TDCX Inc (TDCX) 2021 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. I'm Stuart, your chorus call operator. Welcome, and thank you for joining the TDCX Incorporated Fourth Quarter 2021 Results Conference Call. (Operator Instructions)

I would now like to turn the call over to management. Please go ahead.

Hello, everyone, and welcome to TDCX 2021 fourth quarter and full year earnings conference call. My name is Jason Lim, the Head of Investor Relations. And allow me to introduce management on the call. We have our Executive Chairman, Founder and CEO; Mr. Laurent Junique; and our CFO, Mr. Chin Tze Neng.

Before we continue, I would like to remind you that we will make forward-looking statements, which are subject to risks and uncertainties and may not be realized in the future. You should not place undue reliance on any forward-looking statements. Also, this call includes the discussion of certain non-IFRS financial measures, such as adjusted EBITDA and adjusted EBITDA margins. For a reconciliation of the non-IFRS measures to the closest IFRS measures, please refer to our press release or the Form 6-K, which are available on our website. Lastly, we have provided a convenient translation for the translation of Singapore dollar into the U.S. dollar. This was done at a rate of USD 1 to SGD 1.3517. This should not be construed as representations that the Singapore dollar amounts could be converted into the USD at this or any other rate.

Our management will now share updates on the operating and financial performance. This will be followed by a Q&A session in which we welcome any questions you may have.

With that, let me turn the call over to Laurent. Laurent, please.

Thank you, Jason, and hi, everyone. I'm very happy to report that in Q4 as well as for the whole of 2021, TDCX delivered financially, delivered operationally and delivered strategically.

First of all, a big thank you to our 14,700 employees who have made 2021 a record year through smart and hard work. Many of our employees had to adapt to the new hybrid work model and TDCX had delivered enhanced services to support them in this constantly evolving environment. I have also a thought for our employees who were severely impacted by Typhoon Odette in Cebu in the Philippines and the floods in Malaysia at the end of Q4 just around Christmas. Our teams came together strongly to help, and I'm very proud of them. Currently, 80% of our employees are still working from home, and I'm happy to report that our latest employee satisfaction survey indicates 89% satisfaction score globally compared to 88% last year at the same period. What is also important to know is that all indicators in that survey are up.

As a result of the contributions from our employees, we delivered a strong financial performance. Our Q4 revenue rose 28.8% year-on-year to a record USD 114 million or SGD 155 million. Our adjusted EBITDA was USD 40 million versus USD 32 million for the same period last year. On a full year basis, revenue rose 27.7% year-on-year to a record USD 411 million or SGD 555 million. We managed to achieve a full year performance above the top end of our guidance range. In particular, we have seen strong contributions across several verticals. Digital advertising and media continued its positive trajectory, rising over 40% in FY 2021 off a very large base. We grew our business with these clients, both in the work streams of omnichannel CX and sales and digital marketing across multiple geographies.

2 of our newer verticals continued to grow. We gained further traction in the fintech space as revenue from fintech clients rose 67% in FY 2021 and 114% in Q4, in particular, compared to the same period in 2020. Gaming was also another bright spot as revenue rose 99% in FY 2021 compared to last year. The travel and hospitality vertical posted a 15% gain in Q4 2021 versus Q4 2020 and showing signs of recovery. For the full year, this vertical was still down 4% compared to 2020. With our continued focus on new economy clients, revenue from new economy clients now stands at 93% of total revenue in FY '21.

We delivered operationally. So let me next touch on this. In terms of hiring, in Q4 alone, we hired close to 3,000 staff, whom we call TDpeeps. This meant we achieved a 99% fill rate of what our clients ask for, demonstrating the effectiveness of our hiring mechanisms. I'm also very excited about some significant productivity gains we were able to deliver for some of our clients. In one instance, we were able to increase productivity by 170% on the project with more than 700 FTEs. The positive impact for our client was significant. In another instance, TDCX presented a unique concept of customer life cycle management in new business programs that provides actionable insights, which resulted in 29% incremental acquisition of customers. We have numerous examples of performance, quality or productivity improvements, and we are continuously working towards adding value to the business and that of our clients.

Beyond servicing and growing our existing clients, we were focused on ramping up our business development efforts and adding new logos. These efforts are showing great results. We added a record 20 logos in 2021, more than double the 9 that we added in 2020. Let me share some highlights of our logo additions. During the year, we further entrenched our expertise in fintech and gaming, 2 new economy verticals that were not even existing 5 years ago. We're doing highly specialized work under the fintech umbrellas, such as KYC for customer onboarding and resolution of trading issues. The work for such clients is segregated into various complexity and escalation levels, and we're already helping our fintech clients at the most complex levels.

In gaming, we are starting to move beyond the customer support work on gaming matters, and we now even help to moderate speech and player interaction to our clients also in foreign languages. We added another 2 globally recognized gaming clients to our register during the later part of the year. In addition to this, we also added an interesting new food delivery client. Beyond the established international Western firms, we are seeing a wave of exciting Asian-originated large logos across verticals. This includes e-commerce, gaming, fintech and technology. They will provide a tailwind for TDCX over the medium term even as we continue to grow along with the established clients already on our client list. With the strong logos addition, we ended December 2021 with 52 clients, a 37% jump from the 38 clients as at the end of last year.

Now I was saying that we also delivered strategically. From a geographic perspective, revenue rose across all the geographies we operate in. Our key Southeast Asian geographies, Malaysia, Philippines and Thailand continued to deliver very strong growth, while our newer footprint in North Asia, China and Japan is starting to contribute a sizable mix to overall group revenue. Recently, we've also announced that we commenced operations in South Korea, our newest geography with 3 projects at the onset. This further augments our North Asia presence. All in all, 2021 was a good year for geographical expansion and saw us achieving maiden revenue contribution from 4 geographies: Colombia, India, Romania and South Korea. These 4 newly added geographies underscore our plan to continuously expand our global footprint to offer more language capabilities than ever and to be better positioned for global RFPs.

My executive search unit also delivered the goods in 2021 and continues to be on overdrive mode. Attracting talent in new markets is super important, and we have onboarded 2 senior hires who will be part of the core team in Korea. It's worth noting that one of them joins us from a large Korean CX operator, where he oversaw the International business unit covering some exciting new economy clients in 2021. We also made some senior key hires in India, Romania, and Colombia to lead the new sites. Aside from new geos, Ben Sun, an ex-McKinsey consultant joined us in 2021 as SVP Business Intelligence and Solutions and to lead our in-house advisory unit. Ben has been very involved in redesigning our data and process solutions to provide management and our clients with better data and insights for us to make quicker and better decisions.

Now besides new hires, we have made some internal reorg as well. Ricart Valvekens, our EVP for Philippines and Americas was promoted to Group Chief Client Solutions Officer to oversee areas of B2B branding, marketing, solutioning and RFP proposals management, whilst early 2021, Angie Tay took the all-important and new role of Group Chief Operating Officer. As you can see, we have been busy, and we still have an exciting pipeline of key hires to fill in 2022, and I will update along the way.

In terms of tools and innovation and through our very own digital lab, we invest in developing tools based on artificial intelligence and machine learning to augment delivery of desired CX. We now have 39 tech headcount across Malaysia and India, who are doing 2 things: one, enhancing existing tools such as Flash Suite, our own proprietary suite of management tools to improve productivity and quality. Number two, this team has been working on some new tools. We leveraged artificial intelligence and machine learning to deploy 7 bots, which are now working in sync with our agents in the trust and safety team for a new economy client. The bots truly augment our agents here and drove huge productivity gains. In 2021, this team helped to roll out more than 100 RPA robots to drive efficiency across the group. Our in-house advisory unit led by Ben Sun functions as a close business partner to our ops teams to identify operational and process improvements. I'm confident that these 2 units will make key contributions to productivity gains.

Our offerings to clients continue to evolve to meet their changing needs. In 2021, we commenced providing data labeling services. We categorize and label content on our client's platforms to train and improve machine learning, while also refining algorithms and predictive models. Our clients then use this information to enhance the user experience and utilize key insights on user behavior and evaluation of models for further product improvements and development. For another client, we also set up a regional team in charge of driving sales for cloud services.

Now, on the M&A front, we continue to build our pipeline. Being public-listed has certainly given us a boost as our M&A unit has received more ideas in the last 5 months than in the last 5 years. So the pipeline is healthy in the sense that we have a good view of what's in the market or coming to the market. And we want to be very selective and act only on the right targets in terms of client mix, footprint, culture and financial profile.

I hope I've given you a good view of what we've achieved during the year. We're now more ready than ever to provide our clients with a truly global solution platform, and I'm excited by the opportunities as I look forward to 2022. We believe that what we've achieved so far and the plans that we've laid out sets us on the best possible path forward.

I'll now pass over to Mr. Chin to share more details on the financials as well as the outlook for FY 2022.

Thank you, Laurent. Let me first touch on our track record over the past 4 years. We have delivered consistent growth from 2018 to 2021. Over this period, our revenue rose at a compounded annual growth rate or CAGR of 45%, while adjusted EBITDA rose at a CAGR of 49% and profit rose at a CAGR of 40%. This was coupled with a track record of consistently high adjusted EBITDA margins rising to 33.3% in FY '21, up from 32.9% in FY '20. These numbers are the results of our business strategy and positioning. Our focus remains on the high-growth CX segment, on new economy clients, on complex offerings as well as regionalization of operations underpinned by multilingual hubs.

Next, let me share a bit about our geographical presence. We have a strong global presence across 11 geographies, and we continue to expand. As mentioned earlier, we recognized maiden revenue from 4 new geographies in FY 2021. Of this, Romania, India, South Korea registered their first revenue in Q4 2021 itself. In terms of revenue contribution, Philippines, Malaysia and Singapore are the largest contributors to FY '21 revenue at around 26% each. Thailand contributed 12.9%; Japan 5.6%; and China, 2.1%. Our global headcount stands at just over 14,700 employees as of December 2021.

Next, let me elaborate a bit about our client numbers. As Laurent mentioned earlier, we added a record 20 logos in 2021. This represents a significant increase, more than double the 9 that we added in 2020 and is a testament to our intensified business development efforts. We ended December 2021 with 52 clients, which represents a 37% increase compared to 38 clients as of December 2020. We continue to focus on new economy clients and for FY '21, new economy clients contributed 93% of our revenue.

Let me now share some details on our Q4 2021 financial performance. Revenue rose 28.8% to USD 114 million, our highest ever quarterly revenue. This was driven by broad-based growth across all of our 3 business segments and across all geographies. In the next slide, I will share the breakdown by service stack and geography. To recap, we introduced the performance share plan or PSP in November 2021 to incentivize our staff and act as a long-term talent retention and attraction tool. The adjusted EBITDA metric excludes the cost from the PSP and helps provide for a like-for-like comparison to track earnings performance.

Adjusted EBITDA rose 26.1% to USD 40 million, again the highest we achieved in the quarter. Adjusted EBITDA margin stood at 34.8% for Q4 '21, a decline against Q4 2020, which had exceptionally high margins of 35.6%. Net profit for the period rose 7% on a reported basis. On a comparable basis, excluding PSP costs, net profit would have risen by 26.3%. And excluding PSP costs, net profit margins would have been 22%, slightly below 22.4% of the same period in 2020.

Next, we share more details on our Q4 revenue performance by the services we offer and by the geographies in which we operate. Revenue from omnichannel CX solutions rose 24% to USD 71 million due mainly to higher business volumes driven by the expansion of existing campaigns. In addition, volumes benefited from the mild recovery in the travel and hospitality sector from the impact of the pandemic as compared to the same period of 2020. Revenue from sales and digital marketing services increased by 72% to USD 26 million with the expansion of existing campaigns for clients in the digital advertising and media vertical. Revenue from content, monitoring and moderation services increased by a modest 3% to USD 16 million due to higher business volumes from an existing client in our digital advertising and media vertical.

In terms of revenue contribution by key geographies, Singapore rose 18% to USD 27 million; Philippines rose 21% to USD 30 million; Malaysia rose 39% to USD 31 million; Thailand rose 44% to USD 16 million.

Let me now share some details on our expenses. We continue to monitor closely our overall cost structure and ensure that our total operating cost base is streamlined and aligned to support our fast-growing business. For Q4 2021, operating costs as a percentage of revenue stood at 73%, excluding PSP costs, marginally lower than 73.7% for the same period of 2020. Being a people-centric business, employee benefit expense makes up the largest portion of our total operating cost base. Our employee benefit expenses increased by 42% to USD 72 million for Q4 in tandem with business volume expansion. If we exclude the PSP costs, employee benefit expense would have increased by 34%. This is higher than the increase in average number of employees by 29% over the same period due largely to compensation adjustments to employee reference to performance, cost of living and prevailing talent market conditions in their respective sites, and a one-off recognition award bonus accorded to a certain group of employees for the successful IPO project in Q4 2021.

Our depreciation expense increased by 8% to USD 7 million for Q4, primarily due to higher depreciation on write-off used assets, renovations and capital expenditure in relation to office expansion catered for business growth. All other expenses, which include items such as recruitment, transport and telecommunication expenses rose 2% for Q4 2021.

Next, let me touch on our full year 2021 financial performance. We achieved our highest ever revenue, adjusted EBITDA and net profit for the full year. Revenue rose 27.7% to USD 411 million. Our Top 2 clients make up 62% of revenue compared to 60% for FY 2020 and our Top 5 make up 84% compared to 83% for FY 2020. While we have added new clients during the year, this will take time to contribute more meaningfully in terms of revenue mix. Meanwhile, our top clients continued to grow very strongly with us in FY 2021, leading to a slight increase in concentration.

In terms of earnings, we improved EBITDA margins to 33.3% for FY 2021, marginally higher than 32.9% for FY 2020. Adjusted EBITDA rose 29.4% to USD 137 million. Accordingly, net profit for the period rose 20.6% to USD 77 million. Excluding PSP expenses, net profit growth would have been up 26.7%, while margins would have stood at 19.6%.

Let me next touch on the revenue by service and geography for the full year. Revenue from omnichannel CX solutions rose 22% in FY 2021, while revenue from sales and digital marketing services increased by 73%, and revenue from content, monitoring and moderation rose 7%. OCX remains the largest contributor at 62% of revenue, followed by SDM at 21% and CMM at 15%.

In terms of revenue contribution by key geographies, Singapore rose 22% to USD 106.5 million; Philippines rose 30% to USD 106.8 million; Malaysia rose 27% to USD 107.4 million; while Thailand rose 32% to USD 53 million.

Let me round up on the full year 2021 expenses for the financial section. For the full year 2021, operating costs as a percentage of revenue stood at 75%, excluding PSP costs, marginally lower compared to 76.7% for the same period of 2020. Excluding PSP costs, employee benefit expense rose 30%, slightly higher than the increase in average number of employees of 29% over the same period. Our depreciation expense increased by 21% due to depreciation on capital expenditure invested in new and expansion capacities to support the business growth in several locations. In addition, there was increased depreciation with respect to our office property leased in Spain and Japan to replace the co-working space memberships occupied previously. All other expenses were rather flat as increases in telecom expenses were offset by lower transport and traveling as well as other operating expenses.

Lastly, let me now move to the financial outlook. We expect full financial year 2022 revenue to be in the range of USD 510 million to USD 519 million. This translates to SGD 689 million to SGD 702 million, assuming an exchange rate of USD 1 to SGD 1.3517. At the midpoint of the range, revenue growth is expected to be 25.3% compared to 2021. We expect full year 2022 adjusted EBITDA margins to be approximately 30% to 32%. The revenue guidance reflects our latest perspective of the business after iterations with existing clients and includes some anticipation of growth from our business development activities. The margin guidance builds in our expectations as we continue to invest in business development efforts, geographical expansion and market conditions for talent.

With that, let me hand over back to Laurent.

Thank you, Mr. Chin. I believe we've given you a good view of what we've achieved in 2021 as well as some of our plans moving forward. Thank you for your time. We're happy to take any questions you have. Jason, please.

Thanks, Laurent. I think right now, we are ready for Q&A. Can I ask that you restrict yourself to 3 questions. So operator, we are ready for the first question.

(Operator Instructions) The first question comes from the line of KC Ong from CGS-CIMB.

Congrats on the strong set of results. First, I have 2 questions. First one, can you provide more color and broad parameters around your revenue guidance for FY '22? And secondly, could you give some comments on the trends that you're observing for your largest account, Facebook? Noted that they have guided for a rather soft outlook for first quarter '21 -- for first quarter '22, sorry, while another peer of yours seems to have mentioned that they are shifting roles serving this particular account to Asian countries like Philippines and India.

All right. KC, thank you for the question. I appreciate it. So yes, in terms of the guidance for 2022, we've -- we're looking at really a continuation from last year. So first of all, we see fintech as a big, big growth driver for us. So that's the first thing. Second is we continue to see digital advertising to be a big contributor because it's a large portion of what we do. But we also see high growth from new clients that we've acquired over the past 2 to 3 years, and they're starting to really show in a big way. So we will have a higher growth as well outside of the Top 2 clients that we have. We've also incorporated the good work that was done in our business development activities to significantly increase from last year. On the travel and hospitality business, we factored in a more modest recovery. And then for any further recovery, we'll update as we go along.

Now for Meta Facebook question, really, I don't want to comment on specifics for the client. I can say that, first of all, digital advertising, we have a number of clients, not just Meta is our client in digital advertising. So I believe there's still great growth opportunities in the sector. I also want to point out that we work primarily in Asia Pacific and typically, the growth of digital advertising in Asia Pacific is faster than the rest of the world. What we can see, and we're continuing to watch for, is the intensification of competition in the digital advertising landscape, which we believe could become a fertile ground for TDCX sales and digital marketing. And you can see that in 2021, sales and digital marketing was quite the hero for us in terms of growth, but we expect sales and digital marketing for 2020 to still be the faster-growing segment of the 3 that we have. So we're going to continue to stay the course on the business, and we think we'll be doing quite well.

Next question is from the line of Pang Vitt from Goldman Sachs.

Congrats for the great set of results. Maybe also follow-on from the question earlier just now on the guidance for revenue in 2022. I understand you explained a little bit of the color behind that. But specifically, can you also comment on how -- the visibility that you currently have behind this guidance, meaning that are the guidance are based on the contracts that you already signed, and you already see coming in and that's why you put it in the guidance? And have any of that actually already count any potential win of the new client that you potentially can gain over the year as well?

And when you talk about the recovery of travel and hospitality segment being modest, how do we actually understand a bit more there? Are we actually talking about it going back to the rate of recovery? Are you still going to expect to see some softness in the segment still? So that would be really appreciated if you can provide more color on that. That's question number 1.

Question number 2 is regarding the growth that we've seen in fourth quarter, both in the omnichannel and sales and digital segments. Quarter on quarter growth looked a little bit muted, especially on the omnichannel, with around 4% Q-on-Q. Can you explain what actually happened over there in the fourth quarter that led to quite a slower growth on a sequential quarterly basis? Especially we've seen the reopening of the economy a bit more apparent there. We've seen Airbnb also report quite a good set of numbers. Well, have you seen any challenges? It would be appreciated if you can also explain on that.

And last question will be on the EBITDA margin and the guidance. How comfortable are you with this set of guidance, especially as you are growing into the new regions and new countries? Would appreciate any thoughts on that.

Great, Pang. Very thorough. Appreciate it. So on the growth that we've planned for 2022, we've taken -- the majority of the growth will come from existing contracts with existing clients. We've incorporated growth from business development activities, but it's a lower number. And really, the large, large, large majority of our growth is from existing clients, a mix of the more established clients as well as the new clients that we've acquired over the past 2 years. So it's a pretty stable revenue guidance.

From travel and hospitality, in terms of that forecast, it's moderate because we did it at the time of Omicron. And I think now with the Ukraine crisis looming, I think we were well advised to put it as a modest recovery at this point. The other question around -- I think the last question was around the way we see also recovery on the travel. So -- and in Q4, the fact that the growth between Q3 and Q4 is not so strong, I just wanted to look back at the growth we had in Q3, which was, I think, 41%. So it was a very big quarter in growth, and then we carried through that in Q4. And the role of travel in Q4 was an increase of 15%, I think, on the travel and hospitality. So I think we still have a reasonable growth for Q4 versus Q3, considering we were carried through the Q3 very big quarter.

And how about on the margins, how comfortable are you with this guidance, especially as you're growing into the new regions? And also, just on that point as well, do you foresee or see any pricing pressure when the contract comes up for renewal with any of your client recently?

There's always negotiations going on with clients. So we haven't anticipated a price pressure, but what we've done in our forecasting, we forecast some modest inflation. Modest in the sense that it's higher than last year. But we've not factored in a price increase. So once again, I think we've taken a fairly conservative stance. And hence, we imagine the impact on our margins to be between 30% to 32%. So there is a range here due to that specific aspect.

(Operator Instructions) Next question is from the line of Varun Ahuja from Credit Suisse.

Congrats on a good set of numbers. I've got a few questions. Sorry to pester on revenue growth side, but I won't ask for details on the guidance, per se, but some question on the revenue front will be helpful. So you have added 20 clients. So how long does it take for them to ramp up? Usually I believe the contract is for 1 to 3 years. If you've added some of the clients in first half, I believe this year, next year they should be on full-scale ramp-up by second half. So wanted to understand because you mentioned you're still looking at existing clients for growth. So how much of these 20 clients are contributing towards the growth trajectory?

And secondly, how many people have you added on the business development side in this year versus last year, and what's your target to add the sales people in the organization?

And thirdly, on the revenue side again. What's your view still on growth versus margin? Are you still pretty much focused on profits and high margin -- maintaining margin kind of a growth trajectory, or you can grow for growth at this stage in order to capture market share?

And lastly, on the content monitoring and moderation. How should we think about this segment? It's been for the last few quarters very anemic growth. Is there any more client that you're talking to, or is it still a segment which is -- which should be more of a flattish kind of a thing over the next few quarters?

Varun, yes, nice hearing you again. So coming back to your first question, the 20 clients that we've acquired last year are definitely contributing this year to the revenue. They do take time to bring a certain amount of revenue, but every client is different. So we have larger ones, we have smaller ones, but they will all be contributing. What we've seen in general is that they take about 2, 3 years to come to maturity and that's what we're monitoring right now in 2022 is the clients we brought in 2019, 2020 are starting to really contribute to the growth in revenue.

So it does take time, but we'll see some immediate revenue from them in a modest way this year, and we've taken that into account in our forecast. In terms of business development team, I mentioned earlier on that we've appointed Ricart Valvekens to accelerate on that front. Beyond the headcount that we've added, the 3 last year, we want to add another 5 this year. It's not as fast as I'd like in terms of addition, and we're really looking for top quality personnel in the right geographies. But our listed status is really helping us to acquire the right caliber of personnel. Beyond hiring, we've improved on our client solutions team and also in our advertising and marketing budget so there's quite a bit of things going on that front, and once again, we're starting to see the results in terms of new client acquisitions.

On the growth, the quality growth, we spoke about TDCX pursuing quality growth. And the question is can we grow faster with looking at a wider group of clients. And so we're open to it. We're looking at that. We're looking at opportunities to expand into new geographies, acquire new verticals like e-commerce, food delivery, and we've acquired a food delivery client that could generate more growth. And they could bring us lower margins, but we want to be able to balance the quality growth for volume and maintain the right balance. So we're not closing the door on growing larger volume accounts when the opportunities arise in the right geographies as well. But we still continue to believe that we can continue to drive more complex work and a large potential percentage of our business coming from a complex work.

On the content moderation side of your question, we expect it to be stable. We don't expect tremendous growth from it at this point in our budget 2022. We've acquired a new client in 2021 in content moderation. What we see is an increase in business from trust and safety for some clients which is related. We've had a nice uptick also of data labeling, which are more or less in the same category of business for TDCX. I hope that answers your question, Varun.

Sure, it does. Lastly if I can take just the confirmation, the PSP cost, all of it is in employee benefit or split with other line item. This is for...

Maybe, Mr. Chin, an opportunity for you to answer this question.

Could you repeat that question? I can hear bits and pieces of it.

Sure, Mr. Chin. The PSP cost, stock compensation cost, is it all of it in employee benefit or is it split between some of the other headings, line items in the cost?

All of them are in the employee benefit expense factored in.

Next question is from the line of Han Tan from HSBC.

I wanted to ask a little bit about currency impacts. Given we have seen strength in the dollar, does your existing EBITDA margin guidance of 30% to 32% factor that in? Maybe if you could help us understand the sensitivity impact of dollar on earnings and margins.

Mr. Chin, for you.

Yes. In our earnings guidance, we took a stand of neutral ForEx assumption as how we ended the year before. So there is no -- we didn't take any views on how the U.S. dollar will behave in the coming -- in the current year.

Okay. So if the dollar strengthened by 3%, what sort of margin impact might that have?

If the dollar strengthened?

If the dollar strengthens versus the peso and Sing dollar by 3%, how much would that benefit margins and earnings?

If the pesos or the Thai baht move or deteriorate against the U.S. dollar, yes, then it will definitely help the margins on a top line basis. As to how much is it, well, it really depends at what rate that we bill and what rate that we collect. Sometimes the timing between billing and collection can flux the ForEx. It can [turn] at the top line and then later if the collection turns the other way or the ForEx turns the other way upon collection, then you might actually neutralize.

So essentially so far in the concluded year, in Q4, actually, we did have enjoyed a bit of ForEx gain predominantly because talking about the historical trend, 2021, the currency of pesos, Thai baht, even Malaysian ringgit actually weakened against the U.S. dollar I think due to the rebound of the -- strengthening of the U.S. dollar versus the 2020 situation where we began the year strongly. Most currency began the year strongly and then during -- at the onset of COVID, and even during COVID, these currency turned around. So I think -- I mean, U.S. dollar became stronger. So, in a way, 2021, we did had some good ForEx movement in our favor in quarter 3 and also a bit in quarter 4. So I would say that really helps. On a hypothetical basis, maybe on a constant currency basis, I would say, maybe 1% or 2%, it will help on that front.

Okay. And then to understand for your EBITDA margin guidance of 30% to 32%, what factors are you thinking of on the lower end of that range and higher end of that range?

I would -- well, it will stay within that. I really can't comment whether we will land at the lower end or the higher end. I would just comment that that we are quite comfortable to stay within that range for now. I guess we can comment -- give a better narrower guidance as the quarter rolls by. That much I would be able to say for now.

Okay. No problem. Just one last question for me. I wonder if you could talk a bit more about the AI data labeling segment, how should investors think about it? Is it more tactical or strategic? And if it is strategic, how big do you expect contribution to be?

Laurent here. So, yes, that segment for now is not very big. So we would call it tactical. But it's a nice complement to our services and to our clients. So we're watching it and we are looking at it, and we're creating a value for our clients with that segment. And as it grows further, then we'll see whether it should become a segment. But now it's an adjacent service to the services we provide. So the bulk of what we do is still Omnichannel CX and the Sales and Digital Marketing. But we are building our competence, we're building our client base on that sector, and we're definitely watching that space.

There are no further telephone questions. Are there any questions from the webcast?

Yes, Stuart. So I have 2 questions on the webcast around the same thing. It's how do you expect revenue concentration to evolve in 2022 and how do we expect the top 2 client concentration to change in 2022.

Thank you, Jason. So, yes, concentration in 2022, we see it coming down due to the fact that the clients that are not those high concentration clients are growing faster. And I mentioned fintech, I mentioned some sectors that are bringing us that accelerated growth. So from that organic growth, we're seeing a reduction in concentration. And we're continuing to monitor this as we want to continue reducing our concentration and possibly accelerate that through other options as well that we're considering at this point.

Another question on the webcast is, what guidance do you provide for Q1? I think the response is that we only provide the full-year guidance for FY '22. We do not have a specific guidance for the quarter.

So I think that we've reached the end of questions for the webcast. Can I check -- for the conference call, we have actually a few more minutes. We can take more questions either on the conference call or the webcast. May I know if any of the analysts on the call would like to ask any more questions?

(Operator Instructions) There's a follow-up question from the line of Pang Vitt from Goldman Sachs.

Just a quick follow up here. Is there any current update on what's going on with the Airbnb warrant? Do we have any timeline or anything that we can foresee that should come into play? Any update on that would be very helpful.

Secondly also just wanted to have a better understanding. Last time in the third quarter results, you mentioned that you have won so far 16 new clients over the first 9 months of 2021, and now you mentioned that you have won 20 new clients. Does it mean that in the fourth quarter, there's 4 more clients that you won? Any update or particular more colors on who are the new clients that you recently acquired?

So the clients -- the Airbnb warrant discussion is ongoing. It's going well according to our plan. I can't provide a particular date, but we'll definitely bring it to your attention as soon as we know.

In terms of coming back to the new clients. We had clients who are interesting sectors in gaming in the last quarter. 2 clients in the gaming, 1 client in the tech sector as well, another 1 actually in the social space. And so it's still mostly new economy are the kind of clients that we attract, and we're able to close and we're excited about that for sure.

And just to be clear, all these clients, do we expect to serve them mainly in Southeast Asia or any of these are actually meant for the global mandate on the regions that you are going?.

Well, there is 1 in Korea. The other 2 are in Asia and then there's 1 that is going to be both in Asia and in Colombia. And actually the 1 in Korea is also in Spain as well for us. So it's a mix of geographies.

We also have another follow-up question from the line of KC Ong from CGS-CIMB.

Just wanted to confirm 2 numbers. First one, I think on the fintech vertical, you did emphasize that this is a segment that you're excited about for FY '22. May I just understand better how big is the revenue contribution currently you're seeing from fintech segment or fintech vertical in FY '21? And second question is can I understand better what's your revenue weighted customer retention rate for FY '21 as well?

I'll defer the fintech question to Mr. Chin. In the meantime, the other question is around the retention clients we did. The revenue weighted average was 129% versus -- in 2020, I think it was 128%. So very stable on that front, yes. Mr. Chin, on the fintech contribution in '21, right, is the question.

Yes, that's correct.

We also have a follow-up question from Varun Ahuja from Credit Suisse. Please go ahead.

So two questions. First, if you can tell us, for the fourth quarter and for the overall year, what has been the churn in the client base. So obviously, when you ended 2020, you were recalibrating your client base and more focusing on profitable ones. So is that exercise completed? What is the normal churn level on the client side?

Number 2, on new geographic expansion, are there further geography that you're looking to add? I remember I think you mentioned about Taiwan sometimes. So if that is on the line, any further expansion that you're looking at?

And given the geographies that you've entered, the contribution still remains very low, at 1%. So how should we think about it from a medium term perspective? What conversations are you having with clients?

So the client retention was, I think, the first question. So we were at 79% in 2021, and so that's where we are. On our new geos, yes, Taiwan is on our list of new countries. We have a new list as well for 2022. We're not ready to share that list yet, but we'll continue to increase our expansion in different geos. And then their contribution to revenue is going to take time. That's what we said before. It takes a few years, about 2 to 3 years. And I think I did mention before, we have 2 strategies, one where we do a strategic entry into a market to add to the network. And when we do this, we go in without a client. So it takes 2 to 3 years to build this in our revenue. But it's an investment into the future.

And then we have geographies that we set up very closely with our clients, and those start yielding revenue straight away. South Korea is an example of that. We're starting with 3 clients in South Korea, and we've already started last year. And so that's how we play it. So in our budget 2022, we have a bit of revenue contribution from new geos, but it's still very, very moderate at this point.

Okay. I think we just have time to squeeze in one very last question from the webcast. What's the best way to think about receivables? Why did it increase in '21? And what -- how do we think about EBITDA to free cash flow conversion? Maybe Mr. Chin, do you want to take that?

Yes. During the year-end of 2021, there was some increase, a bump-up in the receivables primarily due to a couple of the top clients that had some administrative challenges, hiccups in the billing process, culminating to large -- a slight backlog in the billings in the last quarter. Having said that, we have managed to get those backlog billings paid off by end of February. So there's a slight hiccup happening on that front.

On the EBITDA over cash flow basis, it's still looking healthy. So the -- it's tracking quite healthily on that front. We are still going through careful cash management in terms of our working capital as well as our overhead as well as our CapEx phasing in accordance with our internal planning of our capacities and business expansion.

Thanks, Mr. Chin. I think that's all the time we have on the call. Maybe we'll have Laurent give some closing remarks.

Well, thank you very much, everyone, for your support. And then we will see you next quarter. Thank you.

Thanks. Goodbye.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.