Concentrix Corporation

Hello everyone. Thank you for joining us and welcome to the Concentrix Second Quarter 2026 Financial Results Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Elise Brassell, Corporate Communications and Investor Relations. Elise, please go ahead.

Thank you operator and welcome everyone to Concentrix's second quarter 2026 earnings call. This call is the property of Concentrix and may not be recorded or rebroadcast without 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 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 in 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 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, Elise. Hello everyone and thank you for joining us on our second quarter 2026 earnings call. Our second quarter marked an acceleration in many areas in the evolution of our business. A few key statistics we are very excited about. First, we saw a record level of contract signings for our IEX suite of technology up 400% year over year for the number of deals. We saw increases of 25% year on year in the number of deals where we sold technology with our services. We saw an increase of 80% year on year in the number of deals where we sold AI and technology with our services. We saw record second quarter cash flow. We improved our efficiency by increasing our revenue per non-billable headcount by 14% year on year. We saw margin expansion sequentially of 10 basis points with a clear path to continued expansion. While early days, the momentum we see in the parts of the business we've been investing in are paying off while we're being prudent about managing our cost structure to drive better returns. Our key message today is we are continuing to effectively execute our strategy and we're making the right investments in the business for long-term shareholder value. Now, let's break down some of these areas further. First, on our IX suite of technology, we closed almost 100 deals in the second quarter and are now focused on keeping up with demand for deployments. While we have improved our implementation speed by 12% through the quarter, we need to be faster to take advantage of the demand. We are on track to double our IX suite revenue by the end of this fiscal year, hoping to surpass $120 million in annual recurring revenue. While growing, our IX Suite is still a small percentage of our total revenue. What really excites us about this is now we have clients using our solution for the year and the economics are becoming clearer. We now have 11% of our revenues influenced by IX Suite deployments. While we can see some revenue decreases when we first deploy the platform from driving automation and productivity gains, these tend to be short lived. We are seeing clients with iXSuite growing significantly faster than our consolidated average and delivering almost 350 basis points better margin and starting to buy additional licenses for clients internal operations by the end of the first year of installation. Our subscription with clients already deployed grew 24% year on year for new license revenue. This is because our technology works in enterprise settings and drives real value. One other important point for investors to appreciate, of the top 75% of our clients, 97% have AI in production. The vast majority have multiple AI solutions deployed for multiple use cases for CX versus homogenous technology stack. The solutions we are putting in with our partners and our own technology are delivering real value because we have deep domain knowledge of the processes. The environments of clients are getting more complex with AI, not less, and that provides additional opportunities for us to manage these environments and sell additional services. It also shows AI has not significantly cannibalized our revenue or opportunities when our client base has adopted it. Second, while Andre will talk through the strong cash flow results in more detail, it's important to appreciate that as we stated at the beginning of the year, we are focused on reducing our debt. We believe it is the best way to deliver value to our shareholders when the stock price is more volatile than we would all like. Third, we saw a path this quarter to accelerate the use of AI internally within our own organization and align our cost structure to the profit potential of the various areas of our business. This drove a higher restructuring charge than we anticipated at the beginning of the quarter. But on a cash basis, even after some reinvestment, we expect to cover the charge in six to nine months. We are not completely done yet and expect that we will spend an additional $75 million in restructuring this year while still hitting our free cash flow guide, reducing our net leverage below 2.6 times and continuing to reduce our debt in 2027. Lastly, as we have called out, we have some very fast moving parts of our business that are benefiting from the current environment of enterprises needing AI expertise that are practical, real and well thought out. We are focused on keeping up with the demand as quickly as possible by ensuring we continue to have the right resources available in the right markets with the right vertical expertise. We are doing this successfully by rebalancing our priorities of spend in real time. Now, Turning to the marketplace, we are definitely seeing increased financial pressure on our clients as they try and cope with their own investment needs and their current operating environments. This has created demand for more of our automation solutions, but also increased the urgency of moving work offshore and caused certain clients to prioritize spend across their client base, resulting in reduced spend overall. Combined, this has resulted in approximately 2% additional headwind going into our third quarter that we see for the rest of the year. While the market is competitive, we are being very prudent to ensure we have the right economic returns on our business. We have a strong competitive offering to help clients reduce their total cost of delivery with right shoring and automation. This environment and the faster deployments of our technology do meet revenue, but we see the path to a greater return as we demonstrated with higher margins this quarter and faster growth further out as more of our business mix changes. In fact, this is exactly where Concentrix excels. We're solving the AI ROI challenges with putting the right tools and services together for clients. As AI gets more complex, clients increasingly looking for partners who can deliver across the full ecosystem, which plays directly to our strengths. While others may excel in one or two areas, few can match our integrated model and is helping us win more complex deals and is demonstrating greater value to our clients. As an example, two of our largest cross-sell wins in the quarter added AI services for existing Fortune 500 clients. This dynamic is fundamental to our growth strategy and reinforces our confidence in the trajectory ahead. In the back half of the year, we're staying focused on winning complex, high value work with practical technology led solutions to solve real business problems and running more efficiently so we can invest in new areas of growth while improving our profit margins. I would like to thank our game changers for their passion this quarter and our clients for their partnership. And with that, Andre, I'll turn it over to you.