Concentrix Corporation

Good day and thank you for standing by. Welcome to the Concentrix's Fiscal Fourth Quarter FY2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. I would now like to hand the conference over to your speaker today. Sarah Buda, Vice President, Investor Relations.

Terrific. Thank you, Operator, and good evening. Welcome to the Concentrix fourth quarter and fiscal 2024 earnings call. This call is the property of Concentrix and may not be recorded or rebroadcast without the written 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 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 expectations, events, or developments. Please refer to today'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 and our other public filings with the SEC. Also during the call, we will discuss non-GAAP financial measures, including adjusted free cash flow, non-GAAP operating income, non-GAAP operating margin, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income, non-GAAP EPS, and constant currency revenue growth. A reconciliation of these non-GAAP measures is available in the news release and on the company's investor relations website under financials. With me on the call today are Chris Caldwell, our President and CEO, 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 up for your questions. And now I'll turn the call over to Chris.

Thank you, Sarah. Hello, everyone, and thank you for joining us today for our fourth quarter and fiscal year 2024 earnings call. Before we get into the details of our results, I think it might be helpful to look at how our business has evolved over the past few years to show why we are confident that we will continue to grow profitably in 2025 and believe mid-single-digit growth is achievable in later years. As we have stated and provided many examples over the last two years since GenAI started to be mainstream, We have executed with intent to focus our offerings on taking advantage of GENE-AI and expanding into new areas while keeping our underlying business healthy by de-investing in commodity work. As a result, we have more than 2,000 clients, including 155 of the global Fortune 500 with extremely high client revenue retention rate of approximately 99% in fiscal 2024. We have built a defensible market leadership position as a provider of integrated technology-led business solutions that power our clients' success. This means we have the scale, technologies, and capabilities to broaden our market and address the evolving needs of our clients. Our top 25 clients, which are all leading global brands, have an average tenure of over 16 years with us. Our revenue with these top clients continues to grow faster than the rest of our business as we introduce auxiliary services and complementary solutions to expand our value and grow our share while automating and innovating work for them. In fact, nearly $1 billion of our revenue in 2024 is derived from new concentric solutions that didn't exist at scale in our business 24 months ago. Solutions such as data annotation, data modeling, analytics, B2B sales enablement, AI design and deployment, cybersecurity, financial crimes and compliance are now today, and even now with our commercial available software products, Combining our revenue from these offerings grew above mid single digits in fiscal 2024. Additionally, we have our Catalyst IT services offering, which represents roughly 8% of total revenue and is also growing well. As we have grown these ancillary services and we have also proactively reduced the percentage of our business related to low complexity transactions from 13% three years ago to 7% today. As we expect to continue to reduce this percentage further in fiscal 2025. And finally, as AI emerged as a business imperative, we have consistently grown and evolved our business to take advantage of this opportunity and use it as a source of differentiation. In fact, with generative AI deployments across half of our clients, approximately 200,000 desktops in our own operations using GenAI, and with tens of thousands of digital workers that are autonomous, we are confident saying that we have one of the larger deployments of AI technology at scale in the world. We have found that as we deploy our technology, we grow revenue faster with these clients. And we are particularly encouraged that as we have completed the web help integration, we have a large pipeline of new clients in Europe who we will deploy our technology in fiscal 2025. While the market focused on the erroneous perception of AI as a headwind for our business, we have turned it into a tailwind, using generative AI to take advantage to create new opportunities while making our traditional business better. We have given numerous examples on our last few calls of how we lead our clients through their AI journey from designing and building their operations to deploying automation in reducing low-value transactions to enhancing their internal productivity. In doing so, we reduce our clients' total costs while increasing our revenue as they consolidate spend with fewer providers and unlock new sources of revenue for us. This has been the case throughout our history and continues to be the case today. I am delighted with the progress we have made as we have adapted and innovated to address our clients' evolving needs. While we see a clear disconnect today between our underlying fundamentals and our public market valuation, I am confident that as we execute our multi-year growth strategy, our valuation will align with the strength of our business and the value of our distinguished and unique market leadership positions. With this context as a backdrop, let me give you my view of our most important achievements of 2024 and our expectations for 2025. I'll then turn the call over to Andre, who can provide more details on our financials and outlook. 2024 was a remarkable year for Concentrix. We integrated WebHelp with Velocity, aligning our sales, marketing, delivery, and operations team within the first year. We aligned our cultures around one company, one team, ensuring we delivered global scale consistently with local relevance and expertise for every client in every location around the globe. We are delighted to say the WebHelp integration is now complete with ongoing Net Synergy benefits showing through in 2025 and beyond. We secured a number of key transformative wins in 2024, both with our own technology and technology from leading partners, and our pipeline continues to be strong going into 2025. We have made prudent investments in our business that we believe will allow us to drive growth and margin expansion in the future. This included founding a new software products organization with strong leadership, enhancing AI tools and technology, and expanding our relationship with partners. And we have our first commercial wins with our Gen AI IX product suite. All in all, 2024 was a strong year for Concentrix. We delivered solid financial results, growing revenue well ahead of most peers in the broader BPO and ITO service sector, while generating strong free cash flow. We've evolved our business to take advantage of what clients want, fewer providers that can do more, and invested more that take global scale and technology capabilities to meet their needs. But what gets me most excited is the strong fundamental platform we put in place to drive sustainable growth into the future. For 2025, let me be very clear. We expect to grow our revenue, our non-GAAP operating margin, and our free cash flow while paying down debt. We will continue to expand our Gen AI offering both from leading companies like Salesforce, Microsoft, and Google, and others on top of our own technology in order to offer our client base the best solution for their business. We'll expand our key relationships by demonstrating the power of concentrics, combining our design-build-run capabilities and innovative AI-led solutions, domain expertise, and business process excellence to fuel our client success. And we will continue to secure new transformational wins that demonstrate the value of our broad-based technology solutions while decreasing our low-complexity business. As we look to the years ahead, I'm excited about what we are in our journey to become the world's most trusted partner for business and technology solutions, the power world that works. I'd like to thank our dedicated game changers for their hard work and commitment to excellence, and our clients for their trust and their business. Now, I'll turn the call over to Andre.