Concentrix Corporation

Good day, ladies and gentlemen, and welcome to Concentric's fiscal third quarter 2021 financial results conference call. At this time, all participant lines are in a listen-only mode. Later, we'll conduct a question and answer session, and instructions will be given at that time. If you would like to ask a question, press star then 1 on your touchtone telephone. As a reminder, today's call is being recorded. If you require any further assistance, please press star then 0. I would now like to turn the call over to your host today, David Stein, Vice President, Investor Relations. Please go ahead.

Thank you, Sarah, and good morning. Welcome to the Concentrix third quarter fiscal 2021 earnings call. This call is the property of Concentrix and may not be recorded or rebroadcast without the permission of Concentrix. This call contains forward-looking statements that address our expected future performance and that, by their nature, address matters that are uncertain. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements as a result of new information or future events or developments. Please refer to yesterday's earnings release and our most recent filings with the SEC for additional information regarding uncertainties that could affect our future financial results. This includes the risk factors provided in our annual report on Form 10-K. Also during the call, we will discuss non-GAAP financial measures, including free cash flow, non-GAAP operating income, adjusted EBITDA, and adjusted EPS, as well as adjusted constant currency revenue growth. A reconciliation of these non-GAAP measures is available in the news release and on the Concentrix Investor Relations website under Financials. With me on the call today are Chris Caldwell, our President and Chief Executive Officer, and Andre Valentine, our Chief Financial Officer. Chris will provide a summary of our operating performance and growth strategy, and Andre will cover our financial results and business outlook. Then we'll open the call for your questions. Now I'll turn the call over to Chris.

Thank you very much, David. Good morning, everyone, and welcome to our third quarter earnings call for fiscal 2021. I will be covering our announcement about our new dividend and share repurchase program later in my comments, but first wanted to start off with our strong operating results. We delivered outstanding organic growth and profit progression in the third quarter. What pleases me most is the broad range where the growth is coming from and also the sustainability of the work that we are winning. As a reminder, less than 1% of our revenue comes from COVID-specific programs. In the third quarter, we recorded revenue of $1.4 billion, representing reported revenue growth of 20% compared with last year. On an adjusted constant currency basis, revenue increased 19%. Our third quarter non-GAAP operating income improved to $182 million, up 49% compared with last year. Adjusted EBITDA increased 40% to $215 million, and non-GAAP earnings per share increased 63% to $2.49. We delivered these strong results while continuing to invest in our staff, our client relationships, and our technology platforms. Digging into our operating results in more detail, in the third quarter, we saw revenue growth across all verticals, particularly in technology, retail, banking, and healthcare. Revenue from our travel and transportation clients One of our fastest growing sub verticals before COVID for the first time exceeded pre-pandemic levels in the third quarter with particular strength in Europe and Asia. This is encouraging as we look to regain the business we lost from the pandemic. Additionally, during the quarter, we drove broad-based growth across all geographies. While we are encouraged by these growth trends, nevertheless, COVID continued to impact our team and operations during the quarter. We experienced virus surges primarily in Asia and continue to invest in the physical and mental health of our staff, including providing vaccine support in many of the regions we operate in. Our work-at-home staff stayed level at 70%. Even as we experienced COVID-related impacts in the third quarter, we remain strong overall performance, demonstrating the resilience of our operating model. Our results include a net COVID impact on profit of approximately $6 million. In addition to the strong revenue and profit performance in the third quarter, we continue to see very strong new business signings. This included all-time high new logo acquisitions. Once again, we signed more than two dozen new clients in the quarter, including over a dozen new Disruptor brands. Our revenue from Disruptor clients is now on a run rate approaching $1.1 billion of total annual revenue. Part of our success in winning new business is due to our digital transformation capabilities and discipline processes. Our end-to-end solutions help transform client businesses through increased efficiency and by delivering greater customer experiences for their customers. Many of our large enterprise clients and disruptor clients are benefiting from our digitally enabled solutions. For example, we recently helped a large technology company transform its customer journey, remodeled how they delivered their services, reduce traditional interactions, and move more into self-service using technology we implemented. This increased their customer satisfaction by over 50%, resulting in a significant increase in sales through their channel while reducing their costs by about 30%. Another example of how we're delivering differentiated services for our clients is a high-growth fintech company that was having difficulty meeting demand with their internal resources and a few partners that were unable to scale. we were able to consolidate much of the volume, help optimize their customer journey map, drove efficiencies and effective results across their credit card, loan, and retail banking business, delivered cost savings of 35%, and within 24 months have reached their larger partner status. Our clients view our combination of deep domain expertise, digital-enabled global delivery, and the ability to invest in a secure, adaptable, and scalable technological infrastructure technology infrastructure as key differentiators. We are proud to have received all-time high scores for innovation from our clients during the third quarter. We will be stepping up our investment in our technology platforms to continue this momentum as we see long-term benefits of this strategy. We see a significant opportunity to deploy more complex digital engagements as clients seek superior levels of customer experience. Our sales pipeline continued to grow across all regions and verticals during the quarter, and we expect the fourth quarter to be another strong quarter of new business signings. This gives us confidence in our ability to drive incremental growth in future quarters. We now expect above-market adjusted cost and currency revenue growth of approximately 17% for the full year with meaningful profit margin expansion well above pre-COVID levels. Looking forward, we are bullish on CX market fundamentals, client demand for innovative digital and technology solutions, and our ability to execute for opportunities for value creation. Our continued strong financial position provides flexibility for us to invest in the business and enhance shareholder value across multiple areas. Based on our current financial strength and our confidence in the future, today we announced a quarterly dividend and share repurchase program as part of our capital deployment plan to increase shareholder value. We are pleased to initiate a quarterly dividend of 25 cents per share in the fourth quarter. We are also pleased that our board has authorized a $500 million stock repurchase program. We are still committed to continuing to look for creative M&A targets, and even with our announcement today, we have an ability to invest significantly in the right acquisitions. In summary, we expect to achieve faster-than-market growth with margin expansion. As a market leader, we are passionately focused on continuing to drive superior execution and enhance shareholder value. I would like to thank our exceptional staff for their commitment to execution, our clients for their trust, and our board of directors for their support and mentorship, and our investors for their confidence in Concentrix. Before I turn a call over to Andre, I want to let you know we are planning to hold an investor day in January 2022 to review our progress since our spinoff last year and the incredible opportunity and our superior ability to lead in the CX industry. So look for a save-the-date communication later this quarter. Now I will turn the call over to Andre. Andre?