TDCX Inc.

Q3 2023 revenue was $120 million, stable on a constant-currency basis but down 5.4% year over year on a reported basis, mainly due to a stronger Singapore dollar and lower volumes from key clients. Adjusted EBITDA declined 9.1% year over year, with margin at 27.8% versus 29.0% a year ago and 25.9% in Q2 2023. Profit for the period was $23 million, up 2.3% year over year. For the first 9 months of 2023, revenue was $366 million, up 2.5% reported and 7% in constant currency, with profit of $65 million, up 10.3%. Management reiterated FY23 constant-currency revenue growth of 2% to 4% and adjusted EBITDA margin of approximately 25% to 27%.

Laurent Junique framed the quarter as resilient despite a tough macro backdrop and client volume cuts, emphasizing that the business outside the largest client is growing strongly. He highlighted diversification progress, including 94 clients, 51% growth in clients outside the top 5, and revenue from new geographies growing 5x year over year. His tone was confident but cautious: he sees green shoots for 2024, but said the macro remains uncertain and guidance for next year will be handled carefully.

Tze Neng Chin said Q3 reported revenue fell 5.4% year over year because of FX and lower volumes from top clients, while adjusted EBITDA margin improved sequentially from 24.0% in Q1 to 25.9% in Q2 and 27.8% in Q3. He said the margin improvement was driven more by utilization gains, headcount rightsizing, and better site scaling than by FX. He also cited $86 million of cash generated from operations for the first 9 months of 2023, $318 million of cash and cash equivalents at September 30, and no debt, while noting continued investment in new geographies and capabilities such as TDCX AI.

Analysts focused on the revenue slowdown, especially the decline at top clients, and management said the weakness was expected and already reflected in the August guidance revision. Laurent said the top client reductions are tied to cost-efficiency actions and that performance at larger digital advertising clients is difficult to map directly to TDCX because the company serves only certain geographies and service lines. On headcount, management said reductions are a direct response to lower volumes and are part of normal rightsizing, not a broad layoff program; they also said shifting work to lower-cost locations is a headwind to revenue but not a large one.