Concentrix(US:CNXC)2023-01-26 16:00Financial Performance - Gross profit increased by 14.6% in fiscal year 2022 compared to fiscal year 2021, with gross margin percentage rising from 35.3% to 35.7%[199] - Net cash provided by operating activities was $600.72 million in fiscal year 2022, up from $514.18 million in fiscal year 2021[205] - Free cash flow for fiscal year 2022 was $460.70 million, an increase from $365.10 million in fiscal year 2021[206] - The company reported revenue of $6,324,473 for the fiscal year ended November 30, 2022, representing a significant increase compared to previous years[410] - Net income before non-controlling interest for fiscal year 2022 was $435,640, up from $405,577 in 2021, indicating a growth of approximately 7.5%[419] - Comprehensive income attributable to Concentrix Corporation for fiscal year 2022 was $189,826, down from $338,865 in 2021[419] - Revenue for the fiscal year ended November 30, 2022, was $6,357,434, an increase of 5.5% from $6,023,726 in the previous year[542] - Net income for the fiscal year ended November 30, 2022, was $431,816, compared to $392,837 in the prior year, reflecting a growth of 9.9%[542] Assets and Liabilities - Total assets increased to $6,669,768 as of November 30, 2022, compared to $5,046,367 in 2021, reflecting a growth of about 32.2%[414] - Total liabilities increased to $3,973,864 in 2022 from $2,426,112 in 2021, representing a growth of about 63.8%[414] - The company recorded $2.2 billion of indebtedness as of November 30, 2022, prior to debt issuance costs[195] - Cash, cash equivalents, and restricted cash at the end of fiscal year 2022 were $157.46 million, down from $183.01 million at the beginning of the year[205] - The company reported total equity of $2.695904 billion as of November 30, 2022, compared to $2.302085 billion in 2021[445] Acquisitions - The company acquired PK and ServiceSource during the year ended November 30, 2022, impacting 27.9% of total assets and 8.1% of total revenue[209] - The Company completed the acquisition of PK for a total cash consideration of $1,594,905,000, enhancing its capabilities in digital IT services and customer experience design[489] - The total purchase price consideration for the acquisition of PK was $1,573.3 million, funded by a new term loan and additional borrowings[515] - The total consideration transferred for the acquisition of ServiceSource was $167.2 million, with total assets acquired amounting to $230.7 million[525] - The acquisition of ServiceSource is expected to enhance the company's B2B digital sales and customer success solutions[542] - The preliminary purchase price allocation for ServiceSource includes $40,200 of identifiable intangible assets, which will be amortized over their estimated useful lives[548] - The company incurred $33,763 in acquisition-related and integration expenses for the fiscal year ended November 30, 2022[560] Tax and Indebtedness - The provision for income taxes increased in fiscal year 2022 due to a change in the mix of income earned in different tax jurisdictions[201] - The company established a reserve of $78.5 million for unrecognized tax benefits as of November 30, 2022[207] - The company may further increase its indebtedness in the future, which could have adverse consequences for operations and stockholders[195] Operational Insights - The company operates in over 40 countries, with significant concentrations in the Philippines, India, the United States, the United Kingdom, Europe, China, and Japan[410] - The Company operates in a single segment, with more than half of its workforce located in the Philippines and India, reflecting its integrated global delivery model[459] - The company has experienced variability and volatility in estimates related to the ongoing effects of the COVID-19 pandemic on its operations[430] - Concentrix experienced a significant impact from the COVID-19 pandemic, transitioning a large portion of its workforce to remote work during Q2 2020[455] Financial Controls and Reporting - The company maintains effective internal control over financial reporting as of November 30, 2022, based on established criteria[406] - The evaluation of acquisition-date fair value of customer relationships was identified as a critical audit matter, requiring significant auditor judgment[408] - The Company tests goodwill for impairment annually, with the carrying value compared to its fair value to assess potential impairment losses[497] - The company has not identified any goodwill impairment for the fiscal years presented in the consolidated financial statements[441] Share-Based Compensation - Total share-based compensation for fiscal year 2022 was $47,516, up from $36,762 in fiscal year 2021[563] - Share-based compensation costs are recognized ratably over the requisite service period, with adjustments based on performance conditions and stock price changes[509] - The fair value of stock options issued during fiscal year 2022 was estimated at $132.42 per share, with 395 options outstanding as of November 30, 2022[556] - The company expects to recognize $141,836 of total unamortized share-based compensation expense related to non-vested awards over an estimated weighted-average amortization period of 3.18 years[559] Revenue Recognition - The Company recognizes revenue primarily from the provision of CX solutions and technology, with revenue recognized over time as services are delivered[475] - In fiscal year 2022, no client accounted for more than 10% of the Company's consolidated revenue, a decrease from 11.9% in 2021 and 11.5% in 2020[501] - As of November 30, 2022, one client comprised 12.4% of the Company's total accounts receivable balance, indicating a significant concentration of credit risk[474] Other Financial Matters - The company accounts for its derivative instruments at fair value, impacting its financial position and performance[463] - The Company recognizes tax benefits from uncertain tax positions only if they are more likely than not to be sustained upon examination[509] - The Company accounts for foreign currency translation adjustments in "Accumulated other comprehensive income (loss)"[508] - Basic and diluted earnings per common share are calculated using the two-class method, considering the impact of participating securities[511] - The Company recognizes operating lease payments within "Cash flows from operating activities" in the consolidated statements of cash flows[468] - The company capitalizes costs incurred to develop software, amortizing these costs over the economic life of the software[434] - The funded status of the company's pension and other post-retirement benefit plans is measured as the difference between the fair value of plan assets and the benefit obligation[510]