Concentrix Corp (CNXC) Q4 2024 Earnings Summary

Executive Summary

Q4 revenue was $2.448B, at the high end of prior company guidance ($2.420–$2.470B), with pro forma constant currency growth of 1.5% YoY at the top of the guided range .
Non-GAAP diluted EPS of $3.26 exceeded prior Q4 guidance of $2.90–$3.16, while non-GAAP operating income of $346.7M landed in the top half of the guided $335–$355M range .
Margins compressed YoY (non-GAAP OI margin -110 bps to 14.2%), driven by GenAI iX productization/commercialization costs, upfront investments for transformational wins, and duplicate costs from accelerated offshoring, as management detailed on the call .
FY25 outlook guides modest constant-currency revenue growth (0–1.5%), slight margin uptick, and adjusted FCF of $625–$650M; buyback authorization increased to $600M, and dividend maintained at $0.33275, reinforcing capital return as a catalyst .
Early traction in GenAI applications (iX suite) and completed Webhelp integration position CNXC for share gains and back-half ramps in transformational programs; near-term stock drivers include margin normalization as offshoring dual costs fade and visibility into AI-led revenue ramps .

What Went Well and What Went Wrong

What Went Well

Revenue met the top end of guidance and constant-currency pro forma growth hit the high end; adjusted EBITDA grew modestly YoY to $402.9M with strong operating cash flow of $284.4M in the quarter .
Management highlighted more than a dozen early wins in the new GenAI iX product suite and strong pipeline, with completed Webhelp integration and synergy run-rate supporting FY25 margin/FCF expansion: “We’ve seen our investments in our GenAI product suite generate more than a dozen wins only weeks after launch… Entering 2025, we are delighted with our strategic position” — CEO Chris Caldwell .
Capital returns were significant: $220M returned in FY24 via buybacks/dividends; buyback authorization refreshed to $600M; Q4 buybacks of 0.7M shares at $34.0M indicate opportunistic repurchases amid perceived valuation disconnect .

What Went Wrong

GAAP operating margin fell 220 bps YoY to 5.9% and non-GAAP OI margin declined 110 bps to 14.2%, with management citing technology spend, upfront investments in transformational wins, and duplicate costs from accelerated shore shifts in Q4 .
Certain verticals were pressured on a pro forma basis: technology/consumer electronics and communications/media decreased ~1% in Q4 pro forma constant currency, reflecting muted consumer tech volumes and price sensitivity in commoditized work .
Management reiterated continued proactive reduction of low-complexity transactions (targeting a further 1–2% mix reduction in FY25), creating a near-term revenue headwind as automation ramps, with margin benefits lagging by two to three quarters post-offshoring .

Financial Results

Metric	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Revenue ($USD Millions)	$2,230.8	$2,380.7	$2,387.4	$2,448.0
Diluted EPS ($)	$1.09	$0.98	$0.25	$1.72
Non-GAAP Diluted EPS ($)	$3.36	$2.69	$2.87	$3.26
Operating Margin (%)	8.1%	6.3%	6.4%	5.9%
Non-GAAP Operating Margin (%)	15.3%	13.5%	13.9%	14.2%
Adjusted EBITDA Margin (%)	17.8%	15.9%	16.3%	16.5%

Segment revenue breakdown (verticals):

Vertical ($USD Millions)	Q4 2023	Q3 2024	Q4 2024
Technology & Consumer Electronics	$656.741	$664.829	$685.841
Retail, Travel & E-commerce	$512.816	$593.736	$616.337
Communications & Media	$350.416	$380.508	$385.996
Banking, Financial Services & Insurance	$323.465	$352.471	$360.025
Healthcare	$186.306	$172.400	$187.227
Other	$201.018	$223.468	$212.598
Total	$2,230.762	$2,387.412	$2,448.024

KPIs and capital allocation:

KPI	Q2 2024	Q3 2024	Q4 2024
Cash from Operations ($MM)	$238.339	$191.622	$284.401
Adjusted Free Cash Flow ($MM)	$201.887	$135.250	$218.686
Shares Repurchased (MM)	0.7	0.6	0.7
Buybacks ($MM)	$40.3	$39.1	$34.0
Dividend per Share ($)	$0.3025 (paid May 7)	$0.33275 (paid Nov 5)	$0.33275 declared, payable Feb 11

Non-GAAP adjustments (Q4 2024 highlights for context): Amortization of intangibles $110.1M; acquisition-related/integration expenses $59.6M; foreign currency gains $(27.5)M; change in acquisition contingent consideration $(18.2)M; share-based compensation $30.0M .

Guidance Changes

Q4 2024 Guidance vs Actual

Metric	Period	Previous Guidance	Actual	Change
Revenue ($B)	Q4 2024	$2.420–$2.470	$2.448	Met high end
Non-GAAP Operating Income ($MM)	Q4 2024	$335–$355	$346.7	Top half
Non-GAAP EPS ($)	Q4 2024	$2.90–$3.16	$3.26	Beat
Effective Tax Rate (%)	Q4 2024	24–25	Not explicitly disclosed for Q4; FY tax $48.1M	N/A

Full Year 2024 Guidance Evolution and Actual

Metric	Q2’24 Guidance	Q3’24 Guidance	Actual FY 2024	Change
Revenue ($B)	$9.580–$9.675	$9.591–$9.641	$9.6189	Lowered in Q3; achieved within range
Non-GAAP Operating Income ($B)	$1.350–$1.400	$1.306–$1.326	$1.3179	Lowered in Q3; achieved within range
Non-GAAP EPS ($)	$11.40–$12.07	$11.05–$11.31	$11.42	Lowered in Q3; actual slightly above
Adjusted Free Cash Flow ($MM)	$700	$625–$650	$474.5	Lowered; came in below updated view (integration costs, collections timing)

New FY2025 and Q1 2025 Guidance

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($B)	Q1 2025	N/A	$2.355–$2.370 (CC growth 0–0.75%; ~200 bps FX headwind)	New
Non-GAAP Operating Income ($MM)	Q1 2025	N/A	$305–$315	New
Non-GAAP EPS ($)	Q1 2025	N/A	$2.49–$2.64; assumes ~64.1M diluted shares and ~5% participating securities	New
Effective Tax Rate (%)	Q1 2025	N/A	25.5–26.5	New
Revenue ($B)	FY 2025	N/A	$9.470–$9.610 (CC growth 0–1.5%; ~150 bps FX headwind)	New
Operating Income ($MM)	FY 2025	N/A	$663–$703	New
Non-GAAP Operating Income ($B)	FY 2025	N/A	$1.300–$1.340	New
Non-GAAP EPS ($)	FY 2025	N/A	$11.18–$11.77; assumes ~63.6M diluted shares and ~5% participating securities	New
Adjusted Free Cash Flow ($MM)	FY 2025	N/A	$625–$650	New
Non-GAAP Interest Expense ($MM)	Q1/FY 2025	N/A	~$74 in Q1; ~$273 FY	New
Share Repurchase Authorization ($MM)	FY 2025	Prior $188 remaining (Aug)	$600 authorized; pace to exceed FY24 buybacks modestly	Increased
Dividend per Share ($)	FY 2025	$0.33275 paid Nov 5	$0.33275 declared payable Feb 11	Maintained; historical 10% annual increases referenced

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3)	Current Period (Q4)	Trend
AI/technology initiatives	Introduced iX Hello; $100M annual run-rate in GenAI investments; ~1,000 clients using GenAI; POCs converting to production	iX GenAI product suite logged > a dozen wins weeks after launch; half of clients on GenAI; tens of thousands of autonomous agents deployed; expanding partnerships (Salesforce, Microsoft, Google)	Scaling deployments; early product traction; continued partner-led and proprietary solutions
Offshoring & delivery mix	Accelerated shore-shift created duplicate costs and margin pressure; clients pulling forward offshoring	Further offshoring (Europe→Africa/Eastern Europe; North America→offshore), with 2–3 quarter lag before margin benefits post-dual costs	Ongoing shift; near-term margin headwind, medium-term margin tailwind
Low-complexity work reduction	Commodity work <7%; walking away from price-led deals	Plan to reduce low-complexity mix by another 1–2 pts in FY25 (to ~5%)	Continued intentional mix improvement; near-term revenue headwind
Client consolidation	Winning ~80% of consolidation opportunities; strong bookings	Share gains with largest clients expected as they consolidate spend	Consolidation supportive of share/mix gains
Transformational programs	Large BFSI win (~$150M/5-year; ramps late FY25); upfront investments depress near-term margins	Additional transformational deals (smaller than BFSI) ramp Q2–Q3 with back-half revenue contribution; margin uplift over time	Back-half weighted revenue; staged margin accretion
Vertical trends	Muted consumer tech volumes; communications/media price sensitivity; retail/travel/e-comm +8% CC pro forma	Retail/travel/e-comm +~9% CC pro forma; BFSI +5%; tech/CE and communications/media -~1% CC pro forma; healthcare down on pro forma basis due to offshoring	Mixed; consumer tech still muted; retail/e-comm resilient
Cash flow/leverage	Free cash flow strong; net leverage ~2.95x, targeted ~2x over two years	FY25 adjusted FCF $625–$650M; net debt reduced ~$209M in FY24; liquidity ~$1.5B	Improving FCF; deleveraging continues

Management Commentary

“We’ve seen our investments in our GenAI product suite generate more than a dozen wins only weeks after launch… Entering 2025, we are delighted with our strategic position and our opportunities for ongoing growth, margin and free cash flow.” — Chris Caldwell, President & CEO .
“Non-GAAP operating income margin was 14.2%, a decrease from Q4 2023, primarily due to our increased technology spend, upfront investments in some transformational wins, and duplicate costs related to accelerated shore shift in Q4.” — Andre Valentine, CFO .
“For 2025… we expect to grow our revenue, our non-GAAP operating margin, and our free cash flow while paying down debt.” — Chris Caldwell .
“The Board has refreshed our share repurchase authorization to $600 million… we’ll be active in share buyback… and continue to support our dividend.” — Andre Valentine .

Q&A Highlights

Offshoring and margin dynamics: Management noted ongoing offshoring (Europe→Africa/Eastern Europe, healthcare programs offshore) with dual costs in transition; margin benefits typically emerge in 2–3 quarters post-ramp .
Transformational deals ramp timing: The large BFSI program will be more meaningful in H2 FY25; smaller transformational wins begin contributing in Q2–Q3 with back-half weighting .
Path back to mid-single-digit growth: With ancillary services (~$1B revenue) and Catalyst (~8% of revenue) growing mid/high single digits, plus automation and mix improvement, management sees mid-single-digit growth achievable shortly after FY25 .
Capital allocation: FY25 plan prioritizes organic investments, modestly higher buybacks than FY24 ($136M), dividend potentially up 10% again, and debt paydown toward target leverage .
AI adoption and managed services: Half of clients on GenAI; tens of thousands of agentic agents deployed; CNXC’s domain expertise and compliance capabilities underpin managed services and software margins with iX suite .

Estimates Context

We attempted to retrieve S&P Global consensus for Q4 2024 (EPS and revenue) but the data was unavailable due to an SPGI daily request limit at the time of query; therefore, comparisons to Wall Street consensus are not provided. Management’s Q3 guidance was met or exceeded: revenue at the high end ($2.448B vs $2.420–$2.470B), non-GAAP EPS above the range ($3.26 vs $2.90–$3.16), and non-GAAP OI within the $335–$355M range .

Key Takeaways for Investors

Q4 execution was solid against company guidance, with a notable EPS beat on a non-GAAP basis; margin compression was transitory, tied to accelerated offshoring and upfront transformation investments that should unwind over 2–3 quarters .
FY25 guide implies modest CC revenue growth, slight margin uptick, and stronger adjusted FCF ($625–$650M), setting a base for deleveraging and capital return; the refreshed $600M buyback authorization is a near-term support for the equity story .
AI remains a tailwind: early iX product wins, broad client deployment of GenAI, and deep partner integrations should drive sticky, higher-margin revenue; watch for incremental product launches and software-led margins .
Mix shift away from low-complexity work (targeting ~5% in FY25) and client consolidation wins favor CNXC’s scale and technology-led model; anticipate back-half weighted contribution from transformational programs .
Vertical backdrop is mixed (consumer tech muted; retail/e-comm resilient); FX headwinds (150–200 bps) embedded in guidance and non-GAAP interest assumptions ($74M Q1; $273M FY) are important context for EPS modeling .
Near-term trading lens: potential catalysts include evidence of margin normalization as offshoring dual costs roll off, incremental iX product win disclosures, and buyback pace; risks include macro volume softness and price-sensitive commoditized work .
Medium-term thesis: completed Webhelp integration, synergy realization, AI-led solutions, and transformational program ramps support a path back to mid-single-digit growth with accretive margins and strong FCF conversion .