TDCX Inc. (TDCX) Q4 2021 Earnings Call Transcript

TDCX Inc. (TDCX 0.42%)
Q4 2021 Earnings Call
Mar 09, 2022, 7:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

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. Throughout, today's recorded presentation all participants in a listen-only mode.

Presentation will be followed by a question-and-answer session. [Operator instructions] I would now like to turn the call over to management. Please go ahead.

Jason Lim -- Head of Investor Relations

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 on the Form 6-K, which are available on our website. Lastly, we have provided a convenient translation for the translations of Singapore dollar into the US dollar. This was done at a rate of USD 1 to SGD 1.3517.

This should not be construed as representation 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.

Laurent Junique -- Founder and Chief Executive Officer

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 have delivered enhanced services to support them in this constantly evolving environment.

I also have thoughts 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 them, and I am 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 for our employees, we delivered a strong financial performance. Our Q4 revenue was 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 the 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 are seeing strong contributions across several verticals. Digital advertising and media continued its positive trajectory, rising over 40% in FY 2021 of a very large base. We grew our business with these clients, both in the workstreams of omnichannel CX and sales and digital marketing across multiple geographies.

Two 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 TD peeps.

This meant we achieved a 99% fill rate of what our clients asked 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 toward 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 nine 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, two new economy verticals that were not even existing five years ago. We're doing highly specialized work under the fintech umbrella such as KYC for customer onboarding and resolution of trading issues.

The work for these clients is segregated into various complexity and escalation levels, and we are 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 for our clients also in foreign languages. We added another two globally recognized gaming clients, who are registered during the latter 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 originator 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, continue 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 the three 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 four geographies: Colombia, India, Romania, and South Korea.

These four 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 two 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 headcounts across Malaysia and India. while doing two things.

One, enhancing existing tools such as Flash suite, our own proprietary suite of management tools to improve productivity and quality. No. 2, this team has been working on some new tools. We leverage artificial intelligence and machine learning to deploy seven bots, which are now working in sync with our agents in the trust and safety team for our economy clients.

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 two units will make key contributions to productivity gains.

Our offerings to clients continue to evolve to meet their changing needs. In 2021, the commenced providing data labeling services we categorize on label content on our clients' 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 developments. 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 publicly listed has certainly given us a boost as our M&A units as we see more ideas in the last five months than in the last five 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 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.

Chin Tze Neng -- Chief Financial Officer

Thank you, Laurent. Let me first touch on our track record over the past four 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 the 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 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 four 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 nine 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 three business segments and across all geographies. In the next slide, I will share the breakdown by service type and geography. To recap, we introduced the performance share plan, or PSP, in November 2021 to incentivize our staff and act as long-term talent retention and exertion 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 $40 million, again, the highest we achieved in a 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%. Excluding PSP costs net profit margins would have been 22%, slightly below 22.4% on 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 $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 60 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 benefits expense makes up the largest portion of our total operating cost base.

Our employee benefit expenses increased by 42% to $72 million for Q4, in tandem with business volume expansion. If we exclude the PSP cost, employee benefits 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 the respective sector, and a one-off recognition of work bonus accorded to 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 catering for business growth.

All other expenses, which includes 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 a full year. Revenue rose 27.7% to USD 411 million.

Our top two clients make up 62% of revenue, compared to 60% for FY 2020, and our top five 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 continue to grow very strongly with us in FY 2021, leading to a slight increase in concentration. In terms of earnings, it 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 a full year 2021 expenses for the financial section.

For the full year 2021, operating costs as a percentage of revenues stood at 75%, excluding PSP costs, marginally lower compared to 76.7% for the same period of 2020. Excluding PSP costs, employee benefits 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 set as increases in telecoms 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 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 built in our expectations as we continue to invest in business development efforts, geographical expansion and market conditions for talent.

With that, let me hand it over back to Laurent.

Laurent Junique -- Founder and Chief Executive Officer

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 are happy to take any questions you have. Jason, please.

Jason Lim -- Head of Investor Relations

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

Questions & Answers:

Operator

[Operator instructions] The first question comes from the line of KC Ong from CGS-CIMB. Please go ahead.

KC Ong -- CGS-CIMB Securities -- Analyst

Hi, thanks for taking my question, and congrats on the strong Feb results. First, I have two questions, first one can you provide more color and broad parameters around revenue guidance for FY '22? And secondly, could you give some comments on the trends that you're observing for the 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 those serving this particular account to Asian countries like Philippines.

Laurent Junique -- Founder and Chief Executive Officer

All right. Thanks, Casey, thank you for the question. Appreciate it. So yes, in terms of the guidance for 2022, 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 of a large portion of what we do. But we also see a high growth from new clients that we've acquired over the past two to three 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 two 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 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 clients.

I can say that first of all, digital advertising, we have a number of clients, not just the Meta 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. And what we can see and we are continuing to watch for is the intensification of competition in the digital advertising landscape, which we believe could become fertile ground for TDCX's 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 segments of the three that we have. So we we're going to continue to stay the course on the business and we think we'll be doing quite well. Thank you, Casey.

KC Ong -- CGS-CIMB Securities -- Analyst

Thank you so much.

Operator

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

Pang Vitt -- Goldman Sachs -- Analyst

Thank you very much, Laurent, for the opportunity to ask the question, and congrats for the great set of results. Maybe also, I will follow further on from the question earlier, just now on the guidance for revenue in 2022? I know that 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 contract 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 [Inaudible] actually understand a bit more than -- 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 that you can provide more color on that. That's question No.

1. No. 2, if we got things of growth that we've seen in fourth quarter, both in the omnichannel, social and digital segment, quarter-on-quarter growth looks a little bit muted, especially on omnichannel, because for the -- 4% Q-on-Q. Can you explain what actually happened out there in the fourth quarter that led to quite a slower in growth on a sequential quarterly basis? And especially we've seen reopening of the economy, a bit more apparent there.

You see NPLs to record quite a good set of numbers as well. Have you seen any challenges? Will be appreciated if you can also explain on that? And last question would be on that EBITDA margins and the guidance. How comfortable are you with this set of guidance, especially as you are growing into the new region, into new countries? Would appreciate any thoughts on that. Thank you.

Laurent Junique -- Founder and Chief Executive Officer

Great. Thanks. 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 and growth plan activities. But it's a lower number, and really a 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 two years.

So it's a pretty stable revenue guidance. From the travel 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 a recovery, right, on the travel. So in Q4, right, 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, a very big quarter.

Pang Vitt -- Goldman Sachs -- Analyst

Thank you. And how about on the margins? How comfortable are you with this guidance, especially as you're growing into the new vision? And also, just on the price there, do you foresee or see any pricing pressure when the contracts come up for renewal with any of your clients recently?

Laurent Junique -- Founder and Chief Executive Officer

There is always negotiations going on with clients, so we haven't anticipated price pressure. But what we've done in our forecasting, we've forecast some modest inflation, modest in the sense that it's higher than last year. And 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.

Pang Vitt -- Goldman Sachs -- Analyst

Thank you.

Operator

[Operator instructions] The next question is from the line of Varun Ahuja from Credit Suisse. Please go ahead.

Varun Ahuja -- Credit Suisse -- Analyst

Yes, hi. Good evening management and congrats on a good set of numbers. I've got few questions. Sorry to pester on revenues both sides, but I won't ask for details on the guidance.

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 contracts for one to three years. If you've added some of the clients in first half, I believe this year, next year, there should be on full scale ramp-up, right in second half.

So wanted to understand, because you mentioned you are still looking at existing clients. So how much of these 20 clients are kind of contributing toward 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 salespeople in the organization? And thirdly, on the revenue side again, what's your view still on growth toward the margin? Are you still pretty much focused on profitable high margin, maintaining margin kind of a growth trajectory? Or you can kind of grow for growth at this stage 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, already, had growth. Is there anymore 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? Thank you.

Laurent Junique -- Founder and Chief Executive Officer

Hi, 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 two to three years to come to maturity, and that's what we are monitoring right now in 2022, is the clients we brought it in 2019, 2020 are starting to really contribute to the growth in revenue. So it does take time, but we will 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 three last year, we want to add another five 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 a 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? 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. So, 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 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.

Varun Ahuja -- Credit Suisse -- Analyst

Sure. It does. Lastly, if I can take the -- just a confirmation. The PSP cost is -- all of it is an employee benefit? Or split it at the line item? [Inaudible]

Laurent Junique -- Founder and Chief Executive Officer

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

Chin Tze Neng -- Chief Financial Officer

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

Varun Ahuja -- Credit Suisse -- Analyst

Sure. Sure, Mr. Chin. The PSP cost, stock compensation cost, is it all of it in employee benefits? Or it's split between some of the other settings, line items in the cost?

Chin Tze Neng -- Chief Financial Officer

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

Varun Ahuja -- Credit Suisse -- Analyst

OK. OK. Thank you.

Operator

Next question is from the line of Han Tan from HSBC. Please go ahead.

Han Tan -- HSBC -- Analyst

Hey, thank so much. I wanted to ask a little bit about currency impacts. Given we are seeing strength in the dollar, that your existing EBITDA margin guidance of 30.2% factored in, maybe if you could help us understand the sensitivity impact of dollar on earnings and margins? Thanks.

Laurent Junique -- Founder and Chief Executive Officer

Mr. Chin, for you.

Chin Tze Neng -- Chief Financial Officer

Yes. In our earnings guidance, we took a standoff neutral forex assumption as how we ended the year before. So there is no -- we didn't give any views on how the US dollar will behave in the coming -- in the current year.

Han Tan -- HSBC -- Analyst

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

Chin Tze Neng -- Chief Financial Officer

Is the dollar -- sorry, Han Tan?

Han Tan -- HSBC -- Analyst

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

Chin Tze Neng -- Chief Financial Officer

I mean, if the pesos or the Thai baht move deteriorate against the US dollar, yes, then it would definitely help the margins on the top line basis. As to how much is it, well, it really depends on at what rate that we bill and what rate that we collect. Because sometimes, the timing between billing and collection can flux the forex. It can 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 a -- enjoy 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 US dollar. I think due to the rebound of the strengthening of the US dollar versus the 2020 situation where we begin the year strongly. I mean, most currency begin the year strongly, and then during -- at the onset of COVID and even during COVID, these currency turned around. So I think -- I mean, US dollar became stronger.

So in a way, 2021 we did have some good forex movement in our favor in quarter three and also a bit in quarter four. So I would say that really helps. On the hypothetical business, maybe -- on a constant currency basis, I would say, maybe 1% or 2%, it will help on that front.

Han Tan -- HSBC -- Analyst

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

Chin Tze Neng -- Chief Financial Officer

I would -- well, I mean, we will stay within the range. I really can't comment whether we will land at the lower end or the higher end. I would just comment that we are quite comfortable to stay within that range for now. I guess, we can comment if a sort of a better narrowed guidance as those years turns -- as the quarter rolls by.

That much I would be able to say for now.

Han Tan -- HSBC -- Analyst

OK. Just one last question from me. I wonder if you could talk a bit more about AI data labeling segment. How should investors think about -- is that more tactical or strategic? And if it's strategic, how big do you expect contribution to be? Thanks.

Laurent Junique -- Founder and Chief Executive Officer

Yes. Laurent here. So yes, the -- 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'll -- we're watching it and we are looking at it and we're creating value for our clients with that segment and as it grows further, then we will 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 sales and digital marketing. But we are building our competence, we are building our client base on that sector, and we are definitely watching that space.

Han Tan -- HSBC -- Analyst

OK, thanks. Thanks very much. No other question from me.

Operator

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

Jason Lim -- Head of Investor Relations

Yes, Stuart. So I have two questions on the webcast around the same thing, is how do you expect revenue concentration to evolve in 2022? And how do we expect the top two client concentration to change in 2022? So...

Laurent Junique -- Founder and Chief Executive Officer

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. Our clients are growing faster, and I mentioned fintech, I mentioned some sectors that are bringing us that accelerated growth. So that's -- from that organic growth, we are 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 are reconsidering at this point.

Jason Lim -- Head of Investor Relations

Thanks, Laurent. There's 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's -- we've reached the end of the questions for the webcast.

Can I check-in for the conference call, we have actually a few more minutes. We can pick more questions either on the conference call or the webcast. May I know if any of the analysts on the call would like to know ask any more questions?

Operator

[Operator instructions] We have a follow-up question from the line of Pang Vitt from Goldman Sachs. Please go ahead.

Pang Vitt -- Goldman Sachs -- Analyst

Hi. Thank you very much again. 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 you can proceed this would -- 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 nine months of 2021. And now, you mentioned that there've been 20 new clients, right, I mean, in the fourth quarter, that four more clients that you won. Any update or in particular more color on who are the new clients that you recently acquired?

Laurent Junique -- Founder and Chief Executive Officer

Yes, Pang. Thank you for this question. So the clients -- the Airbnb warrant, the discussion is ongoing, it's going well according to our plan. I can't provide a particular date, but we will 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. Two clients in the gaming, one client in the tech sector, as well, another one actually in the social space. So it's still mostly new economy of the kind of clients that we attract and we're able to close, and we are excited about that for sure.

Pang Vitt -- Goldman Sachs -- Analyst

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

Laurent Junique -- Founder and Chief Executive Officer

Well, there is one in Korea. Yeah. The other two are in Asia. And then there is one that is going to be both in Asia and in Colombia.

And actually, one in Korea, also in Spain as well for us. So it's a mix of geographies.

Pang Vitt -- Goldman Sachs -- Analyst

I see. Thank you very much.

Laurent Junique -- Founder and Chief Executive Officer

You're welcome, Pang.

Operator

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

KC Ong -- CGS-CIMB Securities -- Analyst

Hi, thanks for taking my question again. Just wanted to confirm two 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 I 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 what's your revenue versus customer retention rate for FY '21? Thanks.

Laurent Junique -- Founder and Chief Executive Officer

So I'll defer the fintech question to Mr. Chin. In the meantime, the other question is around the retention clients. We did -- 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 2021, right is the question.

KC Ong -- CGS-CIMB Securities -- Analyst

Yes, that's correct. Thank you.

Varun Ahuja -- Credit Suisse -- Analyst

Yes, thanks. So two questions first. If you can tell us if -- for this fourth quarter and for the overall year, what has been the churn in the client rate. So obviously, when you entered 2020, you were kind of recaliberating your client base and more focusing on profitable ones.

So is that [Inaudible]. What is the normal churn level on client side? And No. 2, on new geographic expansion, for the geography you that looking to had, I remember, I think you mentioned about Taiwan sometimes. So if that is on from the line and any further expansion that you're looking at? And given the geographies that you've entered, the contribution still remains very low at 1%.

How should we think about from a medium-term perspective? What conversations are you having with clients? Thank you.

Laurent Junique -- Founder and Chief Executive Officer

Thank you, Varun. So the client retention was, I think, the first question, and so we were at 80% -- at 79% in 2021. And so that's where we are. On the 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 will continue to increase our expansion in the 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 two to three years. And I think I did mention before, we have two strategies. One where we do a strategic entry into the market to add to the network. And when we do this, we go in without a client.

So it takes two to three 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 three clients in South Korea, and we've already started last year.

So that's how we played. So in our budget 2022, we have a bit of revenue contribution from new geos, but it's still very moderate at this point.

Varun Ahuja -- Credit Suisse -- Analyst

Thank you, very much.

Jason Lim -- Head of Investor Relations

OK. 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 do -- how do we think about EBITDA to free cash flow conversion? Maybe, Mr. Chin, do you want to take that?

Chin Tze Neng -- Chief Financial Officer

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

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

Jason Lim -- Head of Investor Relations

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

Laurent Junique -- Founder and Chief Executive Officer

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

Jason Lim -- Head of Investor Relations

Thanks, goodbye.

Operator

[Operator signoff]

Duration: 58 minutes

Call participants:

Jason Lim -- Head of Investor Relations

Laurent Junique -- Founder and Chief Executive Officer

Chin Tze Neng -- Chief Financial Officer

KC Ong -- CGS-CIMB Securities -- Analyst

Pang Vitt -- Goldman Sachs -- Analyst

Varun Ahuja -- Credit Suisse -- Analyst

Han Tan -- HSBC -- Analyst

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