EX-99.1 2 q32024exhibit991.htm EX-99.1 Document

Exhibit 99.1
TELUS INTERNATIONAL (CDA) INC.
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 2024



TELUS International (Cda) Inc.
Condensed Interim Consolidated Statements of Income (Loss) and Other Comprehensive Income (Loss)
(unaudited)
  Three monthsNine months
Periods ended September 30 (millions except earnings per share)Note2024202320242023
REVENUE3$658 $663 $1,967 $2,016 
  
OPERATING EXPENSES 
Salaries and benefits 423 403 1,265 1,258 
Goods and services purchased 126 116 359 339 
Share-based compensation414 25 21 
Acquisition, integration and other16 11 32 48 
Depreciation1035 36 104 102 
Amortization of intangible assets1146 44 135 138 
  660 615 1,920 1,906 
    
OPERATING (LOSS) INCOME
 (2)48 47 110 
  
OTHER EXPENSES (INCOME) 
Changes in business combination-related provisions12 — (60)— 
Interest expense535 38 106 107 
Foreign exchange loss (gain)
 1 (2)1 (4)
(LOSS) INCOME BEFORE INCOME TAXES
 (38)12  
Income tax (recovery) expense
6(6)7 (9)
NET (LOSS) INCOME
 (32)(7)16 
  
OTHER COMPREHENSIVE INCOME (LOSS)
  
Items that may subsequently be reclassified to income 
Change in unrealized fair value of derivatives designated as held-for-hedging (29)13 (8)
Exchange differences arising from translation of foreign operations 41 (36)2 (19)
  12 (23)(6)(12)
COMPREHENSIVE (LOSS) INCOME
 $(20)$(14)$(13)$
  
EARNINGS (LOSS) PER SHARE
7
Basic $(0.12)$0.03 $(0.03)$0.06 
Diluted $(0.12)$0.03 $(0.16)$0.06 
  
TOTAL WEIGHTED AVERAGE SHARES OUTSTANDING (millions) 
Basic7275 274 275 273 
Diluted7275 276 294 277 
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
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TELUS International (Cda) Inc.
Condensed Interim Consolidated Statements of Financial Position
(unaudited)
As at (millions)NoteSeptember 30, 2024December 31, 2023
ASSETS   
Current assets   
Cash and cash equivalents $149 $127 
Accounts receivable8470 498 
Due from affiliated companies16(a)39 62 
Income and other taxes receivable8 
Prepaid and other assets 42 35 
Current portion of derivative assets912 16 
  720 743 
Non-current assets   
Property, plant and equipment, net10485 517 
Intangible assets, net111,437 1,546 
Goodwill111,971 1,963 
Deferred income taxes 39 29 
Other long-term assets17(b)26 25 
  3,958 4,080 
Total assets $4,678 $4,823 
    
LIABILITIES AND OWNERS’ EQUITY   
Current liabilities   
Accounts payable and accrued liabilities17(b)$301 $290 
Due to affiliated companies16(a)216 178 
Income and other taxes payable 61 57 
Current portion of provisions127 
Current maturities of long-term debt13120 122 
  705 649 
Non-current liabilities   
Provisions12138 191 
Long-term debt131,480 1,628 
Derivative liabilities914 12 
Deferred income taxes 271 290 
Other long-term liabilities 22 16 
  1,925 2,137 
Total liabilities 2,630 2,786 
    
Owners’ equity2,048 2,037 
Total liabilities and owners’ equity $4,678 $4,823 
  
Contingent liabilities15
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
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TELUS International (Cda) Inc.
Condensed Interim Consolidated Statements of Changes in Owners’ Equity
(unaudited)
(millions)NoteNumber
of shares
Share
capital
Contributed
surplus
Retained
earnings
Accumulated
other
comprehensive
loss
Total
Balance as at January 1, 2023
267 $1,503 $55 $292 $(12)$1,838 
Net income— — — 16 — 16 
Other comprehensive loss
— — — — (12)(12)
Common shares issued125 — — — 125 
Share-based compensation18 (1)— 21 
Balance as at September 30, 2023274 $1,646 $59 $307 $(24)$1,988 
Balance as at January 1, 2024
274 $1,648 $55 $347 $(13)$2,037 
Net loss
   (7) (7)
Other comprehensive loss
    (6)(6)
Multiple Voting Shares converted to Subordinate Voting Shares14(3)(11)   (11)
Subordinate Voting Shares converted from Multiple Voting Shares143 11    11 
Share-based compensation1 14 10   24 
Balance as at September 30, 2024275 $1,662 $65 $340 $(19)$2,048 
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
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TELUS International (Cda) Inc.
Condensed Interim Consolidated Statements of Cash Flows
(unaudited)
  Three monthsNine months
Periods ended September 30 (millions)Note2024202320242023
OPERATING ACTIVITIES   
Net (loss) income
 $(32)$$(7)$16 
Adjustments: 
Depreciation and amortization81 80 239 240 
Interest expense35 38 106 107 
Income tax (recovery) expense
(6)7 (9)
Share-based compensation14 25 21 
Changes in business combination-related provisions  — (60)— 
Change in market value of derivatives and other (5)(3)(9)(5)
Net change in non-cash operating working capital17(c)52 66 106 37 
Share-based compensation payments (2) (2)
Income taxes paid, net (18)(11)(36)(49)
Cash provided by operating activities 121 185 371 356 
INVESTING ACTIVITIES 
Cash payments for capital assets17(c)(25)(20)(76)(58)
Cash receipts from other assets
 — 1 — 
Cash payments for acquisitions, net11 (1)(3)(852)
Cash used in investing activities (25)(21)(78)(910)
FINANCING ACTIVITIES  
Shares issued 2 
Withholding taxes paid related to net share settlement of equity awards4(a)(1)(1)(4)(3)
Long-term debt issued17(d)115 40 205 1,076 
Repayment of long-term debt
17(d)
(193)(187)(405)(435)
Interest paid on credit facilities (23)(27)(71)(80)
Cash (used in) provided by financing activities (102)(174)(273)561 
Effect of exchange rate changes on cash and cash equivalents 3 (1)2 — 
CASH POSITION 
(Decrease) increase in cash and cash equivalents
 (3)(11)22 
Cash and cash equivalents, beginning of period 152 143 127 125 
Cash and cash equivalents, end of period $149 $132 $149 $132 
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
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TELUS International (Cda) Inc.
Notes to Condensed Interim Consolidated Financial Statements
(unaudited)
 
TELUS International (Cda) Inc. (TELUS Digital or the Company), formally rebranded to TELUS Digital Experience in the third quarter of 2024, is a leading digital customer experience innovator that designs, builds and delivers next-generation solutions, including artificial intelligence (AI) and content moderation, for global and disruptive brands.
TELUS Digital was incorporated under the Business Corporations Act (British Columbia) on January 2, 2016, and is a subsidiary of TELUS Corporation. TELUS Digital maintains its registered office at 510 West Georgia Street, Vancouver, British Columbia.
The terms we, us, our or ourselves are used to refer to TELUS Digital and, where the context of the narrative permits or requires, its subsidiaries.
Additionally, the term TELUS Corporation is a reference to TELUS Corporation, and where the context of the narrative permits or requires, its subsidiaries, excluding TELUS Digital.
Notes to the condensed interim consolidated financial statementsPage
General application
1.Condensed interim consolidated financial statements
2.Capital structure financial policies
Consolidated results of operations focused
3.Revenue
4.Share-based compensation
5.Interest expense
6.Income taxes
7.
Earnings (loss) per share
Consolidated financial position focused
8.Accounts receivable
9.Financial instruments
10.Property, plant and equipment
11.Intangible assets and goodwill
12.Provisions
13.Long-term debt
14.Share capital
15.Contingent liabilities
Other
16.Related party transactions
17.Additional financial information
18.
Segment reporting
1. Condensed interim consolidated financial statements
(a)     Basis of presentation
The notes presented in our condensed interim consolidated financial statements include only significant events and transactions and are not fully inclusive of all matters normally disclosed in our annual audited financial statements; thus, our interim consolidated financial statements are referred to as condensed. Our financial results may vary from period to period during any fiscal year. The seasonality in our business, and consequently, our financial performance, mirrors that of our clients. Our revenues are typically higher in the third and fourth quarters than in other quarters, but this can vary if there are material changes to our clients’ operating environment, such as potential impacts of a recession and our clients’ response to those impacts, or material changes in the foreign currency rates that we operate in.
These condensed interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2023, and are expressed in United States dollars and follow the same accounting policies and methods of their application as set out in our audited consolidated financial statements for the year ended December 31, 2023. The generally accepted accounting principles that we use are International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS-IASB). Our condensed interim consolidated financial statements comply with International Accounting Standard 34, Interim Financial Reporting and reflect all adjustments (which are of a normal recurring nature) that are, in our opinion, necessary for a fair statement of the results for the interim periods presented.
These condensed interim consolidated financial statements as at and for the three- and nine-month periods ended September 30, 2024 were authorized by our Board of Directors for issue on November 8, 2024.
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(b)    Accounting policy developments
Initial application of standards, interpretations and amendments to standards and interpretations
In May 2023, the International Accounting Standards Board issued International Tax Reform – Pillar Two Model Rules (Amendments to IAS 12), which amended IAS 12, Income Taxes. The amendments provide, and we use, temporary relief from accounting for deferred income taxes arising from the Organisation for Economic Co-operation and Development’s Pillar Two model rules (such rules ensuring that large multinational corporations would be subject to a minimum 15% income tax rate in every jurisdiction in which they operate). As different jurisdictions are expected to implement the OECD rules at different speeds and at different points in time, the amendments are intended to help ensure consistency within, and comparability across, financial statements. The amendments are effective for annual reporting periods beginning on or after January 1, 2023. We have assessed the impacts of the amended standard, and our financial disclosure was not materially affected by the application of the amendments.
Standards, interpretations and amendments to standards and interpretations not yet effective and not yet applied
In April 2024, the International Accounting Standards Board issued IFRS 18, Presentation and Disclosure in the Financial Statements, which sets out the overall requirements for presentation and disclosures in the financial statements. The new standard will replace IAS 1, Presentation of Financial Statements. Although much of the substance of IAS 1, Presentation of Financial Statements, will carry over into the new standard, the new standard incrementally will:
With a view to improving comparability amongst entities, require presentation in the statement of operations of a subtotal for operating profit and a subtotal for profit before financing and income taxes (both subtotals as defined in the new standard);
Require disclosure and reconciliation, within a single financial statement note, of management-defined performance measures that are used in public communications to share management’s views of various aspects of an entity’s performance and which are derived from the statements of income and other comprehensive income;
Enhance the requirements for aggregation and disaggregation of financial statement amounts; and
Require limited changes to the statement of cash flows, including elimination of options for the classification of interest and dividend cash flows.
The new standard is effective for annual reporting periods beginning on or after January 1, 2027, with earlier adoption permitted. We are currently assessing the impacts of the new standard; while there will be a limited shift of where a number of our management-defined performance measures are disclosed and reconciled (primarily a shift from management’s discussion and analysis to the financial statements), we do not expect that the totality of our financial disclosure will be materially affected by the application of the new standard.
In May 2024, the International Accounting Standards Board issued Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7). The narrow scope amendments are to address diversity in accounting practice in respect of: the classification of financial assets with environmental, social and corporate governance and similar features; and to clarify the date on which a financial asset or financial liability is derecognized when using electronic payment systems. The new standard is effective for annual reporting periods beginning on or after January 1, 2026, with earlier adoption permitted. We are currently assessing the impacts of the new standard but do not expect to be materially affected by the application of the amendments.
2. Capital structure financial policies
Our objective when managing capital is to maintain a flexible capital structure that optimizes the cost and availability of capital at acceptable risk levels.
In the management of capital and in its definition, we include owners’ equity (excluding accumulated other comprehensive income), long-term debt (including long-term credit facilities and any hedging assets or liabilities associated with our long-term debt, net of amounts recognized in accumulated other comprehensive income and excluding lease liabilities) and cash and cash equivalents. We manage capital by monitoring the financial covenants in our credit facility (Note 13—Long-term debt).
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We manage our capital structure and make adjustments to it in light of changes in economic conditions and the risk characteristics of our business. In order to maintain or adjust our capital structure, we may issue new shares, issue new debt with different terms or characteristics, which may be used to replace existing debt, or pay down our debt balance with cash flows from operations. 
3. Revenue
We earn revenue pursuant to contracts with our clients, who operate in various industry verticals. The following presents our earned revenue disaggregation for our five largest industry verticals for the following periods:
Three monthsNine months
Periods ended September 30 (millions)2024202320242023
Tech and Games$277 $301 $830 $885 
Communications and Media164 155 482 465 
eCommerce and FinTech60 71 193 216 
Healthcare48 38 144 115 
Banking, Financial Services and Insurance41 34 116 115 
All others1
68 64 202 220 
$658 $663 $1,967 $2,016 
1.Includes, among others, travel and hospitality, energy and utilities, retail, and consumer packaged goods industry verticals.
We serve our clients, who are primarily domiciled in North America, from multiple delivery locations across various geographic regions. In addition, our AI data solutions business has clients that are largely supported by crowdsourced contractors that are globally dispersed and not limited to the physical locations of our delivery centres. The following table presents our earned revenue disaggregated by geographic region, based on location of our delivery centre or where service was provided, for the following periods:
Three monthsNine months
Periods ended September 30 (millions)2024202320242023
Europe$193 $202 $576 $625 
North America178 184 546 583 
Asia-Pacific149 162 461 474 
Central America and others1
138 115 384 334 
$658 $663 $1,967 $2,016 
1.Includes South America and Africa geographic regions.
4. Share-based compensation
(a)    Restricted share unit plan
We grant restricted share units (RSUs) and performance restricted share units (PSUs), which are accounted for as equity-settled, as this is the expected manner of their settlement when granted. All awards granted under the restricted share unit plan are nominally equal in value to one TELUS Digital subordinate voting share. Our PSU grants largely have the same features as our RSUs, but have a variable payout (0% 300%) that depend upon the achievement of operating performance targets (non-market conditions), or total shareholder return on TELUS Digital subordinate voting shares relative to an international peer group of customer experience and digital IT services companies (market conditions). The grant-date fair value of our PSUs affected by the achievement of non-market conditions equals the share price of the corresponding TELUS Digital subordinate voting share as of the grant date. Reflecting a variable payout, we estimate the grant-date fair value of our PSUs affected by the relative total shareholder return performance condition using a Monte Carlo simulation.
The following table presents a summary of the activity related to our restricted share unit plan:
7


Three monthsNine months
Number of unitsWeighted average grant-date fair valueNumber of unitsWeighted average grant-date fair value
Period ended September 30, 2024Non-vestedVestedNon-vestedVested
Outstanding, beginning of period13,955,245 — $8.05 2,615,746 — $21.36 
Granted1,2
7,241,699 489,118 $3.11 19,836,119 528,234 $5.30 
Vested(9,601)9,601 $11.35 (797,904)797,904 $20.48 
Exercised3
— (498,719)$3.18 — (1,326,138)$13.69 
Forfeited(343,464)— $6.52 (810,082)— $16.19 
Outstanding, September 30, 202420,843,879 — $6.36 20,843,879 — $6.36 
1.During the three-month period ended September 30, 2024, we canceled the Unit Appreciation Rights (UARs) that were granted in the third quarter of 2023 to certain employees of WillowTree, in exchange for 5,762,233 RSUs, which require continued employment and vest annually over a three-year period beginning in 2025 (graded-vesting method). Consistent with the UAR awards previously granted, the settlement of these RSUs are funded by the provisions for written put options (see Note 12—Provisions for additional details on the written put options).
2.On June 28, 2024, in connection with the amendments to our provisions for written put options (see Note 12—Provisions for additional details on the amendments), we granted 9,198,600 PSUs to the holders of the written put options. These PSUs require continued employment, are subject to the achievement of the financial performance of certain TELUS Digital products and services with variable payout between 0% to 300%, and vest annually over a three-year period beginning in 2026.
3.During the three-month period ended September 30, 2024, 498,719 RSUs were exercised and settled with 303,793 subordinate voting shares issued from treasury and $1 million in withholding taxes paid. During the nine-month period ended September 30, 2024, 1,286,633 RSUs and 39,505 PSUs were exercised and settled with 805,723 subordinate voting shares issued from treasury and $4 million in withholding taxes paid.
As at September 30, 2024, the outstanding restricted share units comprised of 9,374,142 RSUs, 11,180,924 PSUs (non-market conditions), 288,813 PSUs (market conditions).
(b)    Share option award plan
We grant share option awards, which are accounted for as equity-settled, as this is the expected manner of their settlement when granted. Share option awards grant the right to the employee recipient to purchase and receive a subordinate voting share of TELUS Digital for a pre-determined exercise price, and are generally exercisable for a period of ten years from the date of grant. The following table presents the activity related to our share option award plan:
Three monthsNine months
Number of share
option award units
Weighted
average
exercise price
Number of share
option award units
Weighted
average
exercise price
Period ended September 30, 2024Non-vestedVestedNon-vestedVested
Outstanding, beginning of period89,088 2,363,846 $9.89 220,100 2,316,683 $10.39 
Granted
2,909,788 — 3.69 2,909,788 — $3.69 
Vested — — — (110,050)110,050 $25.00 
Forfeited — — — (20,962)(62,887)$25.00 
Outstanding, September 30, 20241
2,998,876 2,363,846 $6.52 2,998,876 2,363,846 $6.52 
Exercisable, September 30, 2024— 2,363,846 $9.32 — 2,363,846 $9.32 

1.The exercise price for options outstanding as at September 30, 2024 ranged from $3.69 for 2,909,788 options with a weighted-average remaining contractual life of 10 years, $4.87 to $8.95 for 2,096,582 options with a weighted-average remaining contractual life of 2.2 years, and $25.00 for 356,352 options with a weighted-average remaining contractual life of 6.4 years.
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The weighted average fair value of the share options granted during the three-month period ended September 30, 2024, and the weighted average assumptions used in the fair value estimation at the time of grant, calculated by using the Black-Scholes model, are as follows:
Period ended September 30, 2024Nine months
Share option award fair value (per share option)$1.50
Risk free interest rate2.7%
Expected lives (years)6.5
Expected volatility35.4%
Dividend yield
5. Interest expense
 Three monthsNine months
Periods ended September 30 (millions)2024202320242023
Interest on long-term debt, excluding lease liabilities$24 $27 $74 $78 
Interest on lease liabilities8 23 17 
Amortization of financing fees and other1 2 
Interest accretion on provisions2 7 
 $35 $38 $106 $107 
6. Income taxes
Three monthsNine months
Periods ended September 30 (millions)2024202320242023
Current income tax expense (recovery)
  
For current reporting period$16 $18 $43 $49 
Pillar Two global minimum tax
 — 1  
Adjustments recognized in the current period for income tax of prior periods(1)— (7)(6)
15 18 37 43 
Deferred income tax recovery
Arising from the origination and reversal of temporary differences(21)(14)(30)(50)
Adjustments recognized in the current period for income tax of prior periods
 (1) (2)
 (21)(15)(30)(52)
 $(6)$$7 $(9)
Our income tax expense (recovery) and effective income tax rate differ from that calculated by applying the applicable statutory rates for the following reasons: 
9


 Three monthsNine months
Periods ended September 30 (millions except percentages)2024202320242023
Income taxes computed at applicable statutory income tax rates$(12)32.6 %$9.1 %$(7)n/m$(7)(101.0)%
Non-deductible (taxable) items
2 4 
Withholding and other taxes5 17 11 
Losses not recognized1 3 
Foreign tax differential(3)(3)(5)(8)
Adjustments recognized in the current period for income tax of prior periods(1)(1)(7)(8)
Pillar Two global minimum tax
 — 1 — 
Other2 — 1 — 
Income tax expense (recovery)
$(6)15.8 %$25.0 %$7 n/m$(9)(128.6)%
The effective tax rate, calculated as tax expense as a proportion of income before taxes, is undefined due to nil income before taxes for the nine months ended September 30, 2024.
We are subject to the global minimum top-up income tax under Pillar Two tax legislation. The top-up income tax relates primarily to our operations in Bulgaria and Ireland, where the statutory income tax rate is 10% and 12.5%, respectively. As at September 30, 2024, both Bulgaria and Ireland have enacted global minimum income tax into domestic tax legislation effective January 1, 2024. As a result, our Bulgarian and Irish subsidiaries will be liable for the top-up income tax rather than the ultimate Canadian parent company. During the nine-month period ended September 30, 2024, the Company recognized a current income tax expense of $1 million related to the Pillar Two tax.
We have applied a temporary mandatory relief from deferred tax accounting for the impacts of the top-up income tax and it is recognized as a current income tax in the period it is incurred.
7. Earnings (loss) per share
(a)Basic earnings (loss) per share
Basic earnings (loss) per share is calculated by dividing net income (loss) by the total weighted average number of equity shares outstanding during the period.
 Three monthsNine months
Periods ended September 30 (millions except earnings per share)2024202320242023
Net (loss) income for the period
$(32)$$(7)$16 
Weighted average number of equity shares outstanding275 274 275 273 
Basic (loss) earnings per share
$(0.12)$0.03 $(0.03)$0.06 
(b)Diluted earnings (loss) per share
Diluted earnings (loss) per share is calculated to give effect to the potential dilutive effect that could occur if additional equity shares were assumed to be issued under securities or instruments that may entitle their holders to obtain equity shares in the future, which include share-based compensation awards (see Note 4—Share-based compensation for additional details) and provision for written put options (see Note 14(c)—Intangible assets and goodwill—Business acquisitions in our Annual Report and Note 12—Provisions for additional details). The number of additional shares for inclusion in the diluted earnings per share calculation was determined using the treasury stock method and, for our provision for written put options, the if-converted method.

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 Three monthsNine months
Periods ended September 30 (millions except earnings per share)2024202320242023
Net (loss) income for the period
$(32)$$(7)$16 
After-tax impact of provisions for written put options
 — (41)— 
Fully diluted net (loss) income
$(32)$$(48)$16 
Weighted average number of equity shares outstanding275 274 275 273 
Dilutive effect of share-based compensation  
Dilutive effect of provisions for written put options
 — 19 — 
Weighted average number of diluted equity shares outstanding275 276 294 277 
Diluted (loss) earnings per share
$(0.12)$0.03 $(0.16)$0.06 
During the three months ended September 30, 2024, the dilutive effect of share-based compensation awards and written put options, and for the nine months ended September 30, 2024, the dilutive effect of share-based compensation awards, were excluded from the calculation of diluted loss per share, since their conversion to equity shares would decrease diluted loss per share for the period. During the nine-month period ended September 30, 2023, 440,201 share options were anti-dilutive and excluded from the calculation of diluted earnings per share.
8. Accounts receivable
As at (millions)September 30, 2024December 31, 2023
Accounts receivable – billed$214 $278 
Accounts receivable – unbilled228 194 
Other receivables33 28 
 475 500 
Allowance for doubtful accounts(5)(2)
Total$470 $498 
The following table presents an analysis of the age of customer accounts receivable. Any late payment charges are levied at a negotiated rate on outstanding non-current customer account balances.
As at (millions)September 30, 2024December 31, 2023
Customer accounts receivable – billed, net of allowance for doubtful accounts 
Less than 30 days past billing date$137 $174 
30-60 days past billing date56 78 
61-90 days past billing date7 11 
More than 90 days past billing date9 13 
 209 276 
Accounts receivable – unbilled228 194 
Other receivables33 28 
Total$470 $498 
We maintain allowances for lifetime expected credit losses related to doubtful accounts. Current economic conditions (including forward-looking macroeconomic data), historical information (including credit agency reports, if available), reasons for the accounts being past due and line of business from which the customer accounts receivable arose are all considered when determining whether to make allowances for past-due accounts. The same factors are considered when determining whether to write off amounts charged to the allowance for doubtful accounts against the customer accounts receivable. The doubtful accounts expense is calculated on a specific-identification basis for customer accounts receivable over a specific balance threshold and on a statistically derived allowance basis for the remainder. No customer accounts receivable balances are written off directly to bad debt expense.
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The following table presents a summary of the activity related to our allowance for doubtful accounts:
 Three monthsNine months
Periods ended September 30 (millions)2024202320242023
Balance, beginning of period$5 $$2 $
Additions — 3 
Balance, end of period$5 $$5 $
9. Financial instruments
General
The carrying values of cash and cash equivalents, due from or to affiliated companies, accounts receivable, accounts payable and accrued liabilities and certain provisions approximate their fair values due to the immediate or short-term maturity of these financial instruments. Our long-term debt, measured at amortized cost, approximates fair value as it bears interest at applicable market rates.
The fair values of the derivative financial instruments we use to manage our exposure to currency risks are estimated based upon quoted market prices in active markets for the same or similar financial instruments or on the current rates offered to us for financial instruments of the same maturity, as well as discounted future cash flows determined using current rates for similar financial instruments subject to similar risks and maturities (such fair value estimates being largely based on the European euro: US$ and Philippine peso: US$ forward exchange rates as at the statement of financial position dates).
Derivative
The derivative financial instruments that we measure at fair value on a recurring basis subsequent to initial recognition are as set out in the following table; all such items use significant other observable inputs (Level 2) for measuring fair value at the reporting date.
 September 30, 2024December 31, 2023
As at (millions)Designation
Maximum
maturity
date
Notional
amount
Fair value
and carrying
value
Price or
rate
Maximum
maturity
date
Notional amount
Fair value
and carrying value
Price or
rate
Current assets1
         
Derivatives used to manage         
Currency risks arising from Euro business acquisition
HFH3
2025$23 $9 USD:1.00 EUR:0.92
2024
$22 $12 
USD:1.00 EUR: 0.92
Currency risks arising from Philippine peso denominated purchases
HFT2
2025$120 $3 USD:1.00 PHP:56.84
2024
$81 $
USD:1.00 PHP:56.32
Interest rate risk associated with non-fixed rate credit facility amounts drawn
HFH3
2025$9 $ 3.52 %2024$$
3.52%
      
Current liabilities1
     
Derivatives used to manage     
Currency risks arising from Philippine peso denominated purchases
HFT2
2025$8 $ USD:1.00 PHP:55.59
2024
$17 $— 
USD:1.00 PHP:54.94
      
Non-current liabilities1
     
Derivatives used to manage     
Currency risks arising from Euro business acquisition
HFH3
2028$392 $13 USD:1.00 EUR:0.922028$409 $10 
USD:1.00 EUR: 0.92
Interest rate risk associated with non-fixed rate credit facility amounts drawn
HFH3
2028$149 $1 3.52 %2028$155 $
3.52%
1.Notional amounts of derivative financial assets and liabilities are not set off.
2.Foreign currency hedges are designated as held for trading (HFT) upon initial recognition; hedge accounting is not applied.
3.Designated as held for hedging (HFH) upon initial recognition (cash flow hedging item); hedge accounting is applied. Unless otherwise noted, hedge ratio is 1:1 and is established by assessing the degree of matching between the notional amounts of hedging items and the notional amounts of the associated hedged items.
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10. Property, plant and equipment
 Owned assetsRight-of-use
lease assets
(millions)Network assetsBuildings and
leasehold
improvements
Computer equipment, furniture, and otherAssets
under
construction
TotalBuildingsTotal
At cost       
As at January 1, 2024$59 $159 $308 $37 $563 $487 $1,050 
Additions10 33 45 23 68 
Dispositions, retirements and other— — (2)— (2)(12)(14)
Transfers18 (27)— — — 
Foreign exchange— 
As at September 30, 2024$63 $168 $335 $43 $609 $501 $1,110 
Accumulated depreciation 
As at January 1, 2024
$39 $75 $197 $— $311 $222 $533 
Depreciation18 36 — 60 44 104 
Dispositions, retirements and other— — (2)— (2)(12)(14)
Foreign exchange— — — 
As at September 30, 2024$46 $94 $231 $ $371 $254 $625 
Net book value 
As at December 31, 2023$20 $84 $111 $37 $252 $265 $517 
As at September 30, 2024$17 $74 $104 $43 $238 $247 $485 
11. Intangible assets and goodwill 

(a)     Intangible assets and goodwill
(millions)
Customer
relationships
Crowdsource
assets
SoftwareBrand and
other
Total
intangible
assets
GoodwillTotal
intangible
assets and
goodwill
At cost       
As at January 1, 2024$1,769 $120 $63 $104 $2,056 $1,963 $4,019 
Additions— — 26 — 26 — 26 
Additions from acquisition1
— — — — — 
Dispositions, retirements and other— — (3)— (3)— (3)
Foreign exchange— — — 
As at September 30, 2024$1,773 $120 $86 $104 $2,083 $1,971 $4,054 
Accumulated amortization
As at January 1, 2024$407 $45 $33 $25 $510 $— $510 
Amortization102 11 13 135 — 135 
Dispositions, retirements and other— — (3)— (3)— (3)
Foreign exchange— — — — 
As at September 30, 2024$513 $56 $39 $38 $646 $ $646 
Net book value
As at December 31, 2023$1,362 $75 $30 $79 $1,546 $1,963 $3,509 
As at September 30, 2024$1,260 $64 $47 $66 $1,437 $1,971 $3,408 
1.In the first quarter of 2024, we acquired a business which expanded our customer experience delivery capabilities in the Asia-Pacific region for purchase consideration of $3 million.
(b)     Impairment testing of goodwill
As at September 30, 2024, certain events and circumstances were such that it was considered appropriate to test the carrying value of the TELUS Digital cash-generating unit goodwill for impairment, including the carrying value of our assets exceeding our market capitalization. As at September 30, 2024, the recoverable amount of the TELUS Digital cash-generating unit was in excess of its carrying amount by approximately $700 million. Such recoverable amount was determined based on a fair value less costs of disposal method (such method categorized as a Level 3 fair value measure), which resulted in a higher recoverable
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amount than that of the value-in-use method, and used a discount rate of 9.3%, a perpetual growth rate of 3.0%, and cash flow projections through the end of 2029. We validated the results of the recoverable amounts through a market-comparable approach and an analytical review of industry facts and facts that are specific to us.
The fair value less costs of disposal method uses discounted cash flow projections that employ the following key assumptions: future cash flows and growth projections; associated economic risk assumptions and estimates of the likelihood of achieving key operating metrics and drivers; and the future weighted average cost of capital. Had growth projections declined in the projection period by more than trivial amounts, or if the discount rate increased by more than a trivial amount, the September 30, 2024 estimated recoverable amount of the TELUS Digital cash-generating unit would be less than its carrying amount; we believe that any reasonably possible change in other key assumptions on which our calculation of the recoverable amount of the TELUS Digital cash-generating unit is based would not cause its carrying value to exceed its recoverable amount. If the future financial performance were to adversely differ from management’s best estimates for the key assumptions and associated cash flows were to be materially adversely affected, we could potentially experience future material impairment charges in respect of the TELUS Digital cash-generating unit’s goodwill.
12. Provisions
(millions)
Employee related1
Written put options2
Other3
Total
As at January 1, 2024
$$188 $$193 
Additions26 — 35 
Use(21)— (8)(29)
Reversals
— (60)— (60)
Interest effect and other
— — 
As at September 30, 2024$6 $134 $5 $145 
Current$$— $$
Non-current134 $138 
As at September 30, 2024$6 $134 $5 $145 
1.Related to personnel-related reorganization charges.
2.In connection with our acquisition of WillowTree in 2023, a provision for written put options to acquire the non-controlling interest in the WillowTree business retained by certain members of WillowTree management was established. On June 28, 2024, we entered into supplemental agreements with the employees beneficially holding the written put options which, among other revisions, supplemented the written put options with certain compensatory income, established a combined maximum payout for the written put options and such supplemental compensatory income, revised certain performance-based criteria based on the achievement of the financial performance of WillowTree and certain other TELUS Digital products and services, and sets the settlement to be 100% in subordinate voting shares of the Company. These changes to the written put options resulted in a gain on modification and corresponding reduction of the provisions. During the nine-month period ended September 30, 2024, in connection with these changes to the written put options and our estimates of certain performance-based criteria in relation to these written put options, we recognized other income of $60 million, included in Changes in business combination-related provisions in our condensed interim consolidated statements of income (loss) and other comprehensive income (loss).
3.Other provisions generally relate to legal and other activities that arise during the normal course of operations.
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13. Long-term debt
(a)    Details of long-term debt
As at (millions)September 30, 2024December 31, 2023
Credit facility$1,331 $1,463 
Deferred debt transaction costs(9)(11)
 $1,322 $1,452 
Lease liabilities278 298 
Long-term debt$1,600 $1,750 
Current$120 $122 
Non-current1,480 1,628 
Long-term debt$1,600 $1,750 
(b)    Credit facility
We have a credit facility secured by our assets with a syndicate of financial institutions, which includes TELUS Corporation as a lender, maturing on January 3, 2028. The credit facility is comprised of an $800 million revolving credit facility and an amortizing $1.2 billion term loan. As at September 30, 2024, the revolving credit facility and term loan had an effective interest rate of 6.97% (December 31, 2023 - 7.46%).
September 30, 2024December 31, 2023
As at (millions)Revolving component
Term loan component1 
TotalRevolving componentTerm loan componentTotal
Available$579 $ $579 $492 
N/A
$492 
Outstanding
Due to TELUS Corporation$15 $80 $95 $22 $83 $105 
Due to Other206 1,030 1,236 286 1,072 1,358 
 $221 $1,110 $1,331 $308 $1,155 $1,463 
Total$800 $1,110 $1,910 $800 $1,155 $1,955 
1.Relative to amounts owed to the syndicate of financial institutions, excluding TELUS Corporation, we have entered into foreign exchange derivatives (cross currency interest rate exchange agreements) that effectively convert an amortizing amount of $415 million of the principal payments, and associated interest obligations, to European euro obligations with an effective fixed interest rate of 2.62% and an effective fixed exchange rate of US$1.00: EUR 0.92. These have been accounted for as a net investment hedge in a foreign operation (see Note 9—Financial instruments for additional details)
The credit facility bears interest at prime rate, U.S. dollar base rate, or Term Secured Overnight Financing Rate (SOFR) (all such terms as used or defined in the credit facility) plus applicable margins. The credit facility contains customary representations, warranties and covenants, including two financial quarter-end ratio tests. Net Debt to Adjusted EBITDA ratio, both measures as defined in our credit agreement, must not exceed 3.75:1.00 for each quarter in fiscal 2024 and 3.25:1.00 subsequently. The Adjusted EBITDA to Debt Service (interest and scheduled principal repayment) ratio must not be less than 1.50:1.00, all as defined in the credit facility. If an acquisition with an aggregate cash consideration in excess of $250 million occurs in any twelve-month period, the maximum permitted Net Debt to Adjusted EBITDA ratio per credit agreement may be increased by 0.50:1.00 and shall return to the then applicable Net Debt to Adjusted EBITDA ratio after eight fiscal quarters.
The term loan of the credit facility is subject to an amortization schedule requiring that 1.25% of the original principal advanced be repaid each quarter with the balance due at maturity of the amended credit facility on January 3, 2028.
As at September 30, 2024, we were in compliance with all financial covenants, financial ratios and all of the terms and conditions of our credit facility and long-term debt agreement.
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(c)    Long-term debt maturities
Anticipated requirements to meet long-term debt repayments, calculated upon such long-term debts owing as at September 30, 2024, are as follows:
Composite long-term debt denominated inU.S. dollarsEuropean
euros
Other
currencies
 
For each fiscal year ending December 31 (millions)Long-term
debt, excluding
leases
LeasesTotalLeasesLeasesTotal
2024 (remainder of year)$15 $5 $20 $3 $6 $29 
202560 20 80 13 24 117 
202660 21 81 9 22 112 
202760 19 79 7 18 104 
20281,136 14 1,150 4 16 1,170 
Thereafter 32 32 26 19 77 
Future cash outflows in respect of composite long-term debt principal repayments$1,331 $111 $1,442 $62 $105 $1,609 
Future cash outflows in respect of associated interest and like carrying costs1
288 52 340 15 29 384 
Undiscounted contractual maturities$1,619 $163 $1,782 $77 $134 $1,993 
1.Future cash outflows in respect of associated interest and carrying costs for amounts drawn under our credit facility (if any) have been calculated based upon the rates in effect at September 30, 2024.
14. Share capital
Our authorized and issued share capital as at September 30, 2024 is as follows:
AuthorizedIssued
As at (millions)September 30, 2024December 31, 2023September 30, 2024December 31, 2023
Preferred Sharesunlimitedunlimited — 
Equity Shares
Multiple Voting Sharesunlimitedunlimited164 167 
Subordinate Voting Sharesunlimitedunlimited111 107 
As at September 30, 2024, there were 16 million authorized but unissued subordinate voting shares reserved for issuance under our share-based compensation plans, and 4 million authorized but unissued subordinate voting shares reserved for issuance under our employee share purchase plan.
15. Contingent liabilities
(a)Indemnification obligations
In the normal course of operations, we provide indemnification in conjunction with certain transactions. The terms of these indemnification obligations range in duration. These indemnifications would require us to compensate the indemnified parties for costs incurred as a result of failure to comply with contractual obligations or litigation claims or statutory sanctions or damages that may be suffered by an indemnified party. In some cases, there is no maximum limit on these indemnification obligations. The overall maximum amount of an indemnification obligation will depend on future events and conditions and therefore cannot be reasonably estimated. Where appropriate, an indemnification obligation is recorded as a liability. Other than obligations recorded as liabilities at the time of such transactions, if applicable, historically we have not made significant payments under these indemnifications. As at September 30, 2024, we had no liability recorded in respect of indemnification obligations (December 31, 2023 - $nil).
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(b)Claims and lawsuits
We are party to various legal proceedings and claims that arise in the ordinary course of business. The ultimate outcome of these matters is inherently uncertain. Therefore, if one or more of these matters were resolved against us for amounts in excess of management's estimates of loss, or if any outcome becomes more likely than not and estimable, our results of operations and financial condition could be adversely affected.
16. Related party transactions
(a)Transactions with TELUS Corporation
TELUS Corporation produces consolidated financial statements available for public use and is the ultimate parent and controlling party of TELUS Digital.
Recurring transactions
TELUS Corporation and its subsidiaries receive customer care, integrated business process outsourcing, information technology outsourcing, and digital product development services from us, and provide services (including people, network, finance, communications, and regulatory) to us. We also participate in defined benefit pension plans that share risks between TELUS Corporation and its subsidiaries.

20242023
Three months ended September 30 (millions)
TELUS
Corporation
(parent)
Subsidiaries
of TELUS
Corporation
TotalTELUS
Corporation
(parent)
Subsidiaries of
 TELUS
Corporation
Total
Transactions with TELUS Corporation and subsidiaries
Revenues from services provided to$ $160 $160 $— $133 $133 
Goods and services purchased from (4)(4)— (6)(6)
  156 156 — 127 127 
Receipts from related parties (208)(208)— (202)(202)
Payments to related parties 4 4 — 
Payments (made) collected by related parties on our behalf and other adjustments(17)13 (4)(8)(3)
Foreign exchange(1) (1)— — — 
Change in balance(18)(35)(53)(81)(76)
Accounts with TELUS Corporation and subsidiaries
Balance, beginning of period(174)50 (124)(96)58 (38)
Balance, end of period$(192)$15 $(177)$(91)$(23)$(114)
Accounts with TELUS Corporation and subsidiaries
Due from affiliated companies$21 $18 $39 $10 $26 $36 
Due to affiliated companies(213)(3)(216)(101)(49)(150)
 $(192)$15 $(177)$(91)$(23)$(114)
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20242023
Nine months ended September 30 (millions)TELUS
Corporation
(parent)
Subsidiaries
of TELUS
Corporation
TotalTELUS
Corporation
(parent)
Subsidiaries of TELUS Corporation
Total
Transactions with TELUS Corporation and subsidiaries
Revenues from services provided to$ $479 $479 $— $394 $394 
Goods and services purchased from (13)(13)— (17)(17)
 $ $466 $466 $— $377 $377 
Receipts from related parties (529)(529)— (440)(440)
Payments to related parties 16 16 — 20 20 
Payments (made) collected by related parties on our behalf and other adjustments(45)27 (18)(2)(41)(43)
Foreign exchange4  4 — 
Change in balance$(41)$(20)$(61)$— $(84)$(84)
Accounts with TELUS Corporation and subsidiaries      
Balance, beginning of period(151)35 (116)(91)61 (30)
Balance, end of period$(192)$15 $(177)$(91)$(23)$(114)
Accounts with TELUS Corporation and subsidiaries
Due from affiliated companies$21 $18 $39 $10 $26 $36 
Due to affiliated companies(213)(3)(216)(101)(49)(150)
 $(192)$15 $(177)$(91)$(23)$(114)
In the condensed interim consolidated statement of financial position, amounts due from affiliates and amounts due to affiliates, where contractually required, are generally due 30 days from billing and are cash-settled on a gross basis.
(b)Transactions with key management personnel
Our key management personnel have the authority and responsibility for overseeing, planning, directing and controlling our activities and consist of our Board of Directors and our Executive Leadership Team.
During the three-month period ended September 30, 2024, share-based compensation expense of $6 million was recognized. We granted 187,673 RSUs, 170,510 PSUs, and 266,490 share options, with total grant-date fair value of $2 million.
During the nine-month period ended September 30, 2024, share-based compensation expense of $7 million was recognized. We granted 1,259,640 RSUs, 839,016 PSUs, and 266,490 share options, with total grant-date fair value of $17 million. 389,584 equity-settled awards were exercised and settled with subordinate voting shares issued from treasury.
17. Additional financial information
(a)Statements of income (loss) and other comprehensive income (loss)
During the nine-month period ended September 30, 2024, we had two clients which each individually accounted for more than 10% of our consolidated revenue (September 30, 2023 - three clients). TELUS Corporation, our controlling shareholder and largest client during the nine-month periods ended September 30, 2024 and 2023, accounted for 24.4% and 19.6% of our consolidated revenue, respectively. Google, our second largest client during the nine-month periods ended September 30, 2024 and 2023, accounted for 14.3% and 12.5% of our consolidated revenue, respectively. During the nine-month period ended September 30, 2023, our third largest client, a leading social media company, accounted for 11.8% of our consolidated revenue.
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(b)Statements of financial position
As at (millions)September 30, 2024December 31, 2023
Other long-term assets  
Lease deposits
$12 $12 
Prepaid software and maintenance costs
6 
Other8 
 $26 $25 
Accounts payable and accrued liabilities  
Trade accounts payable$34 $37 
Accrued liabilities78 103 
Payroll and other employee-related liabilities174 135 
Advance billings
3 
Other12 11 
 $301 $290 
(c)Statements of cash flows—operating activities and investing activities
 Three monthsNine months
Periods ended September 30 (millions)2024202320242023
Net change in non-cash operating working capital  
Accounts receivable$3 $(15)$32 $(9)
Due to and from affiliated companies, net53 76 61 84 
Prepaid expenses8 (8)(17)
Other long-term assets (1)
Accounts payable and accrued liabilities(12)— 11 (31)
Income and other taxes receivable and payable, net(4) — 
Provisions3 (2)5 
Other long-term liabilities1 (1)6 
$52 $66 $106 $37 
Cash payments for capital assets
Capital asset additions
Capital expenditures
Property, plant and equipment, excluding right-of-use assets$(16)$(23)$(45)$(57)
Intangible assets(8)(3)(26)(9)
 (24)(26)$(71)$(66)
Change in accrued payables related to the purchase of capital assets(1)(5)
 $(25)$(20)$(76)$(58)
19


(d)Changes in liabilities arising from financing activities
Statements of cash flowsNon-cash changes
Three-month period ended September 30, 2024
(millions)
Beginning
of Period
Issued or receivedRedemptions,
repayments or payments
Foreign
exchange movement
OtherEnd of
period
Long-term debt      
Credit facility$1,386 $115 $(170)$ $ $1,331 
Lease liabilities278  (23)5 18 278 
Deferred debt transaction costs(10)   1 (9)
 $1,654 $115 $(193)$5 $19 $1,600 
Statements of cash flowsNon-cash changes
Three-month period ended September 30, 2023
(millions)
Beginning
of Period
Issued or receivedRedemptions,
repayments or payments
Foreign
exchange movement
OtherEnd of
period
Long-term debt
Credit facility$1,660 $40 $(165)$— $— $1,535 
Lease liabilities267 — (22)(2)26 269 
Deferred debt transaction costs(13)— — — (12)
$1,914 $40 $(187)$(2)$27 $1,792 
Statements of cash flowsNon-cash changes
Nine-month period ended September 30, 2024
(millions)
Beginning
of Period
Issued or receivedRedemptions,
repayments or payments
Foreign
exchange movement
OtherEnd of
period
Long-term debt
Credit facility$1,463 $205 $(337)$ $ $1,331 
Lease liabilities298  (68)2 46 278 
Deferred debt transaction costs(11)   2 (9)
$1,750 $205 $(405)$2 $48 $1,600 
Statements of cash flowsNon-cash changes
Nine-month period ended September 30, 2023
(millions)
Beginning
of Period
Issued or receivedRedemptions,
repayments or payments
Foreign
exchange movement
OtherEnd of
period
Long-term debt      
Credit facility$742 $1,076 $(283)$— $— $1,535 
Other
— — (89)— 89 — 
Lease liabilities236 — (63)95 269 
Deferred debt transaction costs(14)— — — (12)
 $964 $1,076 $(435)$$186 $1,792 
18. Segment reporting
During the third quarter of 2024, we announced the transition of our former Chief Executive Officer (CEO) to the new role of Executive Vice-Chair of our Board of Directors, alongside the appointment of a new Acting CEO. We have determined that as of September 30, 2024, our Acting CEO fulfilled the role of the Chief Operating Decision Maker.
20