Sign in

Concentrix Corp (CNXC) Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 results modestly exceeded guidance: revenue $2.372B, Non-GAAP EPS $2.79, with operating margin expansion YoY; constant-currency revenue grew 1.3% despite FX headwinds .
  • Versus Wall Street: Non-GAAP EPS and revenue both beat consensus by a small margin; management reiterated FY 2025 guidance and modestly raised revenue/OI ranges due to FX, signaling confidence in margin and free cash flow expansion . Consensus values marked with asterisks were retrieved from S&P Global.
  • Strategic catalysts: broad GenAI deployments across half of clients, early monetization of iX Hello, and high win rates in client consolidation; near-term margins reflecting ramp/offshoring costs should improve as programs mature .
  • Capital return and balance sheet: declared $0.33275 dividend and repurchased ~550K shares ($26.2M); liquidity ~$1.5B with ongoing plan to refinance €700M 2% seller’s note by September without increasing leverage .

What Went Well and What Went Wrong

  • What Went Well

    • “We continue to lead our market in Agentic AI solutions…AI is a win-win for us and our clients,” highlighting scaled GenAI deployments across hundreds of thousands of desktops and early iX Hello monetization .
    • Consolidation momentum and share gains in top 25 clients; management cites “high win rate” in consolidation and stronger attach of Catalyst services within transformational deals .
    • Non-GAAP operating margin widened 30 bps YoY to 13.6%; EPS and revenue exceeded internal guidance and consensus; reiterated FY guidance with adjusted FCF target of $625–$650M .

  • What Went Wrong

    • Revenue declined 1.3% YoY on a reported basis (FX headwind), and adjusted EBITDA margin fell 20 bps YoY to 15.8% as offshoring ramps and tech investments pressured near-term profitability .
    • Cash from operations was $1.4M and adjusted free cash flow was a use of $39.8M, consistent with seasonally weak Q1 and factoring program effects .
    • Management noted ongoing macro muted, ramp costs, and dual costs from accelerated offshoring; healthcare vertical execution opportunities identified; consumer electronics volumes remain subdued .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$2,387.4 $2,448.0 $2,372.2
Diluted EPS (GAAP) ($)$0.25 $1.72 $1.04
Non-GAAP Diluted EPS ($)$2.87 $3.26 $2.79
Operating Margin (%)6.4% 5.9% 7.1%
Non-GAAP Operating Margin (%)13.9% 14.2% 13.6%
Adjusted EBITDA Margin (%)16.3% 16.5% 15.8%

YoY comparison:

MetricQ1 2024Q1 2025
Revenue ($USD Millions)$2,402.7 $2,372.2
Operating Income ($USD Millions)$148.4 $168.9
Non-GAAP Operating Income ($USD Millions)$319.1 $321.5
Net Income ($USD Millions)$52.1 $70.3
Non-GAAP Net Income ($USD Millions)$175.7 $188.1
Adjusted EBITDA ($USD Millions)$384.3 $374.2
Diluted EPS (GAAP) ($)$0.76 $1.04
Non-GAAP Diluted EPS ($)$2.57 $2.79
Operating Margin (%)6.2% 7.1%
Non-GAAP Operating Margin (%)13.3% 13.6%
Adjusted EBITDA Margin (%)16.0% 15.8%

Segment breakdown:

Segment Revenue ($USD Thousands)Q3 2024Q4 2024Q1 2025
Technology & Consumer Electronics664,829 685,841 657,692
Retail, Travel & e-Commerce593,736 616,337 583,898
Communications & Media380,508 385,996 371,000
Banking, Financial Services & Insurance352,471 360,025 365,193
Healthcare172,400 187,227 189,805
Other223,468 212,598 204,634

KPIs and balance sheet:

KPIQ3 2024Q4 2024Q1 2025
Cash & Cash Equivalents ($USD Thousands)246,241 240,571 308,000
Long-Term Debt, net ($USD Thousands)4,908,866 4,733,056 4,901,432
Cash from Operations ($USD Thousands)191,622 284,401 1,408
Adjusted Free Cash Flow ($USD Thousands)135,250 218,686 (39,816)
Share Repurchases (Quarter)~$39.1M; 0.6M shares ~$34.0M; 0.7M shares ~$26.2M; ~0.55M shares
Dividend per Share$0.33275 declared (Nov 5, 2024 payable) $0.33275 paid Feb 11, 2025 $0.33275 declared payable May 6, 2025

Guidance Changes

MetricPeriodPrevious Guidance (Jan 15)Current Guidance (Mar 26)Change
Revenue ($B)FY 2025$9.470–$9.610 $9.490–$9.635 Raised slightly (FX tailwind)
Operating Income ($M, GAAP)FY 2025$663–$703 $669–$709 Raised
Non-GAAP Operating Income ($M)FY 2025$1,300–$1,340 $1,300–$1,340 Maintained
Non-GAAP EPS ($)FY 2025$11.18–$11.77 $11.18–$11.77 Maintained
Effective Tax Rate (%)FY 202525.5–26.5 25.5–26.5 Maintained
Adjusted Free Cash Flow ($M)FY 2025$625–$650 $625–$650 Maintained
Revenue ($B)Q2 2025—$2.370–$2.390 New quarterly guidance
Operating Income ($M, GAAP)Q2 2025—$155–$165 New quarterly guidance
Non-GAAP Operating Income ($M)Q2 2025—$315–$325 New quarterly guidance
Non-GAAP EPS ($)Q2 2025—$2.69–$2.80 New quarterly guidance

Earnings Call Themes & Trends

TopicQ3 2024 (Aug)Q4 2024 (Jan)Q1 2025 (Mar)Trend
GenAI deployment & iX HelloLaunched iX Hello; ~1,000 clients using GenAI; $100M annualized product investment; automation examples reducing revenue near-term but creating higher-value work Scaled GenAI across ~200K desktops; early iX suite wins; plan to grow margins/FCF in 2025 “Among the largest scale proven GenAI deployments”; thousands of iX Hello seats; aiming to be accretive by end of FY25 Strengthening adoption; commercialization progressing
Offshoring & ramp costsAccelerated offshoring in late 2024; dual costs impacted margins Duplicate costs in Q4 from shore shift; expected to taper Q2 margin guide reflects ramp/build-outs; dual cost pressure near-term Near-term headwind; improves 2–3 quarters post-ramp
Macro & demandDynamic environment; automation and partner requests for investment Macro affects all services; expect growth via wins/share gains/outsource adoption “Do not see macro improvement”; AI now pervasive; normal seasonality Muted macro; execution-driven growth
Consolidation80% win rate on 22 consolidation opportunities Continued consolidation with fewer providers “Early innings,” momentum continues; strongest in top 25 clients Positive, ongoing tailwind
Catalyst (digital CX/IT)Enablement partner for tech deployments; consulting attach rising ~8% of revenue, mid-high single-digit growth Attach rate up meaningfully; key in transformational deals Solid growth; deeper integration
Balance sheet & refinancingDeleveraging plan; repurchases; liquidity strong Net debt ~$4.495B; repurchase authorization $600M Refinancing €700M seller’s note due Sept; keep 2% note until maturity; no leverage increase Manageable; refinancing on track

Management Commentary

  • CEO: “We continue to lead our market in Agentic AI solutions that drive results…we are among the largest scale proven GenAI deployments in the world” .
  • CEO on iX Hello: “Thousands of seats now deployed…we have started to monetize…focused on being accretive by the end of fiscal 2025” .
  • CFO: “We had recognized about $95M of synergies in fiscal ’24 and are projecting $120M here this year” .
  • CFO on Q1 results: “Non-GAAP diluted EPS was $2.79…benefit from higher operating profit, lower interest expense…and a lower share count” .
  • CEO on macro/AI pervasiveness: “We do not see any macro improvement…AI is pervasive across more than 50% of our client base” .

Q&A Highlights

  • Consumer electronics stabilizing via share gains and data annotation; volumes muted but more predictable; opportunity in healthcare execution .
  • Guidance conservatism: Q2 margins reflect ramp and facility build-outs; full-year left unchanged early in year despite Q1 beat .
  • AI investment cadence: incremental ~$50M in 2024 now tapering; spend to gently decline next 1–1.5 quarters as commercialization scales .
  • Seller’s note refinancing: €700M due Sept; plan to refinance soon without increasing leverage; maintain low-cost 2% note to maturity .
  • Offshoring margins: duplicate costs during migration; benefits accrue after ~2–3 quarters post-ramp .

Estimates Context

Actual vs consensus and guidance:

MetricPeriodActualConsensusCompany Guidance
Revenue ($USD Billions)Q1 2025$2.3722 2.3653*—
Non-GAAP EPS ($)Q1 2025$2.79 2.5875*—
Revenue ($USD Billions)Q2 2025—2.3817*$2.370–$2.390
Non-GAAP EPS ($)Q2 2025—2.7480*$2.69–$2.80
Revenue ($USD Billions)FY 2025—9.8077*$9.490–$9.635
Non-GAAP EPS ($)FY 2025—11.3735*$11.18–$11.77

Values with asterisks (*) retrieved from S&P Global.

Implications:

  • Q1 was a clean beat vs consensus on both Non-GAAP EPS and revenue, supporting confidence in reiterated FY guidance .
  • Q2 guidance brackets consensus closely on EPS and revenue, implying an in-line quarter as ramp/offshoring costs cycle through .
  • FY 2025 revenue guidance sits below consensus, suggesting potential downward estimate revisions unless macro or ramp wins accelerate; EPS guidance aligns with consensus midpoint .

Key Takeaways for Investors

  • Q1 2025 delivered above guidance and consensus on EPS and revenue; margin expansion YoY and disciplined conservatism on FY guide underpin credibility .
  • Near-term margin headwinds from offshoring and ramps should fade within 2–3 quarters; watch Q3–Q4 2025 for margin uptick as programs mature .
  • GenAI/iX Hello commercialization is progressing; management targets accretive contribution by end of FY25 with strong client demand and scaled deployments .
  • Consolidation wins and rising Catalyst attach rates are durable growth drivers with higher-value, stickier revenue; pipeline in Europe/APAC remains healthy .
  • Capital return intact: dividend maintained; buybacks ongoing; refinancing of €700M note expected without leverage increase; liquidity ~$1.5B .
  • Estimates: FY revenue guide below consensus could trigger modest downward revisions; EPS in line—monitor execution on synergies and tapering of AI spend .
  • Trading lens: stock likely reacts to evidence of margin improvement (Q2/Q3), incremental AI monetization milestones, and any updates on consolidation wins or large transformational ramps .

Best AI for Equity Research

Performance on expert-authored financial analysis tasks

Fintool-v490%
Claude Sonnet 4.555.3%
o348.3%
GPT 546.9%
Grok 440.3%
Qwen 3 Max32.7%