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CNXC Concentrix

Participants
David Stein Vice President, Investor Relations
Chris Caldwell President and Chief Executive Officer
Andre Valentine Chief Financial Officer
Shannon Cross Cross Research
Ruplu Bhattacharya Bank of America
Dave Koning Baird
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by and welcome to Concentrix Fiscal First Quarter 2021 Financial Results Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker for today, David Stein, Vice President of Investor Relations. Sir, you may begin.

David Stein

Thank you, Towanda and good morning. Welcome to the Concentrix first quarter fiscal 2021 earnings call. statements their our are nature forward-looking and future uncertain. contains by that address call that expected address performance This matters that materially These results in our cause forward-looking different be our uncertainties expressed than actual statements. those may to future forward-looking undertake new result future or our or as developments. a We do update statements not events to of information Please with could additional for uncertainties that the affect yesterday’s future information release results. our and earnings to SEC refer most filings financial our recent regarding our Annual includes on risk the provided in This XX-K. Report factors Form Also call, including will EBITDA non-GAAP free well growth. discuss cash EPS adjusted revenue as adjusted during income, we the financial constant currency flow, measures, non-GAAP and as operating A and of the non-GAAP Concentrix in under available news on Financials. reconciliation release measures Investor these is the Relations website the President call Caldwell, Andre Chris and Officer on and Executive our are Chief Officer. our Valentine, today me Financial Chief With summary performance will outlook. Chris our cover will financial growth Andre results our of provide and business strategy and a operating and your we questions. Then call will open the for

the Chris. Now will over turn I call to

Chris Caldwell

you Thank call Good XXXX. welcome and fiscal for quarter everyone our morning, first to earnings much, very David.

expectations. clearly, exceeded our of quarter. the at the And we results we start the above are guidance Our that well provided

color, pleased just we long-term most revenue. that that of and into wins let business relationships provide more been from we to are their fueled are our say performance very existing share that us that looking rewarding by pleased for will with Andre customers quickly clients this performance. While be with more execution strong am the me drove I continues to turn have able

our expansion. we demonstrates the overall, growth significant and are margin While trend we are market above-market robust successfully on executing for seeing that plan a upward

which our exposure. of with as travel billion headwind than to as a reduce first more portfolio from revenue our represents year. $X.XX XX%, our offset telecom revenue basis, an of On Our increased X.X% a continued company XX% by rebalancing revenue total compared increase constant currency clients last quarter well

first and a with $XXX net consumer of XX% quarter. technology across our costs revenue was range million XX% also million non-GAAP Our broad year. million of expense compared included portfolio, COVID-related additional quarter of last results electronics, retail, increased up saw EBITDA We $XXX adjusted the in over-performance and of These operating including $XX income healthcare. to e-commerce an and

As mentioned, this and the of industry portfolio in travel our rebalancing growth impact efforts nearly more complete muted healthier, a than COVID-related offset for balanced the business. more volumes

than quarter, new half first During we including more dozen dozen clients, the two signed a disruptive brands. nearly new

annualized over clientele and disruptive has a revenue above in been XX% of million our As reminder, growing $XXX quarters. represents recent

to be global outsourced. plan healthcare cloud-based for to tech and disruptors the its products health continue of and support Helping company of a for patient increase manage provider. fin-tech industry complex encouraged a sales, verticals, that large never company our We signing examples our licensing analytic of strength include Recent support geographies a across launch long-term wins by and providing a serving has insurance fraud, and monitoring historically and forefront solutions. large at device with contract pipeline work the administration the new

instances thousands have deployed remote a of of of tens secure platform workforce. live We and authenticate SecureCX also to our

client geographically our enterprise how clients our voice launched clients. voice wins customer also customer to customer entry-level expand diverse platform existing we the quarter, our allows where that actionable market of a our or of they of regardless continue the Essentials, our platform. interactions complements From satisfaction This VOC This base. from to our standpoint, insights have engage

on across above verticals additional solutions of the levels. demand with we strong revenue margins enhance we our expect And the XXXX investments XX% staff achieve digital through we deepening offerings. technology above performance the now service, growth to client made fiscal to-date our solution and geographies We pre-COVID to our currency CX and in see for looking summary, sales, and In increased experienced with relationships. and constant for to demand our adds continue technology solutions with our are forward we individually Based integrated strong and an quarter, services. technical

are new emerging expanding to pursue innovating selectively digital our superior strategic while markets, We we relentlessly and acquisitions with solutions for drive returns into shareholders.

As clients, culture, fostering committed and do, empowered people, our greater all to right their staff towards where communities. working our is them. and for for remain in customers meaningful most by includes in always, the ways we and for our planet a an to doing inclusive we our good our supported care others, that This

execution, like their for Board for support over exceptional to I trust and turn their for would now thank our staff and our will call I of for mentorship. Directors to Finally, clients talented their Andre. commitment the our

Andre Valentine

the Thank begin results to business financial the our second a you, Chris. with good be It’s for today. quarter I you for of review will and then quarter. our with discuss outlook first

Revenue Reported $XX the and quarter. the a foreign $X.XX revenue billion. accelerated currency million. include a compared in XX% benefit revenues was last revenue profit first with quarter currency growth year. Our nearly On in basis, constant first increased of

with strong across set of clients Our increases a our broad reflects strategic growth verticals.

We which in every growth in operate in also the saw quarter. we region

due XX% Our top was enrollment. performing strong vertical open healthcare, seasonal to from growing volumes

with from grew grew vertical media services, and in tourism banking, the and volumes communications as We fin-tech X% e-commerce travel the growth across than believe Revenue clients. we personal which more growth vertical quarter of in from global our portfolio year-over-year. grew about of last consumer decreased impact single-digits, vertical. across the and less including by clients quarter Our impact first insurance our and the providers. to overall efforts. and represented clients, clients by expected in the high financial grew in our this XX% over near banking XX% and were rebalancing XX% the retail strategic several X% other Revenue approximately disruptor end from from an platform our clients electronics we XX%. Revenue signals retail, lower travel e-commerce as from growth several offset approximately and clients first such the rate technology this and Contributing will our growth quarter the which total revenue of verticals year significantly pronounced XXX experience on

Turning basis, a was profit non-GAAP operating in improved profitability, with On to quarter. million year-over-year million income first year. significantly compared $XXX the $XXX last

last non-GAAP XX was the points quarter basis Our margin XX.X%, operating first up compared with year.

and last up year. First $XXX million basis XX.X%, quarter adjusted year with was last was adjusted margin compared EBITDA EBITDA compared $XXX points with XX million our

first revenue COVID COVID-XX in basis, reflects strong profitability of growth, Our which On flow-through expenses quarter. a than expenses. net $XX the million the impact from offset more approximated

first results of the income was million $X.XX EPS income, compensation $XXX diluted expense. was $XX Adjusted the net quarter quarter, included million non-GAAP of $X.XX last $X.XX $X.XX compared million and year. in GAAP GAAP to of share-based year. $XX was year. net compared of million amortization last first for with terms EPS $X compared with In last intangibles

Our than effective was slightly in quarter lower GAAP tax rate the of expected. XX% first

in taxable to certain less higher taxes. income exposure Our erosion based U.S. resulted

receivable $XX flow, first revenue from quarter cash the to Moving Higher higher approximately cash in end. the resulted in flow at million. quarter balances accounts operations quarter planned than in totaled

other first cause lower our in payouts than quarters. business, end cash can year Additionally, to flows quarter incentive and payroll be

the to flow million. continue the Capital the negatively approximate expenditures free net in totaled quarter, impacted income. quarter flow in While cash non-GAAP expect we to this $XX year cash for

expenditures range full for revenue. X% to expect of to to We continue the X.X% be capital of year in the

billion. was the Turning total, $X.XXX the end cash interest to quarter, sheet, debt In at $XXX million. cash bearing the and balance of equivalents was

AR $XXX During Net we $XXX X.XXx the first balance EBITDA million. million and capacity reducing the remains quarter, paid with at securitization. debt loan, on of principal $XX $XXX was was adjusted liquidity on million quarter, strong, leverage At quarter end end. to and credit our down lines term cash, gross of the undrawn approximately million the outstanding approximately of our

flexibility. Our current significant financial gives liquidity us

remain the for strategic priorities business growth funding opportunities. existing deployment through organic and Our growing capital

I will quarter. our expectations second for Now, discuss the

are billion approximately of quarter a be Given impact second including X% business, second exchange revenue expect $X.XX of quarter billion, at the seeing we with momentum we foreign the compared XXXX. the to positive $X.XX of to in rates in range accelerated

quarter second We of non-GAAP million million. $XXX income expect to operating $XXX

$X count an tax weighted and of expense in effective diluted rate XX% XX%, to interest approximately of a approximately quarter, million share million XX expect We the average second to be shares.

to approximately at Because with currency Our excludes non-GAAP income of quarter and including revenue to billion, X% above revenue positive $XX to be operating and into or related This we full rates expect compared amortization foreign our of going constant momentum of $X.X $XX XX%. the expense. expectation an exchange of intangibles equates million QX year impact an above XXXX. growth now approximately compensation our second for guidance of QX, share-based strong million

our above we currency X% during suggested constant We yearly plan growth is range where on from to the do a year range. full Our in subsequent significant revenue spin, growth a our in quarters. it not that XX% we X% that increase guidance updating would be discussed

Our fluctuation our our transaction expectations are quarter encouraged results. or very or included integration future or not impacts for do expectations costs. business we currency include closing, the disposition foreign are by any first acquisition-related not in Also impacts. future In

expectations our for quarter in confident are second We beyond. the and

leader executing plan market. a market, the faster We large, than grow in are fragmented global growing a to well-positioned organically and a

cash strong well-positioned sustained balance growth, progression As consolidator open are a strong with successful time, free line deliver margin market At flow. questions. this proven, for a and please in Towanda, the our sheet, to we

Operator

the comes Research. Our Thank Cross first question [Operator Shannon from of you. line Instructions] Cross with

Your open. line is

Shannon Cross

what on they seeing was strength about within revenue other – airport of And good Thank longevity you. and Thank then the I have you a I and couple the life. back wondering actually your thoughts then the much very of day am I also know you are components, am travel? it’s And are curious about follow-ups. healthcare? some of to in in maybe coming an I the and morning. I

Chris Caldwell

Chris. Hey, Shannon, this is

see business international a each that travel we market the Unfortunately, side. perspective, communicated we’ve that side in a still the from market travel what kind travel that seeing of we’re on and effectively the And and still on revenue had is up. individual less industry is is before was nonexistent. the business market the business that But on in. and with lot domestic specifically domestic of our the we the international side regions in picking of operate travel So

the and So pick on be we to travel there foreseeable clientele we future up still expect focusing that. with. in starting sales see more we a headwind side and deal a overall efforts for will are the But that domestic that that

On is growing, we’ve a robust side, what seen strong, the clearly, healthcare market.

had – clients new net by coming new that in by market have or We we’ve by net clients growth wins, in a been that services not won. only – revenue net

enrollment that we open is going in. we see there new business a more through one albeit so that seasonality we’re the that longevity, And good with have

Shannon Cross

COVID. I’m we COVID regard And coming question a maybe customers BPO and picture curious, or Okay. are out are then out outsourcing, hopefully, of bigger viewing with to of coming how

So, customers’ RFPs some of And on come terms around poses of rely wondering more a just onshore then you have how as up? in may the changed if an willingness thoughts will of pandemic just and offshoring, others, maybe start maybe it to on incremental to this? opportunity the mindset see

Chris Caldwell

So to during pandemic. have Shannon, provides, more clients outsourcing through trying pretty because were which customers through very of business, we to is the seeing pandemic partners to who the more market What basically who align I scale that and what out. they the our are were past that’s to provide job there that challenges, need staffing pandemic the change. on amount more we think can pandemic What your your also from perspective the business are the going is seen successful to to help been and to accomplish rely have be will pricing did in to is give continue make we or customers make able of net is being someone of a cost I outsourced sort a think starting do giving time the seeing trusted are pre source to which either because new them business internal that we choices are necessarily times. now there had supporting everything variable, already also is with don’t the through supporting pandemic. happened some outcomes-based we’ve And hardest are their relationship new is And where remain model that to business you to that coming a adverse what outsourcing that’s that our good that own

Shannon Cross

can think COVID over we year? how Okay, would If the that And then costs assume may on my great. ameliorate? think mix of margin question, And some shift questions. you then opportunity? should about the Thank how my just incremental then about gross I may And coming last completes you. gross margin, revenue

Andre Valentine

Andre. you. net is to and COVID is versus to down of the margin speak largely Yes, gross that is Shannon, year, that prior because cost bulk this Good Certainly, up. show our where is the

– think think are costs, a us while. we I So for frankly, with those

fashion. solutions will in were and We pandemic somewhat longer. function flare-ups to that a those to that our with across regionalized And continue the to margins cause Certainly, in margins of verticals, more a globe, us in costs move away. moving see costs that a the localized of bit growing directions over be though strategic adding gross to stay is time, prior going we there think our COVID room technology more they that will the and the back up towards for to be will function

Shannon Cross

Great. Thank so much. you

Andre Valentine

you. Thank

Operator

Thank you.

question of Bhattacharya from line comes with next America. Our Ruplu of the Bank

line Your open. is

Ruplu Bhattacharya

for questions quarter. congrats Thanks on Hi. the my and taking

For Chris, ask one, and digital the of developing strategic the past emerging I you’ve first talked the in growth new in wanted investing markets you, are drivers two solutions. to

with little maybe can there so made the specifically, more to terms cost-conscious you’ve bit maybe progress respect be in talk in two typically areas? demanding far customers you more and So required. markets, of those tend to a services emerging about And

your talk customers can? maybe advantages has other about can markets the you of Concentrix that profitably enable can emerging competitors of maybe So than some to competitive serve some more you those in that

Chris Caldwell

Ruplu. Sure,

efficiency You can nail deliver labor a be be markets has to technology of the those on can’t The emerging on hit rely arbitrage. for some There There – tend has that the head. to you clients. element. higher you to level

enterprise, those able think I helps been So specifically emerging in markets, technology. our more overall we’ve drive that us but in to global

is desire We’re within markets. efficient be pilot those to they able to there because things more and are cost-conscious a certainly faster more

that’s successful, solutions take led and those where we’ve And also in so them against think more of markets only be competition our I in grow to established got as highly, it’s continue markets. not of because but proof we very points us highly those markets, worked bring to some to competitive

to entry-level as telephony can now your doing Essentials continuing tens to VOC more we VOC digital product well successful telephony practice. the question offerings. a we’ve announcements in Obviously, work a product, think our that announcement that little thousands we We end We’ve grow talked points did, as I it’s that platforms. voice we remote of last that. SecureCX that more talked into around Clearly, to IVR while. deploying done launched, we’ve integrated solutions. solutions, second also are only sell, CX which stand-alone but more our place about as about secure got of our product and adds not cloud-based And a natural in

from digital get And clearly, our this products use goal only not be on with. regular just to in is us So a we our but is direct, both clients of CX we’re whether whole also with technology, as to of we of CX perspective, our solutions that things those there part seeing may are on, it’s areas. but going a go-to-market And traction good host that top of driving. solutions

Ruplu Bhattacharya

Okay. those details. Thanks for

guidance. clarification year like I’d question, second the ask a revenue the full around to just For

even Is quarter, second being in correctly, for talked $X.X of I improving Andre heard the year. I that I fiscal fiscal still – and get if because XQ, than you quarter. $X.XX your billion you if the fiscal think it the $X.X that Chris, then terms revenues I billion. said full in higher guidance, XQ modest be can XQ, sequentially mean, XQ, midpoint this with case Last the from about I seems growth billion think I take XQ the of

misread I maybe – just I’m So that.

Thank if what clarify you. seeing, for you just the is? half year the you your second what guidance So full thoughts and can what are

Andre Valentine

me, for a Ruplu. Yes, clarity little

X% strong we fact So this that felt about longer to faster having the the given was need, in felt what here a of the time spin-off the year that our than that, for at And X%. QX range into is in now that. to and a expect no in we’ve of and momentum we to to need, We being the market talking spoken growth fact, much grow address QX the expectation. guided performance

we we’ll whether so And Whether is we’ve that the the demand that environment XX%. – now see half plays that said what right that the grow strong we’ll year, how continues above of is something longer exactly through go back strong, that, think really data we But indicating no instead that XX%. point there above we we’re out put and that with as that and had address just we grow dealing will that forward. relevant, is

did do Take last for impact and you. all $X.X – apply to so the is on it of kind And currency with of revenues and XX% I and that. that math the the billion year’s top add

Ruplu Bhattacharya

Got for growth. it. the is XX% growth certainly, And Thanks strong actually yes, clarification.

for on mean, Maybe wanted surtax were things quarter, ask recently, So near-shore last hearing Biden not offshore maybe my center question, discussion the last but call the planning administration mean, Chris, or to thanks operations. I details about I just – we about for that. a I and some you,

So thoughts on thoughts a face you U.S. on surtax, clients overall thoughts or call forward? may you. just how outside your would that? and going Thank U.S. that I that such business mean any heard servicing surtax if the servicing a the Have anything? is impact centers And imposed, your

Chris Caldwell

has X, few administration sort first for first discussion or few common of Ruplu, months. I the think in in Yes, a days the or every been X last that

that say it to And has pass. or so won’t to nothing can’t. Not far, yet

to it’s as don’t change And cost-effective solution massive of work to I them have that it our think, a because that do manner suddenly regardless it. be whether still we that’s perspective, the the see dynamic And surcharge the being we whatever will support possibly think economics the work near-shore would done that, needs or to of onshore, the we then business be certainly would is for clearly, accordingly. make the just And of most with we sure from clients come adjust offshore. it we done. impact adjust what it, I our I and through still needs to to if changes at delivery possible.

Ruplu Bhattacharya

any as And tax makes competitors that No, it. sense. would other impact Got well.

So, congrats the in as the guide. again the strong on quarter as strong well results

Thank on strong execution. you. congrats the So

Chris Caldwell

Thank very you much.

Operator

you. Thank

Our from Baird. comes next with Dave of question the line Koning

Your line is open.

Dave Koning

guys. Hey, job. Thanks. Great Yes.

Andre Valentine

you. Thank

Dave Koning

or I And currency Yes. of guess was kind through currency, the going or I year then revenue? the creating was guess, the there XX% driving there like around something of or maybe a give maybe driving rest XX% looks vertical I like pacing? of believe, that QX, kind that growth constant the things digits. constant two a pace pacing? kind Or right or year, take, is single I one wondering, of is looks of midpoint kind that like about QX onetime off specifically that’s falls I am maybe there maybe and something it client the And somewhere or year, of it low early

Andre Valentine

isn’t. Andre. No, there David, it’s really

of feel is the the In very that of clients. are good things fact, do nature the our sustainable with kind we to work of up one signing we about

involved go a away because I and be what revenue call that trace track not and kind that bit would might in etcetera. there X% than little much of would revenue, probably So vaccine, less is COVID-related

said I I is just more kind think Ruplu. what of point of my answer to the to here

Obviously, spin-off an in that very comparison the talked to longer providing not – update We’re X% easy range X% we’re QX. our to probably The expectations. have we we is no a relevant. really at about just

half indicated. then the So see revenue factor you’ve you’ll it’s the to range very And strong it’s demand if place, in of that be growth going just performance. a this environment, in very, stays then of environment our where in second that demand

Dave Koning

XX% follow-up it parts to the for Like assuming that rest consumer, you driving it XX% to growing to – XX%, tech, think Got that continue there band. ones all that to those and some broad-based? are the verticals just as be the maybe like well I to travel, And broad-based, health, guess, over it? of my it decelerate, you pretty much guidance the is now like going it. expectation of was are Is going And kind keep look switching? are the retail, I pretty other but health be is will accelerate? will of driving care will kind Or year, of is were

Andre Valentine

of think e-commerce, our verticals. we – really through, about Well, across the within and as frankly, geos and instance, strength as you look all look the at is through nice it’s I across mean, the drivers names, just retail levels. also, I broad-based growing good the in the feel verticals, of I – a for it number

And see the I flavor health enrollment. where That some and see seasonal go in as go-forward at to care within basis. we e-commerce health care. could higher operates towards normal that then think to open you’ll out again strong and on growth perhaps with a return growth patterns you at you in be a seasonal retail as perhaps forward, XX% QX not might look

Dave Koning

it. Got

Great job. thanks. Okay,

Andre Valentine

Thank you.

Operator

further remarks. would Mr. call Thank Stein the closing to for questions no I am you. to in back now like the over queue. showing I turn

David Stein

that very all day. good and today the end you joining call a much Thank call. will for Have the

Operator

Thank your Ladies participation. conference this you call. and today’s gentlemen, for concludes

now may disconnect. You