Concentrix Corporation (CNXC) on Q2 2021 Results - Earnings Call Transcript
Operator: Good day and thank you for standing by and welcome to Concentrix's First Fiscal Second Quarter 2021 Financial Results Conference Call. After the speaker presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, David Stein, Vice President, Investor Relations. Please go ahead. David Stein: Thank you and good morning. Welcome to the Concentrix second quarter fiscal 2021 earnings call. This call is the property of Concentrix and may not be recorded or rebroadcast without the permission of Concentrix. Chris Caldwell: Thank you very much, David. Good morning, everyone and welcome to our second quarter earnings call for fiscal 2021. During the second quarter, we continued to see our value proposition resonat in the market with couple of strong momentum in our sales and solid execution in our operations driving our performance to the exceed pre-COVID levels. We had record revenue of $1.37 billion in the second quarter, representing organic revenue growth of 29% compared with last year. On a constant currency basis, revenue increased by 24%. Our second quarter non-GAAP operating income improved to $172 million up 155% and adjusted EBITDA increased 113% to $208 million compared with last year. In the second quarter, while the US and some parts of Europe started to open up, we saw continued effects of the COVID pandemic in certain regions particularly Asia where we invested in support and resources for our stock to care for themselves and their families. We focused on humanitarian efforts for all of our stock and their families as experienced thousand of additional cases across India, Philippines, Vietnam and Malaysia. Our hearts and thoughts go out to all of those affected. Andre Valentine: Thank you, Chris. Good to be with you today. I'll begin with a review of our financial results for the second quarter and then discuss our business outlook for the third quarter. As anticipated in our guidance last quarter, our revenue and profit growth accelerated in the second quarter and I'm pleased that we delivered results at the higher end of our guidance range. Revenue was $1.37 billion. On a constant currency basis, revenue increased organically by over 24% compared with last year. Reported revenues included foreign currency benefit of $45 million. As Chris mentioned, our strong growth reflects increased demand across a broad set of existing and new clients in all of our verticals. We also saw growth in every region in which we operate. The magnitude of the increase reflects the extreme COVID impacts in the second quarter of last year. Still even normalizing for COVID impacts, we believe we grew slightly faster in the second quarter than we did in the first quarter of 2021. Our top-performing vertical in terms of the year-over-year revenue growth was retail travel and e-commerce, which grew 38% due to strong e-commerce volumes and increases with travel and tourism clients as the domestic travel market began to pick up. Our banking, financial services and insurance and healthcare verticals, each grew approximately 36%. Revenue from technology and consumer electronics clients grew by approximately 27%. I'm pleased to report that we were able to achieve the relative stability we expected in the communications and media vertical as revenues in this vertical grew slightly on a sequential basis. On a combined basis, we also grew with clients in our other verticals by 15%. Contributing to the growth across our strategic verticals were are over 115 global disruptor clients, which represented about 19% of our second quarter total revenue approximately, $260 million in quarterly revenue and grew by 47% year-over-year. Turning to profitability, our non-GAAP operating income was $172 million and our non-GAAP operating margin was 12.6% in the quarter. Second quarter adjusted EBITDA was $208 million and our EBITDA margin was 15.2%. Our profitability reflects flow-through from strong revenue growth, which more than offset the impact of COVID expenses. On a net basis COVID expenses approximated $10 million reduction in profit in the second quarter. In terms of net income in the second quarter non-GAAP net income was $125 million and adjusted EPS was $2.37. GAAP results for the second quarter included $35 million of amortization of intangibles and $9 million of share-based compensation expense. GAAP diluted EPS was $1.50 per share. Our effective GAAP tax rate of 34% in the second quarter includes a $9 million charge related to tax impact from the movement of our non-core insurance solutions business to assets held for sale, as part of our efforts to fine tune our business portfolio. For clarity, the CIS business provides administrative services to life insurance clients and is unrelated to the CX services we provide to the insurance industry. Our non-GAAP tax rate was 26%. Operator: Our first question will come from the line of Ruplu Bhattacharya from Bank of America. You may begin. Ruplu Bhattacharya: Hi, thanks for taking my questions and congrats on the strong quarter. Chris, you've talked several times about disruptor clients being a focus for the company. Can you maybe just talk about how that relationship progresses with these disruptor clients? Is it all inflationary in the sense that revenue in year two more than year three more than year two and on average how many years does it take for a disruptor client to become mature and then possibly start asking for discounts? Chris Caldwell: Hi Ruplu and appreciate the congratulations. From a disruptor perspective, it really comes into a couple categories. We look at disruptors in terms of are they going to be a leader in their space. Are they doing something that's truly disruptive? Frankly, where is their focus on the end markets and as you would expect, there are some disruptors who will start small with us very, very small and will grow extremely rapidly and get to a level of maturity within 24 months, 36 months. There's others that will grow to a moderate level and be consumed by somebody else in the space or consumed by sort of an existing enterprise of our client and then there's some that will not make other series raises and will be relatively small and might disappear. Generally what we find from a maturity curve perspective, it's somewhere between call it 48 months and maybe seven years that they start to kind of look at how they do procurement differently than what they've historically done in the past. What we offer to them though is a significant amount of agility, significant amount of ability to scale, global diversity, significant amount of insight into regulatory issues and some types of security issues in some places and then access to technology that from a capital base it might not be able to invest in as they start out but certainly is high value to them as they continue to grow. So lots of different offerings we offer into that disruptor space. Ruplu Bhattacharya: Thanks for all the details on that. For my next question Chris, can you talk about what impact you think competitor sites going private and being purchased by the SITEL Group will have in the industry and as part of that, can you talk about the pricing environment and your focus on outcomes-space pricing. How is that trending? Chris Caldwell: For sure. So certainly first I'd like to with Chuck congratulations. He's been a great competitor and certainly legend in the industry and a fantastic operator. From our perspective, we historically have not really competed with that company outside of in some technology spaces, but the pricing environment historically remained stable whether it's private or public competitors. The market is generally the market and what clients are starting to change their attention to is really to your second point outcomes-based pricing or outcomes-based performance incentives and that's really where I think we shine because we like those contracts, they tend to give us much more leverage, we're able to invest more in those contracts and get a benefit from them and so we see that as something that will continue to progress in this environment and then take out sort of a simple price to price comparison in the marketplace. Ruplu Bhattacharya: Got it and for my last one if I can ask one to Andre, under your revenue guide at the midpoint for fiscal 3Q is mostly flat sequentially, but operating margin guide looks like down 40% sequentially to 12.1%. Can you maybe just talk about the puts and takes impacting operating margin and then how does -- how do those factors trend going forward beyond 3Q? Andre Valentine: So the real trend there you're right, the midpoint relatively flattish from a revenue perspective and down just a tip sequentially from a margin perspective. In the third quarter, we invest pretty heavily in ramps into the fourth quarter and so that is certainly the largest of the puts and takes as we think about rolling forward from Q2 to Q3. On top of that, as Chris and I both mentioned, we are doing some things globally with staff wages across the grass to grow with a real focus also on the entry level wages for our US staff and so that will have an impact as well, but again -- so that's not how we get to that guidance. We think it's balanced guidance and we're very confident we'll achieve it. Ruplu Bhattacharya: Okay. Thanks again for all the details. Congrats on the strong execution and end results. Operator: Our next question comes from the line of Shannon Cross from Cross Research. Shannon Cross: I was wondering can you talk a bit about how the conversations with customers have changed in sort of hopefully we're in the post-COVID world or what some of the customers have learned about what they want to do internally versus outsource? I'm just curious what kind of new opportunities might be there following what we've all gone through during the last year and they I have a follow-up question thank you? Chris Caldwell: For sure Shannon. So sort of couple of high level trends. First of all, we see as a whole our clients looking for more customer ways of engaging with clients and physical environment and certainly that's been driven by e-commerce and then driven by more services and parts delivered to their homes. It's been driven by more digital engagements where you don't actually have to talk to somebody or chat with somebody and so we're seeing those are really focus around conversations and how to reduce customer efforts, how to reduce contact points and how to make the experience going forward in a very simplistic way. And so that's also changed some of what their priorities have been around saying when we outsource something instead of outsourcing one component of that in order to get full leverage, in order to take our more cost and drive better experience, they're actually looking out sourcing more end to end of the process so that for instance we can take over that and then not only put in our own technology, put in our own staff around it, design our own digital experience for it and deliver it to the clients. That has opened up comments about this in sort of Q3 and Q4, especially in Q1 is that we're seeing our clients who have long-standing relationships with give us more stuff that historically has not been outsourced and so we see that as a very positive trend. Shannon Cross: And then is there a potential for more asset sales when you look at the various companies and capabilities that you have an and on the flip side of that how are you thinking about M&A these days? Chris Caldwell: So Shannon, you're talking about our divestiture of the CIS business. Shannon Cross: Yes exactly. Chris Caldwell: No we're very happy with the portfolio of services that we have and frankly have been investing more and more. CIS was a bit of a unique instance where we took it as far as we could and then it wasn't tied into the rest of our core focus around customer experience and so wanted to make sure that that team were able to continue to grow and so that worked out very, very well for all parties involved. I think from our perspective when we look to the M&A environment, we've talked about this, evaluations are on the higher side right at the moment. We're very focused on making sure that we're disciplined and the type of transaction that we would do to drive the right shareholder returns and we're also very focused and getting capabilities and technology that will increase our overall ability to deliver better experiences for our clients. We're not after bulk for bulk or size for size because we already obtained that and now it's all about really driving superior value to our clients. Shannon Cross: Okay. And maybe a clarification just on the wages, is this going to hit from an expense perspective all in the current quarter or will it be something that sort of rolls through the model over the next few quarters? Thank you. Chris Caldwell: It's really in the guidance Shannon and starts to; I don’t use the word impact but the investment starts this quarter started this quarter and they started this quarter and will continue to be in our guidance going forward, but it effectively is increase for what we're doing within the wage category. Operator: Our next question comes from the line of Vincent Colicchio from Barrington Research. You may begin. Vincent Colicchio: Curious communications and media segment had a nice quarter, should we expect that to be stable going forward or see some growth sequentially and then similar question on the travel market? Chris Caldwell: So Vince from the telecommunication standpoint we're pretty happy with where it is and we kind of mentioned that we're seeing stability. So you'll some growth, you'll some ebbs and flows, but really what we're looking at as a percentage of business and we don’t see a material change from where that is even though the rest of business is growing. So that would indicate there are some underlying uptick but really if look at as a percentage of business more so than anything else and are very happy with where it is and we're happy with the clients that we're doing and the services we're delivering and the profitability its returning to us. In terms of the travel vertical and clients, pre-COVID it was one of our fastest growing verticals both in the disruptor category as well as in some of the established travel category and health category. What we're seeing is very encouraging much sooner than we expected with signs of life in the domestic travel markets both in Europe and in North America. So that we definitely want to grow. We deftly want to see continued increases and we'll somewhat be reliant on how people feeling about travel and how sustainable travel is and then certainly how business travel kicks in. So couple components to that but absolutely we expect to see that vertical grow over time. Vincent Colicchio: And I think you mentioned the pandemic impacting some of your foreign locations. I apologize if I missed it but has the delivery -- has there been delivery disruption in any of those markets incrementally from last quarter? Chris Caldwell: No the team is just amazing, amazing team in the countries and frankly have just done a remarkable job. We increased our work at home presence as we kind of called out almost 10% and the reason we increased it significantly more globally and moved our whole numbers up about 10% to about 70% work at home and the performance has been in line if not a little bit better than in facilities in some of those regions. So I am extremely happy with how deliveries have been able to execute and how we're been able to support the clients. Vincent Colicchio: And was there anything unusual in other income this quarter? Andre Valentine: Not really. So what primary shows up there Vince is foreign currency translation gains. We do some hedging there to try to minimize those -- volatility there. What you see coming through is a gain there is some of the forward points that we do hit on the hedges that we put in place and so as I would think about that line on a go forward basis, I would think about it being relatively neutral and flat. Operator: Thank you. And I am showing no further questions at this time. I'd like to turn the call over to Chris for any closing remarks. Chris Caldwell: Thank you very much. We very much appreciate your interest in Concentrix today. We are pleased with our performance year-to-date and are confident in the strength of our business model and track record of being a consolidator in the space. We really continue to see ourselves performing better than the market growth rate with margin expansion. As the market leader in CX solutions, we're passionately focused on considering strong execution of our operations to drive continued growth and evaluation. Thank you again and have a great day. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Concentrix Corporation (NASDAQ: CNXC) Earnings Miss and Financial Overview
Concentrix Corporation (NASDAQ: CNXC) is a leading entity in the technology and services sector, renowned for its comprehensive solutions. On September 25, 2025, CNXC disclosed its earnings per share (EPS) of $2.78, falling short of the anticipated $2.88. This earnings shortfall signifies a negative surprise of 3.47%, as underscored by Zacks. The company's actual revenue reached approximately $2.48 billion, marginally below the forecasted $2.53 billion.
Despite the earnings shortfall, Concentrix's revenue of $2.48 billion for the quarter ending August 2025 exceeded the Zacks Consensus Estimate by 1.02%. This revenue figure denotes a 4% growth from the $2.39 billion reported in the corresponding quarter of the previous year. On a constant currency basis, revenue ascended by 2.6%, surpassing the company's projections. Concentrix has consistently outperformed consensus revenue estimates over the past four quarters.
Following the publication of its third-quarter earnings report, Concentrix's stock price witnessed a downturn. The company has adjusted its fiscal 2025 earnings guidance downwards, beneath prior forecasts. Nonetheless, Concentrix is witnessing robust demand for its integrated solutions and has elevated its full-year growth outlook. The company is poised to return in excess of $240 million to shareholders in fiscal 2025 and has declared an increase in its quarterly dividend.
Financially, CNXC boasts a price-to-earnings (P/E) ratio of approximately 14.24, showcasing the market's appraisal of its earnings. Its price-to-sales ratio is pegged at about 0.36, indicating the market's valuation in relation to its revenue. The enterprise value to sales ratio stands at around 0.83, reflecting the company's valuation inclusive of debt and exclusive of cash. The enterprise value to operating cash flow ratio is approximately 11.22, denoting the company's efficacy in generating cash from its operations.
CNXC's financial leverage is evidenced by its debt-to-equity ratio of approximately 1.14. The company's current ratio of about 1.61 signifies its capability to settle short-term liabilities with short-term assets. Moreover, CNXC possesses an earnings yield of about 7.02%, representing the return on investment. Operating income for the quarter was $147 million, accounting for 5.9% of the revenue, underscoring the company's operational efficiency.
Concentrix Corporation (NASDAQ: CNXC) Sees Positive Analyst Sentiment and Growth Potential
- The consensus target price for Concentrix Corporation (NASDAQ:CNXC) has increased from $69.8 to $77.5, indicating analyst confidence.
- Despite a slight earnings miss, the company's focus on digital transformation and technology innovation is recognized by analysts, with a notable price target of $183 set by analyst Vincent Colicchio.
- Concentrix's resilience and potential for growth are highlighted in its Q2 2025 earnings call, despite the earnings miss, showing a slight improvement from the previous year.
Concentrix Corporation (NASDAQ:CNXC) is a leading global provider of customer experience (CX) solutions, integrating technology to enhance client interactions. The company offers services like CX process optimization, technology innovation, and business transformation. It caters to a wide range of industries, including consumer electronics, technology, e-commerce, and health insurance.
Over the past year, Concentrix's stock has seen a positive trend in its consensus target price. A year ago, the average target price was $69.8, which has increased to $77.5 in both the last month and the last quarter. This upward trend indicates growing confidence among analysts in the company's performance and potential for growth.
Despite a recent earnings miss, where Concentrix reported $2.7 per share against the Zacks Consensus Estimate of $2.76, analyst Vincent Colicchio from Barrington has set a significantly higher price target of $183. This suggests that analysts see strong future potential for the company, possibly due to its strategic focus on digital transformation and technology innovation.
The company's recent Q2 2025 earnings call, held on June 26, 2025, featured key participants like CFO Andre S. Valentine. The call highlighted the company's performance and future prospects. Despite the earnings miss, the slight improvement from $2.69 per share in the same quarter last year shows resilience and potential for growth.
Investors should monitor Concentrix's quarterly earnings reports and strategic announcements, as these could impact stock performance. Developments in the technology and customer experience sectors may also influence the company's market position and stock valuation. The positive sentiment among analysts, reflected in the upward trend of the consensus target price, suggests that Concentrix is well-positioned to capitalize on its strengths in the CX solutions market.
Concentrix Posts Q2 EPS Miss, But Revenue Beats & Strong Guidance Offers Rebound Potential
Concentrix Corporation (NASDAQ:CNXC) posted second-quarter earnings that came in below expectations, but revenue exceeded forecasts.
For the quarter, the firm reported adjusted EPS of $2.70, missing the $2.78 consensus estimate. Revenue rose 1.5% year-over-year to $2.42 billion, slightly above the $2.38 billion forecast.
Looking ahead, Concentrix guided for third-quarter revenue of $2.445–$2.47 billion, comfortably above analyst estimates of $2.392 billion. The company expects Q3 adjusted EPS of $2.80–$2.91, bracketing the $2.90 consensus.
For full-year fiscal 2025, Concentrix forecasts revenue of $9.72–$9.815 billion and adjusted EPS of $11.53–$11.76, both ahead of Street expectations, signaling confidence in accelerating momentum despite the Q2 earnings shortfall.
Concentrix Corporation (NASDAQ: CNXC) Earnings Miss and Revenue Beat
- Concentrix reported an EPS of $2.70, missing the estimated $2.76, marking a negative surprise of 2.17%.
- The company's revenue outperformed expectations, generating $2.42 billion, surpassing the estimated $2.38 billion.
- Despite the earnings miss, Concentrix raised its full-year growth outlook and plans to return over $240 million to shareholders.
Concentrix Corporation (NASDAQ: CNXC) is a prominent player in the global technology and services sector. The company provides customer experience solutions and technology services to a wide range of industries. As a part of the Zacks Business - Services industry, Concentrix competes with other service providers in delivering innovative solutions to enhance customer engagement and operational efficiency.
On June 26, 2025, Concentrix reported earnings per share (EPS) of $2.70, slightly below the estimated $2.76. This earnings miss represents a negative surprise of 2.17%, as highlighted by Zacks. Despite this, the EPS showed a marginal increase from the $2.69 reported in the same quarter last year. In contrast, the previous quarter saw Concentrix exceed expectations with an EPS of $2.79, resulting in a positive surprise of 8.14%.
Concentrix's revenue performance was a bright spot, with the company generating $2.42 billion, surpassing the estimated $2.38 billion. This revenue beat exceeded the Zacks Consensus Estimate by 1.57% and marked a 1.5% increase from the previous year's second quarter. The company has consistently outperformed consensus revenue estimates over the past four quarters, showcasing its strong market position.
Despite the revenue success, Concentrix's stock price experienced a decline following the earnings announcement. The earnings miss contributed to this slip, even though the company exceeded its revenue guidance for the quarter. Concentrix remains optimistic, raising its full-year growth outlook and planning to return over $240 million to shareholders through share repurchases and dividends in fiscal 2025.
Financially, Concentrix maintains a price-to-earnings (P/E) ratio of approximately 13.11, with a price-to-sales ratio of 0.37. The company's enterprise value to sales ratio is 0.85, and its enterprise value to operating cash flow ratio is 11.34. With an earnings yield of 7.63% and a debt-to-equity ratio of 1.22, Concentrix demonstrates a balanced approach to growth and financial stability. The current ratio of 1.65 indicates a strong liquidity position, ensuring the company can cover its short-term liabilities effectively.
Concentrix Surges 37% Following Earnings Beat and Bullish 2025 Outlook
Concentrix (NASDAQ:CNXC) shares jumped 37% intra-day today as the company delivered a solid first-quarter earnings beat and issued confident full-year guidance that topped Wall Street expectations.
The company posted adjusted earnings of $2.79 per share for Q1, beating the consensus estimate of $2.61, while revenue of $2.37 billion matched expectations. Despite a 1.3% year-over-year decline in revenue, growth was positive at 1.3% on a constant currency basis.
Although the adjusted EBITDA margin edged down slightly to 15.8% from 16.0% a year earlier, investors were encouraged by the company’s upbeat guidance and strategic momentum in areas like generative AI and digital transformation services.
For fiscal year 2025, Concentrix expects earnings per share between $11.18 and $11.77, exceeding the analyst consensus of $11.34. The company also guided revenue between $9.49 billion and $9.64 billion, compared to the $9.54 billion estimate.
Concentrix reaffirmed its plan to generate $625 million to $650 million in adjusted free cash flow and announced it will return over $240 million to shareholders through buybacks and dividends over the year.
Concentrix Surges 37% Following Earnings Beat and Bullish 2025 Outlook
Concentrix (NASDAQ:CNXC) shares jumped 37% intra-day today as the company delivered a solid first-quarter earnings beat and issued confident full-year guidance that topped Wall Street expectations.
The company posted adjusted earnings of $2.79 per share for Q1, beating the consensus estimate of $2.61, while revenue of $2.37 billion matched expectations. Despite a 1.3% year-over-year decline in revenue, growth was positive at 1.3% on a constant currency basis.
Although the adjusted EBITDA margin edged down slightly to 15.8% from 16.0% a year earlier, investors were encouraged by the company’s upbeat guidance and strategic momentum in areas like generative AI and digital transformation services.
For fiscal year 2025, Concentrix expects earnings per share between $11.18 and $11.77, exceeding the analyst consensus of $11.34. The company also guided revenue between $9.49 billion and $9.64 billion, compared to the $9.54 billion estimate.
Concentrix reaffirmed its plan to generate $625 million to $650 million in adjusted free cash flow and announced it will return over $240 million to shareholders through buybacks and dividends over the year.
