment year, focusing on new capabilities and talent in growth areas like digital solutions and AI. The strategy involves targeted investments, cost reductions, and geographic expansions to meet client needs. Tobias Dengel added that differentiation in service lines allows for premium pricing, supported by partnerships and AI-first development.
Q: How is TELUS International addressing potential impacts of tariffs on clients, and what are the long-term margin expectations?
A: Tobias Dengel explained that they are focusing on second and third-order impacts of tariffs, such as economic slowdowns, and positioning themselves as cost-reduction partners. Gopi Chande mentioned that while the competitive environment remains, they are seeing stability and expect gradual margin improvements through efficiency initiatives and strategic investments.
Q: With a slight decline in headcount, how do you foresee hiring trends for the rest of 2025, and is there an opportunity to reduce headcount in favor of AI?
A: Jason Macdonnell acknowledged opportunities to reduce headcount through AI, enhancing productivity and efficiency. While there will be investments in key talent and capabilities, overall workforce size may decrease as AI and operational efficiencies are implemented.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
