Release Date: June 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Concentrix Corp (CNXC, Financial) reported solid revenue growth, exceeding guidance with approximately $2.4 billion in revenue, marking a 1.5% year-on-year increase.
- The company is seeing strong momentum in its AI-led customer experience offerings and adjacent AI solutions, which are growing faster than the core business.
- Concentrix Corp (CNXC) launched iX Hero, an AI-powered application, complementing its autonomous AI assistant product, iX Hello, and is gaining early market traction.
- The company is benefiting from partner consolidation, allowing it to win new business with more complex and scalable services.
- Concentrix Corp (CNXC) has a strong pipeline and expects continued revenue growth, driven by broad-based momentum across geographies and verticals, including banking, tech, media, and healthcare.
Negative Points
- Operational margins were lighter than anticipated due to holding labor during client project pauses and preparing for accelerated growth.
- Non-GAAP operating income was below guidance due to client program pauses related to tariffs and elevated investments for future growth.
- The company faced a mixed impact from foreign exchange rates, which were a headwind for profitability despite being a tailwind for revenue.
- There is a 2% headwind from work moving offshore, impacting revenue growth and causing temporary duplication of costs.
- The operating margin guidance for the full year is lower by 40 basis points, reflecting challenges in maintaining profitability amid revenue growth.
Q & A Highlights
Q: Is the revenue acceleration in the second half broad-based or reliant on specific contracts?
A: Christopher Caldwell, President and CEO, stated that the momentum is broad-based across geographies and verticals, including banking, tech, media, and healthcare. The deals being won are more complex and involve their technology, which is a strategic focus for the company.
Q: How is AI impacting Concentrix's market position and future expectations?
A: Christopher Caldwell explained that Concentrix's AI solutions, including their iX suite, are gaining traction. Clients are adopting these solutions faster than expected, and the company is seeing economic returns. The AI initiatives are expected to be accretive by the end of Q4, with continued growth without additional investment.
Q: What caused the Q2 margins to be below guidance, and how will they improve?
A: Christopher Caldwell noted that margins were impacted by a temporary pause in client projects due to tariffs. The company chose to hold labor, which was strategic for client relationships. Margins began improving in May, and further improvement is expected in Q3 as projects resume.
Q: What is the outlook for operating margins and revenue growth in the second half?
A: Andre Valentine, CFO, expressed confidence in margin improvement due to new business ramping up and additional client share gained. The company expects sequential margin improvement and is focused on achieving the higher end of their revenue guidance.
Q: How is Concentrix's pricing strategy evolving with AI and automation?
A: Christopher Caldwell mentioned that while there is interest in outcomes-based pricing, most deals still follow traditional transactional models. The company is focused on growing new revenue streams, such as their iX product suite, which includes discrete software-like revenue.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
