PhillipCapital analyst Jonathan Woo has kept his “buy” call on TDCX as the NYSE-listed company's revenue for the 1QFY2022 ended March stood within expectations.
On May 25, Singapore-based TDCX, which provides customer experience solutions to technology companies, posted revenue of $152.4 million for the 1QFY2022, up 26.9% y-o-y.
The higher revenue was lifted by increases in TDCX’s Omnichannel CX and sales and digital marketing segments. The figure was offset by a dip in revenue for its content moderation segment.
To Woo, TDCX’s y-o-y revenue growth stood slightly higher than his estimated 25%, with sales and digital marketing the main growth driver.
The analyst says he expects this trend to continue for the FY2022 as more companies turn to outsourced specialised services like TDCX to maximize their marketing budgets.
The company also saw 10 new client additions during the quarter, which was more than double that of the corresponding quarter in the year before.
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While TDCX’s revenue stood in line with Woo’s estimates at 22% of his FY2022 forecast, its PATMI, at $22.2 million, stood below expectations at 17% of Woo’s full-year estimates.
The 1QFY2022 PATMI, which fell 0.6% y-o-y, declined due to higher employee benefits expense and tax rate.
On the back of increasing uncertainties in the macroeconomic environment and weakness, TDCX has lowered its revenue guidance for the FY2022 by more than 5% to $650 million - $675 million.
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“The company cited a generally weaker and uncertain macroeconomic environment, and slower-than-expected expansion of some of its clients as reasons for this revised guidance,” says Woo in his May 27 report.
Looking ahead, Woo is expecting TDCX’s revenue from its content moderation segment to remain “fairly stable”.
He adds that he sees the company’s Omnichannel CX being the most affected segment from an overall slowdown in business activity.
However, he sees its sales and digital marketing segment to continue expanding as demand for highly specialised services are expected increase due to a larger emphasis placed by clients on maximizing their marketing budgets.
Overall, Woo remains “optimistic” about TDCX’s ability to add new clients and increase overall client count through organic growth.
Despite his positive outlook, Woo has lowered his FY2022 revenue estimates by 5% to $665 million on account of slower overall growth.
He has also lowered his PATMI estimates by 33% to $88 million due to higher employee benefits as a result of an $8 million increase in equity share payments.
On top of it, Woo has lowered his target price on the counter to US$15.76 ($21.57) from US$22 previously.
Shares in TDCX closed 29 US cents higher or 2.66% up at US$11.18 as at May 27 (US time).
