Core Insights - Varonis Systems, Inc. has formed a strategic partnership with Concentrix Corporation to provide end-to-end solutions for large enterprises to implement AI safely while protecting data [1][2] - The partnership aims to reduce sensitive data exposure from AI agents, chatbots, and LLMs, addressing AI-driven cyber threats [3][4] Company Overview - Concentrix is a Fortune 500 company serving over 155 Fortune Global 500 clients, focusing on technology and services [2][5] - Varonis is recognized as a leader in data security, trusted by thousands of organizations to protect data across various environments [6][7] Partnership Details - The collaboration will leverage Varonis' Data Security Platform, integrating automated data classification, remediation, alerting, and AI readiness monitoring [3][4] - The partnership will provide 24/7 Managed Data Detection and Response services to enhance security for clients [3][4] Industry Context - The rise of AI technologies is transforming business performance but also introduces new vulnerabilities, necessitating robust data security solutions [4] - Automated, end-to-end data security is emphasized as essential in the AI era to prevent data breaches effectively [4][6]

Revenue and Profitability - For the three months ended February 28, 2025, revenue decreased by 1.3% to $2,372,222 thousand compared to $2,402,748 thousand for the same period in 2024[120] - The cost of revenue decreased by 1.9% to $1,516,323 thousand, down from $1,546,219 thousand in the prior year[124] - Gross profit for the three months ended February 28, 2025, was $855,899 thousand, a slight decrease of 0.1% from $856,529 thousand in the previous year[124] - Revenue from the technology and consumer electronics vertical decreased by 1.1% to $657,692 thousand, while retail, travel, and e-commerce remained flat[121] - The unfavorable impact of foreign currency exchange rates on revenue was $62.4 million, or 2.6%, primarily due to the weakening of the euro and Brazilian real[122] Operating Performance - Operating income increased to $168,867 thousand for the three months ended February 28, 2025, compared to $148,439 thousand in the prior year[120] - Operating income increased by 13.8% to $168,867 thousand for the three months ended February 28, 2025, up from $148,439 thousand in the prior year, with an operating margin improvement from 6.2% to 7.1%[129] - Non-GAAP operating income was $321,486 thousand for the three months ended February 28, 2025, compared to $319,061 thousand for the same period in 2024[139] - Adjusted EBITDA decreased to $374,207 thousand for the three months ended February 28, 2025, from $384,318 thousand in the prior year[139] Net Income and Earnings Per Share - Net income for the three months ended February 28, 2025, was $70,257 thousand, up from $52,102 thousand in the same period last year[120] - For the three months ended February 28, 2025, diluted EPS increased to $1.04 from $0.76 for the same period in 2024, with non-GAAP diluted EPS rising to $2.79 from $2.57[140] Expenses and Taxation - Selling, general and administrative expenses decreased by 3.0% to $687,032 thousand for the three months ended February 28, 2025, compared to $708,090 thousand for the same period in 2024[127] - Interest expense and finance charges, net decreased by 11.5% to $72,994 thousand for the three months ended February 28, 2025, compared to $82,439 thousand for the same period in 2024[130] - Provision for income taxes increased by 47.4% to $30,535 thousand for the three months ended February 28, 2025, up from $20,722 thousand in the prior year, with an effective tax rate increase from 28.5% to 30.3%[134] - The effective tax rate increase was primarily due to tax law changes and a change in the mix of income earned in different tax jurisdictions[135] Share Repurchase and Dividends - The company repurchased 539,802 shares for approximately $25.8 million during the three months ended February 28, 2025, compared to 237,105 shares for $21.7 million in the same period last year[142] - As of February 28, 2025, approximately $582.3 million remained available for share repurchases under the existing authorization[142] - Future cash dividends will be subject to board approval and depend on financial condition, earnings, and other factors[146] Cash Flow and Liquidity - Net cash provided by operating activities was $1.4 million for the three months ended February 28, 2025, a significant improvement from a net cash used of $46.9 million for the same period in 2024[169] - Net cash used in investing activities decreased to $51.3 million for the three months ended February 28, 2025, compared to $60.6 million for the same period in 2024, primarily due to reduced capital expenditures[170] - Net cash provided by financing activities increased to $102.3 million for the three months ended February 28, 2025, compared to $14.4 million for the same period in 2024, driven by net borrowings under the Securitization Facility[171][172] - Free cash flow was a use of cash of $49.2 million for the three months ended February 28, 2025, an improvement from a use of cash of $102.9 million for the same period in 2024[173] - Adjusted free cash flow was a use of cash of $39.8 million for the three months ended February 28, 2025, compared to a use of cash of $81.3 million for the same period in 2024[174] - Total liquidity as of February 28, 2025, was $1,498.5 million, including undrawn capacity on the revolving credit facility of $1,042.5 million[175] - Cash and cash equivalents totaled $308.0 million as of February 28, 2025, with 98% held by non-U.S. legal entities[176] Debt and Financing - The company issued $800 million of 6.650% Senior Notes due 2026 and $800 million of 6.600% Senior Notes due 2028 as part of its financing strategy[148] - The Restated Credit Facility provides for a senior unsecured revolving credit facility of up to $1,042.5 million and a term loan facility of approximately $2,144.7 million[153] - The outstanding principal balance on the Term Loan was $1,500 million as of February 28, 2025, with no principal payment due until maturity[154] - The company entered into an amendment to the Securitization Facility to increase available borrowings from $600 million to $700 million and extend the termination date to January 14, 2027[160] - The Sellers' Note issued as part of the Webhelp Combination has an aggregate principal amount of €700 million, accruing interest at 2% per annum, due on September 25, 2025[164] Foreign Currency Exposure - Approximately 55% of revenue is priced in U.S. dollars, with significant exposure to contracts denominated in euros, British pounds, Japanese yen, and Brazilian real[180] - The potential loss in fair value from foreign currency hedging contracts due to a hypothetical 10% adverse change in exchange rates is approximately $103.7 million, which would be mitigated by corresponding gains on underlying exposures[181] - The company experienced a $22.2 million reduction in selling, general and administrative expenses due to changes in foreign currency exchange rates[128] - A one hundred basis point increase in interest rates on variable-rate debt would result in an estimated increase in interest expense of approximately $20.5 million per year[183]

Group 1 - Concentrix is shifting its business model to become an artificial intelligence implementer rather than being affected by AI [1] - The company provided guidance to generate approximately $625 million in free cash flow [1]

Financial Data and Key Metrics Changes - In Q1 2025, the company reported revenue of approximately $2.37 billion, growing 1.3% year over year on a constant currency basis, exceeding expectations [21][30] - Non-GAAP operating income was $322 million, with a margin of 13.6%, an increase of 30 basis points from Q1 last year [24] - Non-GAAP net income was $188 million, reflecting a nearly 9% increase year over year, with non-GAAP diluted EPS at $2.79 [25][26] - Adjusted free cash flow was a use of $40 million, an improvement of $41 million from last year [27] Business Line Data and Key Metrics Changes - Revenue from retail, travel, and e-commerce clients grew 4% year over year, led by travel clients [22] - Revenue from banking, financial services, and insurance grew 3% [22] - The tech vertical grew about 1%, primarily driven by consumer electronics, while healthcare and media sectors were largely flat year on year [23] Market Data and Key Metrics Changes - The company has no exposure to US government contracts at this time [23] - The demand environment in Q1 was solid, with a focus on consolidation opportunities and cross-selling [9][31] Company Strategy and Development Direction - The company’s long-term growth strategy focuses on integrated AI solutions and expanding the value provided to clients [10][16] - The deployment of Gen AI solutions is a key part of the strategy, with thousands of seats now deployed across enterprise clients [13][57] - The company aims to grow its share of wallet and market through a broader array of business services [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in ongoing revenue, margin, and cash flow growth for the remainder of the year [8] - The macro environment is viewed as muted, with strong performance in Asia Pacific and Europe [110] - The company expects to generate mid-single-digit growth in the long term [32] Other Important Information - The company returned approximately $48 million to shareholders in Q1, including share repurchases and dividends [28] - The company is focused on maintaining investment-grade principles while supporting its dividend [40] Q&A Session Summary Question: Commentary on consumer electronics vertical - Management noted that the company is taking market share in consumer electronics, with stability observed in the sector [46][48] Question: AI suite usage and revenue generation - The IXLO suite is being deployed internally and commercially, with thousands of seats already in use, expected to generate revenue [55][57] Question: Gen AI impact on revenue growth - Management indicated that Gen AI is pervasive across solutions, contributing positively to revenue growth despite initial challenges [63][76] Question: Guidance and margin expectations - Management maintained a conservative approach to guidance, with some ramp costs affecting Q2 margins [81] Question: Debt positioning and refinancing plans - The company is actively engaged in discussions to refinance a €700 million seller's note due in September, aiming to maintain leverage [105][107] Question: Macro trends and booking momentum - The macro environment is muted, but bookings are strong in Asia Pacific and Europe, with a focus on offshore delivery [110][112]

Revenue Performance - Revenue for Q1 2025 was $2,372.2 million, a decrease of 1.3% year-on-year from $2,402.7 million in Q1 2024, but a constant currency growth of 1.3%[6] - Total revenue for the three months ended February 28, 2025, was $2,372,222, a decrease of 1% compared to $2,402,748 for the same period in 2024[28] - Revenue forecast for the three months ending May 31, 2025, is projected between $2,370,000 and $2,390,000, with a reported growth rate of (0.40)% to 0.35%[32] - Full year reported revenue guidance is set at $9.490 billion to $9.635 billion, with constant currency growth expectations of 0% to 1.5%[11] - The fiscal year ending November 30, 2025, revenue is expected to be between $9,490,000 and $9,635,000, with a growth forecast of (1.35)% to 0.15%[32] Income and Earnings - Operating income increased to $168.9 million, representing 7.1% of revenue, compared to $148.4 million or 6.2% of revenue in the prior year[6] - Net income rose by 34.9% to $70.3 million from $52.1 million in Q1 2024[6] - Operating income rose by 14% to $168,867 for the three months ended February 28, 2025, compared to $148,439 for the same period in 2024[28] - Net income increased by 35% to $70,257 for the three months ended February 28, 2025, compared to $52,102 for the same period in 2024[28] - Non-GAAP diluted earnings per share (EPS) was $2.79, up 8.6% from $2.57 in the prior year[6] - Diluted EPS for the three months ended February 28, 2025, was $1.04, compared to $0.76 for the same period in 2024, reflecting a 36.8% increase[32] - Non-GAAP operating income is projected to be between $315,000 and $325,000 for the same period[32] Cash Flow and Financial Position - The company expects to generate approximately $625 million to $650 million of adjusted free cash flow for the full fiscal year 2025[5] - Net cash provided by operating activities was $1,408,000 for the three months ended February 28, 2025, a significant recovery from a negative cash flow of $(46,870,000) in the prior year[32] - Free cash flow improved to $(49,210,000) from $(102,929,000) year-over-year, indicating a 52.0% reduction in cash outflow[32] - Cash and cash equivalents increased to $308,000 as of February 28, 2025, from $240,571 as of November 30, 2024[26] - Total assets decreased slightly to $11,895,119 as of February 28, 2025, from $11,991,438 as of November 30, 2024[26] - The company’s total liabilities decreased to $7,861,349 as of February 28, 2025, from $7,951,714 as of November 30, 2024[26] - The company’s additional paid-in capital increased to $3,711,701 as of February 28, 2025, from $3,683,608 as of November 30, 2024[26] Shareholder Returns - The company repurchased approximately 550,000 shares for $26.2 million at an average cost of $47.84 per share in Q1 2025[10] - The quarterly dividend of $0.33275 per share was declared for payment on May 6, 2025[10] Guidance and Expectations - For Q2 2025, the company anticipates reported revenue between $2.370 billion and $2.390 billion, implying constant currency growth of 0.50% to 1.25%[11] - The effective tax rate for the full year is expected to be approximately 25.5% to 26.5%[11] - The company expects a constant currency revenue growth of 1.3% for the upcoming quarters[30] Other Expenses - Acquisition-related and integration expenses primarily related to the combination with Webhelp, including severance and IT system consolidation costs[33] - Foreign currency losses (gains), net, included in other expenses, primarily consist of gains and losses from foreign currency transactions and derivative contracts[33]

Core Insights - Concentrix Corporation reported financial results for the fiscal first quarter ended February 28, 2025, showing a slight decline in revenue but significant growth in operating income and net income [1][4][6]. Financial Performance - Revenue for the first quarter was $2,372.2 million, a decrease of 1.3% year-on-year from $2,402.7 million [6]. - Operating income increased to $168.9 million, representing 7.1% of revenue, compared to $148.4 million (6.2% of revenue) in the prior year [6]. - Non-GAAP operating income was $321.5 million, or 13.6% of revenue, slightly up from $319.1 million (13.3% of revenue) year-on-year [6]. - Net income rose to $70.3 million, a 34.9% increase from $52.1 million in the previous year [6]. - Non-GAAP net income was $188.1 million, up 7.1% from $175.7 million [6]. Margins and Earnings - The operating margin improved by 90 basis points to 7.1% [6]. - Non-GAAP operating margin increased by 30 basis points to 13.6% [6]. - Adjusted EBITDA was $374.2 million, with a margin of 15.8%, down from $384.3 million (16.0% margin) in the prior year [6]. Shareholder Returns - The company paid a quarterly dividend of $0.33275 per share on February 11, 2025, and declared another dividend of the same amount payable on May 6, 2025 [4][5]. - Concentrix repurchased approximately 550,000 shares for $26.2 million at an average cost of $47.84 per share, with a remaining authorization of $582.3 million for share repurchases [7]. Future Outlook - The company expects to generate approximately $625 million to $650 million of adjusted free cash flow for the fiscal year 2025 [5][9]. - Full-year revenue guidance is set between $9.490 billion and $9.635 billion, implying constant currency revenue growth of 0% to 1.5% [13].

Core Points - Concentrix Corporation plans to announce its fiscal first quarter 2025 financial results after market close on March 26, 2025 [1] - A conference call and webcast will be held on the same evening to discuss the financial results [1] - The live conference call will be available in listen-only mode on the Concentrix website [2] Company Overview - Concentrix Corporation is a Fortune 500® company and a global leader in technology and services [3] - The company provides integrated, end-to-end solutions to over 2,000 clients across various industries [3] - Concentrix aims to help companies simplify their operations and enhance interactions through advanced technology solutions [3]

Core Insights - Concentrix Corporation has launched iX Hello 2.0, a customizable AI solution designed to enhance customer engagement across enterprises [1][3] - The new platform includes features such as multi-modal bots, appointment booking tools, and order status trackers, which can be deployed quickly [1][3] - Concentrix emphasizes its extensive experience with over 2,000 clients to create effective solutions that simplify customer interactions [3][4] Product Features - iX Hello 2.0 offers smart and responsive capabilities, providing high-quality self-service answers while continuously improving customer experiences [7] - The platform is accessible from various engagement channels, including webchat, voice, SMS, smart devices, and applications [7] - It is designed for easy setup with pre-built AI app blueprints and can integrate with major enterprise systems like Salesforce, Microsoft, AWS, and Workday [7]

Core Insights - Concentrix Corporation has been recognized as the Highest Leader in Everest Group's inaugural B2B Sales Services PEAK Matrix® Assessment, highlighting its strong market impact and service delivery capabilities [1][2]. Group 1: Company Recognition - Among 15 evaluated service providers, Concentrix achieved the Highest Leader position due to its strategic integration of AI technologies and a comprehensive partner ecosystem focused on tailored B2B sales services solutions [2][3]. - The company outperformed in categories such as Market Adoption, Vision and Strategy, Innovation and Investments, and Delivery Footprint, reinforcing its status as a leader in the B2B sales services sector [3]. Group 2: Service Offerings - Concentrix provides a range of B2B sales services, including inside sales, account management, sales operations, channel sales, customer success, and renewals [3]. - The acquisition of ServiceSource and Webhelp has enhanced Concentrix's expertise in B2B sales, allowing access to proprietary solutions for lead generation and scoring [3]. Group 3: Strategic Vision - The company aims to deepen its capabilities and expand its reach to support clients in achieving their sales goals effectively, leveraging its expertise in data, technology, and AI [4]. - Concentrix's commitment to utilizing leading-edge technologies while maintaining a client-centric approach empowers it to develop AI-based, customized B2B sales tools and processes [4].

Core Insights - Concentrix Corporation has been recognized as the Highest Leader in Everest Group's inaugural B2B Sales Services PEAK Matrix Assessment, highlighting its strategic integration of AI technologies and a comprehensive partner ecosystem [1][2]. Company Overview - Concentrix is a global technology and services leader, providing B2B sales services such as inside sales, account management, and customer success [3][4]. - The company has enhanced its B2B sales expertise through acquisitions, including ServiceSource and Webhelp, which provide proprietary solutions for lead generation [3]. Strategic Advantages - Concentrix's recognition as a leader is attributed to its strong market impact, successful service delivery, and innovative use of AI technologies [2][3]. - The company has established partnerships with leading technology organizations and offers a suite of in-house solutions, including real-time seller support and customer intelligence tools [3]. Market Position - Concentrix has outperformed competitors in categories such as Market Adoption, Vision and Strategy, Innovation and Investments, and Delivery Footprint, solidifying its position in the B2B sales services sector [3]. - The company aims to deepen its capabilities and expand its reach to support clients in achieving their sales goals effectively [4]. Future Outlook - Concentrix is committed to leveraging advanced technologies and maintaining a flexible, client-centric approach to enhance its B2B sales tools and processes [4].