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Concentrix(CNXC) - 2024 Q3 - Quarterly Report
2024-10-04 12:01
[PART I—FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited consolidated financial statements for the three and nine months ended August 31, 2024 and 2023, along with detailed notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased from **$12.49 billion** to **$12.21 billion** as of August 31, 2024, driven by lower cash and intangibles, with total liabilities also decreasing Consolidated Balance Sheet Highlights (in millions/billions) | Account | August 31, 2024 (unaudited, $B) | November 30, 2023 ($B) | | :--- | :--- | :--- | | **Total Assets** | **$12.21** | **$12.49** | | Cash and cash equivalents ($M) | $246.2 | $295.3 | | Goodwill ($B) | $5.08 | $5.08 | | Intangible assets, net ($B) | $2.48 | $2.80 | | **Total Liabilities** ($B) | **$8.04** | **$8.35** | | Long-term debt, net ($B) | $4.91 | $4.94 | | **Total Stockholders' Equity** ($B) | **$4.17** | **$4.14** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Q3 2024 revenue increased to **$2.39 billion** from **$1.63 billion** YoY due to the Webhelp acquisition, but net income declined to **$16.6 million** from **$77.6 million** Statement of Operations Summary (in millions, except per share amounts) | Metric (in millions) | Three Months Ended Aug 31, 2024 | Three Months Ended Aug 31, 2023 | Nine Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$2,387.4** | **$1,632.8** | **$7,170.9** | **$4,883.9** | | Gross Profit | $864.2 | $593.7 | $2,578.3 | $1,755.1 | | Operating Income | $153.2 | $162.3 | $451.9 | $480.9 | | **Net Income** | **$16.6** | **$77.6** | **$135.6** | **$244.4** | | **Diluted EPS** | **$0.25** | **$1.49** | **$2.00** | **$4.67** | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities decreased to **$383.1 million** for the nine months ended August 31, 2024, with financing activities shifting from a **$1.64 billion** inflow to a **$268.1 million** outflow Cash Flow Summary (Nine Months Ended Aug 31, in millions/billions) | Cash Flow Activity (in millions/billions) | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities ($M) | $383.1 | $448.7 | | Net cash used in investing activities ($M) | ($183.4) | ($115.7) | | Net cash provided by (used in) financing activities ($M/$B) | ($268.1) | $1.64B | | **Net (decrease) increase in cash ($M/$B)** | **($74.7)** | **$1.97B** | [Notes to the Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of the company's accounting policies and financial statement line items, covering the Webhelp Combination, revenue, debt, and equity - The company completed its acquisition of Webhelp on September 25, 2023, for a total purchase price consideration of approximately **$3.77 billion**, net of cash acquired[18](index=18&type=chunk)[19](index=19&type=chunk) - For the nine months ended August 31, 2024, revenue from the Retail, travel and ecommerce vertical grew **86.5%** YoY, and Communications and media grew **48.8%** YoY, primarily driven by the Webhelp Combination[92](index=92&type=chunk) - During the nine months ended August 31, 2024, the company repurchased **1.5 million shares** for **$101.6 million** and paid dividends totaling **$61.2 million**[8](index=8&type=chunk)[104](index=104&type=chunk) - As of August 31, 2024, the company was in compliance with all debt covenants related to its Senior Notes, Restated Credit Facility, and other borrowing arrangements[87](index=87&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=38&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management analyzes financial results, highlighting the Webhelp Combination's impact on revenue, margins, and expenses, and discusses liquidity, capital resources, debt, and non-GAAP measures [Results of Operations](index=41&type=section&id=Results%20of%20Operations) Q3 2024 revenue increased **46.2%** to **$2.39 billion** due to the Webhelp Combination, but operating income fell **5.6%** to **$153.2 million** due to higher SG&A expenses and amortization - Q3 2024 revenue increased by **46.2%** YoY, primarily due to the Webhelp Combination[128](index=128&type=chunk) - Q3 2024 SG&A expenses increased by **64.8%** YoY, mainly due to incremental costs from the Webhelp Combination, a **$77.0 million** increase in amortization, and a **$17.6 million** increase in acquisition-related and integration expenses[137](index=137&type=chunk)[138](index=138&type=chunk) - Interest expense for Q3 2024 increased by **63.9%** YoY to **$80.8 million**, driven by interest on senior notes and the Sellers' Note issued for the Webhelp acquisition[142](index=142&type=chunk)[143](index=143&type=chunk) - The effective tax rate for Q3 2024 was **37.0%**, up from **27.3%** in Q3 2023, primarily due to a change in the geographic mix of income[148](index=148&type=chunk)[149](index=149&type=chunk) [Certain Non-GAAP Financial Information](index=45&type=section&id=Certain%20Non-GAAP%20Financial%20Information) The company provides non-GAAP metrics to assess base operating performance, with Q3 2024 Non-GAAP operating income at **$331.0 million** and Non-GAAP diluted EPS at **$2.87** GAAP to Non-GAAP Reconciliation Highlights (Q3 Ended Aug 31, in millions, except per share) | Metric (in millions, except per share) | 2024 | 2023 | | :--- | :--- | :--- | | **GAAP Operating Income** | **$153.2** | **$162.3** | | Non-GAAP Operating Income | $331.0 | $231.0 | | **GAAP Net Income** | **$16.6** | **$77.6** | | Non-GAAP Net Income | $192.2 | $143.7 | | **GAAP Diluted EPS** | **$0.25** | **$1.49** | | Non-GAAP Diluted EPS | $2.87 | $2.76 | [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) As of August 31, 2024, total liquidity was **$1.47 billion**, with cash used for debt repayment, **$101.6 million** in stock repurchases, and **$61.2 million** in dividends, while remaining debt compliant - Total liquidity as of August 31, 2024, was **$1.47 billion**, comprising undrawn credit facilities and cash and cash equivalents[188](index=188&type=chunk) - During the nine months ended August 31, 2024, the company voluntarily prepaid **$350 million** of the principal balance on its Term Loan[172](index=172&type=chunk) - The company repurchased **$101.6 million** of its common stock and paid **$61.2 million** in dividends during the first nine months of fiscal 2024[163](index=163&type=chunk)[164](index=164&type=chunk) - On September 25, 2024, the company announced a quarterly cash dividend of **$0.33275 per share**, an increase from the previous rate[107](index=107&type=chunk)[164](index=164&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section details the company's exposure to market risks, primarily from foreign currency exchange rates and interest rates, and its use of derivative instruments for hedging - The company has significant foreign currency risk as approximately **50%** of revenue is priced in U.S. dollars, while a substantial portion of costs are in local currencies like the Philippine peso and Indian rupee[193](index=193&type=chunk)[194](index=194&type=chunk) - A hypothetical **10%** adverse change in foreign currency exchange rates would result in a potential loss in fair value of approximately **$103.8 million** on hedging contracts, substantially mitigated by corresponding gains on underlying exposures[194](index=194&type=chunk) - The company is exposed to interest rate risk on its variable-rate debt, where a **100 basis point** increase in interest rates would cause an estimated increase in annual interest expense of approximately **$20.2 million**[196](index=196&type=chunk) [Controls and Procedures](index=53&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective as of August 31, 2024, with ongoing integration of Webhelp's internal controls - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of the end of the reporting period[197](index=197&type=chunk) - The company is in the process of evaluating and integrating the operations, processes, and internal controls of the acquired Webhelp business[199](index=199&type=chunk) [PART II—OTHER INFORMATION](index=55&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) [Legal Proceedings](index=55&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is involved in ordinary course legal proceedings not expected to materially affect its financial position, with no material developments this quarter - During the three months ended August 31, 2024, there were no new material legal proceedings or material developments in previously reported proceedings[201](index=201&type=chunk) [Risk Factors](index=55&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company reports no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for fiscal year ended November 30, 2023 - There have been no material changes from the risk factors disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended November 30, 2023[202](index=202&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details Q3 2024 common stock repurchases, totaling **607,298 shares** for approximately **$39.3 million**, with **$188.5 million** remaining under authorization Share Repurchases (Quarter Ended August 31, 2024) | Period | Total Shares Purchased (Program) | Average Price Paid per Share ($) | | :--- | :--- | :--- | | June 2024 | 215,452 | $60.42 | | July 2024 | 199,861 | $66.93 | | August 2024 | 191,985 | $67.23 | | **Total** | **607,298** | **$64.72 (approx.)** | - As of August 31, 2024, approximately **$188.5 million** remained available for share repurchases under the existing program[203](index=203&type=chunk) [Other Information](index=55&type=section&id=ITEM%205.%20OTHER%20INFORMATION) The company reports no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q3 2024 - During the third quarter of 2024, no directors or officers adopted or terminated a Rule 10b5-1 trading arrangement[204](index=204&type=chunk) [Exhibits](index=56&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, including Webhelp acquisition agreements, corporate governance documents, and officer certifications - The report includes certifications from the CEO and CFO pursuant to Rule 13a-14(a) and Section 906 of the Sarbanes-Oxley Act of 2002[206](index=206&type=chunk)
Concentrix Reports Weak Earnings, Joins CarMax And Other Big Stocks Moving Lower In Thursday's Pre-Market Session
Benzinga· 2024-09-26 12:13
Group 1 - U.S. stock futures are higher, with Dow futures gaining around 200 points [1] - Concentrix Corporation reported quarterly earnings of $2.87 per share, missing the analyst consensus estimate of $2.93 per share [1] - Concentrix's quarterly revenue was $2.387 billion, beating the analyst consensus estimate of $2.382 billion [1] Group 2 - Concentrix shares fell 13.8% to $54.79 in pre-market trading [2] - One Liberty Properties, Inc. shares dipped 26.3% to $20.02 in pre-market trading [3] - Pagaya Technologies Ltd. shares fell 15% to $10.59 after announcing a $125 million exchangeable senior notes offering [3] - Critical Metals Corp shares declined 8.3% to $6.00 in pre-market trading [3] - CarMax, Inc. shares declined 7.3% to $69.02 following downbeat quarterly earnings [3] - Armada Hoffler Properties, Inc. shares declined 7.3% to $11.00 after announcing upsizing and pricing of a public offering [3] - Sonos, Inc. shares fell 6% to $11.86 in pre-market trading [3]
Concentrix(CNXC) - 2024 Q3 - Earnings Call Transcript
2024-09-25 23:28
Financial Data and Key Metrics - Q3 2024 revenue was $2.4 billion, reflecting 2.6% pro forma constant currency growth [19] - Non-GAAP operating income was $331 million, up $100 million YoY, with a margin of 13.9%, down 20 bps YoY [21] - Adjusted EBITDA was $388 million, up $119 million YoY, with a margin of 16.3%, down 20 bps YoY [21] - Non-GAAP net income was $192 million, up $49 million YoY, and non-GAAP EPS was $2.87, up $0.11 YoY [22] - Adjusted free cash flow was $135 million, below expectations due to client collection delays and accelerated integration costs [23] - Net debt was $4.67 billion, with a net leverage ratio of 2.95x pro forma adjusted EBITDA [24] Business Line Data and Key Metrics - Retail, travel, and e-commerce revenue grew 8% YoY on a pro forma constant currency basis [19] - Banking, financial services, and insurance revenue grew 5% YoY [19] - Technology and consumer electronics revenue grew 1%, while communications and media revenue declined 3% [20] - Healthcare revenue decreased 4% due to offshore delivery shifts [20] Market Data and Key Metrics - The company won 80% of 22 client consolidation opportunities in Q3 [11] - The airline win in Q3 leverages Generative AI solutions across 15 lines of business and 10 languages [8] - A large infrastructure company saw 40% of transactions handled autonomously by an AI bot, resulting in a 12% near-term revenue reduction [9] - A $150 million five-year contract was secured with a large financial organization for a transformational program [10] Company Strategy and Industry Competition - The company is focusing on winning higher complexity deals and walking away from commoditized business, with less than 7% of revenue now from transactional price-led business [7] - Investments in Generative AI tools have increased to a $100 million annual run rate [14] - The launch of iX Hello, a Generative AI productivity tool, aims to automate internal tasks and boost productivity [15] - The company is reallocating capital towards technology and transformation work to secure long-term business [17] Management Commentary on Operating Environment and Future Outlook - Clients are accelerating technology adoption and pushing for faster transformations, leading to shorter transition timelines [5] - The company expects Q4 revenue of $2.42 billion to $2.47 billion, with pro forma constant currency growth ranging from -0.5% to 1.5% [30] - Full-year 2024 revenue is expected to be $9.591 billion to $9.641 billion, with pro forma constant currency growth of 2.2% to 2.7% [32] - The company aims to reduce net leverage to 2.8x adjusted EBITDA by year-end 2024 [34] Other Important Information - The company repurchased 600,000 shares for $39 million in Q3 and expects full-year repurchases to exceed $130 million [25] - A 10% increase in the quarterly dividend was announced [25] - Integration synergies are expected to reach $120 million by 2025, a year ahead of schedule [28] Q&A Session Summary Question: Revenue impact from walking away from commoditized business vs. new business wins [37] - The company expects a 1% headwind from client volume declines, a 0.5% headwind from offshoring, and a <0.5% headwind from lost consolidation opportunities [38] Question: Ramp timelines for new business wins [39] - The airline win will start generating revenue in late Q4/early Q1, with full ramp by Q2/Q3 2025 [40] - The large transformational project will see revenue by end of Q2 2025, with full ramp by end of Q4 2025 [40] Question: Accelerated merger-related costs in 2025 [41] - The company is accelerating integration spending to achieve $120 million in synergies by 2025, reinvesting savings into transformation activities [42] Question: Other expenses increase in Q3 [43] - The increase was due to $33 million in foreign currency losses and changes in contingent consideration [44] Question: Catalyst business trends [45] - The Catalyst business is performing well, enabling technology deployments and consulting on transformational deals [46] Question: Offshoring impact on revenue and margins [47] - Offshoring is causing dual costs and margin compression in the short term, but longer-term contracts will lead to margin expansion [49] Question: TCE segment performance [52] - The TCE segment saw muted volumes, particularly in consumer electronics, despite share gains [53] Question: Client consolidation opportunities [54] - The company is seeing faster-than-expected consolidation, driven by clients managing costs and seeking full solutions [55] Question: Automation targets [57] - Automation timelines are accelerating as clients seek in-year savings, but the scope of automation remains consistent [58] Question: iX Hello pricing and cannibalization [64] - iX Hello is priced per seat with volume discounts, and the company is comfortable with cannibalizing low-margin business [65] Question: Gen AI investment ROI [67] - The company expects ROI on its $100 million annual Gen AI investment by end of 2025, with accretive margins and growth rates [68] Question: Impact of new technology products on margins [71] - The company is managing investments within its $100 million run rate and expects to see margin improvements as transformational programs ramp [72] Question: Offshore program margin benefits and pricing environment [73] - Offshore programs typically take 2-3 quarters to show margin benefits, and the pricing environment remains competitive, with clients shifting upfront costs to providers [74] Question: Gen AI adoption and future disruption [75] - Close to 1,000 clients are using Gen AI at scale, with some proof-of-concepts converting to production, but clients remain cautious about customer-facing AI [76][77] - The company expects continued adoption of multiple Gen AI solutions tailored to specific client needs [80]
Concentrix Corporation (CNXC) Q3 Earnings Miss Estimates
ZACKS· 2024-09-25 22:21
Concentrix Corporation (CNXC) came out with quarterly earnings of $2.87 per share, missing the Zacks Consensus Estimate of $2.92 per share. This compares to earnings of $2.71 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -1.71%. A quarter ago, it was expected that this company would post earnings of $2.62 per share when it actually produced earnings of $2.69, delivering a surprise of 2.67%. Over the last four quarters, the ...
Concentrix(CNXC) - 2024 Q3 - Quarterly Results
2024-09-25 20:08
Exhibit 99.1 (1) concentrix Concentrix Reports Third Quarter 2024 Results – Delivers revenue above the midpoint of guidance and profit within guidance range – Returns $60 million to shareholders in the quarter through share repurchases and dividends and raises quarterly dividend by 10% – Introduces iX Hello™, the Company's first commercial product launch, reflecting the Company's accelerated AI investments Newark, Calif., September 25, 2024 – Concentrix Corporation (NASDAQ: CNXC), a global technology and se ...
Concentrix Introduces Intelligent Experience Technology Product Suite with Launch of iX Hello™
GlobeNewswire News Room· 2024-09-25 20:06
Core Insights - Concentrix Corporation has launched iX Hello, a GenAI-powered self-service application aimed at enhancing productivity and engagement quality while ensuring high security [1][5] - iX Hello serves as a versatile solution for businesses, enabling the creation of virtual assistants for various applications, including data analysis and language translation [2][4] Product Features - iX Hello integrates with leading Large Language Models (LLMs) and internal data sources, providing a cost-effective way to improve productivity and work quality in a secure environment [2][4] - The application supports over 90 languages for market-ready copy translation, data analysis, and content summarization, among other functionalities [4] - Built-in innovations allow companies to create GenAI experiences that align with their brand voice and vocabulary [4] Strategic Importance - The launch of iX Hello is a significant milestone in Concentrix's product roadmap, leveraging decades of experience and insights from billions of customer interactions [5] - Concentrix is also offering a private preview of future iX Hello functionalities for select organizations, which includes approximately 40 pre-built virtual agents [5][6] Future Developments - Concentrix plans to introduce additional technology products in the iX suite in the coming months, indicating a commitment to expanding its AI and GenAI capabilities [6]
Concentrix Reports Third Quarter 2024 Results
GlobeNewswire News Room· 2024-09-25 20:05
Delivers revenue above the midpoint of guidance and profit within guidance range Returns $60 million to shareholders in the quarter through share repurchases and dividends and raises quarterly dividend by 10% Introduces iX Hello™, the Company's first commercial product launch, reflecting the Company's accelerated AI investments NEWARK, Calif., Sept. 25, 2024 (GLOBE NEWSWIRE) -- Concentrix Corporation (NASDAQ: CNXC), a global technology and services leader, today announced financial results for the fiscal th ...
Concentrix: Hardly Growing Post-Merger (Rating Downgrade)
Seeking Alpha· 2024-09-19 07:35
Company Overview - Concentrix (NASDAQ: CNXC) is set to report its Q3 financial results on September 25th [1] - The company has been under review since the author's initial article, with a focus on long-term performance [1] Investment Strategy - The author prefers a long-term investment horizon, typically 5-10 years [1] - The investment portfolio is diversified, including growth, value, and dividend-paying stocks, with a particular emphasis on value stocks [1] - The author occasionally engages in selling options as part of the investment strategy [1]
Concentrix Schedules Release of Third Quarter 2024 Financial Results and Webcast of Investor Conference Call
GlobeNewswire News Room· 2024-09-05 20:05
Core Insights - Concentrix Corporation plans to announce its fiscal third quarter 2024 financial results after market close on September 25, 2024 [1] - A conference call and webcast will be held on the same evening to discuss the financial results [1] Company Overview - Concentrix Corporation is a Fortune 500® company and a global leader in technology and services, helping over 2,000 clients with integrated solutions [3] - The company focuses on human-centered, tech-powered, and intelligence-fueled services, aiming to transform how companies connect and grow [3] - Concentrix operates across 70+ markets, delivering outcomes across various major verticals [3]
Concentrix Sets Bold Goals to Support People and Planet in New Sustainability Report
Newsfilter· 2024-07-08 14:00
NEWARK, Calif., July 08, 2024 (GLOBE NEWSWIRE) -- Concentrix Corporation (NASDAQ:CNXC), a global technology and services leader, today announced the release of its 2024 Sustainability Report - The Power Of One, detailing the company's progress toward supporting its people, local communities and planet, and evolving its strategy for a more sustainable future. Concentrix has committed to take bold action to create a more sustainable tomorrow and has already exceeded many of its 2025 sustainability goals. Now, ...