Concentrix(CNXC) - 2025 Q3 - Quarterly Results

Third Quarter Fiscal 2025 Results Overview Concentrix reported strong Q3 FY25 results, with revenue exceeding guidance and a significant increase in GAAP net income and EPS, despite a slight decline in non-GAAP operating income and adjusted EBITDA. The company also raised its full-year growth outlook Key Financial Highlights Concentrix reported strong Q3 FY25 results, with revenue exceeding guidance and a significant increase in GAAP net income and EPS, despite a slight decline in non-GAAP operating income and adjusted EBITDA. The company also raised its full-year growth outlook Key Financial Metrics | Metric | August 31, 2025 ($M) | August 31, 2024 ($M) | Change (%) | Change (bps) | | :--------------------------------- | :-------------------- | :-------------------- | :--------- | :----------- | | Revenue | 2,483.3 | 2,387.4 | 4.0 % | | | Operating income | 147.0 | 153.2 | (4.0)% | | | Non-GAAP operating income | 305.1 | 331.0 | (7.8)% | | | Operating margin | 5.9 % | 6.4 % | | -50 bps | | Non-GAAP operating margin | 12.3 % | 13.9 % | | -160 bps | | Net income | 88.1 | 16.6 | 430.7 % | | | Non-GAAP net income | 183.2 | 192.2 | (4.7)% | | | Adjusted EBITDA | 359.2 | 388.1 | (7.4)% | | | Adjusted EBITDA margin | 14.5 % | 16.3 % | | -180 bps | | Diluted EPS | 1.34 | 0.25 | 436.0 % | | | Non-GAAP diluted EPS | 2.78 | 2.87 | (3.1)% | | - Delivers revenue above guidance for Q3 and raises full year growth outlook[5] - Sees strong demand environment for integrated solutions[5] - Cash flow provided by operations was $224.8 million in the quarter. Adjusted free cash flow was $178.8 million in the quarter[6] CEO Commentary The CEO highlighted Concentrix's strong growth momentum, attributing it to its position as a trusted provider of business transformation solutions combining CX expertise, AI, and IT services. The strategy is aligned with client needs, driving market share gains and long-term value - Concentrix's ongoing growth momentum demonstrates its strong position as a trusted provider of business transformation solutions that combine CX expertise, AI and IT services globally[7] - The company's strategy is aligned with client needs, helping them drive positive business outcomes, gain market share, and expand offerings to drive long-term value for clients and shareholders[7] Capital Allocation Concentrix outlines its capital allocation strategy, including increased quarterly dividends and continued share repurchases, demonstrating a commitment to shareholder returns Quarterly Dividend Concentrix increased its quarterly dividend, demonstrating a commitment to returning value to shareholders - The Company paid a $0.33275 per share quarterly dividend on August 5, 2025[12] - The Board of Directors declared a quarterly dividend of $0.36 per share payable on November 4, 2025[12] Share Repurchase Program The company continued its share repurchase program in Q3, reducing outstanding shares and indicating further authorization for future repurchases - The Company repurchased approximately 800,000 common shares in the third quarter at a cost of $42.2 million, at an average cost of $53.07 per share[12] - As of August 31, 2025, the Company's remaining share repurchase authorization was $495.1 million[12] Business Outlook Concentrix provides financial guidance for Q4 and full-year FY25, including revenue, EPS, and adjusted free cash flow expectations, while noting limitations in non-GAAP reconciliations Fourth Quarter Fiscal 2025 Expectations Concentrix provided guidance for Q4 FY25, projecting reported revenue between $2.525 billion and $2.550 billion, with constant currency revenue growth of 1.5% to 2.5%. Non-GAAP EPS is expected to be $2.85 to $2.96 Q4 FY25 Expectations | Metric | Low ($M) | High ($M) | | :--------------------------------- | :------- | :-------- | | Reported Revenue | 2,525 | 2,550 | | Constant Currency Revenue Growth | 1.5 % | 2.5 % | | Operating Income | 163 | 173 | | Non-GAAP Operating Income | 320 | 330 | | Non-GAAP EPS | 2.85 | 2.96 | | Effective Tax Rate | ~25% | ~25% | Full Year Fiscal 2025 Expectations For the full fiscal year 2025, the company anticipates reported revenue of $9.798 billion to $9.823 billion, implying constant currency revenue growth of 1.75% to 2.0%. Non-GAAP EPS is projected to be $11.11 to $11.23 Full Year FY25 Expectations | Metric | Low ($M) | High ($M) | | :--------------------------------- | :------- | :-------- | | Reported Revenue | 9,798 | 9,823 | | Constant Currency Revenue Growth | 1.75 % | 2.0 % | | Operating Income | 627 | 637 | | Non-GAAP Operating Income | 1,250 | 1,260 | | Non-GAAP EPS | 11.11 | 11.23 | | Effective Tax Rate | ~24% | ~24% | Adjusted Free Cash Flow and Shareholder Returns Outlook Concentrix expects to generate significant adjusted free cash flow and return a substantial amount to shareholders in fiscal year 2025 - The Company expects to generate approximately $585 million to $610 million of adjusted free cash flow in fiscal year 2025[11] - The Company also expects to return approximately $240 million to shareholders in fiscal 2025 through share repurchases and dividends[11] Non-GAAP Outlook Reconciliation Disclaimer The company notes that a quantitative reconciliation of non-GAAP EPS and adjusted free cash flow outlook to GAAP measures cannot be provided without unreasonable efforts due to the inability to forecast certain volatile items - A quantitative reconciliation of non-GAAP EPS outlook to GAAP cannot be provided without unreasonable efforts due to the inability to forecast future changes in acquisition contingent consideration and foreign currency losses (gains), net[12][14] - A quantitative reconciliation of adjusted free cash flow outlook to GAAP cannot be provided without unreasonable efforts due to uncertainty related to future changes in the Company's factoring program[15] Company Information This section provides details on the company's Q3 FY25 conference call and an overview of Concentrix Corporation as a global technology and services leader Conference Call and Webcast Concentrix hosted a conference call and webcast for investors to discuss its Q3 FY25 results, with a replay available online - The Company hosted a conference call for investors to review its third quarter fiscal 2025 results on September 25, 2025[16] - A live webcast and replay are available in the Investor Relations section of the Company's website[16] About Concentrix Concentrix Corporation is a Fortune 500 global technology and services leader, providing human-centered, tech-powered, and intelligence-fueled end-to-end solutions to over 2,000 clients across 70+ markets, focusing on business transformation and client experience - Concentrix Corporation (NASDAQ: CNXC) is a Fortune 500® global technology and services leader[17] - The company designs, builds, and runs fully integrated, end-to-end solutions for over 2,000 clients across 70+ markets[17] - Concentrix focuses on transforming how companies connect, interact, and grow, delivering outcomes across every major vertical[17] Non-GAAP Financial Measures Concentrix defines and explains its use of non-GAAP financial measures to provide a clearer view of core operating performance by excluding certain non-operational items Definition and Rationale Concentrix uses various non-GAAP financial measures, such as constant currency revenue growth, non-GAAP operating income, adjusted EBITDA, non-GAAP net income, free cash flow, and non-GAAP diluted EPS, to provide a clearer view of its core operating performance by excluding certain non-recurring or non-operational items - Concentrix discloses non-GAAP financial information, including constant currency revenue growth, non-GAAP operating income, non-GAAP operating margin, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income, free cash flow, adjusted free cash flow, and non-GAAP diluted EPS[18][19][22] - These non-GAAP measures are used to better assess and understand base operating performance, facilitate period-to-period comparisons, and for management's operational goals and compensation purposes[20] - Non-GAAP measures exclude items like acquisition-related expenses, amortization of intangibles, and share-based compensation, which do not directly relate to ordinary business operations or reflect underlying business performance[18][20] Safe Harbor Statement The Safe Harbor Statement clarifies that the news release contains forward-looking statements subject to inherent uncertainties and substantial risks, which could cause actual results to differ materially from expectations. It lists various risk factors, including economic conditions, cybersecurity, new technologies, and regulatory changes - The news release includes forward-looking statements under Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934[21] - These statements are inherently uncertain and involve substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied[23] - Risks include general economic and geopolitical conditions, cyberattacks, uncertainty from new and emerging technologies (including generative AI), inability to protect information, and changes in law or regulations[23] Financial Statements This section presents Concentrix's consolidated balance sheets and statements of operations, detailing assets, liabilities, equity, revenue, and net income for the reported periods Consolidated Balance Sheets As of August 31, 2025, Concentrix reported total assets of $12.41 billion, an increase from November 30, 2024. Key changes include higher cash and cash equivalents, accounts receivable, and goodwill, alongside an increase in total liabilities and stockholders' equity Consolidated Balance Sheet Data | Metric | August 31, 2025 ($M) | November 30, 2024 ($M) | | :-------------------------- | :-------------------- | :-------------------- | | Total assets | 12,410,099 | 11,991,438 | | Cash and cash equivalents | 350,259 | 240,571 | | Accounts receivable, net | 2,051,920 | 1,926,737 | | Goodwill | 5,191,565 | 4,986,967 | | Intangible assets, net | 2,079,278 | 2,286,940 | | Total liabilities | 8,065,970 | 7,951,714 | | Total stockholders' equity | 4,344,129 | 4,039,724 | Consolidated Statements of Operations For the three months ended August 31, 2025, Concentrix reported a 4% increase in total revenue to $2.48 billion, with significant growth in Banking, Financial Services & Insurance (9%) and Communications & Media (8%). Net income surged by 430% to $88.1 million, and diluted EPS increased from $0.25 to $1.34 year-over-year Consolidated Statements of Operations Data | Metric | Three Months Ended Aug 31, 2025 ($M) | Three Months Ended Aug 31, 2024 ($M) | % Change | | :--------------------------------- | :---------------------------------- | :---------------------------------- | :------- | | Total Revenue | 2,483,253 | 2,387,412 | 4 % | | Cost of revenue | 1,628,246 | 1,523,220 | 7 % | | Gross profit | 855,007 | 864,192 | (1)% | | Operating income | 146,984 | 153,242 | (4)% | | Net income | 88,110 | 16,631 | 430 % | | Diluted EPS | 1.34 | 0.25 | 436 % | | Weighted-average common shares outstanding (Diluted) | 62,702 | 64,749 | | Revenue by Segment | Revenue Segment | Three Months Ended Aug 31, 2025 ($M) | Three Months Ended Aug 31, 2024 ($M) | % Change | | :--------------------------------- | :---------------------------------- | :---------------------------------- | :------- | | Technology and consumer electronics | 670,573 | 664,829 | 1 % | | Retail, travel and e-commerce | 622,822 | 593,736 | 5 % | | Communications and media | 411,229 | 380,508 | 8 % | | Banking, financial services and insurance | 384,449 | 352,471 | 9 % | | Healthcare | 174,106 | 172,400 | 1 % | | Other | 220,074 | 223,468 | (2)% | GAAP to Non-GAAP Reconciliations This section provides detailed reconciliations from GAAP to non-GAAP financial measures, including revenue growth, operating income, EBITDA, net income, EPS, and free cash flow, along with explanatory notes Revenue Growth Reconciliation For Q3 FY25, reported revenue growth was 4.0%, which translates to 2.6% on a constant currency basis after accounting for a 1.4% negative foreign exchange impact Revenue Growth Reconciliation | Metric | Three Months Ended Aug 31, 2025 | | :--------------------------------- | :------------------------------ | | Revenue growth, as reported under U.S. GAAP | 4.0 % | | Foreign exchange impact | (1.4)% | | Constant currency revenue growth | 2.6 % | Operating Income Reconciliation Non-GAAP operating income for Q3 FY25 was $305.1 million, adjusted from GAAP operating income of $147.0 million by excluding acquisition-related and integration expenses, step-up depreciation, amortization of intangibles, and share-based compensation Operating Income Reconciliation | Metric | Three Months Ended Aug 31, 2025 ($M) | Three Months Ended Aug 31, 2024 ($M) | | :--------------------------------- | :---------------------------------- | :---------------------------------- | | Operating income | 146,984 | 153,242 | | Acquisition-related and integration expenses | 18,619 | 36,055 | | Step-up depreciation | 2,704 | 2,449 | | Amortization of intangibles | 111,779 | 116,556 | | Share-based compensation | 25,042 | 22,663 | | Non-GAAP operating income | 305,128 | 330,965 | Adjusted EBITDA Reconciliation Adjusted EBITDA for Q3 FY25 was $359.2 million, a decrease of 7.4% from the prior year, after adding back interest, taxes, depreciation, and non-GAAP adjustments to net income Adjusted EBITDA Reconciliation | Metric | Three Months Ended Aug 31, 2025 ($M) | Three Months Ended Aug 31, 2024 ($M) | | :--------------------------------- | :---------------------------------- | :---------------------------------- | | Net income | 88,110 | 16,631 | | Interest expense and finance charges, net | 72,014 | 80,815 | | Provision for income taxes | 23,334 | 9,785 | | Other expense (income), net | (36,474) | 46,011 | | Acquisition-related and integration expenses | 18,619 | 36,055 | | Step-up depreciation | 2,704 | 2,449 | | Amortization of intangibles | 111,779 | 116,556 | | Share-based compensation | 25,042 | 22,663 | | Depreciation (exclusive of step-up depreciation) | 54,074 | 57,115 | | Adjusted EBITDA | 359,202 | 388,080 | Operating and EBITDA Margins In Q3 FY25, GAAP operating margin was 5.9% (down 50 bps YoY), non-GAAP operating margin was 12.3% (down 160 bps YoY), and Adjusted EBITDA margin was 14.5% (down 180 bps YoY) Operating and EBITDA Margins | Metric | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | | :--------------------------------- | :------------------------------ | :------------------------------ | | Operating margin | 5.9 % | 6.4 % | | Non-GAAP operating margin | 12.3 % | 13.9 % | | Adjusted EBITDA margin | 14.5 % | 16.3 % | Net Income Reconciliation Non-GAAP net income for Q3 FY25 was $183.2 million, a 4.7% decrease year-over-year, after adjusting GAAP net income for various non-recurring items and their tax effects Net Income Reconciliation | Metric | Three Months Ended Aug 31, 2025 ($M) | Three Months Ended Aug 31, 2024 ($M) | | :--------------------------------- | :---------------------------------- | :---------------------------------- | | Net income | 88,110 | 16,631 | | Acquisition-related and integration expenses | 18,619 | 36,055 | | Imputed interest related to sellers' note | 4,739 | 4,259 | | Foreign currency losses (gains), net | (35,531) | 33,435 | | Amortization of intangibles | 111,779 | 116,556 | | Share-based compensation | 25,042 | 22,663 | | Income taxes related to the above | (30,535) | (55,753) | | Non-GAAP net income | 183,231 | 192,158 | Non-GAAP Net Income Attributable to Common Stockholders Non-GAAP net income attributable to common stockholders for Q3 FY25 was $174.5 million, a decrease from $185.7 million in the prior year, reflecting adjustments and allocation to common stockholders Non-GAAP Net Income Attributable to Common Stockholders | Metric | Three Months Ended Aug 31, 2025 ($M) | Three Months Ended Aug 31, 2024 ($M) | | :--------------------------------- | :---------------------------------- | :---------------------------------- | | Net income attributable to common stockholders | 83,896 | 16,073 | | Acquisition-related and integration expenses allocated to common stockholders | 17,729 | 34,845 | | Amortization of intangibles allocated to common stockholders | 106,433 | 112,645 | | Share-based compensation allocated to common stockholders | 23,844 | 21,903 | | Income taxes related to the above allocated to common stockholders | (29,075) | (53,882) | | Non-GAAP net income attributable to common stockholders | 174,468 | 185,711 | Diluted EPS Reconciliation Non-GAAP diluted EPS for Q3 FY25 was $2.78, a slight decrease from $2.87 in the prior year, after adjusting GAAP diluted EPS for various non-GAAP items Diluted EPS Reconciliation | Metric | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | | :--------------------------------- | :------------------------------ | :------------------------------ | | Diluted earnings per common share ("EPS") | 1.34 | 0.25 | | Acquisition-related and integration expenses | 0.28 | 0.54 | | Amortization of intangibles | 1.70 | 1.74 | | Share-based compensation | 0.38 | 0.34 | | Income taxes related to the above | (0.46) | (0.84) | | Non-GAAP diluted EPS | 2.78 | 2.87 | Free Cash Flow Reconciliation Adjusted free cash flow for Q3 FY25 was $178.8 million, an increase from $135.3 million in the prior year, driven by higher cash flow from operations and changes in factoring balances Free Cash Flow Reconciliation | Metric | Three Months Ended Aug 31, 2025 ($M) | Three Months Ended Aug 31, 2024 ($M) | | :--------------------------------- | :---------------------------------- | :---------------------------------- | | Net cash provided by operating activities | 224,803 | 191,622 | | Purchases of property and equipment | (65,054) | (62,746) | | Free cash flow | 159,749 | 128,876 | | Change in outstanding factoring balances | 19,056 | 6,374 | | Adjusted free cash flow | 178,805 | 135,250 | Forecasted Non-GAAP Reconciliations The company provided forecasted non-GAAP reconciliations for Q4 and full-year FY25, detailing expected adjustments for operating income, including amortization of intangibles, share-based compensation, and acquisition-related expenses Forecasted Non-GAAP Reconciliations | Metric | Q4 FY25 Low ($M) | Q4 FY25 High ($M) | Full Year FY25 Low ($M) | Full Year FY25 High ($M) | | :--------------------------------- | :--------------- | :---------------- | :---------------------- | :----------------------- | | Operating income | 162,500 | 172,500 | 626,696 | 636,696 | | Amortization of intangibles | 105,000 | 105,000 | 431,556 | 431,556 | | Share-based compensation | 35,000 | 35,000 | 113,504 | 113,504 | | Acquisition-related and integration expenses | 15,000 | 15,000 | 68,451 | 68,451 | | Step-up depreciation | 2,500 | 2,500 | 10,116 | 10,116 | | Non-GAAP operating income | 320,000 | 330,000 | 1,250,323 | 1,260,323 | Notes to Reconciliations This section provides detailed explanations for the various adjustments made in the GAAP to non-GAAP reconciliations, including acquisition-related and integration expenses, debt costs, legal settlement costs, foreign currency impacts, and the calculation of tax effects and diluted EPS - Acquisition-related and integration expenses primarily include costs associated with the Company's combination with Webhelp, such as severance, facilities consolidation, and IT system consolidation[36] - Foreign currency losses (gains), net, included in other expense (income), net, consist of gains and losses from revaluation and settlement of foreign currency transactions and derivative contracts not qualifying for hedge accounting[36] - Diluted EPS is calculated using the two-class method, allocating earnings proportionally among common stock and participating securities, with restricted stock awards and units considered participating securities[36]