Financial Data and Key Metrics Changes - The company reported revenue of approximately $2.48 billion for Q3 2025, representing a year-on-year increase of 2.6% on a constant currency basis and 4% as reported [10][11] - Non-GAAP operating income was $305 million, which was below the guidance range due to excess capacity and investments in cybersecurity [12][13] - Adjusted EBITDA for the quarter was $359 million, with a margin of 14.5% [13] - Non-GAAP diluted earnings per share was $2.78, slightly below the guidance range [13] - Adjusted free cash flow increased to $179 million, up about $44 million year on year [14] Business Line Data and Key Metrics Changes - Revenue from banking, financial services, and insurance clients grew 8% year on year, while media and communications clients grew 7% [11] - Retail, travel, and e-commerce clients saw a 3% increase, primarily driven by travel [11] - Technology and consumer electronics, as well as healthcare verticals, remained essentially flat [11] Market Data and Key Metrics Changes - The company is experiencing strong demand for integrated offerings and adjacent solutions, particularly in the banking and financial services sector [10][11] - The demand for AI technology platforms is increasing, with nearly 40% of new wins this year including AI solutions [6][8] Company Strategy and Development Direction - The company is focused on combining AI, customer experience (CX), and IT services to create integrated solutions that differentiate it in the market [4][8] - The IX AI technology suite is expected to ramp up and become accretive as it gains traction [6][8] - The company aims to capture growth opportunities in the evolving market landscape, positioning itself as a trusted partner for clients [5][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving modest sequential margin improvement in the coming quarters despite current margin pressures [5][19] - The overall demand environment remains positive, with expectations for continued revenue growth and cash flow generation [18][19] - Management anticipates that the consolidation trend in the industry will continue, driven by clients seeking fewer partners and deeper relationships [43] Other Important Information - The company returned approximately $64 million to shareholders in Q3, including $42 million in share repurchases and $22 million in dividends [15] - The Board has authorized an increase in the quarterly dividend to $0.36 per share [15] - The company expects full-year adjusted free cash flow to be between $585 million to $610 million, reflecting a year-on-year increase [18] Q&A Session Summary Question: Can you unpack the margin guide down and the impact of excess capacity? - Management indicated that excess capacity from tariff-impacted clients was a primary driver of the margin guide down, with expectations for normalization over multiple quarters [21][23] Question: How is the IX suite performing in terms of pipeline and win rates? - Management reported that 40% of new wins include the IX technology, with a mix of discrete billing and bundled offerings [27][29] Question: What are the criteria for investments in transformational items? - Investments are made with long-term relationships in mind, focusing on clients who are expected to reciprocate with increased volume and opportunities [49][50] Question: What is the outlook for free cash flow and capital returns? - Management remains optimistic about increasing free cash flow in 2026, prioritizing debt repayment while supporting dividends and share repurchase programs [58][59]