• Revenue: Q4 revenue of approximately $2.45 billion, growing 1.5% on a pro forma constant currency basis.
• Non-GAAP Operating Income: $347 million for Q4, with a margin of 14.2%.
• Adjusted EBITDA: $403 million in Q4, with a margin of 16.5%.
• Non-GAAP Net Income: $219 million for Q4.
• Non-GAAP EPS: $3.26 for Q4.
• GAAP Net Income: $116 million for Q4.
• GAAP Diluted EPS: $1.72 per share for Q4.
• Full Year Revenue Growth: 2.7% on a pro forma constant currency basis for fiscal 2024.
• Adjusted Free Cash Flow: $475 million for fiscal 2024.
• Share Repurchase: $136 million of common shares repurchased in fiscal 2024.
• Dividends Paid: $84 million during fiscal 2024.
• Net Debt Reduction: Approximately $209 million during fiscal 2024.
• Cash and Cash Equivalents: $241 million at year-end.
• Total Debt: $4.736 billion at year-end.
• 2025 Revenue Guidance: $9.47 billion to $9.61 billion.
• 2025 Non-GAAP EPS Guidance: $11.18 to $11.77 per share.
• 2025 Adjusted Free Cash Flow Guidance: $625 million to $650 million.
• Q1 2025 Revenue Guidance: $2.355 billion to $2.37 billion.
• Q1 2025 Non-GAAP EPS Guidance: $2.49 to $2.64 per share.

• Warning! GuruFocus has detected 5 Warning Signs with CNXC.

Release Date: January 15, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Concentrix Corp (NASDAQ:CNXC) achieved a high client revenue retention rate of approximately 99% in fiscal 2024.
• The company has successfully integrated Webhelp, resulting in ongoing net synergy benefits expected to show in 2025 and beyond.
• Concentrix Corp (NASDAQ:CNXC) has expanded its offerings with new solutions like data annotation, AI design, and cybersecurity, contributing nearly $1 billion in revenue in 2024.
• The company has a strong pipeline of new clients in Europe following the Webhelp integration, indicating potential for future growth.
• Concentrix Corp (NASDAQ:CNXC) has a robust free cash flow generation, allowing for debt reduction and increased shareholder returns through dividends and share repurchases.

Negative Points

• Revenue growth was modest at 1.5% on a pro forma constant currency basis for Q4, reflecting challenges in some verticals.
• Non-GAAP operating income margin decreased due to increased technology spend and upfront investments in transformational wins.
• The company faces headwinds from ongoing decreases in revenue from North American communications clients.
• There is a continued decline in low complexity transactions, which could impact revenue growth in the short term.
• Concentrix Corp (NASDAQ:CNXC) anticipates a negative impact from foreign exchange rates on revenue growth in 2025.

Q & A Highlights

Q: Can you provide some commentary on the revenue headwind from less complex work and any geographic delivery mix changes? A: Christopher Caldwell, President and CEO, explained that they expect to reduce low-value transactions by 1% to 2% in 2025, which will be a headwind. Additionally, there is a shift from Europe to Africa and Eastern Europe, and from North America to offshore locations, driven by cost considerations.

Q: Could you update us on the large transformational win and its impact on revenue and P&L in 2025? A: Christopher Caldwell noted that revenue from the large transformational deal will start to be meaningful in the third and fourth quarters of 2025. Smaller transformational deals will begin generating revenue in Q2 and Q3, with more impact in the latter half of the year.

Q: Are companies starting to reinvest in service due to consumer pushback against automation? A: Christopher Caldwell observed that in certain industries like BFSI and high-value goods, there is a pushback leading to more outsourcing. However, in sectors like telecom and consumer electronics, this trend is less evident. Companies aiming to differentiate are outsourcing more tech and customer experience services.

Q: How is the digital CX or Catalyst business performing, and what are the growth expectations for fiscal 2025? A: Christopher Caldwell stated that the Catalyst business, representing about 8% of total revenue, is growing well at mid to high single digits. It is expected to continue this growth trajectory as more partner implementations are added.

Q: What are the priorities for cash in fiscal 2025, and how will you balance reinvestment, M&A, and buybacks? A: Andre Valentine, CFO, emphasized the focus on organic growth investment, debt reduction, and capital return to shareholders. The company plans to increase share repurchases modestly above the $136 million in fiscal 2024, continue dividends, and move closer to their target leverage ratio.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.