Concentrix Corporation Q2 FY2025 earnings call

• Chris Caldwell noted momentum from investments, with solid revenue above guidance. Operational margins were lighter in April due to client pauses from tariffs and preparing for accelerated growth. By May, margins trended favorably, expecting improvement in Q3. • AI strategy is working, with iX suite products like iX Hero and iX Hello gaining traction. Clients value practical AI solutions, and third-party validation shows strong partner selection for AI initiatives. • Andre Valentine mentioned revenue exceeded guidance, non-GAAP operating income was $304 million (below prior guidance range) due to tariff impacts and investments. Margins improved in May and expect sequential improvement in Q3 and Q4. Adjusted EBITDA was $357 million with a 14.8% margin.

In the second quarter, Concentrix reported revenue of approximately $2.4 billion, a 1.5% year-on-year increase on constant currency and as-reported basis. Revenue growth was broad-based across verticals. Retail, travel, and e-commerce clients saw 3% growth (led by travel), media and communications grew 3%, banking, financial services, and insurance grew 2%, while tech and healthcare were relatively flat. Adjusted free cash flow for the quarter was over $200 million.

• Q3 2025: Revenue expected $2.445 billion to $2.470 billion, constant currency growth 1%-2%. Operating income $162M-$172M, non-GAAP operating income $318M-$328M, non-GAAP EPS $2.80-$2.91. • Full-year 2025: Reported revenue $9.720B-$9.815B, constant currency growth 1%-2%. Operating income $675M-$695M, non-GAAP operating income $1.300B-$1.320B, non-GAAP EPS $11.53-$11.76, adjusted free cash flow $625M-$650M.

• Tariffs caused some clients to pause projects in April, impacting margins. • Foreign exchange rates had mixed impacts on profitability. • Offshore movement affected growth in tech and healthcare verticals.

Q: Joseph Vafi asked about revenue acceleration being broad-based and AI journey.

A: Chris Caldwell said momentum is broad-based with strong pipeline in geographies and verticals. AI technology journey includes internal suite products like iX Hero and iX Hello gaining traction, with clients adopting and scale seen.

Q: Robby Bamberger inquired about Q2 margin decline and tariff impact.

A: Chris Caldwell explained April client pauses due to tariffs led to margin impact, but clients appreciated the stance and are now moving volume to Concentrix. FX had mixed effects.

Q: Ruplu Bhattacharya asked about AI offerings revenue contribution and margin guide.

A: Chris Caldwell stated $50M incremental spend on iX suite, expecting Q4 accretion, and no plan to moderate spending. Andre Valentine mentioned focus on higher revenue guide and incremental revenue driving margin improvement.

Q: Vincent Colicchio asked about consolidation benefits and managed services.

A: Chris Caldwell said consolidation benefits come from operational excellence, technology, and scale. Managed services grow faster due to AI maintenance needs, though currently a small portion of revenue.

Q: Divya Goyal asked about headcount elasticity and automation impact.

A: Chris Caldwell said headcount can be adjusted quickly, but elasticity varies by role. Automation and AI are used for competitive advantage without massive headcount decline expected.