Concentrix Corporation

Hello, everyone. Thank you for joining us and welcome to the Concentrix fourth quarter and fiscal year 2021.

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 future expected 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 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. And then we will open up the call for your questions. Now I'll turn the call over to Chris. Thank you.

Thank you, Sarah. Hello, everyone, and thank you for joining us today for our fourth quarter and fiscal year 2025 earnings call. I'm going to start off with an overview of 2025 and provide some thoughts on the year ahead before I hand it over to Andre, who will discuss details of our financial results and outlook for 2026. For the past few years, we've been clear about evolving our business to deliver more solutions that involve technology. We have made investments in building out capabilities while strengthening our deep domain expertise in line with this. This early start embracing technology solutions has helped us capitalize on the introduction of AI by helping clients navigate the path to success with these new advances. We see a vast opportunity in front of us today to redefine our industry and add incremental value to clients. At the start of 2025, we started executing on an internal plan to capture more of this opportunity and accelerate our evolution to a high-value intelligent transformation partner. To execute, we aligned our team around four key sets of actions. First, focus on complex work and high-value services to become our client's preferred number one partner while deepening our relationship with them. Second, grow share of wallet by utilizing our extended offerings as clients consolidate the use of CX, BPO, and ITS vendors into fewer partners. Third, leverage our own IP investments and platforms to differentiate ourselves from competitors. Fourth, and finally, drive incremental efficiency so we can save to invest in these new areas of growth and opportunity. Reflecting on 2025, I am pleased with the progress we have made along these four areas. First, high complexity work. This year, we were successful in reducing our non-complex work from 7% to 5% of our revenue. What we are most happy about is we did the majority of this by putting in our own technology to automate work. We also worked with clients to optimize their cost structure by re-solutioning existing work to take advantage of technology and our global footprint. In fact, in 2025, we invested $95 million in new capabilities, capacity, facilities, security, and footprint. This helped move 4% of our onshore business to offshore centers. This migration does result in some margin compression as we incur additional and duplicate costs for a period of time. However, by doing so, we captured share, drove new solution sales, attracted new talent, and strengthened our position with our client base while providing a foundation for further growth into 2026. Second, wallet share. Striving to be number one in execution with our clients has allowed us to grow our share of wallet by selling them additional solutions. To capitalize on these opportunities, we invested in retooling our go-to-market capabilities significantly through the year. We have retrained our entire sales and account management team, upgraded 25% of this team with enterprise sellers, invested in SMEs supporting technology solutions, and developed a clear vertical offering while building out our partner organization for a little over $25 million of incremental spend. These results are now showing strong promise. A few data points. A 6% increase in the annual contract value of deals in the pipeline as we exited this year. A 9% increase in new wins year on year. A 14% increase in transformational deal values this year. A 23% increase in cross-sell up-sell deals this year. and a 37% increase in values for our new service areas this year. These data points help illustrate the business mix evolving more to technology-enabled, specialist, and adjacent services. We are now being recognized in enterprise circles as being a trusted end-to-end solutions partner. This has also helped drive our consolidation wins to record highs this year. Within our existing base, 98% of our top 50 clients now rely on Concentrix for more than one solution. Going into 2026, we believe we'd be a foundation to gain market and wallet share with the right clients doing the right business. Third, leveraging our own IP. 2025 was also a pivotal year as we launched IX Suite, our AI platform. This was an incremental investment of over $25 million in the fiscal year to develop, productize, and commercialize our product. While the AI market is crowded and competitive, we have been very happy with our progress in differentiating and gaining adoption of our tech, particularly with our IX Hero solution that augments and supercharges human advisors. We exited 2025 with over $60 million in annualized AI revenue of just our AI platform, reaching break-even as we committed to at the start of the year. This is in addition to us selling third-party AI solutions and helping clients deploy their own AI investments. Now, more than 40% of our new business includes some form of our own technology as part of the solution. This attack rate is well ahead of our expectations. Most importantly, our clients are realizing tangible results and impressive feat amidst a market backdrop of AI noise and failed promises. Fourth and finally, to drive efficiencies in our business. As I have laid out, we have been busy accelerating our evolution that has brought forward some costs. To offset as much of these costs as possible, we have been very disciplined in driving efficiencies in our own business so we can invest in the areas we have just talked about. We deployed significant technology internally and retooled many areas of our business to focus on our future states. This has allowed us to reduce our expenditures on non-billable resources and infrastructure by close to $100 million by run rate as we exit Q1 2026 and invest those savings in the areas that drive further future growth. Looking back at the successful operations of 2025, I am pleased with our results. Through the year, we supported clients through significant tariff uncertainties, natural disasters, and geopolitical headwinds staying a valuable part of their ecosystem. Doing what is right for clients has allowed us to continually accelerate our revenue growth, increase our CSAP, and develop a defensible model that blends technology and services. This year, we exceeded revenue expectations with steadily improving year-on-year growth every quarter throughout the year. For the fiscal year, we delivered 2% total growth in constant currency and exited Q4 with constant currency revenue growth above 3%. This growth was achieved, even as we reduce the amount of low complexity work in our business by 2% year on year moved 4% of our onshore business to offshore and acted selectively in the business we took on. Our newer adjacent offerings have a growth rate reaching high single digits in aggregate and now represent a meaningful part of our business, the quality of revenue has never been stronger. Before I hand over to Andre, I would like to highlight a few key wins in 2025 to bring life for investors how we have seen our offerings evolve. We were chosen by one of the largest banks in the world to design, build, and operate a build-operate-transfer model for the bank's highly complex investment banking asset security trading back office processes. We now have opportunities in multiple geographies with multiple lines of business to grow that relationship. We were selected by one of the largest electric car companies to manage their digital footprint, providing insights, content, and warnings back to their head office, all being supported by our technology solutions. We have been recognized for helping scale their global presence and driving operational efficiencies. We took over a captive of one of our clients with the introduction of our own system and processes and have been able to achieve significant cost savings within the first year for the client while improving their customer's experience. This is resulting in further opportunities with the client to take over other shared service centers around the world. For one of our largest European banks, we proactively automated the entire intake of claims, which resulted in a larger award of business to us that grows our revenue and our margins. We have launched a revenue generation program with one of the largest AI model makers, helping them find sources of revenue and developing a community of integrators to use their technology demonstrating even the leaders in AI rely on concentrics for services. These are just a few of the magnitude of wins we have had our business in 2025 that demonstrate the value we bring to our clients. No matter if a client has their own operations or uses ours, uses our AI solutions or is a true AI company, an emerging contender or a mature enterprise, we are able to win, service, and grow these clients. Turning our thoughts to 2026, the demand environment continues to evolve and Concentrix wants to lead the way. For our clients, we believe scale matters in many ways. Cost-optimized global footprint, breadth of offering, domain expertise across vertical, horizontal regions and technologies. We believe we're competing and winning in this market because we bring both the agility of an entrepreneurial organization with the maturity and scale of an established market leader to deliver the innovation and excellence clients expect. Regardless of the fluctuation of our stock price in 2025, we are committed to evolving our business. Despite three years of speculation, we are proving that AI is a tailwind for our business. We are growing our revenue consistently quarter over quarter. We are entering new areas of TAM growth. We are generating strong cash flow. We are returning value to shareholders and we are paying down debt. In short, evaluation today is a stark disconnect from the underlying strength of our business and the upside opportunity of our long-term strategy. In summary, this is the right market and the right moment for Concentrix. We see a tremendous opportunity in front of us to refine our industry and deliver the solutions our clients need at the speed, scale, and caliber they expect. We're making the right investments in the business to capitalize on these opportunities that continue to increase our quality of revenue. Revenue that is longer term, margin accretive after implementation, higher complexity with multi-service consumption that drives tangible value for our clients i am positive about our vision our model and our prospects for long-term profitable growth and i'm excited about the road ahead and now i will turn the call over to andre thank you chris and hello everyone 2025 was a year of significant achievement for concentrics we accelerated revenue growth in each sequential quarter we achieved break-even profitability with our ix suite