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Ladies and gentlemen, welcome to the TDCX Q2 2023 Results Announcement. My name is Aida and I will be coordinating your call today. [Operator Instructions].
I will now hand you over to the management team to begin.
Hello, everyone, and welcome to TDCX second quarter 2023 earnings conference call. My name is Jason Lim, the Head of Investor Relations. Joining us on the call today is our Executive Chairman, Founder and CEO, Mr. Laurent Junique; our CFO, Mr. Chin Tze Neng; and our EVP of Corporate Development, Mr. Edward Goh.
Before we continue, I would like to remind you that we will make forward-looking statements, which are subject to risks and uncertainties that may not be realized in the future. You should not place any reliance on any forward-looking statements. Also, this call includes the discussion of certain non-IFRS financial measures such as adjusted EBITDA and constant currency revenue growth. For reconciliation to the closest IFRS measures, please refer to the Form 6-K, which is available on our website.
We have prepared a convenient translation for the Singapore dollars to the U.S. dollar at a rate of USD 1 to SGD 1.3557. This should not be construed as representation that any Singapore dollar amount can be converted to USD at this or any other rate.
With that, let me hand over the call to Laurent. Laurent, please?
Hello, everyone, and thank you for joining us today. We delivered a strong and resilient set of results against the backdrop of a challenging environment. I appreciate that everyone at TDCX has put in the extra mile to achieve this, and I would like to thank our global team for their efforts.
Let me begin with some highlights. Q2 2023 revenue rose 5.5% year-on-year. On a constant currency basis, revenue would have grown an even stronger 11.3%, which significantly exceeded our guidance. Our largest segment, Omnichannel CX continued to grow at a nice clip of 8% year-on-year. Our traditional strength in Sales and Digital marketing also came through as the segment grew 15%.
We continue to deliver industry-leading margins with adjusted EBITDA margin at 25.9% for Q2 2023. Margins were down compared to last year as we continue to put in necessary investments to position ourselves stronger for tech sector recovery. This includes initiatives such as our geographic expansion, building out of our TDCX AI arm and operationally keeping strong agent and support ratios for our clients. Our CFO, Mr. Chin, will provide more details on our margins later.
Operationally, I'm very proud that we remain at the top end of performance tables for our clients, and as a result, continue to grow business broadly across our clients. Revenue from plans outside the top 5 grew 67% year-on-year, if not for the impact of one of our key clients reducing volumes as part of their focus on cost efficiency, we would have registered much stronger overall revenue growth. Our strategic geographic expansion over the last 2 years has really started to contribute meaningfully. All in, revenue from our new geographies was 9x in Q2 2023 compared to what it was in Q2 2022. This included clients that we added from our Hong Kong subsidiary as well.
Overall, we delivered a robust earnings performance as profit for the period rose 9.4% to USD 22 million. We stand out amongst peers in our sector and still being able to deliver good earnings growth over a very tough period. This clearly demonstrates that TDCX continues to execute a very exceptional levels. Our profit performance has translated into strong cash flows and a strong balance sheet. Cash generated from operations was USD 49 million for the first half of 2023. As of 30th of June 2023, we have USD 301 million cash and cash equivalents with no debt on the balance sheet. This puts us in a very strong position to move quickly on several strategic growth options, especially in an environment of high interest rates.
We continue to explore M&A opportunities that could help enhance our capabilities or reach to better serve our clients or to accelerate our growth. Besides that, we have the financial strength and flexibility to deploy capital for important organic initiatives, such as TDCX AI, our consulting capabilities and investing in our new geographic sites. I'm very happy with the progress that TDCX AI is making, and we're growing our team steadily. Our clients have entrusted us on consulting and advisory services and in piloting and implementing AI-enabled CX solutions. A number of projects are in the pipeline.
For example, with the large tech clients, our team was tasked to analyze the cognitive load of multiskilled agents and to identify the tipping point at which an individual agent would be overwhelmed by product information and which would impact the way a customer service campaign would be set up. Another example we've done for clients is modeling and analyzing agents' learning curves and thereafter developing customized road maps such that agents reach peak performance faster. For the Travel and Hospitality client, we incorporated machine learning to anticipate and decrease employee attrition by up to 15%.
We are also leveraging Google Cloud's enterprise-grade generating AI capabilities to build an AI-enabled chatbot to respond to candidates' queries about our company and the recruitment process and integrating this with our proprietary flash hire recruitment system. To sum up, there are huge businesses as well as productivity improvement opportunities with AI, and we're moving at incredible pace to take advantage of these.
TDCX is very differentiated. We are agile, nimble and hyper-focused on the complex segment, which requires human intervention and that is not easily replaceable. Our positioning and strength in Southeast Asia are unique amongst global CX providers. I'm not sure if the public markets have misunderstood or overreacted to the threat of Gen-AI while underestimating the efficiencies and opportunities that this could bring at current traded levels and considering the profitability and cash generation of our differentiated business, we see great value, and we intend to prioritize share buybacks as a form of enhancing shareholders' returns.
Next, let me touch on some current highlights. Our business development momentum remains very strong. Plan count rose 52% to 91 clients as of June 30, 2023, and we have a further 7 clients who have been signed up but not yet launched. Beyond the quantity, I'm excited about the quality of clients that we launched in Q2, which included several giants of the world in their respective spaces. This includes an established global e-commerce platform based out of the U.S., a rapidly growing fast fashion e-commerce platform, which is one of the 2 fastest-growing giants globally and a leading travel platform based out of Asia, which is one of the world's largest in this space. With a higher client count and broader growth, we improved our revenue diversification as our top 5 clients contributed 73% of this quarter's revenue, down from 83% in the same period last year.
In terms of geographic reach, we now have a much wider footprint compared to 2 years ago. With a growing headcount of over 18,700 employees globally, we are able to serve more clients across the world. The revenue chart here demonstrates our unique positioning amongst global listed CX providers with around 71% of our business focused on serving Southeast Asian and North Asian languages.
Before I hand over to our CFO, let me share some views on the outlook. Having completed half of the year now, we have a better sense of where we will land for FY 2023. We've seen delays in decision-making from clients and the lengthening of the sales cycle throughout the first 6 months. The effect flows through to the second half, which means that the higher end that we were aiming for in second half 2023 is not coming through. As such, we are adjusting our FY 2023 revenue outlook to reflect this. Mr. Chin will provide more details later.
While we do not want to get too much ahead of ourselves, we are starting to get the slightly clearer picture of how the next year is going to unfold. There are encouraging signs for economic activity in the U.S., coupled with recent positive results for several of the tech giants, including those in the digital advertising space. This bodes well, and I'm cautiously optimistic that we're starting to see some green shoots for 2024 rebound. With our efforts on operational excellence and focus on value-adding to our clients, we're in a very strong position to seize opportunities as they arise.
With that, let me hand over to Mr. Chin.
Thank you, Laurent. In Q2 2023, we delivered revenue of USD 126.2 million, up 5.5% year-on-year on a reported basis. Had the Singapore dollar remained constant against our operating subsidiaries' currencies from Q2 2022, revenue would have risen by 11.3%. The exchange rate used for the translation of the local functional currencies of the Malaysian ringgit, Philippine peso, Thai baht, Japanese yen and renminbi depreciated between 3% to 9% against the group's presentation currency of Singapore dollar for Q2 2023 compared to Q2 2022.
Moving on to profitability measures. EBITDA decreased by 2.2% to USD 33.7 million this quarter due largely to higher employee benefit expenses, which rose 7.1% year-on-year, higher than the revenue growth rate. Adjusted EBITDA declined 7.1% to USD 32.7 million in Q2 2023, as margins contracted from 29.4% to 25.9% on high infrastructure and employee costs. I will elaborate more on this in a later slide.
Interest income increased 6x with increased funds in interest-earning deposits against the high interest rate environment, while income tax expenses declined 24% with the reinstatement of tax incentive in the Philippines that was suspended in Q2 last year. Consequently, profit for the period grew 9.4% to USD 21.6 million. Adjusted net income, which represents profit before equity settled share-based payment expense, net foreign exchange gain or loss and acquisition-related professional fees was stable year-on-year. This was largely because we incurred lower equity settled share-based payment expense in Q2 2023 compared to the same quarter last year.
Let me next provide some insights of our revenue by service offerings. Our growth in Q2 was led by the Sales and Digital marketing line of business, followed by Omnichannel CX services but was partly offset by a decline in Content, Trust and Safety. Revenue from Sales and Digital marketing services increased by 15% to USD 33 million, driven by the expansion of existing campaigns by digital advertising and media as well as e-commerce clients. Our newer client cohorts from 2022 continue to scale up, further contributing to the growth in this line of business.
Omnichannel CX revenue rose 8% to USD 76 million as a result of higher business volumes, driven by the expansion of existing campaigns by clients in the travel and hospitality, gaming, FMCG, financial services and tech verticals. Revenues from Content, Trust and Safety declined 19% year-on-year to USD 16 million due to contraction of volume requirements by existing clients in the digital, adverting and media vertical, partially offset by expansion in the travel and hostility vertical. In summary, Omnichannel CX made up 60% of our total business in Q2, while Sales and Digital marketing and Content, Trust and Safety contributed 26% and 13%, respectively.
Next, let me elaborate on the adjusted EBITDA margin movement from 29.4% in Q2 2022 to 25.9% in Q2 2023. In terms of margin impact, higher rental and maintenance, telecoms and tech expenses were offset by lower recruitment costs, leading to a neutral impact. There was a 0.8% impact from general overheads, largely higher infrastructure costs linked to office-based expansion for our new sites and higher professional fees incurred such as tax and legal fees.
Thirdly, there is a 2.7% impact from higher employee costs, of which the bigger factor is higher local support and shared service account. There is also some impact from higher headcount of the block agents versus billable as well as higher corporate costs. However, when comparing to Q1 2023, there was a sequential improvement of margins from 24.2% to 25.9%. This was due to an improvement in utilization in both the mature sites and new sites like Brazil, Turkey and Korea as well as an improvement of excess headcount compared to Q1 2023, which resulted in Q2 2023, closer to our block agents' headcount and man hours.
Let me next move on to the half year performance. Our revenue for the 6 months ended 30 June 2023 was USD 247.9 million, up 6.8% on a reported basis or up 11.8% in constant currency terms. EBITDA was up 2% to USD 65 million, and profit for the period increased by 15.4% to USD 41.7 million. This was driven by a reversal of equity settled share-based payment in Q1 2023, higher interest income as well as lower income tax expenses. Excluding the effects of the reversal of the share-based payment expense, adjusted EBITDA declined 11.6% to USD 62 million, while adjusted net income declined 9.9% to USD 38.9 million. These were largely a result of increased employee costs and high overheads in particular for the first quarter of 2023.
Accordingly, adjusted EBITDA margins for first half 2023 landed at 25%, down from 30.3% in first half of 2022. To a large extent, much of the margin compression is due to planned costs such as our geographic expansion, choosing to recruit new good talent and keeping strong support and shared service staff ratios.
For first half 2023, revenue from Omnichannel CX grows 8% to USD 148 million. Revenue from Sales and Digital Marketing services increased by 19% to USD 66 million, while revenue from Content, Trust and Safety services was down 18% at USD 32 million. For the half year, Omnichannel CX contributed 60% of our business, while Sales and Digital marketing stood at 27% and Content, Trust and Safety at 13%.
Lastly, let me provide an update on our full year 2023 outlook. We have revised the full year 2023 revenue growth range to 2% to 4% on a constant currency basis from 3% to 8% previously. As Laurent mentioned, some clients are taking longer to commit to business volumes. During Q2, one of our key clients also reduced their volume forecast for the remaining months of FY '23. This means that there is a knock-on effect on the revenue numbers that we can put into our forecast of second half of 2022. Further, revenue was strong in the second half of 2022, which sets a higher bar in terms of year-on-year percentage growth for the second half of 2023.
In terms of adjusted EBITDA margins, we have trimmed the top end of our range, and our guidance for full year 2023 is now expected to be approximately 25% to 27%. We are committed to putting in the necessary investments and spending in the business for the long term and remain cautious in our cost optimization efforts with an eye on volume recovery for 2024. We have adjusted the margin outlook accordingly to reflect this. Against the backdrop of what we are expecting, we are restrategizing our own approach to make it more elastic against revenue. For example, this includes planning infrastructure [indiscernible] spending closer to revenue pipeline. These initiatives will take some time to benefit margins likely in full year '24.
With that, let me hand you back to Laurent.
Thank you, Mr. Chin. We're ready to take questions. Hi, everyone.
[Operator Instructions] We now have our first question from Pang Vitt from Goldman Sachs.
Three question from me, please. Number one, on the guidance and outlook. Can you please go over the rationale why you make this substantial change to your revenue guidance? Especially if we're looking at your first half of the year on constant currency basis, you are up in double digits. So what has changed? I'm sure you're talking about some of your clients, but can you go into specific details of that? On the back of that as well, what level of confidence and visibility you have on this revised guidance. Is there any possibility of further revise down going forward? That's question number one.
Number 2, you also mentioned that you started seeing signs of better 2024. Can you further clarify and provide more color on that. Have any of your clients started indicating that they will likely increase that spending into next year?
And number 3, lastly, can you share with us more around how AI may impact your business? How many percent of your business may be more impact comparatively? And how do you plan to remit the list here?
All right. Thank you, Pang, for all these questions. So yes, the revised guidance from 3% to 8% to 2% to 4%. I mean you called it substantial. It's not tremendously substantial, but it does have an impact. I do agree. And so there's a few reasons behind this. The first one is the deals we were hoping to close got delayed. So really, the velocity of deals have been slower than anticipated. Some clients who had indicated that second half was going to be stronger was not really -- didn't really materialize, it got delayed even further, let's say, into September at lower volumes than initially anticipated. We still have -- so that's one factor.
We still have pressure from the digital advertising sector, which was not doing terribly well in the first half, but it's not going to do better in the second half. And that's taking into account as well that our second half last year was also a good second half. So that doesn't help us very much. And then yes, the opportunities are coming, though, and we're a bit more optimistic around 2024, leading into your next question. I would say where clients are starting to indicate a better forecast in 2024.
Nonetheless, I think if I come back again on the impact on the second half, which was the primary question you had, travel and hospitality is not really going to show up as much as we were anticipating. China has not really played so well as we were hoping it would. So it's a whole bunch of factors, although we have sectors that are doing pretty well like gaming, tech, e-commerce, automotive for us are really doing extremely well, and there's a whole part of the business that's growing at a fast pace, but it's being brought down by other sectors that are weighed in.
Now if you look at digital advertising, we see some good results announced by our key clients generally in the first 2 quarters, Unfortunately, we don't see it translated in immediate growth. So how long more do they need to produce better results until they decided to open the flood gates and decide to invest further is a question mark that we still have on our list. So having said that, we see some green shoots in 2024. We see that the recession fears are starting to subside, and we are seeing some also good momentum on our pipeline. We are closing deals. The leads we're getting starting in the second quarter are starting to turn around compared to the first quarter. So there's a number of encouraging signs that makes us pretty optimistic, if not cautiously optimistic for 2024.
Now the last question you have, and one of the questions I think you have is whether there is a chance that we're going to revise our forecast again in the next announcement for Q3. We think we have a good sense of 2023 at this point. And so any -- barring any unforeseen circumstances or something really major, we are pretty locked in that guidance at this point.
The question on impact of AI, we've had very, very good momentum with TDCX AI, I have to say. And a lot has to do with the role we think TDCX can play as an adviser to our clients. And so we've had a lot of very successful discussions with most of our clients and the successful engagements in consulting projects with them, some that we, I think, have explained earlier in the call. And really, it's leveraging the possibilities that are available to us.
In terms of impact, the first impact we expect from TDCX AI is strengthening our relationship, defending our territory and really enhancing the business we already have with our clients to grow further, show them better productivity, better insights, better quality. And what's interesting, I would say, in Q2 is we didn't anticipate to monetize TDCX AI so quickly. We expected it for a few years to remain a value add to our clients to do what I just said. But now we're starting to make commercial proposals as well with the dollars associated with it.
So there's a real appetite from clients, but we see real opportunities as a result of that. And one of the opportunities we see is a growing total addressable market for TDCX. We see the possibility now to offer some of our services to the in-house call centers and operation. And that's a total addressable market that is 3x the size of the outsourced CX market. So our total addressable market has grown threefold on the basis of that or fourfold because from $100 billion, we're moving into plus $315 billion, $415 billion. But there's also the consulting market term in the CX industry, which is another $30 billion. So we're talking about on $445 billion as opposed to $100 billion.
So this is a huge opportunity for us to play in. And TDCX with its very differentiated offering being in Asia, working with the best clients in the world we've got so much knowledge and capabilities that we can share as part of TDCX AI for this total addressable market that gives us a good confidence level as to the opportunities for us to tap these new trends that we hear a lot about. I hope that answered your questions, Pang.
Our next question is from Khang Chuen Ong of CGS-CIMB.
I just have a few questions here. First, the revenue contribution outside of your top 5 clients seems to have bumped up really well in Q2. So could you please share a bit more color on this? Are you seeing clients that have onboarded over the past year or 2 ramping up the campaign sales scales more significantly? Or are there any other standout performers that are moving the needle here?
And my next question would be on the EBITDA margin guidance. So should -- considering the lower adjusted EBITDA margin, should we expect this trend to be more cyclical in nature given the lower volume outlook in the second half? Or is this more structural looking at the types of services that you're providing to some of the newer clients?
Thank you very much for the questions. Yes, the performance outside of our top 5 clients is quite staggering and significant. We're very happy with that the whole goal of the company, where we have 2 strategies to diversify from our bigger clients, which is build our portfolio of newer clients to outpace the growth of our bigger clients. Then the second one is on the M&A side, continue to have a more balanced business. So we've had great success bringing new clients for the past few years. Some of them date back to 2021, and they started rather small, but they've now taken over the world. So we have a gaming client, for example, where we really started in one location back in 2021. And now we are in 5 locations. It's become a global client. It's been growing very fast in the gaming sector. We onboarded on the back of this another great gaming client as well, where we expect that it's now operating in 2 locations. We expect it to grow another location. So that's doing well.
We onboarded as well recently, a fast-moving fashion from Asia, and this client is growing super fast but really extremely fast which it's a star for us in one of our locations in the Philippines. We have digital advertising, a new client that would have onboarded about 2 years ago, that's starting to really deliver. So we just recently onboarded less than a year ago an automotive business. And automotive is going through a bit of a revolution of a change of distribution model, transitioning from wholesale and agents and distributors into an online model that creates tremendous opportunities for us. It's a global deal. So there are quite a few opportunities.
But what I find super interesting as well, and a lot of our -- more and more of our clients are becoming -- are originally from Asia. And there's a big trend where TDCX is able to attract the Asian superstars, the leading companies of Asia as part of our clientele, which really represent the future of the economy for Asia and for the world actually because they're not operating in Asia only, if they've done their job of having a good market share in this growing territory, and they're taking over the world, and we're there to support them where they need us to be. Now we have 16 locations to serve our clients. So we've been making great progress on growing our location. So we're in a fantastic position, in a good place at this point.
Maybe the second question, I think, is around the margins. And both maybe the short term and the long term part of the margin, maybe I'll defer to Mr. Chin to talk to you about the market, if you don't mind.
Yes. Sure. Thanks, Laurent. So on the margin side of thing, it is due to largely planned costs and investments and our continuing investment into the business as a reflection of our geographic expansion that we have put in, in the last couple of years, the building up of our AI that Laurent has alluded a bit a while ago. That also is baked into the EBITDA outlook as well as what happened in Q1 on our improvement going into Q2 about keeping our agents sizing in the anticipation of the volume movement that -- which comes along with support and shared service staff ratios to deliver the best optimal outcome for our clients. And it's kind of reflected in Q2 that we are going to continue on that path going into the remaining months of the year.
In that sense, we think that these investments are quite necessary to put us in a healthy position to benefit from a possible macro recovery, if it turns in towards the end of this year going into 2024. So on that basis, we do commit ourselves to putting in, as like I said earlier on necessary investment and spending for the business in the long term rather than going on a quarter-to-quarter basis. Remaining careful in how we optimize our costs with an eye on volume rebound in '24. But at the same time, against what's happening in the near term, we are also reprioritizing our overheads generally, from what we have planned early on to make it more stay kind of elastic against our revenue volume that in the near term so that our EBITDA phase on cost of what outlook, things like infrastructure, capacity planning decisions are still to be revisited to ensure that we don't stay too off course from the business side of things. So that's what is -- we are happening now and also going into the remaining part of the year.
Thanks, Mr. Chin. We have some questions on the webcast that I can read out. Number one, can you share a bit more color on your business development pipeline? How is it coming along? And second one would be you announced some share buybacks in Q2 '23. Can you give more color around that and your plans going forward?
Yes. Thank you for the question. So our pipeline is building up pretty nicely. And what I like about it as well this year, we've gotten quite a bit of interest in a new sector that we haven't been really into, which is health tech. So we won 2 contracts in that sector in Europe. But we have -- and then the third one in Asia as well. We have more coming up on the health sector as well, which is going to be an interesting new development for TDCX to grow our opportunities for business. We see in Q3, the number of leads starting to get into the zone of the higher numbers than we've had before over the past 2 quarters, good opportunities in still a lot of new economy companies as well for us. And as well, I would say that what makes this year different is we're getting a lot more RFPs from existing clients. And the deals we're closing as well have a much higher sales value than they did in the previous quarter. So our business development team that was recently restructured is doing a great job, and that can only get better. And so that answers the questions on the pipeline.
I'll leave the other questions to be answered by Edward Goh, our Head of Corporate Development.
Sure. Thanks, Laurent. On the topic of buyback, I think we've always said we are guided by valuation against our peers. But my view on sort of the impact of liquidity, but I think at current levels, definitely, we're seeing very attractive values, I think sort of prioritizing really the use of our capital on this exercise. I think looking at just sort of our cash being $300 million, still, that's about 40% of our current market cap. It looks like a very sort of a good level for us to continue to be more proactive in our share buyback program. So definitely, we've sort of done some in the second quarter of '23, which we purchased about 160,000 ADS over this period of time. So we continue to sort of adopt the same approach going forward.
And if I can wrap on a little bit on the business development pipeline as well. Just wanting to indicate a little bit of what we're seeing as potential trends that are going to impact us and drive more business for us, really the opportunity for outsourcing, which we think is going to fuel 2024. We're starting to see that clients who have laid off need to get things done, but they don't have the manpower, they don't have the capabilities even in the in-house market, clients don't have the capabilities because everybody has been going through the leaner exercise. And the kind of inquiries we're getting from clients are becoming increasingly complex because those are the resources that they cut.
So the second trend that we see also is the ever rising expectations as the world becomes more and more digital. The expectations are much higher. So some of our clients have increased their NPS expectations, their CSAT expectations. And these increases come at a cost that can be mitigated through automation, but will require much more investment and effort and that's we think will be driving the price of the business and what we sell to our clients and leveraging absolutely TDCX AI to help to drive that. So we see quite a number of positive trends at this point that can continue to power the business in 2024 and beyond.
Operator, can we have the next question, please?
Our next question is from Jonathan Woo of Phillip Securities.
The first is, could you give some update on the new geographies, Indonesia and Brazil? How has the progress been -- has the pipeline over there been as expected? And the second question would be on the key client that actually reduced volumes for you guys, or reducing volumes? Can you give us a little bit more color on them, how much volume did they cut and how much expected growth was based in percentage terms?
Thank you, Jonathan. So 2 geos here, Indonesia pretty new to us. So it's -- at this point, it's embryonic expansion. We are very early days in Indonesia, but successful already with a client because our strategy for 2023 and 2024 will be to go in greenfield operations supported by clients as previously different where we were in some locations strategically investing, but for several reasons, one that we already have quite a good footprint globally that we're trying to control our costs as well. Now we choose locations when we have business. So Indonesia was exactly that. It's -- so it's just starting, but very successful at this point.
Brazil is, I would call it a tremendous success. We started with a client. We have a bit more than 100 headcount now in Brazil. When I say it's a tremendous success because we were able to do this really in a very short period of time in Sao Paulo that the business is performing super well for our clients. But that also, we are getting a number of inquiries. And finally, because it's also completing the puzzle of Latin America, where we were in Colombia, we are in Colombia doing really well in Bogota. But it's difficult to have a Latin American strategy unless you cover Portuguese and Brazil because Brazil is still a huge powerhouse in Latin America, having the combination of Bogota and Sao Paulo as it makes it really credible and capable. So very happy with where this is going. Very happy also with our operational capability in terms of setting up greenfield sites over the past 2 years, we've done mostly 100% success in greenfield operations, which is a tribute to our operations teams, and it's super important for our clients to give us more business moving forward. So that plays around our agility.
Now going back to the second question about clients reducing volume. Yes, I cannot give too much details about which clients I'd rather give sectors. So as you would expect, digital advertising has been under pressure for the right or for the wrong reasons. I would say the sales and digital marketing a lot less under pressure, more the OCX and content moderation were under pressure, and that will continue to be the case a little bit. Fintech has also contracted yet we're seeing some rebound, but more in the later part of the year. So that's why our guidance is affected as well. But that's giving us some hope in 2024 on the fintech side.
I would say travel and hospitality, we were expecting, I would say, a much better Q2, Q3 out of travel and hospitality. And is it mostly because China didn't show up? Is it because Japan is not traveling outside, there could be different reasons, I think, maybe globally as well. But it's not delivering the usual power numbers that we are used to. Nonetheless, our first half on travel and hospitality is quite spectacular, nonetheless -- and good, it's just that the second half is not tremendous.
So that's what's going on, if I can say. We have other sectors like tech, gaming, e-commerce, that's flying, so that the opportunities even in the financial services for us. So it's not all gloom. It's a mix of factors that are pretty sectoral and the other sectors are doing well. I hope that answers the question, Jonathan.
This concludes today's Q&A session. I will now hand over to Jason for closing remarks.
Okay. Thanks, everyone, for joining us on this call. If you have any further questions or any follow-ups, please feel free to get in touch with us. On behalf of management, we're signing off. Thank you, and goodbye.
This concludes today's call. Thank you for joining. You may now disconnect your lines.