TELUS International (Cda) Inc. (TIXT) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to the Fifth Annual Meeting of the Shareholders of TELUS Digital. I'm Josh Blair, and I'm pleased to be your Chair for this meeting. As we look to ensure that we are making ourselves and our company as accessible as possible to all of our shareholders on an effective and efficient basis, we are again having you attend our annual meeting in a virtual format via a live webcast. This technology-enabled format allows all shareholders and appointed proxy holders from any location worldwide to attend, participate and vote at the meeting. Guests are also welcome to attend and listen to our meeting. Now I would like to formally introduce the people helping me conduct the meeting today. Jason Macdonnell is our acting Chief Executive Officer, Chief Operating Officer and President, Customer Experience; and Tobias Dengel is our President of TELUS Digital Solutions. Also helping me today is Michel Belec, our Chief Legal Officer. Michel will be acting as the Secretary of this meeting. As well, we have the fabulous Abi Sills with us, our General Counsel and Assistant Corporate Secretary. Abi will be acting as our moderator for the question period, which will immediately follow the completion of the formal items of business and termination of the meeting. Now before we begin, please read the cautionary statement on the screen. Today's meeting will contain forward-looking statements as is typical at these kinds of meetings. These are based on assumptions and subject to risks, including those described in our public filings. Before we proceed with the business of the meeting, let me turn the call over to Jason and Tobias, who each have a few remarks. Jason, over to you first.

Thank you, Josh, and good afternoon, everyone. 2024 presented both challenges and opportunities for TELUS Digital. Prolonged macroeconomic headwinds affected client spending, leading to a midyear revision of our company's outlook. In response, our renewed management team set a recovery strategy with 4 key priorities: further evolving our business capabilities, service offerings, tools and processes, delivering differentiated service quality by integrating technology and customer experience; developing our talent, including strengthening our team with AI industry skills and leadership and of course, driving efficiencies and optimizing our global footprint to invest in high-demand locations. This focused approach helped stabilize our performance in the second half of the year. We exited 2024 with a revenue base of $2.658 billion, and we are committed to delivering further improvements toward our ultimate goal of returning TELUS Digital to sustainable and meaningful growth. We also took an opportunity during this transition to rebrand to TELUS Digital. This new brand better reflects our core focus on the digital aspects of customer experience, our complementary service lines and supports our go-to-market strategy. While we continue to adjust an evolving market -- to an evolving market, our commitment to delivering reliable results continues in 2025 with a focus on investments to drive our growth recovery. We also continue to implement improvements to optimize our technology, team, services and geographic and customer diversity. Service quality excellence will always remain a cornerstone of our success. We are deploying targeted improvement plans to enhance our operational performance and always excel in better customer sentiment. Our goal is always to be ranked as the leader across all of our client accounts even when already exceeding targets. Our competitive positioning is directly linked to delivering the best customer experience, the best and positive differentiated experience across all benchmarks and for each client. And I'm incredibly proud of how our team works to deliver this positive differentiation each day. They are truly world-class. Where clients choose to consolidate partners, services or substitute legacy support with AI capabilities, we look to be the partner of choice at the forefront in driving this technology service change and leverage our relationship with clients to increase product intensity or grow in new locations or with new opportunities. With approximately 78,000 team members across 31 countries, we're well positioned to serve our clients through practical digital solutions, in customer experience management, trust, safety and security, IT operations and AI applications and development. Now I'll invite Tobias to expand on these capabilities and the progress we intend to make.

Thank you, Jason, and thank you, Josh. Good afternoon, everyone. Our focus on driving customer experience excellence through digital solutions is resonating strongly with our clients. At TELUS Digital, we've taken a holistic approach to digital transformation, focusing on the complete customer journey. This includes solutions where we have best-in-class expertise in helping clients attract, engage and retain customers through digital marketing and sales and development of customer-facing apps and websites and extends to our technology-led service solutions and CRM capabilities. There's a growing synergy between our digital and CX capabilities. We're seeing real results in 2 key areas: first, in digitizing our own operations; and second, in transforming our clients' customer experience delivery. Bringing our AI tooling to more than 20 existing accounts has already created added value for clients in the form of productivity improvement while driving further interest and further engagement and potential new business opportunities for TELUS Digital. Our CX strategy audits have become a powerful tool, helping clients identify high-value opportunities for their ongoing digital transformation, helping solidify our position as a trusted adviser and leading to additional opportunities. The market is experiencing a shift in how businesses approach customer experience and digital transformation. With our integrated expertise in both CX and digital solutions, combined with our data science and AI engineering capabilities, we're well positioned to support our clients in their entire journey. Our commitment to clients remains on delivering practical, measurable improvements in customer experience that drive real business value. Back to you, Jason.

Thank you, Tobias. It's important to note that we also remain committed to the TELUS Digital value of giving back to communities where we live and work. And our global team is at the heart of these contributions. In 2024, our global team surpassed more than 100,000 volunteer hours for the first time and over 26,000 of our team members participated in more than 457 events around the world. Our 5 TELUS Digital community boards also contributed $0.5 million to charitable projects, bringing our total to $5.6 million in funding to grassroots charitable organizations since 2011. Since 2007, we have positively impacted the lives of more than 1.6 million people around the world, building stronger communities and helping our fellow citizens in need through our large-scale volunteer events and charitable giving. The symbiotic relationship between TELUS Digital and the communities where we live and work remains an important differentiator for our company, helping us build and retain an engaged and capable team globally, and they are certainly a capable and credible team. On that note, I'll now pass it over to Michel to review today's agenda and outline some procedural matters. Michel, over to you.

Thank you, Jason and Tobias. Hello, everyone. As outlined in the agenda, in addition to tabling our financial statements, there are 3 matters that we will be voting on: The election of directors, the appointment of auditors and the amendments to the company's 2021 Omnibus long-term incentive plan, all as described in the management proxy circular. Once all matters have been voted on, we will announce our preliminary voting results, and the business of the meeting will officially come to a close. If you have any comments not directly related to the business of the meeting, please save them until after the meeting. At that time, we will have our question-and-answer session during which we'd be pleased to answer your other questions. Let us now turn to the meeting procedures. I'm pleased to advise that we have the necessary quorum. The preliminary scrutineers' report indicates that approximately 97.17% of eligible votes are represented at this meeting. I will add the final scrutineers' report to the minutes of the meeting when available. We have also received a declaration of mailing from Computershare, confirming that it sent the notice of today's meeting to all registered holders of TELUS Digital shares as well as a notice advising them how to view and download our management proxy circular. I'm tabling the declaration and will add it to the minutes of this meeting. Now let me turn things back to you, Josh.

Thank you, Michel. I declare this meeting to be properly constituted for the transaction of business. With the consent of the meeting, I appoint Stephen Bandola, representative of Computershare as the scrutineer for this meeting. I would now like to introduce you to the 10 Board members standing for reelection. All 10 nominees are attending this virtual meeting. However, before I do that, I would like to take a moment to express our gratitude to Tony Geheran, who is retiring from our Board of Directors effective as of the end of our meeting today. His dedicated service, wisdom and unwavering commitment have been instrumental in our organization's progression. The expertise and perspective he's brought to our boardroom discussions have helped shape our strategic direction and as the Chair of our Governance and Nominating Committee, strengthen our governance practices. On behalf of the entire organization, thank you, Tony, for your years of service and the lasting impact you've made. We wish you the very best in all of your future endeavors. Now let me turn to our 10 nominees. I am honored to serve as a member and Lead Director of the TELUS Digital Board. Our other nominees are Darren Entwistle, Jeffrey Puritt, Madhuri Andrews, Olin Anton, Navin Arora, Doug French, Sue Paish, Carolyn Slaski and Sandra Stuart. Each nominee's biographical information can be found in our management proxy circular. I'm pleased to confirm following the meeting and with the support of your Board of Directors and subject to our reelection, Darren has agreed to serve again as our Chair of the Board. Jeff will serve as Executive Vice Chair, and I will serve again as Lead Director. As was the case last year and despite the fact that he is entitled to compensation, Darren has again requested that both the company and TELUS not provide him with any compensation for his service as a member nor as Chair of the Board should he be reelected. I would also like to note that members of our executive team are attending our virtual meeting today. Clearly, and day in and day out, they provide the leadership and commitment that drive the success of our company. And on behalf of the Board, I thank each of you. Now let's proceed with those matters that require a vote at this meeting. Michel, would you explain the voting procedure that shareholders will be following?

Will do. Thank you, Josh. However, before we discuss the voting procedure, I'd like to table TELUS Digital's audited annual financial statements for the year ended December 31, 2024, which are included in the 2024 annual report. These were made available to shareholders in February. Additional copies are available by sending an e-mail request to our Investor Relations department at [email protected]. Now back to the voting procedure. We'll be voting on 3 matters at the meeting today. Voting on all matters will be conducted by an online poll, which I'll explain shortly. Let me first explain some of the other basic features of our virtual meeting platform and how you can vote at our meeting. When you're logged in today, you should see the information screen displayed. Here, you can view information about TELUS Digital. And if you're logged in as a registered shareholder or a proxy holder, you can use this screen to ask questions that are directly related to the business of the meeting. To see our slide presentation while you're listening to the webcast, just click the broadcast icon or the arrow. We're using the Lumi Virtual Meeting platform for today's meeting. This platform allows for online voting and only registered shareholders or validly appointed proxy holders may vote. We've asked Nicole Gutierrez, a shareholder, to make motions today, and this is just intended to make the meeting flow more smoothly. When the Chair declares the poll open, registered shareholders and validly appointed proxy holders will see a voting icon on their screen and the resolution wording will be displayed. To vote, just select one of the voting options. Your response will be highlighted and a confirmation message will appear to show that your vote has been received. To change your vote, simply select the other voting option. And if you'd like to cancel your vote, just press cancel. In order for your vote to be properly recorded, it's important that you remain connected to the Internet at all times. If you lose connectivity, your vote may not be recorded. Josh will open the poll on all 3 items of business at the same time. Again, those 3 items are the election of the directors, the appointment of our auditors and the amendments to the company's 2021 Omnibus long-term incentive plan. This will give you time, ample time to vote. He'll remind you of your choices for each item. And after the last item of business, he'll provide a reminder for you to vote if you have not already done so, and then we'll close the poll. Now let me explain the procedure for asking questions. Again, only registered shareholders or validly appointed proxy holders are permitted to ask questions. Questions directly related to the business of the meeting should be asked during the meeting. Any other questions are welcome, but should be held until the question period that will immediately follow the completion of the formal items of business and termination of the meeting. Now when you wish to ask a question, please select the messaging tab, type in your question within the chat box at the top of the messaging screen. Click the arrow button to submit and you should receive a confirmation that your message has been received. If you've got a question related to the resolution that is being discussed, please submit it at the time the resolution is being presented. As mentioned, if you have a general question, it's not related to the resolutions, please wait until after the business of the meeting is complete to submit your question. Abi Sills will monitor all questions submitted and will relay them to Josh. If there are similar questions on the same topic, Abi may pick one question or summarize the nature of the questions to facilitate the smooth operation of the meeting. Any questions that are personal in nature or related to customer service will be directed to a representative who will be in touch with you by e-mail after the meeting. Also, any questions pertinent to our meeting that cannot be answered today due to time constraints will be answered and posted on telusdigital.com/investors. A transcript of the questions and answers will be available on the Investor Relations section of our website as soon as practical after today's meeting and will remain online for at least 1 week. Once shareholders and proxy holders have had a reasonable opportunity to express their views, both for and against the matter, in the interest of keeping to our schedule, Josh may end the discussion even if not everyone has had a chance to speak. All right. We are now going to turn to the first item of business. Over to you, Josh.

Thanks, Michel. I now open the polls for all 3 items of business. Please feel free to vote while I am speaking on each of the items. The first voting item is the election of directors for the upcoming year. The Board has set the number of directors to be elected at 10 as permitted by the articles of the company since Tony Geheran, one of our directors, will be retiring from our Board following the meeting. Notwithstanding that our shareholders' agreement with our parent company specifies that our Board should be comprised of 11 directors, TELUS has consented to 10 nominees being proposed for election. The nominees I introduced earlier in this meeting represent a cross-section of diverse experience and background. They have all agreed, if elected at today's meeting, to help direct the future of TELUS Digital for the next year. Further to our advanced notice requirements for director nominations, Michel has advised me that no additional nominations for election as directors were received. May we please have a motion for the nomination of these 10 individuals?

Mr. Chair, my name is Nicole Gutierrez, and I'm a registered shareholder. I move that the 10 individuals identified as nominees in the management proxy circular be elected as directors of the company to hold office for the ensuing year.

Thank you, Nicole. Michel, are there any questions on the election of directors?

Josh, there are no questions on this matter.

Thank you. For the election of directors, you will see the names of all 10 nominees. Please scroll down to ensure you have voted on all 10 nominees. To cast your vote for a nominee, please select for. To withhold your vote from a nominee, please select withhold. The next item of business to be voted on is the appointment of auditors for the ensuing year. The recommendation to appoint Deloitte LLP was made by the Audit Committee of your Board and supported by the Board. May I please have a motion for the appointment of the auditors?

I move that Deloitte LLP Chartered Professional Accountants be appointed as the auditors of the company for the ensuing year at a remuneration to be fixed by the directors.

Thank you, Nicole. Michel, are there any questions on the appointment of auditors?

There are no questions on this matter, Josh.

Thank you, Michel. On the motion to appoint the auditors, to cast your vote for the auditor's appointment, please select for. To withhold your vote, please select withhold. The next item of business to be voted on is the amendments to the 2021 Omnibus long-term incentive plan as outlined in the management proxy circular. May I please have a motion on these amendments?

I move to approve the amendments to the 2021 Omnibus long-term incentive plan as outlined in the management proxy circular.

Thank you, Nicole. Michel, are there any questions on the amendments?

There are no questions on this matter, Josh.

Thank you. On the motion to approve the amendments to the company's 2021 Omnibus Long-term Incentive Plan to cast your vote for the approval of the amendments, please select for. To vote against, please select against. So different than withhold this time, if you want to vote against, please select against. And of course, to vote for, please select for. We will now be continuing with the voting. If you have not already done so, please vote on all 3 items of business. I will give you some additional time to finalize your vote selections. [Voting]

All right. I trust everyone has now voted. So I declare the poll closed on all items of business. Thank you. Through the magic of technology, our scrutineer has tabulated the results, and we can now confirm the results. On the first motion, the election of directors, the 10 nominees listed in the management proxy circular are elected, and I so declare them elected. On the second motion, the appointment of auditors, Deloitte LLP received a significant majority of votes for their appointment and so have been appointed as the company's auditors at a remuneration to be fixed by the directors, and I so declare them appointed. On the third motion, the approval of the amendments to the company's 2021 Omnibus long-term incentive plan, this motion received significantly in excess of 2/3 of the vote for the amendments and so have been approved, and I so declare them approved. A copy of the scrutineer's report with the tabulated results will be available upon request after the meeting. The official results of the meeting will be available on our profile on sedarplus.ca and sec.gov and on telusdigital.com following today's meeting. Now that we have completed the formal items of business for this meeting, I propose that we terminate the meeting and move on to the question-and-answer session. With the consent of the meeting, I declare the meeting terminated. This officially concludes the meeting. At this time, I invite shareholders and proxy holders to submit their questions online, as Michel laid out. You can select the messaging tab and then type your question or comment in the chat box at the top of your messaging screen. To ensure there is adequate time for your questions, we will continue this session for approximately 20 minutes or until there are no further questions, whichever comes first. Questions pertinent to the meeting that cannot be answered at this time will be answered and posted on telusdigital.com/investors and will be available for 1 week following posting. We do not intend to address any questions or statements that are not relevant to the business or affairs of the company or the business of the meeting, which relate to material nonpublic information of the company or those that are related to personal matters or are not otherwise appropriate in the context of this meeting. Abi, can we have the first question, please?

Thanks, Josh. It appears that there are no questions for us to address today.

Okay. Thank you, Abi. A reminder to those on the call that shareholders are always welcome to ask questions by e-mailing our Investor Relations team at [email protected], again, [email protected]. We appreciate your attention and attendance at TELUS Digital's 2025 Annual General Meeting. In closing, on behalf of the TELUS Digital Board of Directors and our executive leadership team, we extend our deep appreciation to our shareholders for your continued support. As management outlined in their earlier remarks today, there is a focused recovery strategy that we believe has begun to stabilize TELUS Digital's performance. The Board is actively engaged in overseeing our return to sustainable and meaningful growth, ensuring that management's strategic priorities align with long-term value creation for all stakeholders. We thank you for your continued trust and support as we work towards our goal of being the partner of choice for global and innovative brands, crafting differentiated experiences and creating future-focused digital transformations that unlock innovation, effectiveness and value for our customers, clients, team members and shareholders. Thank you all for your attention today. Goodbye and our best regards.