Core Insights - Concentrix Corporation has been recognized as a Leader in the Trust and Safety Services PEAK Matrix Assessment 2025 by Everest Group for the fifth consecutive year, highlighting its significant market impact and successful service delivery [1][2] Company Performance - Among 28 assessed providers, Concentrix ranked third for Market Impact and fourth for Vision and Capability, reinforcing its position as a top performer in the industry [2] - The company has made substantial technology investments in areas such as annotation, labeling, content moderation, wellness, identity verification, and analytics, enhancing its human moderation offerings [4] AI and Innovation - Concentrix's focus on integrated AI support is identified as a key strength, particularly in training and managing AI models for clients [3] - The introduction of a new wellness model aims to enhance moderator care at scale, utilizing intelligent systems to monitor well-being and promote long-term mental health across global teams [3][4] Industry Context - The demand for trusted partners in ensuring the safety and integrity of online platforms is increasing, driven by challenges in content moderation, policy enforcement, and the deployment of Generative AI models [4]

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]

Concentrix Corporation (NASDAQ:CNXC) Q1 2025 Earnings Conference Call March 26, 2025 5:00 PM ET Company Participants Sara Buda - Vice President, Investor Relations Chris Caldwell - President and Chief Executive Officer Andre Valentine - Chief Financial Officer Conference Call Participants Joseph Vafi - Canaccord Genuity David Koning - Baird Ruplu Bhattacharya - Bank of America Securities Vincent Colicchio - Barrington Research Divya Goyal - Scotiabank Operator Good day, and thank you for standing by. Welcom ...

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]