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TDCX Inc. (TDCX) Q3 2021 Earnings Call Transcript

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TDCX earnings call for the period ending September 30, 2021.

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TDCX Inc. (TDCX -1.27%)
Q3 2021 Earnings Call
Nov 24, 2021, 7:30 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Ladies and gentlemen, thank you for standing by. I'm Stuart, your course call operator. Welcome, and thank you for joining the TDCX, Inc. third quarter 2021 results conference call.

[Operator instructions] I would now like to turn the call over to management. Please go ahead.

Jason Lim -- Investor Relations

Hello, everyone, and welcome to TDCX 2021 third quarter earnings conference call. My name is Jason Lim from 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'd 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 a discussion of certain non-GAAP financial measures such as EBITDA and EBITDA margins.

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For a reconciliation of the non-GAAP financial measures to the closers GAAP measures, please refer to our press release on the Form 6-K, which are available on our IR website. Lastly, we have provided a convenient translation for the translations of Singapore dollar into the U.S. dollar. This was done at a rate of $1 to SGD 1.3611, this should not be construed as representations that the Singapore dollar amounts could be converted into the $and 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.

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

Thank you, Jason. Hello, everyone, and thank you for joining us today. It is my absolute pleasure to welcome you to our first-ever results call as a public company. Before we begin, I'd like to take a moment to thank all our clients, partners, and investors for your support and for being part of this incredible journey toward our successful IPO in October.

What we've achieved would not have been possible with our amazing team of over 14,000 people who have helped deliver steady results over the past years. And in particular, for this set of results, which we are reporting on. Let me now go through some highlights of our Q3 performance. We are very pleased to announce strong revenue and earnings growth for the quarter.

So a strong Q3 revenue rose 41% year on year to $109 million, mostly contributed by large established clients in digital media and travel, in particular, travel came back in a good way for us. It is still not at 2019 levels, though. We also continue to ramp up in exciting verticals such as fintech and gaming. Revenue rose across all the geographies we operate in, two of our largest geographies, Malaysia and the Philippines continue to deliver very strong growth, while newer footprints like Japan and China, grew in excess of 50%, and Spain doubled year on year.

During the quarter, we achieved a new milestone with maiden revenue contributions from Latin America as we commence our first campaign in Colombia. I'm also excited by our performance in sales and digital marketing where revenue rose 93%. And our largest plants in this space significantly expanded their volumes with us year on year. Revenue from a relatively new professional social media clients in this segment rose four parts.

We're focused on quality growth, higher margins by staying true to our strategy of focusing on new economy clients and our strength in Southeast Asia, we continue to achieve quality growth and improve upon our margins. EBITDA rose 51% to $39 million as EBITDA margins rose to 35.5%. Revenue from new economy clients continued to increase and now stands at 93.4% of total revenue in Q3. New logos, we continue to gain traction with new clients.

Since the start of 2021, we have signed 16 new logos, including several of the fast-growing technology companies in Asia. Our new logos also included our first clients in the food delivery and crypto verticals. Since we have signed a crypto client we've deepened our relationship with them and they've started to contribute meaningfully to revenue. Operationally, we delivered on our headcount increase and continued to expand as total headcount rose 34% to over 14,100 as at 30th of September 2021.

We believe that this stellar set of results puts us on the fun footing moving forward as we start this new chapter as a listed entity. Mr. Chin will share more details on the financials later. But for the benefit of the new investors and analysts joining us, let me quickly provide an overview of our business before I hand it over to our CFO.

Our business comprises three key service offerings. Number one, omnichannel CX solutions; number two, sales and digital marketing services; and number three, content monitoring and moderation services for omnichannel customer experience. We help our clients manage relationships with their customers by providing complex customer experience solutions, such as after-sale service and customer support across multiple languages and multiple channels. One simple example would be helping a foreign English-speaking visitor resolve urgent accommodation issues with the Japanese was a bilingual people who is well-trained to handle complex level issues.

For sales and digital marketing services, we help small, medium enterprises plan and execute their digital advertising campaigns on the world's leading social media and search engine platforms. This requires specialized personnel well versed in the signs of ad optimization on such digital platforms. Lastly, our content monitoring and moderation services help our clients create a safe and secure online environment for social media platforms by providing the human touch to content monitoring. So the services made up 62%, 22%, and 14% of our Q3 revenues, respectively.

While CX solutions have historically represented the majority of our business over time, sales and digital marketing as well as content monitoring and moderation services have both seen a greater share of the revenue mix. This increased diversification in our business mix represents our efforts in continually adapting to our customers' changing business needs and our ability to go with our customers at scale. Now in terms of the addressable market, we operate in a very exciting space, where we see increasing demand in CX services, especially in Southeast Asia from new economy clients. According to Frost and Sullivan, the Southeast Asia CX market size stood at $10 billion in 2020 and is expected to grow to $14 billion by 2025.

Within this space, the new economy segment alone is expected to rise even faster at the compounded annual growth rate or CAGR of 19%. And from a global context, the market is expected to rise from 80 billion to $100 billion over the same period with the new economy segment growing at a CAGR of 17%. So we are strongly positioned to capture the market from these strengths. We believe that we have the first-mover advantage in Southeast Asia with a unique footprint.

And we plan to continue to carefully expand our global footprint while keeping a very firm focus on our center of gravity in Asia. We have an attractive client base that consists of some of the largest and most innovative brands in their respective industries, such as social media and travel and hospitality. Our relationships with our blue-chip new economy clients offer significant opportunities, and we are well-positioned to ride that growth. We have an international footprint in 10 geographies across Asia, Europe, and Latin America.

This provides us with access to a broad talent pool and equips us with multilingual capabilities to serve a global customer base, including English and key Asian languages, such as Mandarine, Thai, Korean, Malay, Vietnamese, Japanese as well as Asian unicorn languages such as Bhutanese and Sinhalese. In recent years, we have opened new offices and to on new client mandates in different geographies, representing our global ambitions and execution. As you can see in the pie chart, over 90% of our Q3 revenues come from our core businesses in Southeast Asia, while our relatively new geographies in Japan and China are starting to contribute meaningfully. We have also expanded into Colombia, India, and Romania in the past two years, and we are ramping up our business there.

Let me round up with TDCX key competitive advantages. We have, first of all, a strong pan Asia footprint, and our leadership position in key Southeast Asian markets helps drive our competitive edge. We run highly successful offshore operations, which drives cost benefits and higher margins. We focus on market-leading global leaders in the new economy sectors.

To meet the demands of high-growth digital clients we are designed to be agile and flexible and scalable, in line with our clients' rapid growth. I emphasis on supporting complex issues is why more than 60% of our employees have college or university degrees and the quality of our employees is a key differentiator. Next, we are domain experts with a deep understanding of high-growth and complex verticals, such as digital advertising, fintech, gaming. Finally, we augment our incredibly talented people with proprietary technology that drives productivity and accuracy of our service delivery.

All the above leads to better employee outcomes, including a lower attrition rate compared to the industry average and high employee satisfaction scores. Our corporate culture is designed to foster a work environment that is fully aligned with our tech clients. I would like now to spend a bit of time on some upcoming trends as well as reiterating the key tenets of our strategy. As economies reopen, we are progressively getting ready for return to the office and for the great reshuffle as it is called.

Our teams are reviewing protocols right now as well as people trends, and we will be leveraging several of the solutions we have available. Firstly, a key theme will be flexibility. We will implement hybrid work arrangements for both office collaboration and work from home. Secondly, keeping in touch with our people a lot more frequently, treat them like our customers and empower them, supersize engagements, and bring mental health support front and center.

Thirdly, rewarding our people with smart compensation and benefits and even greater focus on performance-based compensation and real-world results versus time spent. Lastly, reinvent training, less classroom, more self paced and online, recognize and reward people who are invested in themselves by using our training tools and options. In essence, it's all about culture, culture, culture. It's so easy to lose our culture with the reduced personal time in office so this will need renewed focus on energy.

Now from a strategic point of view, our plans have not changed. We want to, one, expand geographies. We are opening in new offices in North Asia and looking at other locations in Asia. The approach to work from home has opened new possibilities with lighter in-country satellite setups for us; number two, invest in people, as I mentioned earlier, attracting, retaining the best will be central to our success; number three, lean and effective continue to digitalize, HR, finance, anticipate inflation; number four, acquisitions, building pipelines but staying true to our DNA principles.

We'll be very selective when we look for acquisition. Let me now hand it over to Mr. Chin to cover the financials.

Chin Tze Neng -- Chief Financial Officer

Thank you, Laurent. Let me first quickly share some details on our historical financial performance before we dive into details of Q3 2021 over the next few slides. On the left, we have the revenue performance, in the middle, our EBITDA numbers, and on the right net profit. As you can see, our business has achieved consistently high growth with 55% revenue CAGR from f\FY 2018 to FY 2020, and 61% EBITDA CAGR from FY 2018 to FY 2020.

Net profit CAGR was 50% over the same period. This was coupled with a track record of consistently high EBITDA margins rising to 32.9% in FY '20, up from 30.6% in FY '18. For the nine months ended 30th September 2021, we recorded $294 million in revenue, $96 million EBITDA, and $55 million net profit. These numbers attest to the successful execution of our business strategies and competitive positioning, where we are focused on the following principles: focus on high-growth CX segment, strong exposure to new economy clients, focus on complex offerings, regionalization of operations underpinned by multilingual hubs, and 90% of our agents based in Southeast Asia.

Let me now share some details on our Q3 financial performance. Revenue rose 41.3% to $109.3 million, driven by broad-based growth across all of our three business segments and across all geographies. In the next slide, I will share the breakdown by service type and geography. EBITDA rose 51.1% to $38.8 million as we expanded margins from 33.3% to 35.5% on the back of improved staff productivity and continued focus on careful and disciplined cost management.

Net profit for the period rose 46.7% to $22.2 million that reflected some incremental tax charges in Q3. On this slide, we will share more details on our Q3 revenue performance by the services we offer and by the geographies in which we operate. Revenue from OCX Solutions rose 37.9% to $68.2 million, due mainly to higher business volumes driven by expansion of existing campaigns as well as the ramp-up of new projects that commenced during the first half of 2021. In addition, business volumes benefited from the nascent recovery in the travel and hospitality sector from the impact of COVID-19.

Revenues from sales and digital marketing services rose strongly by 93.4% to $23.7 million due to the volume expansion of existing campaigns for our social media clients and search engine clients across our delivery sites in Asia. Revenues from content monitoring and moderation services increased by 7.1% to $15.6 million with high contribution from a social media client. In terms of revenue contribution by key geographies, Singapore rose 32% to $28.7 million. Philippines rose 45% to $28.7 million.

Malaysia rose 40% to $28.2 million. Thailand rose 35% to $30.3 million. Japan rose 66% to $6.3 million, and China rose 73% to $2.4 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 the three months ended 30th September 2021, operating costs as a percentage of revenue improved to 74%, compared to 77.2% for the same period last year. Being a people-centric business, employee benefits expense makes up the largest portion of our total operating cost base. Our employee benefit expenses increased by 37.5% to $63.6 million for Q3 in tandem with business volume expansion.

The average number of employees in Q3 rose by 44% compared to the same period of 2020. On a group staff productivity basis, revenue per employee rose by 5%, while employee benefits per employee rose by 3%, demonstrating that we have improved productivity while managing wage inflation. Our depreciation expense increased by 22.2% to $7.6 billion for Q3, primarily due to depreciation on right off news assets, new renovations, and capital expenditure in relation to office expansion for business growth. All other expenses, which include items such as recruitment, transport, and telecommunication expenses rose 34.3% to $9.6 million.

Aggregating the above movements, total operating expenses rose by 35.5% to $80.9 million, which is lower than our top-line growth of 41.3%. Lastly, let me now move to the financial outlook. We expect full financial year 2021 revenues to be in the range of SGD 549 million to SGD 553 million. This translates to $403 to $406 million, assuming an exchange rate of $1 to SGD 1.3611.

At the midpoint of the range, revenue growth is expected to be 26.7% compared to 2020. We expect full year 2021 EBITDA margins to be approximately 31.7% to 32.2%. This excludes expenses associated with the performance share plan, which will be recognized from Q4 2021 onwards. The PSP serves to incentivize and retain our senior management team and top talent as well as to ensure alignment of interest with investors in creating shareholder value.

We will start to incur expenses related to our listing and ongoing life as a publicly listed company. Lastly, the margin guidance includes our expectations to continue to invest in business development efforts, technology, and innovation to drive growth in the long term. With that, we end our presentation. I'll now hand it back to Laurent for some closing remarks.

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

Thank you, Mr. Chin. Finally, a big thank you again to our incredible employees and my incredible management team, how collectively they are maneuvering around the obstacles created by the pandemic, particularly in Asia exemplary. I also wanted to touch a bit on our corporate social responsibility initiatives, be greener is a program for all of us to care for the environment, and TDCX this year was able to offset 38,770 tons of carbon dioxide, be happier, which is about our employee are being, happy to report and we achieve an employee satisfaction score of 89%, even as the pandemic was creating have everywhere in Asia.

And finally, the third pillar of our corporate social responsibility is be kinder, which is our community outreach program, and which is about to be redesigned as a central entity to uplift communities in Asia through digital environment. Thank you, everyone, for listening. And let's now move to Q&A.

Questions & Answers:


[Operator instructions] First question comes from the line of Pang Vitt from Goldman Sachs. Please go ahead.

Pang Vittayaamnuaykoon

Hi, everyone. Thank you very much for the time and congratulations for the great set of results. A couple of questions from me. Maybe we can go one by one.

Firstly, I just want to understand the growth trend, especially as you mentioned that there is still a certain impact from the slowdown in travel and hospitality segment, if we were to include the travel and hospitality segment, what would the growth rate look like in third quarter on a year-on-year basis? And similarly to that, could you also comment whether the growth from the extension of the current client is higher or the new win of the new client is coming in at a higher rate? That's question number one.

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

Great. Thank you, Pang. So on the travel, we're still deeply affected by the travel impact. If you look at Q3 alone, our whole travel and hospitality business is still down by 22% Q on Q.

If you look at it from the last trailing nine months, we're still minus -- yeah, around the same number in the 20% zone. So it's still a significant impact for us in terms of travel and hospitality. But because we have other businesses that have picked up in fintech, in gaming, and in digital advertising, we're able to compensate that pretty nicely. And now in terms of the growth coming from the clients still, the majority of our growth is still coming from our larger clients.

But other businesses like fintech grew by 62.5%. If I include Crypto, for example, in our fintech business. Gaming grew 86%. We had a new social media client that grew by 300%.

So there's a growth almost everywhere in all our client lines. But the two larger clients seem to be contributing to the bigger part of the growth for the business.

Pang Vittayaamnuaykoon

All right. Thank you very much. Maybe also on since we touched upon the growth rate, right? Just want to understand the guidance that you provide for the full year a bit better. Given the guidance that you provide, it does assume that if you look at the fourth quarter revenue, the year-on-year growth rate will come down from what you actually achieved in third quarter.

Is there any specific trend that you serve that could just for the slowdown? And could you also help provide some framework on what should we think about growth going forward into next year as well?

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

OK. So Q4 this year, one first thing you need to take into account. First of all, we have a very strong Q3, to begin with. Second, Q4 last year was unusually high, so it was almost 20% more than Q3, which is -- it was an unusual year.

It was 2020. We were in still big time in the pandemic. So we are doing -- we're going to do a great Q4. It's just that the base of comparison is much higher if you look at '20 so normally, Q4 is not as strong of all the quarters in terms of seasonality.

So that explains this, to begin with. But still, it will be a very decent growth compared to Q4 2020. Now forward-looking -- the way we look at growth moving into 2022. We're very much guided by the statistics of the markets we operate in.

And we know that specifically in Southeast Asia, we see growth at 19%. But that's the statistics we look at and we rely upon. We need to be doing more than that, and we've demonstrated in the past that we were able to beat those numbers pretty comfortably. Now we're not ready to give guidance for next year.

We will do that in the quarter four results announcement.

Pang Vittayaamnuaykoon

Sure. Thank you very much. I'm not sure whether is that still time to ask more questions or maybe I can go back to the Q1 as well?

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

You can monopolize the time or to you, Pang.

Pang Vittayaamnuaykoon

Sure, sure, sure. Maybe I also wanted to understand, right, the growth, if you could share in terms of country by country, if there's any color on like which countries you see a very interesting trend in especially Otis, you mentioned that there's growth in countries like Philippines and Malaysia that seem to be doing better as well. If there's any color on that would be helpful. And further on that, as you expand it into more geographies, whether it's Colombia, Spain, India, Romania if you can also share with us how the progress and traction being in this new geography as well.

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

Absolutely. So absolutely, Malaysia and the Philippines are powerhouses. The -- from Malaysia grew by 40% and the Philippines by 45%. So it's quite solid growth.

But other markets grew as well pretty well, Japan by 66%. And Spain, which is starting from a small base by 193%. But really, we're placing a lot of expectations around Malaysia and the Philippines as they are the central keys to our business. Now moving forward in terms of new countries, as you know, we pursue an organic growth strategy.

We're pursuing quality growth. So it will take time for them to grow. So usually, it takes us about three years to get to decent levels, which we're starting to enjoy with Spain. As Colombia, we just opened at the beginning of this year in the middle of the pandemic, and then we just opened India as well in the middle of the pandemic, but we've signed up our first client in India.

We sign up our first clients in Colombia. We are opening Romania as well. And we did in a small way as a support to our Barcelona operation. And so the global expansion will take a bit of time to grow.

But so we're relying a lot of our growth on our existing footprint in Asia Pacific for the moment.

Pang Vittayaamnuaykoon

Sure. Thank you very much. Maybe --

Jason Lim -- Investor Relations

Thanks, Pang. I think we have about six questions online. So maybe we'll just take the six questions first before we come back to you if we have more time.

Pang Vittayaamnuaykoon

All right. Thank you.

Jason Lim -- Investor Relations

OK. Thank you.

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

Thank you, sorry.

Jason Lim -- Investor Relations

So I'll just read out about some of the questions that we have. I think we can combine two questions from Xing, Janco Partners and KC from CIMB. It's about which inflation. Can you talk about the impact of inflation on wages and our cost structure? And what is the -- does the MSA allow for which inflation to be passed on to your clients? And if so, how do we put it?

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

All right. So I'll share this one with Mr. Chin. So far, we've been able to cushion wage inflation pretty well.

And it's a collaboration with our clients to begin with. So our clients are very involved in the work we do, and we're always watching labor competition, attrition, competencies. And so we work together to adapt our compensation and benefits strategies, together with our clients' pricing. We're not always able to offset wage inflation on our clients.

But we do work together, and we track a number where we look at our revenue growth versus our wage inflation, and Mr. Chin will talk more about this. At this point, it's positive. So it's definitely on the list of things we do.

Our contracts vary in terms and in the duration and in terms of whether we can have a COLA, cost of living adjustments? Or do we need to wait for the contract to be renewed to ask for a wage increase or price increase? But in some cases, we work with clients directly even doing contract time to decide on changing the pricing to give us the possibility to attract the right competent labor. So I hope that answers the question. Mr. Chin, if you will give a bit of color on how our wages have inflated versus our revenue, that would be useful.

Chin Tze Neng -- Chief Financial Officer

Yes, Laurent. Revenue per agent has increased quarter to quarter by 5%. And on the flip side, which employs benefit expense per employee on average, blended, has increased by 3%. So our supplement Lance explanation by saying that while we try to pass on dollar for dollar of wage inflation to our clients.

We also work on enhancing and improving our productivity to buffer against such wage inflation in terms of using better tools, automation, and reorganize our support team. And the management team on all those programs that are going through this wage inflation net issues. So I would say we historically have been able to buffer this rig inflation pretty closely. Well, the remaining period in coming months and years, the inflation is a pretty common topic exposed by many companies and employers.

We still will be watching closely and reorganized our revisit and reorganized our compensation package to be able to meet the -- our delivery both to our clients at the same time to manage the margins closely. Thank you.

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

Thank you, Mr. Chin.

Jason Lim -- Investor Relations

OK. Thanks, Mr. Chin. So we have the next question online from a couple of investors, again, more or less the same.

We have grown the 13% Q on Q in the current quarter, but the implied guidance is only two to 3% Q on Q into the fourth quarter. Any reason for that change the different growth rates in Q4 revenue?

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

No. I think we're really tracking according to plan. This is very much what we had forecast Q4 that we got. As I mentioned earlier, the contrast between Q4 2020 and then the strong Q3 that we were anticipating.

So it's not unexpected. It's very much in line with our forecast. And I think there was a question earlier on about the impact of travel on our business. And actually, I may not have answered it properly.

But our growth, excluding travel, would have been 43%. So that's to give you a sense of the overall impact of trouble on the business.

Jason Lim -- Investor Relations

Sorry, just to clarify the result for the nine months?

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

Yeah, I think the first 9 months, yeah.

Jason Lim -- Investor Relations

So I think we now have a question on the conference call from Varun. Stuart, can we move back to having the question from Baron on the call, please.


Sure, Jason. We have a question from the line of Varun Ahuja from Credit Suisse. Please go ahead.

Varun Ahuja -- Credit Suisse -- Analyst

Yeah. Hi. Congrats to the management for a strong quarter. I've got a few questions.

Lauren, you have seen very strong traction in the appliance metric, so you've added 16 clients. I would love to hear the breakup where which verticals and any of the clients, obviously, without naming, you will not see a lot more excitement from your side. Plus, how long do you think these clients will take to ramp up, right? Generally, client addition is a strong metric we should focus on because it leads to future growth potential. So how long does it take in your experience for clients to start meaningfully ramping up? And on the clients, again, side, the last question, I want to understand, over the last few years, you have been looking at your client base and kind of restructuring some of those clients who are not paying, how you over that phase now? Should we expect continued growth in clients and kind of churning out some of the low accounts? So that is on the client side? I can come back for the other portion.

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

Thank you, Varun. So yes, I'm quite excited about the new logos that we've brought in, to begin with in terms of acceleration of the pace. So I think first nine months of last year, we had brought in about nine new logos this year, 16. So there is definitely an acceleration here.

Out of the 16 logos we brought in as well if you wanted a bit of color. Nine of them are from Asia, which is an interesting trend. Historically, a lot of our logos are companies from the West, North America primarily, but we're starting to see the emergence of Asian companies, which is exciting. I'm excited about the businesses we brought in, in terms of crypto, which is starting to yield pretty fast.

And then we brought in also food and delivery, which is an interesting new sector for us that we didn't have. We brought in an interesting business in gaming as well, two of them in gaming, one Asian and one European. So that's going to be super interesting. And one in travel as well, social media as well.

So really interesting new economy sectors primarily. Now how long does it take for these businesses to really yield? It takes time. It takes two or three years for them to ramp to the kind of revenues we enjoy with the bigger clients that we have at this point. But they're going to be yielding as soon as next year.

That's a small base, and then they will grow in the next two to three years.

Varun Ahuja -- Credit Suisse -- Analyst

Sure. Also, if you can give more color on the food delivery plan? Is it Asia based? Or is it a European or American base? Any color?

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

There are both European-based western baselines.

Varun Ahuja -- Credit Suisse -- Analyst

OK. Thanks. Laurent, now that post the IPO, there is a cash on the balance sheet, you're pretty comfortable. And clearly, there are certain product gaps may be in terms of the capabilities or in terms of region? How are you thinking about the M&A path angle toward it? Is there any time line that you have in mind? How are you thinking about the M&A that would be helpful?

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

Yep. Great question, Varun. So we want to be very selective in terms of our M&A. We're starting to build our pipeline.

We want to be strategic about it. We know also that M&A can be opportunistic. So one needs to be patient, but we will be looking at either the possibility of bringing complementary companies who are accretive to our profit. So to begin with first criteria, they need to be profitable.

Second, they need to be adding to either vertical we don't already have or geographies we don't already have, so really complementary to our business. And then they need to be, in the sense, profitable but also having a similar culture of DNA that we have. So that makes quite a number of criteria. And that's why I'm saying it's going to be beyond strategic is going to be also opportunistic.

So our team is working on this. But at least now we have the means and the capabilities to complete those deals. And there are quite a few. The market is sufficiently fragmented worldwide and in our region as well in some geographies to have enough opportunities for us to pass.

So there will be some possibilities there.

Varun Ahuja -- Credit Suisse -- Analyst

Sure. Last question for me. Laurent, you mentioned on a nine months basis, you've grown 43%.

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

Varun, we lost you.

Jason Lim -- Investor Relations

Varun, we lost you. You're breaking up.

Varun Ahuja -- Credit Suisse -- Analyst

-- but we have also added new logos. So should we expect on a Y-o-Y basis, a much stronger number than the 19% industry number that you're indicating based on the fracture that you've seen on the business?

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

I think, Varun, what you asked is that we grew 43%. If I exclude travel and hospitality, and that's a much stronger number than the 19%, which is the market -- what the market is doing. Is that correct?

Varun Ahuja -- Credit Suisse -- Analyst

Yeah. And additionally, the travel should recover next year is the general perception, but if you think that's not right, it's still -- still in your outlook, believe travel will be a little bit of a struggle. We want to hear because travel this year, as you mentioned, has declined 20% so a recovery, hopefully, that will provide for the tailwind for your growth so I just want to understand your views overall.

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

Yeah, I understand. No. I mean, comments, I only apply common sense to and estimate that the travel will pick up next year. We sense on the airlines in Asia, that there is some moves happening right now in terms of growth.

You can see that the economies are reopening. I know you're based in Singapore. We know that with the VTLs, things are really happening, which is good news for us for sure. So yeah, that should be, if it picks up as expected, and there's no new crazy thing happening.

We should be able to definitely benefit from the growth of the travel and hospitality next year.

Varun Ahuja -- Credit Suisse -- Analyst

Thank you, Laurent, and good luck for the next quarter.

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

Thank you.

Jason Lim -- Investor Relations

Thank you. So we move on to a question from online from [Inaudible] GMO. The content moderation business has shown low single-digit growth. This is the new normal for the business?

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

So well, content moderation is interesting. There's definitely a favorable market for it. As you can see from the news, as you heard, increased scrutiny around social media. So we believe there is a conducive environment for social media players to increase their support in terms of content moderation.

So now at TDCX, this is a business that started pretty recently. In 2018, it grew significantly. And so it kind of steadied a little bit more this year for us. And we have one major client in the space.

I think you can guess which one. And then, of course, we are now adding more clients on the back of our experience in social media and in content moderation. So we've added one new client that's starting with us in Colombia. So we are also, as part of this effort, working on data annotation and data labeling as a support to content monitoring and moderation as well, an extension to it.

So there is a potential in the space. We don't have statistics or market statistics at this point to indicate or give us guidance as to the growth and the pace at which it will grow moving forward. So I cannot really comment at what pace it is going to grow at this point.

Jason Lim -- Investor Relations

Thanks, Laurent. So now we move back to the conference call. There's a follow-up question from Pang. Stuart will go more back to Pang, please.


Thank you, Jason. Yes, we have a follow-up question from Pang Vitt from Goldman Sachs. Please go ahead.

Pang Vittayaamnuaykoon

Thank you very much. Maybe I want to also hear your thoughts about the factor one of your main clients actually announcing their plan to move toward the concept of metal first and investing more from that angle. Do you think that there's going to be any materially or potential benefit from your point in the service that you actually serve to high?

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

Well, yes, I mean we think the positioning of our client is -- I cannot speak on their behalf. I just know that reading like you, the news, there's a lot of excitement around metaverse. There's also, I think, market consensus that both our biggest clients are growing. There are plenty of new initiatives.

So it's very exciting to be part of the space. Now it's up to us. And of course, the client to see how we can take these opportunities onboard and see how we can benefit from it. But other than that, I don't have enough knowledge about the metaverse to imagine, at this point, the impact it's going to have, except being very excited about it.

Pang Vittayaamnuaykoon

Thank you. Maybe I can also add certainly on the guidance around EBITDA margins, especially as your EBITDA margin this quarter increased significantly to close to 36%, but the full year guidance or EBITDA margins still imply that margins will go back to around 30, 31% next quarter. In the longer point of view, what should we think about the margin trend? Are you going to go for like higher margins from where we see you are or is going to be like steadily decline? And also on that point, is there any one-off expense that we should be aware of in the quarter?

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

Very sharp question, Pang. I'm going to handle the first one on the outlook for margin, and then I'll leave Mr. Chin to talk to you about the behavior of the margin over the past few months and so on. So from the outlook, we don't see a tremendous drop or any job.

We don't see an increase either. We think it will stay around between 29 to 32% as long as we can continue to stick to our strategy, which is quality growth. And at this point, we have no intentions to change that strategy. So the quality growth, working offshore on the increasingly complex work.

I'm very happy that this quarter, actually, we brought in a new client in the cloud business. So we're helping them to sell cloud in multiple geographies in 13 countries. And it's really top-notch personnel that we need to deploy on this program, and it's fairly complex. So we're continuously looking for this kind of engagement, and that will give us a chance to maintain our margins.

If we also play our overheads well and be careful with our cost management. Now there's some one-off and also the margin question you had. Can I ask Mr. Chin to answer that question?

Chin Tze Neng -- Chief Financial Officer

Yes, Laurent. On the margin uptick in quarter three, I believe there were some movements in the ForEx on a few delivery sites, a few keys of our [Inaudible] in TDCX, that had a bit of an upward movement that moves in favor of TDCX that help to a certain extent, pump up the EBITDA margin by one to two percentage points from my back of the envelope calculation as well as we -- typically, in quarter three, even pre covet, we typically pump up a lot of productivity in terms of getting a lot of millibars on board so that we do not want to miss the revenue that has been ordered place into our order book. So in a sense, quarter three this year was enhanced by our pump productivity of our agents that performed pretty well considering the low base of quarter three of 2020. And the slight update in a few of our key currencies from our delivery sites that also help toward bettering the margins notably in September [Inaudible].

Thank you.

Pang Vittayaamnuaykoon

Thank you very much. Maybe last question from here. Is there any update that you can share with us regarding the Airbnb warrant that was part of the disclosure that you mentioned during the perspective?

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

Yes. So thank you for this one as well, Pang. So we're still discussing with Airbnb. Look, I'm very excited about the opportunity of having this project with Airbnb.

I feel that it's an honor that the company is so interested in us. We're getting close. We're working with them and moving in the right direction. And we do not anticipate that the conclusion of it will be very material to any dilution.

And so we're very much on track with our plan for the warrant. It just takes a bit of time because it's usually quite complex. The weight structure and so on, and it's new to us as well. And so we're on track with the warrant with Airbnb.

Pang Vittayaamnuaykoon

Thank you very much.

Jason Lim -- Investor Relations

Yes. Thanks, Pang. So I'd just like to add on to the discussion on EBITDA margins just now that our guidance for EBITDA margin, as you can see in the presentation, it excludes the PSP costs, which will be recognized from Q4 2021 onwards. So I think that's all the time we have all the questions we have.

Maybe I'll just hand it over to Laurent for some closing remarks.

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

Thank you, Jason. Thank you for dialing in. Appreciate it and for your interest in TCDX. This is our first earnings call.

So apologies if we're not experts at it, but we're learning as we go along, and we are very excited to be public listed and looking forward to seeing you next quarter for the next earnings results. Thank you very much.

Jason Lim -- Investor Relations

Thank you.


[Operator signoff]

Duration: 55 minutes

Call participants:

Jason Lim -- Investor Relations

Laurent Junique -- Executive Chairman, Founder, and Chief Executive Officer

Chin Tze Neng -- Chief Financial Officer

Pang Vittayaamnuaykoon

Varun Ahuja -- Credit Suisse -- Analyst

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