Concentrix(US:CNXC)2020-07-31 22:55Financial Data and Key Metrics Changes - Revenue decreased by 9% year-over-year to $47.6 million, primarily due to churned logos and proactive exits from non-core engagements [20][38] - Non-GAAP gross profit margin expanded by 130 basis points year-over-year to 30.2% of revenue, driven by portfolio optimization and productivity improvements [40] - Adjusted EBITDA was negative $400,000, roughly in line with last year's Q2 results [41] - Free cash flow returned to positive territory at $1.6 million, up from $1.4 million in Q2 of 2019 [43] Business Line Data and Key Metrics Changes - The company successfully renewed or extended more than 90% of the contract value that came up for renewal year-to-date through Q2 [29] - New logo wins included two new clients in Q2, with three expansions worth over $1 million each from existing clients [31][55] Market Data and Key Metrics Changes - Global IT spending is expected to decline by 5% to 10% this year, impacting expense and investment priorities for many tech companies [12] - The company noted that mid-market and SMB customer tiers are experiencing higher customer churn and lower product usage [15] Company Strategy and Development Direction - The company is focusing on four strategic pillars: inspire success, impact scale, ignite sales, and innovate solutions [23] - The shift to as-a-service offerings and subscription pricing plans is prompting companies to rethink customer acquisition and retention strategies [14] - The company aims to enhance its digital sales solutions and customer success offerings to address pipeline challenges and improve customer onboarding [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about navigating the current recessionary environment while focusing on controllable factors [19][69] - The company is committed to maintaining a strong balance sheet and liquidity position to weather economic turbulence [45] - Management refrained from providing specific financial outlooks due to the uncertainty surrounding the economic environment [37][66] Other Important Information - The company has made organizational changes, including the departure of the COO, to strengthen its leadership team [7][8] - Employee retention rates have improved, indicating a focus on developing and retaining talent [26] Q&A Session Summary Question: Can you talk about retention and expectations for improvement? - Management expressed confidence in retention rates, which were at 90%, and highlighted efforts to provide value and ROI to clients [50][54] Question: What progress has been made with new logo wins? - All new logos signed in Q2 are now live, and the company has seen improvements in sales bookings performance [55][56] Question: Where is the company in the portfolio rationalization process? - Management indicated that the majority of the rationalization process is behind them, with a focus on rebuilding the client base [58][60] Question: What areas of strength and weakness are being observed in the business? - Growth is noted in sectors such as cloud services and security, while challenges persist in other areas due to the economic environment [62][68]