Document


		Three months				Nine months
Periods ended September 30 (millions except earnings per share)	Note	2023		2022		2023		2022
REVENUE	3	$	663	$	615	$	2,016	$	1,838

OPERATING EXPENSES
Salaries and benefits		403		346		1,258		1,044
Goods and services purchased		116		111		339		344
Share-based compensation	4	5		6		21		20
Acquisition, integration and other		11		7		48		17
Depreciation	10	36		29		102		88
Amortization of intangible assets	11	44		32		138		102
		615		531		1,906		1,615

OPERATING INCOME		48		84		110		223

OTHER EXPENSES (INCOME)

Interest expense	5	38		10		107		29
Foreign exchange gain		(2)		(11)		(4)		(25)
INCOME BEFORE INCOME TAXES		12		85		7		219
Income tax expense (recovery)	6	3		26		(9)		70
NET INCOME		9		59		16		149

OTHER COMPREHENSIVE INCOME (LOSS)
Items that may subsequently be reclassified to income
Change in unrealized fair value of derivatives designated as held-for-hedging		13		26		7		67
Exchange differences arising from translation of foreign operations		(36)		(79)		(19)		(176)
		(23)		(53)		(12)		(109)




COMPREHENSIVE INCOME (LOSS)		$	(14)	$	6	$	4	$	40

EARNINGS PER SHARE	7
Basic		$	0.03	$	0.22	$	0.06	$	0.56
Diluted		$	0.03	$	0.22	$	0.06	$	0.55

TOTAL WEIGHTED AVERAGE SHARES OUTSTANDING (millions)
Basic	7	274		266		273		266
Diluted	7	276		269		277		269


As at (millions)	Note	September 30, 2023		December 31, 2022
ASSETS
Current assets
Cash and cash equivalents		$	132	$	125
Accounts receivable	8	494		428
Due from affiliated companies	16(a)	36		81
Income and other taxes receivable		8		7
Prepaid and other assets		53		35
Current portion of derivative assets	9	20		19
		743		695
Non-current assets
Property, plant and equipment, net	10	494		449
Intangible assets, net	11	1,571		1,008
Goodwill	11	1,951		1,350
Derivative assets	9	21		13
Deferred income taxes		25		14
Other long-term assets	17(b)	23		27
		4,085		2,861
Total assets		$	4,828	$	3,556

LIABILITIES AND OWNERS’ EQUITY
Current liabilities

Accounts payable and accrued liabilities	17(b)	$	301	$	289
Due to affiliated companies	16(a)	150		111
Income and other taxes payable		73		67
Current portion of provisions	12	5		1
Current maturities of long-term debt	13	122		83
Current portion of derivative liabilities	9	1		1
		652		552
Non-current liabilities
Provisions	12	207		2
Long-term debt	13	1,670		881

Deferred income taxes		291		264
Other long-term liabilities		20		19
		2,188		1,166
Total liabilities		2,840		1,718

Owners’ equity		1,988		1,838
Total liabilities and owners’ equity		$	4,828	$	3,556

Contingent liabilities	15


(millions)	Note	Number of shares	Share capital		Contributed surplus		Retained earnings		Accumulated other comprehensive income (loss)		Total
Balance as at January 1, 2022		266	$	1,490	$	24	$	107	$	34	$	1,655
Net income		—	—		—		149		—		149
Other comprehensive loss		—	—		—		—		(109)		(109)
Share-based compensation	4	—	10		14		(1)		—		23
Balance as at September 30, 2022		266	$	1,500	$	38	$	255	$	(75)	$	1,718

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 issued	11(b)	6	125		—		—		—		125
Share-based compensation	4	1	18		4		(1)		—		21
Balance as at September 30, 2023		274	$	1,646	$	59	$	307	$	(24)	$	1,988


		Three months				Nine months
Periods ended September 30 (millions)	Note	2023		2022		2023		2022
OPERATING ACTIVITIES
Net income		$	9	$	59	$	16	$	149
Adjustments:
Depreciation and amortization		80		61		240		190
Interest expense		38		10		107		29
Income tax expense (recovery)		3		26		(9)		70
Share-based compensation		5		6		21		20

Change in market value of derivatives and other		(3)		(26)		(5)		(23)
Net change in non-cash operating working capital	17(c)	66		17		37		(19)
Share-based compensation payments		(2)		(8)		(2)		(14)
Income taxes paid, net		(11)		(16)		(49)		(49)
Cash provided by operating activities		185		129		356		353

INVESTING ACTIVITIES
Cash payments for capital assets	17(c)	(20)		(26)		(58)		(76)
Cash payments for other assets		—		7		—		(13)
Cash payments for acquisitions, net	11(b)	(1)		—		(852)		—
Cash used in investing activities		(21)		(19)		(910)		(89)

FINANCING ACTIVITIES
Shares issued		1		—		3		2

Withholding taxes paid related to net share settlement of equity awards	4(a)	(1)		—		(3)		(1)

Long-term debt issued	17(d)	40		—		1,076		—
Repayment of long-term debt	17(d)	(187)		(78)		(435)		(207)

Interest paid on credit facilities	1(b)	(27)		(5)		(80)		(16)
Cash (used in) provided by financing activities		(174)		(83)		561		(222)

Effect of exchange rate changes on cash and cash equivalents		(1)		(7)		—		(14)

CASH POSITION
(Decrease) increase in cash and cash equivalents		(11)		20		7		28
Cash and cash equivalents, beginning of period		143		123		125		115
Cash and cash equivalents, end of period		$	132	$	143	$	132	$	143


TELUS International (Cda) Inc. (TELUS International) is a leading digital customer experience innovator that designs, builds and delivers next-generation solutions, including AI and content moderation, for global and disruptive brands. TELUS International was incorporated under the Business Corporations Act (British Columbia) on January 2, 2016, and is a subsidiary of TELUS Corporation. TELUS International 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 International 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 International.	Notes to the condensed interim consolidated financial statements		Page
	General application
	1.	Condensed interim consolidated financial statements	5
	2.	Capital structure financial policies	6
	Consolidated results of operations focused
	3.	Revenue	7
	4.	Share-based compensation	8
	5.	Interest expense	9
	6.	Income taxes	9
	7.	Earnings per share	10
	Consolidated financial position focused
	8.	Accounts receivable	11
	9.	Financial instruments	12
	10.	Property, plant and equipment	13
	11.	Intangible assets and goodwill	13
	12.	Provisions	16
	13.	Long-term debt	16
	14.	Share capital	18
	15.	Contingent liabilities	18
	Other
	16.	Related party transactions	18
	17.	Additional financial information	20

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, 2022, 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, 2022, other than as described in the section “Change in presentation” below. 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.

In our condensed interim consolidated statements of cash flows for the three- and nine-month period ended September 30, 2022, we have reclassified $5 million and $16 million, respectively, of cash interest paid on credit facilities from cash flows from operating activities, to cash flows from financing activities. This change in presentation is consistent with the annual disclosures included in our consolidated financial statements for the year ended December 31, 2022.

In our condensed interim consolidated statements of financial position, we have reclassified certain current and non-current provisions previously included in Accounts payable and accrued liabilities and Other long-term liabilities, respectively, based on materiality. All amounts presented for the comparative period have been reclassified to conform with the current period presentation.

In February 2021, the International Accounting Standards Board issued narrow-scope amendments to IAS 1, Presentation of Financial Statements, IFRS Practice Statement 2, Making Materiality Judgements and IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors. The amendments are effective for annual periods beginning on or after January 1, 2023, although earlier application was permitted. The amendments require the disclosure of material accounting policy information rather than disclosing significant accounting policies, and clarify how to distinguish changes in accounting policies from changes in accounting estimates. Our financial disclosure is currently not materially affected by the application of the amendments.

In May 2021, the International Accounting Standards Board issued targeted amendments to IAS 12, Income Taxes. The amendments are effective for annual periods beginning on or after January 1, 2023, although earlier application was permitted. With a view to reducing diversity in reporting, the amendments clarify that companies are required to recognize deferred taxes on transactions where both assets and liabilities are recognized, such as with leases and asset retirement (decommissioning) obligations. Our financial performance or disclosure is currently not materially affected by the application of the amendments.

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 the, temporary relief from accounting for deferred income taxes arising from the Organisation for Economic Co-operation and Development's (OECD) 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 are currently assessing the impacts of the amended standard, but do not expect that our financial disclosure will be materially affected by the application of the amendments.

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).

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.

In connection with our acquisition of WillowTree on January 3, 2023, we amended and expanded our existing credit facility to an aggregate $2.0 billion facility, consisting of an $800 million revolving credit facility and $1.2 billion in term loans payable in five years (see Note 11(b)—Intangible assets and goodwill—Business acquisitions for additional details on the acquisition of WillowTree, and Note 13(a)—Long-term debt—Credit facility for additional details on our credit facility).


	Three months				Nine months
Periods ended September 30 (millions)	2023		2022		2023		2022
Tech and Games	$	301	$	289	$	885	$	856
Communications and Media	155		150		465		432
eCommerce and FinTech	71		67		216		223
Healthcare	38		11		115		34
Banking, Financial Services and Insurance	34		42		115		125
All others1	64		56		220		168
	$	663	$	615	$	2,016	$	1,838

We serve our clients, who are primarily domiciled in North America, from multiple delivery locations across various geographic regions. In addition, our TIAI 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:

We have various restricted share unit award types, including equity-settled restricted share units (RSUs) and performance restricted share units (PSUs). All restricted share units are nominally equal in value to one TELUS International subordinate voting share. Beginning January 1, 2021, restricted share unit awards granted were equity-settled. The following table presents a summary of the activity related to our restricted share units:


	Three months				Nine months
	Number of units		Weighted average grant-date fair value		Number of units		Weighted average grant-date fair value
Period ended September 30, 2023	Non-vested	Vested			Non-vested	Vested
Outstanding, beginning of period	2,295,918	—	$	24.31	1,605,821	—	$	27.10
Granted	—	—	—		1,111,894	342,986	20.30
Vested	(4,546)	4,546	25.68		(400,990)	400,990	26.66
Exercised1	—	(4,546)	25.68		—	(743,976)	22.47
Forfeited	(35,993)	—	24.23		(61,346)	—	24.52
Outstanding, September 30, 2023	2,255,379	—	$	24.31	2,255,379	—	$	24.31

1.During the three-month period ended September 30, 2023, 4,546 RSUs were exercised and settled with of 3,255 subordinate voting shares issued from treasury and a nominal amount in withholding taxes paid. During the nine-month period ended September 30, 2023, 743,976 RSUs were exercised and settled with 610,331 subordinate voting shares issued from treasury and $3 million in withholding taxes paid.

We have equity-settled share option awards (Share Options), and liability-accounted share option awards (Phantom Share Options). Share Options grant the right to the employee recipient to purchase and receive a subordinate voting share of TELUS International for a pre-determined exercise price. Phantom Share Options grant the right to the employee recipient to receive cash equal to the intrinsic value of the share option award, determined as the difference between the market price of a subordinate voting share of TELUS International and the exercise price. Share option awards are generally exercisable for a period of ten years from the time of grant. Beginning January 1, 2021, share option awards granted were equity-settled.


	Three months				Nine 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, 2023	Non-vested	Vested			Non-vested	Vested
Outstanding, beginning of period	344,438	2,316,682	$	11.35	580,715	2,096,582	$	11.31
Vested	—	—	—		(234,075)	234,075	5.34
Exercised1	—	(124,337)	8.46		—	(124,337)	8.46
Forfeited	—	—	—		(2,202)	(13,975)	5.77
Outstanding, September 30, 20232	344,438	2,192,345	$	11.49	344,438	2,192,345	$	11.49
Exercisable, September 30, 2023	—	2,192,345	$	9.56	—	2,192,345	$	9.56

During the three-month period ended September 30, 2023, we granted Unit Appreciation Rights (UARs) to certain employees of WillowTree which have a maximum payout of $120 million, is subject to continued employment, and the fair value determined based on the achievement of certain performance targets of WillowTree. These UARs may be settled in cash or, at our option, TELUS International subordinate voting shares, and vest in three annual tranches exercisable beginning in fiscal 2026. The settlement of UARs are funded by the provisions for written put options arising from the WillowTree acquisition (see Note 11(b)—Intangible assets and goodwill—Business acquisitions and Note 12—Provisions). As such, total payments made to settle any UARs following the vesting of each tranche will be deducted from the gross payments required to settle these provisions.

During the nine-month period ended September 30, 2023, we acquired two businesses and provided performance earn-outs to certain of its employees, subject to continued employment, which have a maximum payout of approximately $12 million payable in fiscal 2025 and may be settled in cash or, at our option, TELUS International subordinate voting shares (see Note 11(b)—Intangible assets and goodwill—Business acquisitions). These earn-outs were included in share-based compensation.


	Three months				Nine months
Periods ended September 30 (millions)	2023		2022		2023		2022
Interest expense
Interest on long-term debt, excluding lease liabilities	$	27	$	6	$	78	$	17
Interest on lease liabilities	7		3		17		10
Amortization of financing fees and other	1		1		3		2
Interest accretion on provisions	3		—		9		—
	$	38	$	10	$	107	$	29


	Three months				Nine months
Periods ended September 30 (millions)	2023		2022		2023		2022
Current income tax expense (recovery)
For current reporting period	$	18	$	27	$	49	$	71
Adjustments recognized in the current period for income tax of prior periods	—		3		(6)		3
	18		30		43		74
Deferred income tax expense (recovery)
Arising from the origination and reversal of temporary differences	(14)		(5)		(50)		(5)
Adjustments recognized in the current period for income tax of prior periods	(1)		1		(2)		1
	(15)		(4)		(52)		(4)
	$	3	$	26	$	(9)	$	70


	Three months								Nine months
Periods ended September 30 (millions except percentages)	2023				2022				2023				2022
Income taxes computed at applicable statutory income tax rates	$	1	9.1	%	$	19	23.3	%	$	(7)	(101.0)	%	$	51	23.5	%
Non-deductible items	1		8.3	%	1		0.8	%	1		14.3	%	5		2.3	%
Withholding and other taxes	4		32.6	%	6		6.9	%	11		158.1	%	18		8.2	%
Losses not recognized	1		8.3	%	2		2.4	%	2		28.6	%	5		2.3	%
Foreign tax differential	(3)		(25.0)	%	(6)		(6.9)	%	(8)		(114.3)	%	(14)		(6.6)	%
Adjustments recognized in the current period for income tax of prior periods	(1)		(8.3)	%	4		4.1	%	(8)		(114.3)	%	4		1.8	%
Other	—		—	%	—		—	%	—		—	%	1		0.5	%
Income tax expense (recovery)	$	3	25.0	%	$	26	30.6	%	$	(9)	(128.6)	%	$	70	32.0	%

Diluted earnings 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 provisions for written put options (see Note 11(b)—Intangible assets and goodwill—Business acquisitions 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.


	Three months				Nine months
Periods ended September 30 (millions except earnings per share)	2023		2022		2023		2022
Net income for the period	$	9	$	59	$	16	$	149
Weighted average number of equity shares outstanding	274		266		273		266
Dilutive effect of share-based compensation	2		3		4		3
Weighted average number of diluted equity shares outstanding	276		269		277		269
Diluted earnings per share	$	0.03	$	0.22	$	0.06	$	0.55


As at (millions)	September 30, 2023		December 31, 2022
Customer accounts receivable – billed, net of allowance for doubtful accounts
Less than 30 days past billing date	$	182	$	154
30-60 days past billing date	62		44
61-90 days past billing date	12		12
More than 90 days past billing date	15		12
	271		222
Accounts receivable – unbilled	195		201
Other receivables	28		5
Total	$	494	$	428

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.

The carrying values of cash and cash equivalents, 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. The carrying value of our provision for written put options is measured at the present value of the estimated future redemption amounts.

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).


		September 30, 2023							December 31, 2022
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	2024	$	22	$	17	USD:1.00 EUR:0.92		2023	$	21	$	19	USD:1.00 EUR: 0.86
Currency risks arising from Philippine peso denominated purchases	HFT2	2024	$	38	$	—	USD:1.00 PHP:57.30		2023	$	53	$	—	USD:1.00 PHP:56.90
Interest rate risk associated with non-fixed rate credit facility amounts drawn	HFH3	2024	$	9	$	3	3.52	%	—	$	—	$	—	—

Non-current assets1
Derivatives used to manage
Currency risks arising from Euro business acquisition	HFH3	2028	$	426	$	19	USD:1.00 EUR:0.92		2025	$	341	$	13	USD:1.00 EUR:0.86
Interest rate risk associated with non-fixed rate credit facility amounts drawn	HFH3	2028	$	159	$	2	3.52	%	—	$	—	$	—	—



Current liabilities1
Derivatives used to manage

Currency risks arising from Philippine peso denominated purchases	HFT2	2024	$	74	$	1	USD:1.00 PHP:55.76		2023	$	50	$	1	USD:1.00 PHP:53.55

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.


		Owned assets										Right-of-use lease assets
(millions)	Note	Network assets		Buildings and leasehold improvements		Computer equipment, furniture, and other		Assets under construction		Total		Buildings		Total
At cost
As at January 1, 2023		$	49	$	138	$	257	$	33	$	477	$	385	$	862
Additions		2		2		12		41		57		57		114
Additions from acquisition	11(b)	—		10		5		—		15		19		34
Dispositions, retirements and other		—		—		(1)		—		(1)		(11)		(12)
Transfers		3		4		18		(25)		—		—		—
Foreign exchange		—		—		(2)		—		(2)		(4)		(6)
As at September 30, 2023		$	54	$	154	$	289	$	49	$	546	$	446	$	992
Accumulated depreciation
As at January 1, 2023		$	31	$	53	$	160	$	—	$	244	$	169	$	413
Depreciation		6		16		33		—		55		47		102
Dispositions, retirements and other		—		—		(1)		—		(1)		(11)		(12)
Foreign exchange		—		—		(1)		—		(1)		(4)		(5)
As at September 30, 2023		$	37	$	69	$	191	$	—	$	297	$	201	$	498
Net book value
As at December 31, 2022		$	18	$	85	$	97	$	33	$	233	$	216	$	449
As at September 30, 2023		$	17	$	85	$	98	$	49	$	249	$	245	$	494


(millions)	Note	Customer relationships		Crowdsource assets		Software		Brand and other		Total intangible assets		Goodwill		Total intangible assets and goodwill
At cost
As at January 1, 2023		$	1,151	$	120	$	57	$	35	$	1,363	$	1,350	$	2,713
Additions		—		—		9		—		9		—		9
Additions from acquisition	11(b)	602		—		—		92		694		608		1,302
Dispositions, retirements and other		—		—		(15)		(25)		(40)		—		(40)
Foreign exchange		(5)		—		(1)		—		(6)		(7)		(13)
As at September 30, 2023		$	1,748	$	120	$	50	$	102	$	2,020	$	1,951	$	3,971
Accumulated amortization
As at January 1, 2023		$	264	$	30	$	33	$	28	$	355	$	—	$	355
Amortization		103		11		7		17		138		—		138
Dispositions, retirements and other		—		—		(15)		(25)		(40)		—		(40)
Foreign exchange		(3)		—		(1)		—		(4)		—		(4)
As at September 30, 2023		$	364	$	41	$	24	$	20	$	449	$	—	$	449
Net book value
As at December 31, 2022		$	887	$	90	$	24	$	7	$	1,008	$	1,350	$	2,358
As at September 30, 2023		$	1,384	$	79	$	26	$	82	$	1,571	$	1,951	$	3,522

members retained approximately 14% of the total equity interest in WillowTree, and were granted written put options related to this retained equity interest that are exercisable in tranches over a three-year period beginning in 2026. These written put options are subject to certain performance-based criteria tied to the WillowTree business, including compounded annual revenue growth rate and cumulative gross margin targets, and may be settled in cash or, at our option, a combination of cash and up to 70% in TELUS International subordinate voting shares. Concurrent with this acquisition, WillowTree management team members provided us with purchase call options, which substantially mirror the written put options. As a result of these purchase call options and written put options, we determined that the non-controlling interest held by the WillowTree management team members would be recognized as a financial liability in the form of provisions for the written put options. The provisions for the written put options were measured at the date of acquisition based on the present value of the estimated future redemption amounts.

The total purchase consideration for WillowTree was $1,175 million, net of assumed debt of WillowTree, comprising of $856 million in cash, $125 million of our subordinate voting shares, and $194 million in provisions for the written put options. Transaction costs for the acquisition were expensed as incurred.

The acquisition brings key talent and diversity to our portfolio of next generation solutions, and further augments our digital consulting and client-centric software development capabilities. The primary factor that gives rise to the recognition of goodwill on this acquisition was the earnings capacity of the acquired business in excess of the net tangible and intangible assets acquired (such excess arising from the low level of tangible assets relative to the earnings capacity of the business). A portion of the amounts assigned to goodwill are deductible for income tax purposes.

During the three- and nine-month periods ended September 30, 2023, WillowTree generated revenue of $42 million and $145 million, respectively, and net loss of $29 million and $80 million, respectively, which included amortization of intangible assets and interest expense on incremental borrowings on our credit facility, both arising from this transaction. As the acquisition closed on January 3, 2023, had the acquisition closed on January 1, 2023, our consolidated revenue and net income would have been the same.

We recognize the WillowTree revenue by applying IFRS 15, Revenue from contracts with customers. Customer contracts are generally based on fees earned per-productive hour, where revenues are recognized as services are provided, or fixed-fee contracts, where revenues are estimated and recognized over-time using the input method. We apply the input method for WillowTree revenue by identifying each performance obligation at the inception of a customer contract, and recognize revenue based on costs incurred toward the satisfaction of each performance obligation relative to the total expected costs required to satisfy that performance obligation. Costs incurred are generally labor hours expended. When there are multiple performance obligations in a customer contract, the transaction price is allocated to each performance obligation based on relative stand-alone selling prices.

During the nine- month period ended September 30, 2023, we completed the acquisition of two businesses which expanded our customer experience operations into Morocco and South Africa, for total purchase consideration of $2 million (comprised of $1 million cash and $1 million in provisions), in exchange for net identifiable assets of $2 million. No goodwill was recognized.

As part of these acquisitions, we provided performance earn-outs to certain employees, subject to continued employment, with a maximum payout of approximately $12 million and payable in fiscal 2025, which may be settled in cash or, at our option, TELUS International subordinate voting shares (see Note 4(c)—Share-based compensation—Other).


(millions)	WillowTree		Other		Total
Assets
Current assets
Cash	$	5	$	—	$	5
Accounts receivable	62		1		63
Prepaid and other assets	3		—		3
	70		1		71
Non-current assets
Property, plant and equipment
Owned assets	15		—		15
Right-of-use lease assets	19		—		19
Intangible assets subject to amortization1	692		2		694
	726		2		728
Total identifiable assets acquired	796		3		799

Liabilities
Current liabilities
Accounts payable and accrued liabilities	42		—		42
Income and other taxes payable	11		—		11
Current maturities of long-term debt	91		1		92
	144		1		145
Non-current liabilities
Long-term debt	16		—		16
Deferred income taxes	69		—		69
	85		—		85
Total liabilities assumed	229		1		230

Net identifiable assets acquired	567		2		569
Goodwill	608		—		608
Net assets acquired	$	1,175	$	2	$	1,177

Acquisition effected by way of:					—
Cash	$	856	$	1	$	857
Provisions2	194		1		195
Subordinate voting shares3	125		—		125
	$	1,175	$	2	$	1,177


(millions)	Employee related1		Written put options2		Other3		Total
As at January 1, 2023	$	—	$	—	$	3	$	3
Additions	14		194		1		209
Use	(10)		—		—		(10)
Interest effect and other	—		10		—		10
As at September 30, 2023	$	4	$	204	$	4	$	212
Current	$	4	$	—	$	1	$	5
Non-current	—		204		3		$	207
As at September 30, 2023	$	4	$	204	$	4	$	212

2.In connection with our acquisition of WillowTree, 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, measured at the present value of the estimated redemption amount (see Note 11(b)—Intangible assets and goodwill—Business acquisitions).

In connection with our acquisition of WillowTree on January 3, 2023 (see Note 11(b)—Intangible assets and goodwill—Business acquisitions), we amended and expanded our existing credit facility to an aggregate $2.0 billion credit facility, consisting of an $800 million revolving credit facility and an amortizing $1.2 billion term loan. The amended credit facility is secured by our assets with a syndicate of financial institutions, which includes TELUS Corporation as a lender, maturing on January 3, 2028. Upon closing this acquisition, we borrowed an aggregate of $963 million on the amended credit facility (comprised of $363 million from the revolving credit facility and $600 million from the term loan), to partially fund the WillowTree acquisition, repay a portion of long-term debt assumed in the transaction, and settle certain transaction costs incurred by WillowTree. As at September 30, 2023, the revolving credit facility and term loan had an effective interest rate of 7.42% (December 31, 2022 - 6.67%).


As at (millions)	September 30, 2023						December 31, 2022
	Revolving component		Term loan component1		Total		Revolving component		Term loan component		Total
Available	$	435	$	—	$	435	$	658	$	600	$	1,258
Outstanding
Due to TELUS Corporation	$	26	$	84	$	110	$	10	$	43	$	53
Due to Other	339		1,086		1,425		132		557		689
	$	365	$	1,170	$	1,535	$	142	$	600	$	742
Total	$	800	$	1,170	$	1,970	$	800	$	1,200	$	2,000

The amended credit facility bears interest at prime rate, U.S. dollar base rate, a bankers’ acceptance rate or Term Secured Overnight Financing Rate (SOFR) (all such terms as used or defined in the amended credit facility) plus applicable margins. The amended credit facility contains customary representations, warranties and covenants, including two financial quarter-end ratio tests. Net Debt to EBITDA ratio must not exceed 4.25:1.00 for each quarter in fiscal 2023, 3.75:1.00 for each quarter in fiscal 2024 and 3.25:1.00 subsequently. The 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 EBITDA ratio per credit agreement may be increased by 0.50:1.00 and shall return to the then applicable Net Debt to EBITDA ratio after eight fiscal quarters.


Composite long-term debt denominated in	U.S. dollars						European euros		Other currencies
For each fiscal year ending December 31 (millions)	Long-term debt, excluding leases		Leases		Total		Leases		Leases		Total
2023 (remainder of the year)	$	15	$	4	$	19	$	4	$	7	$	30
2024	60		16		76		15		26		117
2025	60		18		78		14		17		109
2026	60		19		79		11		15		105
2027	60		16		76		6		8		90
2028 and thereafter	1,280		28		1,308		30		15		1,353
Future cash outflows in respect of composite long-term debt principal repayments	1,535		101		1,636		80		88		1,804
Future cash outflows in respect of associated interest and like carrying costs1	453		47		500		17		22		539
Undiscounted contractual maturities	$	1,988	$	148	$	2,136	$	97	$	110	$	2,343

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, historically we have not made significant payments under these indemnifications. As at September 30, 2023, we had no liability recorded in respect of indemnification obligations (December 31, 2022 - $nil).

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.

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.


	2023						2022
Three months ended September 30 (millions)	TELUS Corporation (parent)		Subsidiaries of TELUS Corporation		Total		TELUS Corporation (parent)		Subsidiaries of TELUS Corporation		Total
Transactions with TELUS Corporation and subsidiaries
Revenues from services provided to	$	—	$	133	$	133	$	—	$	108	$	108
Goods and services purchased from	—		(6)		(6)		—		(8)		(8)
	—		127		127		—		100		100
Receipts from related parties	—		(202)		(202)		—		(104)		(104)
Payments to related parties	—		2		2				12		12
Payments (made) collected by related parties on our behalf and other adjustments	5		(8)		(3)		6		(9)		(3)
Foreign exchange	—		—		—		3		—		3
Change in balance	5		(81)		(76)		9		(1)		8
Accounts with TELUS Corporation and subsidiaries
Balance, beginning of period	(96)		58		(38)		(78)		39		(39)
Balance, end of period	$	(91)	$	(23)	$	(114)	$	(69)	$	38	$	(31)
Accounts with TELUS Corporation and subsidiaries
Due from affiliated companies	$	10	$	26	$	36	$	—	$	50	$	50
Due to affiliated companies	(101)		(49)		(150)		(69)		(12)		(81)
	$	(91)	$	(23)	$	(114)	$	(69)	$	38	$	(31)


	2023						2022
Nine months ended September 30 (millions)	TELUS Corporation (parent)		Subsidiaries of TELUS Corporation		Total		TELUS Corporation (parent)		Subsidiaries of TELUS Corporation		Total
Transactions with TELUS Corporation and subsidiaries
Revenues from services provided to	$	—	$	394	$	394	$	—	$	302	$	302
Goods and services purchased from	—		(17)		(17)		—		(20)		(20)
	—		377		377		—		282		282
Receipts from related parties	—		(440)		(440)		—		(307)		(307)
Payments to related parties	—		20		20		1		12		13
Payments (made) collected by related parties on our behalf and other adjustments	(2)		(41)		(43)		(32)		25		(7)
Foreign exchange	2		—		2		6		—		6
Change in balance	—		(84)		(84)		(25)		12		(13)
Accounts with TELUS Corporation and subsidiaries
Balance, beginning of period	(91)		61		(30)		(44)		26		(18)
Balance, end of period	$	(91)	$	(23)	$	(114)	$	(69)	$	38	$	(31)
Accounts with TELUS Corporation and subsidiaries
Due from affiliated companies	$	10	$	26	$	36	$	—	$	50	$	50
Due to affiliated companies	(101)		(49)		(150)		(69)		(12)		(81)
	$	(91)	$	(23)	$	(114)	$	(69)	$	38	$	(31)

On March 9, 2023, we amended the shareholders’ agreement made with TELUS Corporation and BPEA to eliminate initial post-IPO transition requirements, remove BPEA’s rights regarding the nomination of directors and appointment of observers to our Board and confirm TELUS Corporation’s and the Company’s rights to nominate individuals to serve on our Board.

During the nine-month period ended September 30, 2023, share-based compensation expense of $12 million was recognized, and we granted 365,757 RSUs and 301,727 PSUs, with total grant-date fair value of $14 million. 275,147 equity-settled awards were exercised and settled with subordinate voting shares issued from treasury and 79,678 Phantom Share Options were exercised with weighted average prices at the date of exercise of $14.81.

During the nine-month periods ended September 30, 2023 and 2022, we had three customers which each individually accounted for more than 10% of our consolidated revenue. TELUS Corporation, our controlling shareholder and largest client during the nine-month period ended September 30, 2023, accounted for 19.6% of our revenue (September 30, 2022 - 16.5%). Google, our second largest client during the nine-month period ended September 30, 2023, accounted for 12.5% of our revenue (September 30, 2022 - 11.8%). Our third largest client during the nine-month period ended September 30, 2023, a leading social media company, accounted for 11.8% of our revenue (September 30, 2022 - 16.1%).


As at (millions)	September 30, 2023		December 31, 2022
Other long-term assets
Lease deposits and other	$	19	$	20
Other	4		7
	$	23	$	27
Accounts payable and accrued liabilities
Trade accounts payable	$	38	$	39
Accrued liabilities	113		110
Payroll and other employee-related liabilities	135		129
Share-based compensation liability	—		1
Other	15		10
	$	301	$	289


	Three months				Nine months
Periods ended September 30 (millions)	2023		2022		2023		2022
Net change in non-cash operating working capital
Accounts receivable	$	(15)	$	(2)	$	(9)	$	(30)
Due to and from affiliated companies, net	76		—		84		21
Prepaid expenses	3		4		(17)		(2)
Other long-term assets	3		1		4		7
Accounts payable and accrued liabilities	—		1		(31)		(22)
Income and other taxes receivable and payable, net	2		15		—		8
Provisions	(2)		—		5		—
Other long-term liabilities	(1)		(2)		1		(1)
	$	66	$	17	$	37	$	(19)
Cash payments for capital assets
Capital asset additions
Capital expenditures
Property, plant and equipment, excluding right-of-use assets	$	(23)	$	(24)	$	(57)	$	(71)
Intangible assets	(3)		(2)		(9)		(9)
	(26)		(26)		(66)		(80)
Change in accrued payables related to the purchase of capital assets	6		—		8		4
	$	(20)	$	(26)	$	(58)	$	(76)


			Statements of cash flows				Non-cash changes
Three-month period ended September 30, 2023 (millions)	Beginning of Period		Issued or received		Redemptions, repayments or payments		Foreign exchange movement		Other		End of period
Long-term debt
Credit facility	$	1,660	$	40	$	(165)	$	—	$	—	$	1,535

Lease liabilities	267		—		(22)		(2)		26		269
Deferred debt transaction costs	(13)		—		—		—		1		(12)
	$	1,914	$	40	$	(187)	$	(2)	$	27	$	1,792

			Statements of cash flows				Non-cash changes
Three-month period ended September 30, 2022 (millions)	Beginning of Period		Issued or received		Redemptions, repayments or payments		Foreign exchange movement		Other		End of period
Long-term debt
Credit facility	$	848	$	—	$	(62)	$	—	$	—	$	786
Lease liabilities	210		—		(16)		(10)		22		206
Deferred debt transaction costs	(7)		—		—		—		1		(6)
	$	1,051	$	—	$	(78)	$	(10)	$	23	$	986


			Statements of cash flows				Non-cash changes
Nine-month period ended September 30, 2023 (millions)	Beginning of Period		Issued or received		Redemptions, repayments or payments		Foreign exchange movement		Other		End of period
Long-term debt
Credit facility	$	742	$	1,076	$	(283)	$	—	$	—	$	1,535
Other	—		—		(89)		—		89		—
Lease liabilities	236		—		(63)		1		95		269
Deferred debt transaction costs	(14)		—		—		—		2		(12)
	$	964	$	1,076	$	(435)	$	1	$	186	$	1,792

			Statements of cash flows				Non-cash changes
Nine-month period ended September 30, 2022 (millions)	Beginning of Period		Issued or received		Redemptions, repayments or payments		Foreign exchange movement		Other		End of period
Long-term debt
Credit facility	$	941	$	—	$	(155)	$	—	$	—	$	786
Lease liabilities	215		—		(52)		(18)		61		206
Deferred debt transaction costs	(8)		—		—		—		2		(6)
	$	1,148	$	—	$	(207)	$	(18)	$	63	$	986


TELUS INTERNATIONAL (CDA) INC. CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) September 30, 2023