TDCX posts 2.3% higher Q3 profit of S$31.6 million

NEW York-listed TDCX reported a third-quarter net profit of S$31.6 million, up 2.3 per cent on the year from S$30.9 million previously, despite lower revenue.

This brings its earnings per share to S$0.22 for the quarter, up from S$0.21 in the same period a year earlier.

The digital customer solutions provider on Wednesday (Nov 22) attributed its bottom-line improvement to cost optimisation efforts, lower tax, and higher interest income.

Revenue for the quarter ended Sep 30, 2023, fell 5.4 per cent year on year to S$163.5 million from S$172.8 million.

This came as contributions from the content, trust and safety services segment fell 29.9 per cent to S$19.7 million for the period, due to lower volumes requirement by TDCX’s digital advertising and media client.

Meanwhile, revenue from omnichannel CX solutions services was 2.8 per cent lower at S$98.1 million, amid lower volumes requirement by existing clients in digital advertising and media, and fintech.

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On the other hand, sales and digital marketing services revenue grew 3.5 per cent to S$44.3 million, as the group expanded its existing campaigns by key clients in digital advertising and media, fast-moving consumer goods, and technology. It also scaled up contributions from new clients secured during 2022.

Revenue from other service fees grew by 47.1 per cent to S$1.5 million as well, also due to the expansion of existing campaigns.

TDCX’s founder and chief executive officer Laurent Junique said revenue from the company’s overall client base, excluding its top five clients, grew 51 per cent year on year.  

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“This quarter, we welcomed new clients including a leading global airline based out of Asia, and one of the world’s most popular mobile messaging apps. Such wins are testament to the sector expertise we have built in travel and hospitality and social media platforms,” he added.

Over Q3, group’s interest income grew 166.8 per cent to S$3.3 million due to higher placements of liquid funds in interest-earning deposits, along with an uptick in deposit interest rates during the period.

Employee benefits expense declined 4.4 per cent to S$107.4 million for the period due to lower equity-settled share-based payment expenses. This was mainly the result of the changing business and operating climate, and the recalibration of employee headcount and costs of several key operating units in response to business volume changes, said TDCX.

Recruitment expenses fell 52.5 per cent to S$2.1 million, amid lower hiring and work permit renewal activities mainly of foreign talent in Singapore and Malaysia.

Income tax expense was nearly halved to S$5.8 million from S$10.8 million previously, due to the reinstatement of tax incentives in the Philippines that were suspended in 2022. This was also a result of lower profitability of a few key operating units, and the non-recurrence of a one-off tax in Malaysia implemented in 2022.

TDCX’s adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) margin stood at 27.8 per cent for Q3 FY2023, down from 29 per cent in the same quarter last year.

Assuming a financial exchange rate of US$1 to S$1.3648, it estimates its full-year adjusted Ebitda margin to be around 25 per cent to 27 per cent.

The group expects to report year-on-year revenue growth of 2 per cent to 4 per cent on a constant-currency basis for the full year.