Education
About Us
Working with TipRanks
Follow Us
TELUS International (CDA) (TSE:TIXT)
TSX:TIXT
RESEARCH TOOLSreports
Top Page
TELUS International (CDA)
(TSX:TIXT)
55Neutral
Positive Factors
Financial Performance
Analyst maintains a SPEC BUY rating due to the attractive FCF yield and signs of improvement in the IT services space.
Support from Parent Company
There is support from the parent company TELUS with spend rising 7% year-over-year, and TIXT’s large social media client grew 7% year-over-year, reflecting recent stabilization.
Negative Factors
Margin Pressure
Ongoing investments and pricing pressure are likely to result in a flatter margin trend despite cost-rationalisation efforts.
Revenue Growth Concerns
The 2% revenue growth guide does not envision a decline in the Trust & Safety segment, which suggests some downside risk either during the year or in 2026.
Trust & Safety Segment
TIXT’s Trust & Safety segment remains an area of volatility and potential downside risk, while competitive conditions and pricing across the segments remain fluid.
TELUS International (CDA) (TIXT) vs. S&P 500 (SPY)
Market Cap
$1.09B
Dividend YieldN/A
Average Volume (3M)312.18K
Price to Earnings (P/E)36.0
Beta (1Y)1.33
Revenue Growth-0.37%
EPS Growth-215.49%
CountryCA
Employees75,347
SectorTechnology
Sector Strength46
IndustrySoftware
Share Statistics
EPS (TTM)-0.31
Shares Outstanding111,267,700
10 Day Avg. Volume172,173
30 Day Avg. Volume312,177
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.28
Price to Cash Flow (P/CF)1.30
P/FCF Ratio1.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$6.91Price Target Upside74.10% Upside
Rating ConsensusHold
Number of Analyst Covering7
TELUS International (CDA) Business Overview & Revenue Model
Company DescriptionTELUS International (CDA) Inc. (TIXT) is a Canadian-based company that specializes in designing, building, and delivering next-generation digital solutions to enhance the customer experience (CX) for global and disruptive brands. The company operates in sectors such as technology, games, communications, eCommerce, financial services, and healthcare. TELUS International offers a wide range of services including digital strategy, innovation, consulting, and design, as well as IT lifecycle services, including managed solutions and intelligent automation.
How the Company Makes MoneyTELUS International generates revenue primarily through its comprehensive portfolio of digital customer experience and IT services. The company earns money by providing outsourced customer service solutions, including call center operations, technical support, and IT services to businesses across various industries. Key revenue streams include long-term contracts with enterprise clients seeking customer experience transformations and digital enablement. Additionally, TELUS International leverages its expertise in artificial intelligence, cloud services, and digital consulting to offer value-added services that contribute to its financial growth. Significant partnerships with leading technology companies and its parent company, TELUS Corporation, also play a crucial role in expanding its market reach and enhancing service offerings, thereby boosting revenue.
TELUS International (CDA) Financial Statement Overview
Summary
TELUS International (CDA) faces challenges with declining revenue and negative net income, impacting its profitability metrics. However, it maintains a strong gross profit margin and a stable balance sheet with manageable leverage. The cash flow statement reflects effective cash management, although growth in cash generation needs attention. Overall, the company demonstrates a stable financial base but needs to address profitability to enhance its financial health.Income Statement
TELUS International (CDA) has shown a decline in revenue from $2.71 billion in 2023 to $2.66 billion in 2024, resulting in a negative revenue growth rate. The gross profit margin remains strong at approximately 81%, but the net profit margin has turned negative due to a net loss of $61 million in 2024 compared to a net income of $54 million in 2023. The EBIT margin has also decreased significantly. These results suggest challenges in maintaining profitability despite a high gross profit margin.55
Neutral
Balance Sheet
The company's balance sheet shows a moderate debt-to-equity ratio of 0.78, indicating a balanced approach to leverage. The equity ratio stands at approximately 43%, suggesting a stable capital structure. However, the return on equity has turned negative due to the net loss, indicating challenges in generating returns for shareholders. Overall, the balance sheet reflects stability in terms of asset management but highlights concerns regarding profitability.65
Positive
Cash Flow
TELUS International (CDA) has demonstrated strong cash flow management, with a positive operating cash flow of $517 million and free cash flow of $412 million in 2024. The free cash flow to net income ratio indicates efficient cash generation relative to income. However, the free cash flow growth is minimal compared to the previous year, pointing to a need for improvement in cash generation capabilities. Despite this, the company maintains a solid cash flow position, providing a cushion for future investments.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.66B | 2.71B | 2.47B | 2.19B | 1.58B | Gross Profit |
| 2.15B | 2.25B | 2.00B | 1.76B | 1.28B | EBIT |
| 52.00M | 183.00M | 284.00M | 185.00M | 194.40M | EBITDA |
| 437.00M | 523.43M | 527.25M | 439.10M | 396.92M | Net Income Common Stockholders |
| -61.00M | 54.00M | 183.00M | 78.00M | 103.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 174.00M | 131.00M | 125.00M | 115.00M | 152.50M | Total Assets |
| 4.52B | 4.82B | 3.56B | 3.63B | 3.74B | Total Debt |
| 1.52B | 1.75B | 964.00M | 1.15B | 1.77B | Net Debt |
| 1.35B | 1.62B | 839.00M | 1.03B | 1.61B | Total Liabilities |
| 2.58B | 2.79B | 1.72B | 1.97B | 2.63B | Stockholders Equity |
| 1.95B | 2.04B | 1.84B | 1.66B | 1.11B |
| Cash Flow | Free Cash Flow | |||
| 412.00M | 409.00M | 332.00M | 183.00M | 203.80M | Operating Cash Flow |
| 517.00M | 498.00M | 437.00M | 282.00M | 263.00M | Investing Cash Flow |
| -107.00M | -941.00M | -119.00M | -110.00M | -1.87B | Financing Cash Flow |
| -361.00M | 443.00M | -300.00M | -206.00M | 1.69B |
TELUS International (CDA) Technical Analysis
Negative
3.97
Price Trends
4.76
Negative
5.04
Negative
5.61
Negative
Market Momentum
-0.23
Negative
40.67
Neutral
50.00
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:TIXT, the sentiment is Negative. The current price of 3.97 is below the 20-day moving average (MA) of 3.98, below the 50-day MA of 4.76, and below the 200-day MA of 5.61, indicating a bearish trend. The MACD of -0.23 indicates Negative momentum. The RSI at 40.67 is Neutral, neither overbought nor oversold. The STOCH value of 50.00 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:TIXT.
TELUS International (CDA) Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $12.66B | 65.35 | 10.92% | ― | 15.98% | 21.64% | |
69 Neutral | $10.11B | 11.49 | 16.00% | 3.81% | -3.59% | 432.46% | |
68 Neutral | C$4.45B | 157.81 | -0.10% | ― | 14.85% | -105.25% | |
63 Neutral | C$98.45B | 99.47 | 30.90% | 0.12% | 21.56% | 31.90% | |
58 Neutral | $21.67B | 10.60 | -18.43% | 2.42% | 4.66% | -24.45% | |
55 Neutral | $1.09B | 35.99 | -3.06% | ― | -0.37% | -215.49% | |
50 Neutral | $3.50B | ― | -13.55% | ― | -26.72% | 77.64% |
* Technology Sector Average
Performance Comparison
TSE:TIXT
TELUS International (CDA)
3.97
-7.50
-65.39%
TSE:BB
BlackBerry
5.68
1.97
53.10%
TSE:DSG
The Descartes Systems Group
145.53
21.63
17.46%
TSE:OTEX
Open Text
37.90
-12.81
-25.27%
TSE:KXS
Kinaxis Inc
156.63
2.63
1.71%
TSE:CSU
Constellation Software
4,662.09
965.78
26.13%
TELUS International (CDA) Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -19.64% | Next Earnings Date: May 2, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view with notable achievements in digital solutions and cost efficiencies, contrasted by challenges in overall revenue decline and sector-specific volatility. While new client acquisitions and advancements in AI data solutions are promising, the company faces ongoing challenges in certain sectors and financial metrics.Highlights
Revenue Growth in Digital Solutions
Digital solutions revenue grew by 7% in Q4 and 17% for the year, driven by expanded work with TELUS and new AI data solution projects with Google.
Cost Efficiency Achievements
Achieved $30 million in cost efficiencies in 2024, which contributed to a stabilized adjusted EBITDA margin of 42.9% in the fourth quarter.
New Client Acquisitions and Market Expansion
Expanded business with 162 existing clients and added 55 net new clients across diverse industries, including significant growth in Africa where operations scaled by 800%.
Strong AI Data Solutions Momentum
Good momentum in AI data solutions with new projects supporting large language models and autonomous transportation, driven by partnerships with hyperscalers like Google.
Positive Customer Sentiment Improvement
Customer sentiment index improved by 20% across top 55 accounts, indicating enhanced client satisfaction.
Lowlights
Overall Revenue Decline
Full-year revenue declined by 1% despite stabilization in the second half, impacted by lower revenues from a leading social media network client.
Trust and Safety Sector Volatility
Potential pressure in the content moderation sector due to changing requirements and demand, particularly in Europe, with potential need for further investment.
Weakness in E-commerce and Fintech
Reported lower service volumes from certain clients in the e-commerce and fintech sectors, indicating demand weakness.
Expected Decline in Adjusted EBITDA for 2025
Forecasted a 2% year-over-year decline in adjusted EBITDA for 2025 due to investments required to support future growth.
Company Guidance
During TELUS International's Q4 2024 investor call, guidance for 2025 was outlined with a focus on both opportunities and challenges. Revenue is anticipated to grow by approximately 2% organically, with strong demand in digital solutions as a key driver. Adjusted EBITDA is projected at around $400 million, reflecting a 2% year-over-year decline after normalizing for certain 2024 income adjustments. Investments totaling $65 million, aimed at operational efficiencies and growth initiatives, are planned, while $50 million in cost savings from operational transformation is expected. The company projects an adjusted diluted EPS of $0.32 for 2025 and outlined seasonal revenue expectations, with the first half accounting for approximately 48% of annual revenue. The call highlighted a strategic focus on technology, customer experience, and geographic expansion, particularly in AI data solutions and digital transformation services.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.