Telus International (Cda), Inc. ((TSE:TIXT)) has held its Q4 earnings call. Read on for the main highlights of the call.
Discover the Best Stocks and Maximize Your Portfolio:
- See what stocks are receiving strong buy ratings from top-rated analysts.
- Filter, analyze, and streamline your search for investment opportunities with TipRanks’ Stock Screener.
The recent earnings call for Telus International (Cda), Inc. offered a balanced narrative, highlighting notable achievements alongside ongoing challenges. While the company celebrated growth in digital solutions and successful cost efficiencies, it also faced hurdles in revenue decline and sector-specific volatility. The optimistic outlook on new client acquisitions and AI advancements was tempered by these financial challenges.
Revenue Growth in Digital Solutions
Telus International reported a significant growth in its digital solutions segment, with revenue rising by 7% in the fourth quarter and 17% over the year. This growth was primarily driven by expanded collaborations with TELUS and new AI data solution projects with tech giant Google, underscoring the company’s strategic pivot towards digital transformation.
Cost Efficiency Achievements
The company achieved $30 million in cost efficiencies in 2024, which contributed to a stabilized adjusted EBITDA margin of 42.9% by the fourth quarter. These efficiencies underscore Telus International’s commitment to maintaining financial health amidst a challenging economic landscape.
New Client Acquisitions and Market Expansion
Telus International successfully expanded its business with 162 existing clients and added 55 new clients across various industries. A notable highlight was the significant growth in Africa, where operations scaled by 800%, reflecting the company’s strategic market expansion efforts.
Strong AI Data Solutions Momentum
The company experienced strong momentum in its AI data solutions, with new projects supporting large language models and autonomous transportation. This growth was fueled by partnerships with major tech players like Google, indicating a robust future for Telus International in the AI sector.
Positive Customer Sentiment Improvement
There was a notable 20% improvement in the customer sentiment index across the top 55 accounts, demonstrating enhanced client satisfaction and the effectiveness of Telus International’s customer-centric strategies.
Overall Revenue Decline
Despite some stabilization in the second half of the year, Telus International faced a 1% decline in full-year revenue. This was largely attributed to reduced revenues from a leading social media network client, highlighting the volatility in certain client sectors.
Trust and Safety Sector Volatility
The company indicated potential pressure in the content moderation sector, particularly in Europe, due to changing requirements and demand. This could necessitate further investments to adapt to these evolving market conditions.
Weakness in E-commerce and Fintech
Lower service volumes from clients in the e-commerce and fintech sectors were reported, pointing to a demand weakness in these areas. This sectoral downturn poses a challenge to Telus International’s growth trajectory.
Expected Decline in Adjusted EBITDA for 2025
Looking ahead, Telus International forecasted a 2% year-over-year decline in adjusted EBITDA for 2025. This is attributed to necessary investments aimed at supporting future growth, reflecting a cautious yet strategic approach to long-term success.
Forward-Looking Guidance
Guidance for 2025 projects a 2% organic revenue growth, driven by strong demand in digital solutions. The company anticipates an adjusted EBITDA of approximately $400 million, a slight decline after accounting for 2024 adjustments. Investments of $65 million are planned for operational efficiencies and growth, with an expected $50 million in cost savings from operational transformation. Seasonal revenue expectations were also outlined, with the first half contributing to 48% of the annual revenue. Strategic focus areas include technology, customer experience, and geographic expansion, particularly in AI data solutions and digital transformation services.
In summary, the earnings call reflected a mixed sentiment. While there was optimism around digital solutions growth and AI advancements, challenges in revenue decline and sector-specific volatility remain. The company’s strategic focus on operational efficiencies and market expansion aims to counterbalance these challenges, setting the stage for future growth.
