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TELUS International (CDA) (TSE:TIXT)
TSX:TIXT

TELUS International (CDA) (TIXT) AI Stock Analysis

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TELUS International (CDA)

(TSX:TIXT)

Rating:65Neutral
Price Target:
C$5.50
▲(2.42%Upside)
TELUS International's stock score reflects strong cash flow and a solid client base, tempered by financial and valuation challenges. Positive technical indicators provide some optimism, but the negative P/E ratio and increased leverage present significant risks.
Positive Factors
Acquisition Offer
TIXT received a non-binding indication of interest from parent company TELUS at $3.40 per share for the remaining shares, representing a 15% premium to the closing price and a 23% premium to the stock's trailing 30-day volume weighted average price.
Strategic Synergies
TELUS Corp. is seeking full ownership of Telus Digital to unlock deeper operational synergies and enable enhanced AI capabilities and SaaS transformations.
Negative Factors
Client Concentration
TIXT's revenue growth and profits are under meaningful pressure from client concentration and a weaker IT services demand environment.
Competitive Pricing Pressure
Telus Digital’s margins will remain under pressure due to challenges with recent cost optimization initiatives and pricing pressures from competitive forces.

TELUS International (CDA) (TIXT) vs. iShares MSCI Canada ETF (EWC)

TELUS International (CDA) Business Overview & Revenue Model

Company DescriptionTELUS International (Cda) Inc. provides customer experience and digital business services in Europe, North America, the Asia-Pacific, and the Central America. It offers digital experience solutions, such as AI and bots, omnichannel CX, mobility solutions, cloud contact center, big data, platform transformation, and UX/UI design; and customer experience solutions, including work anywhere/work from home, customer care, technical support, sales growth and retention, and healthcare/patient experience. The company also provides IT lifecycle services comprising cloud and platform services, app dev and management, quality assurance and testing, system operations, IT service desk, internet of things, engineering solutions, and enterprise platform services; advisory services consisting of digital strategy, CX process consulting, data and customer analytics, workforce management, learning excellence solutions, and business and process transformation; robotic process automation, talent acquisition, finance and accounting, and supply chain management; and content moderation and social media, and fraud prevention and detection. It serves tech and games, communications and media, ecommerce and fintech, healthcare, and travel and hospitality industries. The company was founded in 2005 and is headquartered in Vancouver, Canada. TELUS International (Cda) Inc. is a subsidiary of TELUS Communications Inc.
How the Company Makes MoneyTELUS International generates revenue primarily through its comprehensive suite of digital solutions and services tailored to meet the needs of various industries. The company's key revenue streams include digital customer experience management services, IT services, and consulting. Significant revenue is derived from long-term contracts with large enterprises in sectors such as technology, telecommunications, and healthcare. TELUS International also benefits from strategic partnerships and alliances that enhance its service offerings and expand its market reach. By leveraging its expertise in AI and machine learning, the company provides innovative solutions that help clients improve efficiency and customer satisfaction, thus driving revenue growth.

TELUS International (CDA) Earnings Call Summary

Earnings Call Date:May 09, 2025
(Q1-2025)
|
% Change Since: 45.92%|
Next Earnings Date:Aug 01, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view with moderate revenue growth and strong client relationships countered by a decline in adjusted EBITDA margin and increased leverage. While there are promising developments in AI, data solutions, and strategic partnerships, financial challenges remain, particularly in maintaining profitability and managing leverage.
Q1-2025 Updates
Positive Updates
Revenue Growth
TELUS International (Cda) Inc. reported a revenue of $670 million, an increase of 2% year over year, or 3% on a constant currency basis, reflecting growth in AI and data solutions and digital solutions.
Strong Client Relationships
Revenue with TELUS, the largest client, grew 12% year over year. There was also growth with a leading social media client, contributing to a diversified client base.
Expansion in AI and Data Solutions
The company is working on various AI and data solutions, including training solutions for large language models (LLM) and has seen growth in this service line with several clients.
Partnerships and New Client Wins
New partnerships and client expansions were noted, including a partnership with Sumsub for trust, safety, and security solutions, and growth in sectors such as healthcare and financial services.
Negative Updates
Decline in Adjusted EBITDA Margin
The adjusted EBITDA margin was 13.4%, a decrease year over year due to increased salaries and benefits, higher capital expenditures, and an unfavorable comparison with the previous year.
Leverage Ratio Increase
The net debt to adjusted EBITDA leverage ratio increased to 3.4 times as of March 31, compared to 3.2 times as of December 31.
Challenges in Specific Industry Verticals
While there was growth in tech and games, it was partially offset by lower revenue from other clients in this vertical. There were also challenges in maintaining stable revenue across certain geographies.
Company Guidance
During the Q1 2025 investor call, TELUS International (Cda) Inc. reaffirmed its guidance for the full fiscal year, projecting approximately 2% organic revenue growth, with an adjusted EBITDA of around $400 million and an adjusted diluted EPS of 32¢. In Q1 2025, the company reported a revenue of $670 million, a 2% year-over-year increase, or 3% on a constant currency basis. The adjusted EBITDA margin for the quarter was 13.4%, reflecting an increase in salaries and benefits. The company also noted a year-over-year growth in revenue from its largest client, TELUS, by 12%, while AI and data solutions and digital solutions also contributed to overall revenue growth. The company highlighted its focus on geographic and service diversification, aiming to navigate market uncertainties and sustain growth through enhanced client engagement, AI-driven solutions, and strategic partnerships.

TELUS International (CDA) Financial Statement Overview

Summary
TELUS International shows strong cash flow generation and a solid equity base, but faces challenges in maintaining profitability and revenue growth. The balance sheet is stable, though increasing leverage and net losses are concerns.
Income Statement
58
Neutral
The income statement reflects a challenging period for TELUS International. The gross profit margin in the TTM is approximately 61.35%, indicating efficient cost management. However, the company is struggling to maintain profitability with a net loss, resulting in a negative net profit margin of -4.27%. Revenue growth has been inconsistent, with a slight decline in recent periods. The EBIT and EBITDA margins have also contracted, reflecting operational inefficiencies.
Balance Sheet
65
Positive
TELUS International's balance sheet shows moderate financial stability. The debt-to-equity ratio stands at 0.76, suggesting a manageable leverage level, though it has been increasing over time. Return on equity is negative due to net losses, but the equity ratio is a solid 43.27%, indicating a strong asset base relative to liabilities.
Cash Flow
72
Positive
The cash flow statement highlights strong cash generation capabilities, with a positive operating cash flow to net income ratio. Despite a decrease in free cash flow growth, the company maintains a healthy free cash flow to net income ratio, underscoring its ability to generate cash despite net losses.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue2.67B2.66B2.71B2.47B2.19B1.58B
Gross Profit1.64B2.15B2.25B2.00B1.76B1.28B
EBITDA356.00M437.00M523.43M527.25M439.10M396.92M
Net Income-114.00M-61.00M54.00M183.00M78.00M103.00M
Balance Sheet
Total Assets4.51B4.52B4.82B3.56B3.63B3.74B
Cash, Cash Equivalents and Short-Term Investments137.00M174.00M131.00M125.00M115.00M152.50M
Total Debt1.49B1.52B1.75B964.00M1.15B1.77B
Total Liabilities2.56B2.58B2.79B1.72B1.97B2.63B
Stockholders Equity1.95B1.95B2.04B1.84B1.66B1.11B
Cash Flow
Free Cash Flow325.07M412.00M409.00M332.00M183.00M237.00M
Operating Cash Flow436.02M517.00M498.00M437.00M282.00M297.00M
Investing Cash Flow-109.00M-107.00M-941.00M-119.00M-110.00M-1.87B
Financing Cash Flow-343.83M-361.00M443.00M-300.00M-206.00M1.66B

TELUS International (CDA) Technical Analysis

Technical Analysis Sentiment
Positive
Last Price5.37
Price Trends
50DMA
4.17
Positive
100DMA
4.10
Positive
200DMA
4.69
Positive
Market Momentum
MACD
0.30
Negative
RSI
72.82
Negative
STOCH
83.96
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:TIXT, the sentiment is Positive. The current price of 5.37 is above the 20-day moving average (MA) of 4.78, above the 50-day MA of 4.17, and above the 200-day MA of 4.69, indicating a bullish trend. The MACD of 0.30 indicates Negative momentum. The RSI at 72.82 is Negative, neither overbought nor oversold. The STOCH value of 83.96 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:TIXT.

TELUS International (CDA) Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TSCVO
73
Outperform
C$745.09M-9.00%9.08%37.74%
65
Neutral
$1.48B35.99-5.70%2.87%-271.63%
63
Neutral
$34.04B6.14-11.52%1.82%5.53%-18.79%
BBBB
$2.55B-1.76%
TSNOW
69
Neutral
C$60.26M15.37679.89%-10.35%
TSSTC
63
Neutral
C$288.49M-2.67%-1.72%76.81%
TSDND
54
Neutral
C$669.31M-39.72%0.76%2.47%19.37%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:TIXT
TELUS International (CDA)
5.37
-2.74
-33.79%
BB
BlackBerry
4.35
1.92
79.01%
TSE:STC
Sangoma Technologies
8.74
2.29
35.50%
TSE:DND
Dye & Durham
9.94
-2.52
-20.22%
TSE:NOW
NowVertical Group Inc
0.63
0.47
293.75%
TSE:CVO
Coveo Solutions
7.74
-0.22
-2.76%

TELUS International (CDA) Corporate Events

M&A Transactions
TELUS Digital Receives Acquisition Proposal from TELUS Corporation
Neutral
Jun 12, 2025

TELUS Digital has received a non-binding proposal from TELUS Corporation to acquire all outstanding shares not already owned by the corporation for US$3.40 per share. The proposal is contingent upon several conditions, including due diligence and shareholder approval. TELUS Digital’s board plans to form a special committee to review the proposal, but no decisions have been made yet, and shareholders are advised that no action is required at this time.

The most recent analyst rating on (TSE:TIXT) stock is a Hold with a C$7.00 price target. To see the full list of analyst forecasts on TELUS International (CDA) stock, see the TSE:TIXT Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 13, 2025