Concentrix Corporation

Ladies and gentlemen, thank you for standing by and welcome to Concentrix Fiscal Fourth Quarter 2021 Financial Results Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during this session, you will need to press star then one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then zero. I would now like to turn the conference over to your speaker for today. David Stein, you may begin.

Thank you, Tawanda, and good morning. Welcome to the Concentrix Fourth 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'll 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 fourth quarter 2021 earnings call. Ending our first year as a public company, I'd be remiss in not recapping some of our major accomplishments. Not only did we grow faster than the market at 17% in adjusted constant currency, but the growth came from all verticals and all geographies. Our non-GAAP operating margin came in at a record 13.1%, which was a 230 basis point improvement. It's important to note that our growth has come from sustainable business. with shorter-term COVID work being only about 1% of our revenue. We have also made significant progress in evolving our offering in 2021. Some unique offerings include the release of our VOC Essentials platform. Now we have 15,000 daily users in our VOC business. We also became an Amazon Connect partner and are now seeing growth in seats under management. In our marketing solutions business, We launched our EV Consumer Experience Index to help automakers attract more electric vehicle customers. We have also increased our technology penetration by 71% over last year into our new economy accounts with them buying technology and services together now. All this has increased the number of clients that has given us a 10 out of 10 on innovation by 60% year on year. With innovation always top of mind for us, I couldn't think of a better way to end the year than announcing our PK acquisition. This acquisition allows us to deliver even more technology solutions for the CX marketplace at scale. All this and more continues to position us as a CX digital solutions leader in the global market. Specific to the fourth quarter, our revenue of $1.47 billion represented an increase of 13% compared with last year on a reported basis. On an adjusted constant currency basis, revenue increased 14%. Non-GAAP operating income of $203 million was up 16% compared with last year. Adjusted EBITDA increased 13% to $238 million compared with $211 million last year. Our strong growth in the quarter came across all verticals, including double-digit growth in our key strategic verticals, technology, retail e-commerce and travel, banking and finance, and healthcare. The contribution from our new economy clients is continuing to make a positive impact. With fourth quarter new economy client revenue of $329 million, our annual run rate is now over $1.3 billion from these clients. You will notice that we changed our description of these clients to new economy rather than disruptor clients. It's a terminology change and not a change in the underlying client set, just it more aptly describes them. As expected, we did see supply chain impacts for a few of our clients, which impacted our transaction volumes with these clients and muted the quarter slightly. Our unique approach to intentionally infusing digital technology and analytics is driving high levels of sales success. During the fourth quarter, we signed two dozen new clients. Examples of our wins include a broad range of new clients in fintech, retail, travel, and media, providing a full spectrum of services. We are also starting to make traction supporting Web3, Evolution, and while early days, the potential is promising with us supporting many of the market leaders. Going into the new year, our pipeline remains strong in all verticals and geographies, particularly in tech, banking, finance, e-commerce, and travel. From an operating perspective, we maintain strong performance levels in the quarter. With 65% of our talent continuing to work from home, we continue to maintain high levels of satisfaction with our clients and staff. Our client scorecards continues to outperform pre-COVID levels. Our excellent results, leading position and strong balance sheet gave us the flexibility to continue to invest in the business to drive total shareholder returns. Consistent with our capital deployment strategy during the fourth quarter, we paid $13 million in dividends and repurchased $25 million of our stock at an average price of about $181 per share. The solid close to the year and additional strong new business signings gives us confidence in our ability to grow faster than the market again in 2022 while continuing to see margin expansion over the longer term. Now, turning to our PK acquisition, I would like to welcome all new 5,000 team members to Concentrix. Their depth of experience is impressive, and we can clearly see the value of the combination. We have started the process of integrating our PK, Tiger Spike, and marketing solutions business into one. We are calling this combined team Concentrix Catalyst. as the expertise in design, consulting, and execution around digital solutions is truly a catalyst for our clients to think differently about what the art of the possible can be. Our clients view the combination of deep domain expertise, digitally enabled global delivery, and the ability to invest in secure, adaptable, and scalable technology infrastructure as key differentiators. The reception of both existing and prospective clients encourages us that our strategy is working. We will continue to keep you up to date on our progress. Turning to the first quarter outlook and client opportunity perspective, demand for end-to-end solutions remains at historic highs. The market demand for digital customer experience services and solutions has accelerated. We believe we are reimagining what the customer experience can be for our clients, and that resonates with what they want to take with their brands. While we do see tighter labor markets in a few countries and continuing impact from the current COVID variant spikes, This is helping demand for technology and automation which we are focused on taking advantage of. Our overall pipeline remains very strong and healthy with the right mix and type of opportunities we are after to grow. I would also like to thank our Philippines team who dealt with the impact of Typhoon Ray that was both impactful from a humanitarian perspective as well as a business perspective in December. The management team did an amazing job taking care of the team and their families while fully recovering from the storm within a few short weeks. In summary, we had a great first year as a public company, focused on transforming everything CX for our clients and their customers. We remained bullish on the CX market fundamentals and our ability to execute to create value for our clients and our shareholders. We will be going into more detail on our Investor Day next week on Tuesday, January 25th. While we had hoped for an in-person gathering and appreciated all interest in attending in person, due to venue restrictions and limitations of large in-person gatherings, Investor Day will now be a fully virtual event. We're eager to share more about our progress and the incredible opportunity we have in the customer experience industry. Now, I will turn the call over to Andre. Andre.