Press Release

TELUS International reports third quarter 2022 results, delivering strong double-digit profitability growth and robust cash flow

Revenue of $615 million, up 11% year-over-year and 16% on a constant currency basis

Net income of $59 million, compared with $23 million in the same quarter last year

Diluted EPS of $0.22, compared with $0.09 in the same quarter last year

Adjusted EBITDA of $158 million, 15% higher year-over-year

Adjusted Diluted EPS of $0.32, 23% higher year-over-year

Strong cash flow supports continued deleveraging and enhanced liquidity position

Acquisition of WillowTree to bolster design and build capabilities, and drive high-value cross-sell opportunities

Full-year 2022 outlook recalibrated to current macro conditions, calls for healthy double-digit top-line growth with continued strong profitability profile

Vancouver, Canada – TELUS International (NYSE and TSX: TIXT), a leading digital customer experience innovator that designs, builds, and delivers next-generation solutions, including AI and content moderation, for global and disruptive brands, today released its results for the quarter ended September 30, 2022. TELUS Corporation (TSX: T, NYSE: TU) is the controlling shareholder of TELUS International. All figures in this news release, and elsewhere in TELUS International disclosures, are in U.S. dollars, unless specified otherwise, and relate only to TELUS International results and measures.

“In the third quarter of 2022, our highly engaged team members continued to execute upon our long-term strategic vision, achieving healthy double-digit revenue growth while navigating a period of prolonged macroeconomic uncertainties. Despite these challenging headwinds, we remain confident that our ongoing efforts and investments will enable us to further capitalize on the growth in demand for digital transformation capabilities, differentiating TELUS International as the premier global partner to help brands implement, enhance and scale all aspects of their digital customer experience. The recently announced agreement to acquire WillowTree demonstrates our commitment to making strategic investments to expand our design and build capabilities, as part of our end-to-end digital offering. The cross sell and up sell opportunities are exciting, including in particular TI’s mission critical role in continuing to enable TELUS Corporation’s digital transformation journey. There is very little client overlap between TI’s over 600 clients and WillowTree’s marquee client list that includes the likes of Anheuser-Busch InBev (AB InBev), FOX, Manulife, Marriott, PepsiCo and Synchrony, which further amplifies the opportunity. WillowTree also expands our geographic presence with two new delivery countries and increases our onshore and nearshore presence with high-caliber, tenured and growth-minded tech talent who share our commitment to excellence,” said Jeff Puritt, President and CEO of TELUS International. “Notwithstanding the challenges of compounding exogenous events, we continue to deliver double-digit revenue growth while maintaining our leading margins and generating solid cash flow. In the face of current recessionary fears, our focus remains on what we can control, including providing our clients with premium digitally enabled outcomes and allowing them to shift internal resources back to their core competencies. By maintaining this focus and also leveraging ongoing operational efficiencies, we will continue to favorably position our business for long-term profitable growth.”

Jeff continued, “Our global team helps clients find incremental ways to do better with less, while providing unique solutions that are critical to their own long-term growth and digital transformation strategies. In the third quarter, our key new client wins included a multinational banking and financial services company; a leader in conversational commerce, who is reinventing business-to-consumer communication; and the leading provider of trucking roadside assistance in the United States, whose operations rely heavily on technology. In all our engagements, we work relentlessly to become a trusted partner and strategic advisor for our clients, which opens the door for cross-sell and up-sell opportunities for complementary services and solutions. This approach also cultivates longer tenured and more sustainable client partnerships, enabling us to win more business across our existing client base. For example, in the third quarter we secured incremental business with a number of our clients, including the world’s largest e-commerce company; an online game platform and game creation system; one of North America's largest energy and energy-related services providers; a German car parts maker; and an American integrated luxury retailer. In addition, with the acquisition of WillowTree, we will be welcoming more than 50 new marquee brands to our more than 600 existing clients. These additions will further diversify our company’s client base and significantly increase cross-selling opportunities.”

Jeff added, “In the third quarter, our team received industry recognition for their unwavering commitment to delivering superior customer service. Global research and advisory firm, Everest Group, named TELUS International a ‘Leader’ on its 2022 Customer Experience Management PEAK Matrix in the Americas and a “Star Performer’ in the EMEA region, indicating our above-market growth and expansion of our client base across the UK and Eastern Europe. These rankings assess market success, vision and strategy, service focus and capabilities, digital and technological solutions, domain investments and client feedback. Additionally, TELUS International joined Everest Group’s Commitment to Action presented during the Clinton Global Initiative meeting, to grow the impact sourcing market from its current level of 350,000 full-time employees to half a million in three years by connecting marginalized individuals to new job opportunities.”

Vanessa Kanu, CFO said, “While the macroeconomic challenges and implications have persisted, TELUS International continued to show resilience in the third quarter of 2022, delivering revenue growth of 11%, or 16% on a constant currency basis, with Adjusted EBITDA growing 15% and Adjusted Diluted EPS growing 23% when compared with the prior year. TI’s relentless focus on profitable growth and cash flow drove continued deleveraging and has further enhanced our liquidity position and, as a result, our capacity and ability to pursue meaningful acquisition activity such as our agreement to acquire WillowTree.”

Vanessa continued, “WillowTree has demonstrated strong revenue growth from a high quality list of diverse client partners, while maintaining a healthy profitability profile. WillowTree’s ability to drive leading annual revenue per team member is an indication of the high value services they offer. Much like TELUS International, WillowTree has been able to grow, while keeping capital expenditures as a percentage of revenue in low single digits, driving meaningful free cash flow conversion that will also help support TI’s track record of rapid deleveraging after the acquisition closes.”

Vanessa concluded, “Our outlook for the full-year 2022 has been recalibrated to reflect the impact that prolonged macroeconomic uncertainties are expected to have as we close the year. While we expect some revenue headwinds in the fourth quarter driven by softer than expected client demand and longer sales cycles, we are focusing our collective efforts on what we can control and be as efficient with cost as possible. As such, we expect our Adjusted EBITDA margin to be higher than previously guided, while reiterating our outlook on Adjusted Diluted EPS.”

Complete version of the Earnings Release is available at the link below.