Q1 2025 Concentrix Corp Earnings Call
Yeah.
Speaker Change: Good day and thank you for standing by welcome to Concentrix as first quarter 2025 earnings call. At this time all participants are in a listen only mode. Please be advised that today's conference is being recorded after the speaker's presentation there'll be a question and answer session to ask a question. Please press star.
Speaker Change: Our one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again I would not like to hand, the conference over to your speaker today, Sara Buda, Vice President Investor Relations.
Speaker Change: Great. Thank you operator, and good evening welcome to the Concentrix first quarter 2025 earnings call. This call is the property of Concentrix, there may not be recorded or rebroadcast without our written permission of Concentrix. This call contains forward looking statements that address our expected future performance and that by their nature address matters.
Speaker Change: Or is 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.
Speaker Change: Future financial results. This includes the risk factors provided in our annual report on Form 10-K, and other public filings with the SEC.
Speaker Change: 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 in constant currency revenue growth.
Speaker Change: A reconciliation of these non-GAAP measures is available in the news release and on the company's Investor Relations website under financials.
Speaker Change: With me today on the call are Chris Caldwell, our president and CEO and Andre Valentine, Our Chief Financial Officer Christian 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 will turn the call over to Chris. Thank.
Chris: Thank you very much Sarah Hello, everyone and thank you for joining us today for our first quarter 2025 earnings call.
Chris: Let me start with a summary of the positive trends in our business as evidenced by our Q1 results showing year over year revenue and profitability growth above guidance, we have confidence in our ongoing revenue margin and cash flow growth for the remainder of the year.
Chris: We saw a solid demand environment in Q1, with our focus on winning consolidation opportunities cross selling our offerings into our existing accounts and expanding our pipeline of transformative deals we have made progress across all areas in the quarter.
Chris: As a reminder, our strategy for long term accelerated growth with a margin expansion centers around two primary topics first bringing integrated AI solutions that align with clients needs and second expanding the value we provide clients across a broader portfolio of business solutions to grow our share of wallet on the.
First point, we now have Jimmy I solutions powered by our owned and partner technology deployed at scale across our operations with autonomous solutions and Jen AI platforms across hundreds of thousands of desktops that cover the majority of our clients. We believe we are among the largest scale proven <unk> deployments in the world.
Chris: With our decades of expertise in leading clients through their automation journey, we're becoming a trusted provider for companies seeking pragmatic real world AI solutions. In fact, we recently commissioned a third party advisor to conduct a blind survey of more than 400 global enterprises.
Chris: This is to identify sentiment market trends and our own brand recognition.
Chris: While the survey is still in progress early results show that many global enterprises, a few concentrix is a well known trusted partner of choice. When it comes to global scale AI solutions that are enterprise ready secure practical and deployable.
Chris: Clearly the market is entering a more mature phase of jet AI. The headline driven hype has abated with clients. They don't want flashy unproven demos and can't afford more failed AI pilots. They want result, and are turning to the partners. They trust partners that combine human intelligence domain expertise global scale and advanced.
Chris: AI productivity tools to take the promise of AI into reality.
Chris: Is where we are positioned to outperform in the AI powered world.
Chris: Bring me to our AI products.
Chris: Sorry, I am told products. We are pleased with our early results in adoption with thousands of seats now deployed across increasingly number of enterprise clients.
Chris: While still de Minimis to the size of the business. We are this quarter. We have started to monetize a number of clients as a pilot phases turn into deployments. As a reminder, we are focused on our IX suite being accretive to our earnings by the end of fiscal 2025.
Chris: Recently, we introduced new features of IX Hello with smarter.
Chris: Multimodal customer facing assistance that are easy to create customize and integrate across the enterprise.
Chris: We have an aggressive feature release schedule through the year focused on solving real world client challenges.
Chris: On the second part of our strategy, our expanding value for our clients with broader offerings in the first quarter. Our revenue for our top 25 clients continues to outpace the growth rate of the rest of our business our ability to grow share through innovation and our ability to introduce a broad range of business services has allowed us to consolidate volume from other partners as it.
Chris: A reminder, we offer a broad range of business solutions from strategy and design services to data analytics to enterprise technology transformation and digital operations are.
Chris: Our differentiated engagement is helping concentric standout from traditional <unk> providers and more importantly grow our share of client spending.
Chris: In summary, we are starting to see a solid start to the year reaffirming our confidence that we have the right strategy and the right model to drive long term sustainable growth.
Chris: In Q1, we delivered solid financial results with revenue and profit above forecast and year on year growth across all key financial metrics. We continue to lead our market in a gentex AI solutions that drive results demonstrating once again that AI is a win win for us and our clients we are expanding our share of wallet.
Chris: And share of market with a broader array of business services that power our client success and finally, we have strong fundamentals with durable reoccurring revenue streams long standing clients and a track record of strong cash flow generation and shareholder returns.
Chris: I'm pleased with our progress as we begin the year and I'd like to thank our dedicated game changers for their hard work and commitment to excellence and our clients for their trust and business now I'll turn the call over to Andre to review, our first quarter financial results and our outlook for the remaining of the year.
Andre Valentine: Thank you Chris I'll start with a review of our financial priorities for 2025, and then provide a review of our first quarter financial results and outlook for the second quarter and remainder of the year.
Andre Valentine: As I referenced in January our financial priorities for 2025 are to ensure that we're making the right investments in the business to position us for accelerated growth in the long term, while growing margins and cash flow and driving value for shareholders and.
Andre Valentine: I am pleased with our progress against these goals.
Andre Valentine: In the first quarter, we delivered revenue of approximately $2 $3 7 billion growing one 3% year over year on a constant currency basis, which exceeded the high end of the expectations. We discussed on our January earnings call.
Andre Valentine: Growth in the quarter was driven by a combination of solid growth from our top 25 clients and the ramp up of new programs won in 2024 that are beginning to scale.
Andre Valentine: Looking at our first quarter revenue growth by vertical on a constant currency basis revenue from retail and travel and ecommerce clients grew 4% year over year led by travel clients.
Andre Valentine: Revenue from banking financial services and insurance grew 3% our tech vertical grew about 1% led by consumer electronics, which is nice to see as that sector has lagged for a while.
Andre Valentine: Healthcare was largely flat year on year due to short shift from a select few clients and media and communications was also flat on a constant currency basis.
Andre Valentine: For clarity, we have no exposure to U S government contracts at this time.
Andre Valentine: Turning to profitability, our non-GAAP operating income was $322 million. This is above the guidance range. We provided on our last call and a modest increase year over year as we realize the benefits of our synergies while continuing to support our journey on our strategy to drive long term growth.
Andre Valentine: non-GAAP operating income margin was 13, 6% an increase of 30 basis points from Q1 last year.
Andre Valentine: Adjusted EBITDA in the quarter was $374 million a margin of 15, 8%.
Andre Valentine: non-GAAP net income was $188 million in the quarter, an increase of about $12 million compared to the first quarter last year non.
Andre Valentine: non-GAAP diluted EPS was $2 79.
Andre Valentine: This reflects a nearly 9% increase year over year as we benefit from higher operating profit.
Andre Valentine: Your interest expense through debt repayment and lower rates on our variable rate debt and a lower share count as we continue to repurchase our shares.
Andre Valentine: GAAP net income was $70 million for the quarter and GAAP diluted EPS was $1 <unk> per share.
Andre Valentine: Reconciliations for GAAP and non-GAAP measures are provided in today's earnings release.
Andre Valentine: Adjusted free cash flow was a use of $40 million in the quarter, an improvement of $41 million from last year and above our expectations. As a reminder, the first quarter is our lowest cash flow quarter. We are on track to deliver strong sequential growth and cash flow starting in Q2 to achieve our target.
Andre Valentine: $625 million to $650 million of.
Andre Valentine: Adjusted free cash flow for the full year.
Andre Valentine: We returned approximately $48 million to shareholders in the quarter, we repurchased $26 million of our common shares or approximately 550000 shares at an average price of approximately $48 per share.
Andre Valentine: The remaining $22 million in shareholder return was in the form of our quarterly dividend.
Andre Valentine: At the end of the first quarter cash and cash equivalents were $308 million and total debt was $4 9 billion.
Andre Valentine: Bringing our net debt to just under $4 6 billion.
Andre Valentine: We reduced the amount of our off balance sheet factored accounts receivable by $9 million in the quarter with a balanced standing at approximately $152 million at quarters end, our liquidity remains strong at approximately $1 5 billion, including our over $1 billion line of credit which is undrawn.
Andre Valentine: Q1 was a good quarter, we delivered first quarter results that exceeded our expectations. We continue to grow our revenue on a constant currency basis with ongoing cash flow improvement.
Andre Valentine: As Chris mentioned, our top accounts continue to grow faster than the rest of the business, reflecting our ability to grow share as we introduce unique AI solutions and as we introduce a broader set of offerings.
Andre Valentine: Partner consolidation remains a strong trend in our sector and we continue to enjoy a high win rate.
Andre Valentine: Growth is well balanced as we benefit from the strong enduring relationships with top clients and it has been.
Andre Valentine: We ramped new programs on plan.
Andre Valentine: Now I'll turn my attention to our outlook.
Andre Valentine: We've had a solid start to the year and we're pleased with the progress we've made on all fronts.
Andre Valentine: Long term, we continue to believe we can generate mid single digit growth as we deliver on our strategy and as we drive down the lower complexity revenue.
Andre Valentine: We continue to decrease as a percentage of our overall business.
Andre Valentine: With our solid start to the year, we're confident in the trajectory of the business.
Andre Valentine: Given where we are at this early point in the year, we are not revising our full year guidance and continue to take a conservative approach to our outlook with that context, here's our guidance for the second quarter and fiscal 2025.
Andre Valentine: For Q2, we expect the following.
Andre Valentine: Revenue of $2 37 to <unk> $39 billion.
Andre Valentine: Just on current exchange rates these expectations assume an approximate 90 basis point negative impact of foreign exchange rates compared with the prior year period.
Andre Valentine: The guidance implies constant currency revenue growth for the quarter, ranging from 5% to $1 two 5%.
Andre Valentine: We expect operating income of $155 million to $165 million and non-GAAP operating income margin non-GAAP operating income of 315 million to $325 million.
Andre Valentine: This translates into expected non-GAAP EPS of $2 69.
Andre Valentine: To $2 80.
Andre Valentine: Assuming approximately $70 million in non-GAAP interest expense.
Andre Valentine: $3 5 million diluted common shares outstanding and approximately 5% of net income attributable to participating securities.
The effective tax rate is expected to be approximately 26%.
Andre Valentine: Our guidance for the full year 2025 is as follows.
Andre Valentine: Ported revenue of $9 49 billion to $9 635 billion.
Andre Valentine: <unk> increase from our prior guidance based on a more favorable exchange rates.
Andre Valentine: We had initially forecast.
Andre Valentine: Based on current exchange rates these expectations assume an approximate 135 basis point negative impact of foreign exchange rates compared with the prior year period.
Andre Valentine: Accordingly, we are reiterating our guidance for constant currency revenue growth for the full year of zero percent to one 5%.
Andre Valentine: We expect operating income of $669 million to $709 million and non-GAAP operating income of <unk> hundred million to <unk> hundred $40 million.
Andre Valentine: And we expect modest growth in our non-GAAP profit margin as we continue to recognize the benefits of <unk> synergies as the pace of our technology investments moderates in accordance with our plan.
Andre Valentine: Our guidance for non-GAAP EPS is <unk> $11 18 to $11 77.
Andre Valentine: Assuming non-GAAP interest expense of $273 million, approximately $63 6 million diluted common shares outstanding and approximately 5% of net income attributable to participating securities.
Andre Valentine: The effective tax rate for the full year is expected to be approximately 25, 5% to 26, 5%.
Andre Valentine: And finally, we continue to expect adjusted free cash flow of approximately 625 million to $650 million based on synergy savings lower integration spending and lower cash interest expense.
Andre Valentine: In regard to our capital allocation priorities as we said in January we expect our spending on share repurchases to modestly exceed last year, taking advantage of the disconnect. We see between the fundamentals of our business and our current valuation while continuing to pay down debt on plan.
Andre Valentine: We remain committed to maintaining investment grade principles and of course, we will continue to support our dividend, which currently has a yield of nearly 3%.
Andre Valentine: In summary, our Q1 results exceeded our expectations, we are winning the right kind of business and we're confident in our strategy, we are making the right investments in the business, while growing margins and cash flow.
Andre Valentine: And we remain committed to having the right capital structure and continued capital return through a combination of share repurchases and dividends, while reducing our leverage.
Speaker Change: Now Josh let's open the line for questions.
Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for questions.
Joseph: Our first question comes from Joseph <unk> with Canaccord Genuity you May proceed.
Joseph: Hey, guys good afternoon.
Joseph: Nice to see the solid results and the reiterated outlook for the year, just thought maybe drill down a little bit on the vertical market commentary, especially in consumer electronics, which.
Joseph: It was flat, which I think is.
Joseph: A better result than we've seen in the last few quarters just wanted to drill down into that is it is that the year over year numbers are easier or is it are you starting to see some rebound there and then are there any other call outs from what have been some anymore.
Joseph: Sure.
Joseph: Weak verticals over the last few quarters and now have a quick follow up thanks.
Chris Caldwell: Yes, Joe it's Chris so.
Speaker Change: In consumer electronics, primarily where we're seeing flat we are taking share from competitors with some of the offerings that we have in that space. We have started to sell more data annotation services into that vertical which is obviously growing while some of the volume is kind of muted from just a sell through perspective.
Speaker Change: And we're starting to see more I'll call it stability in that sector versus some of the things that we've seen in the past where the forecasts have been well off what the clients were expecting so pretty happy from that perspective. Similarly in technology like we're seeing some decent share gains within those client base, that's providing some better stability.
Speaker Change: And what we've seen in the last couple of quarters were primarily transaction volume is down in terms of other verticals.
Speaker Change: For the most part we're seeing what we expect.
Speaker Change: Healthcare is probably the only one I'd call out debt.
Speaker Change: I think we've got some opportunity to grow faster and we're not executing as well as we'd like but otherwise I think we're doing very well in the verticals by taking share and.
Speaker Change: Getting net new clients within those verticals.
Speaker Change: Great. Thanks, Chris and then just on the AI suite.
Speaker Change: If you could kind of just maybe kind of frame for us.
Speaker Change: The different uses of your technology, you got the IX Hello platform, which you are rolling out and which is kind of a revenue generating product, which I assume you know some customers are using that youre also potentially using an in providing service to customers, but then you've got some of your into.
Speaker Change: Turtle solutions that youre using across a broad majority of your agents are also servicing clients. So just trying to understand better which AI solutions are used in which situations and.
Speaker Change: How does that relate to the revenue opportunity for IX hallow over the medium term. Thanks.
Speaker Change: Thanks, Joe that's a great question, so just to be clear our IX Hello suite of products that we've been developing and starting to deploy now really came from the internal use cases since we deployed so much of our own technology across our enterprise.
Speaker Change: Sort of getting clients were asking for deploy it across their enterprise frankly deployed across competitors enterprises, because they saw the value that we were getting from these products and that was really are.
Speaker Change: The increase in spend last year was to effectively commercialize those products and what we're seeing now is not only are we continuing to deploy our own internal products.
Speaker Change: Across the enterprise to drive better productivity of our team, but the IX Hello products that we're specifically calling out are the commercialized version of those that can be deployed against our clients' environments internally as well as from prospective competitors environments and so we're starting to see some very nice traction after a release in September last year.
Speaker Change: <unk>.
Speaker Change: We've literally got thousands upon thousands of seats deployed that will turn into hopefully all revenue generating opportunities and more client wins coming along the way as they deploy it long term Joe all this internal deployment will effectively be changed over to our IX Hello product suite.
Speaker Change: And at some point that will either turning some billable revenue opportunity as it continued to grow or be spun out from the bundled services that we're doing right now depending on what the commercial arrangement with the client, but we see it as a very very attractive area for us from a revenue generation perspective in 2025, you just called out that we expect it to be accretive.
Speaker Change: To our earnings, but clearly we have bigger plans for it longer term.
Speaker Change: Right now the market acceptance of it we're very happy with.
Speaker Change: Great. Thanks, very much Chris.
Speaker Change: Thank you.
Speaker Change: Our next question comes from David Koning with Baird You May proceed.
David Koning: Yeah, Hey, guys, great job and maybe when we think a little bit about gen AI in the context of the.
Speaker Change: Current environment, the macro environment et cetera.
Speaker Change: When we look at Q2 sequentially, you're guiding to very normal revenue growth relative to like the last four years, it's very normal it would almost look as if Jenny I didn't exist.
Speaker Change: Obviously it does.
Speaker Change: Is there something either about what youre doing right now or macro getting better or something thats, either offsetting gen or maybe it's even a tailwind because it looks like Q2 is very normal relative.
Speaker Change: History, So maybe putting all of those in context I'm just interested in your thoughts sequentially.
Speaker Change: Yes.
Speaker Change: To put in perspective, we do not see any macro improvement really in nor are we budgeting that into our plan for 2025. If there is a big macro improvement that would be great and we certainly see that as help as we continue to go through the course of the year I think what most people may not appreciate is that for the last kind of year almost every solution that we put in.
Speaker Change: Has some jet AI capabilities in it and so to your point it feels like it doesn't exist because it's.
Speaker Change: Through all of our solutions.
Speaker Change: Pervasive across more than 50% of our client base to wear now this is the new normal and what we're growing as is.
Speaker Change: AI enabled us as we continue to drive and I think thats whats kind of seeing more normal in the seasonality than what you would expect.
Speaker Change: Got you well know.
Speaker Change: That's great and I guess secondly, just on margins, that's where you beat us by the most of the margins are really good in the quarter I.
Speaker Change: I guess, how much is left in terms of the web help savings how much is generated by kind of the offshore shift and how much is just scale, maybe kind of putting all those in context. It seems like margins are in a really good spot and continuing to improve.
Speaker Change: David This is Andre so from a synergy perspective, as we closed out fiscal year 'twenty four we reached a point, where we recognized about $95 million of synergies in fiscal 'twenty.
Speaker Change: <unk> 24, and are projecting 120 million here. This year. So you can kind of baked that into.
Speaker Change: Kind of the $25 million of improvement this year from synergy attainment.
Speaker Change: Gotcha, Thanks, guys great job in Q1.
Speaker Change: Thank you very much.
Thank you.
Speaker Change: Our next question comes from <unk> Bhattacharya with Bank of America You May proceed.
Speaker Change: Hi, Thanks for taking my questions.
Speaker Change: Chris I wanted to ask you how much do you expect to spend this year on AI related investments such as software product development and what guardrails do you have around that I mean, what metrics do you look at to judge how much you should be spending on such product development. So if you can help us quantify that a little bit.
Speaker Change: Yes, so if we think about what we did in 2024, where we said we would spend an extra $50 million more than we expected at the beginning of the year on AI development for our tools and that as we came to the end of the year. So December 2024, we will start to scale that down more in line with sort of the revenue that we were.
Speaker Change: Expected as we get into the big hopes of commercialization and Thats really where we are right. Now. So we are certainly less than that incremental $50 million run rate pure Gen. AI tools and that will kind of creep down over the course of the next quarter quarter to half.
Speaker Change: Unless suddenly we start to see much faster growth spurts, and we expect from our Gen AI tools, which would be a good thing and we'd call that out to investors, but in this case, we expect that to kind of come down.
Speaker Change: Not materially but come down gently through the course of the next quarter and a bit while our revenue grows on our AI.
Speaker Change: IX Hello product.
Speaker Change: Okay.
Speaker Change: Can I ask last couple of quarters, you said that there were hundreds of journey II proof of concepts that you have customers who are lending.
Speaker Change: A significant portion of that done and have you seen any benefit or hurt revenues from Gen II.
Speaker Change: And has your thinking on that changed in terms of how much do you think fiscal 'twenty five benefits hurt because of January.
Speaker Change: Yes, so it's interesting.
Speaker Change: We have still hundreds of POC as a journey out there some have gone to deployment. Some are still in POC, where there's some funding required or honestly the clients, we need to reengineer some of their data and we engineer some of their system. So it's not a quick deployment to get kind of real real returns and we expect that to kind of be on AR on.
Boeing basis in place, but a lot clearly as we've called out over half of our client base has gen. AI in deployment in the business running the business each and every every single day, there's clearly sometimes where we're putting engineered solutions that we called out a number of examples over the last couple of earnings calls where it has impacted revenue.
Speaker Change: Initially negatively but then through the course of a couple of quarters we've.
Speaker Change: Growing with our clients because we've taken more share and they've got more services from us et cetera, et cetera, et cetera, we really see honestly route blue.
Speaker Change: Jenny I similar to other automation technologies as a net net positive to our business. It will help us grow our revenue it certainly helped us be more productive and proficient internally.
Speaker Change: And obviously with our new <unk> suite.
Speaker Change: And our technology partnerships, with Salesforce, and Genesis, and Microsoft and Google and AWS.
Speaker Change: They are allowing us to tap into new revenue streams, so were again.
Speaker Change: Quite excited about it and don't see as a negative in 2025 at all.
Andre Valentine: Okay. Thanks for the details there maybe I'll just ask one to Andre.
Speaker Change: I'm just.
Speaker Change: Help me understand the guidance a little bit better. So you beat <unk> earnings by <unk> <unk>.
Speaker Change: Pinpoint of your guidance.
Speaker Change: You're keeping the full year unchanged operating margin for <unk> seems to be 13, 4% versus 13, 6% <unk> on similar revenues what is causing that.
Speaker Change: It stepped down a little bit step down in operating margin in <unk>.
Speaker Change: Is there any incremental weakness in the second half.
Speaker Change: Clearly this conservatism on your part for keeping the full year unchanged. Thanks.
Speaker Change: Thanks for all the hotels.
Speaker Change: We did say in my prepared remarks, we didn't this year.
Speaker Change: Early in the year, we were going to leave guidance pretty much.
Speaker Change: Where it was and so that is part of what Youre seeing there we do have.
Speaker Change: As we win new business and as we grow we have.
Speaker Change: Some ramp costs that are pressuring.
Speaker Change: Margins at touch in Q2.
Speaker Change: And as well as <unk>.
Speaker Change: Including the build out of some additional facilities around the globe, where we have demand so that's kind of.
Speaker Change: Built into the guidance as well, but again back to our guidance principles that we entered the year with.
We want to be conservative we wanted to be in a situation, where we're very much focused on.
Speaker Change: The top half of the range of the guidance if not the top end of the range.
Speaker Change: And just being one quarter into the year.
Speaker Change: Felt like it was the right thing to do just to leave the guidance for the full year, where it was.
Speaker Change: Okay Alright, thank you for all the details appreciate it.
Speaker Change: Alright, Thanks Robert.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Vincent Colicchio with Barrington Research you May proceed.
Vincent Colicchio: Yes, Chris you had mentioned last quarter that you had a healthy pipeline with new web help clients in Europe is that still the case and will be an important driver of this year.
Speaker Change: Yeah, Vince So Europe is doing very well for us, but so frankly as Asia Pac.
Vincent Colicchio: Even the Americas.
Vincent Colicchio: Sales market for delivery outside of the Americas is doing very well for us and so we've got a healthy pipeline.
Vincent Colicchio: Called out in my prepared remarks, what we are.
Vincent Colicchio: Very happy to see is more of a transformational deals that kind of are in integrated level of service for us and so that is also.
Vincent Colicchio: Giving us.
Vincent Colicchio: Kind of confidence that we continue to talk about cuts.
Vincent Colicchio: Constant currency growth through the course of the year and margin expansion opportunities.
Opportunities through the course of the year.
Vincent Colicchio: And continued growth thereafter.
Vincent Colicchio: And how did catalysts performed in the quarter and what are your thoughts on the balance of the year.
Vincent Colicchio: So catalyst.
Vincent Colicchio: Lot of the sales are integrated more into the transformational deals that we're doing overall, we've been very happy with it and continue to be very happy with this year, our tax rate in our first quarter in terms of catalyst services into the rest of our services was up.
Vincent Colicchio: Aw meaningfully.
In the first quarter, which is what we'd like to see and that will I think drive some very nice results through the course of the year.
Vincent Colicchio: You've been.
Vincent Colicchio: Benefiting from a consolidation trend as it comes from some very strong theme for you I assume we're still early innings there is that right.
Vincent Colicchio: Are you doing more consolidation.
Vincent Colicchio: You're benefiting from consolidation more now than a year ago.
Speaker Change: We're certainly benefiting from consolidation now more than a year ago and we do think we're in early innings. We don't think we're anywhere near close to what the possibilities are.
Speaker Change: As we've called out a lot of the consolidation that's happened in the top 25. They are the most sophisticated purchasers are the most demanding purchasers that the most.
Speaker Change: Once we're really pushing the.
Speaker Change: Boundaries when it comes to Gen AI and capabilities and so the fact that we are doing very very well in that group of clients gives us a lot of confidence of what we can do in the rest of the tail of our of our client base as they start to deal with consolidation and the vast majority of what's pushing this consolidation is one not a improving macro so theyre looking at trying to figure out how to do.
Speaker Change: Drive more costs out of the cost structure and to really looking for new Tech solutions around Gen. AI that are practical unusable and actually drive returns versus just being flashy demos and so we're seeing that kind of motivate some of our of our clients to consolidate with us.
Speaker Change: Thank you nice quarter.
Speaker Change: Thank you.
Speaker Change: Thank you and as a reminder to ask a question. Please press star one on your telephone.
Speaker Change: Our next question comes from Davita going out with Scotiabank you May proceed.
Speaker Change: Good afternoon, everyone. So Chris one thing that I wanted to confirm on the AI revenue and margin discussion that we had and as opposed to have had this discussion in the past.
Speaker Change: You continue to deploy some of these new AI products, you will be cannibalizing. Some of your existing revenues is it fair to assume that the revenue growth might stay muted for a while while the margins continue to grow given the nature of the business here.
Speaker Change: Yes, so we.
Speaker Change: We don't necessarily believe so what we see is our ability to constant currency growth I mean, we've talked about on the last earnings call. We've developed a lot of capabilities that support journey.
Speaker Change: Deployment of.
Speaker Change: This sort of two years ago, and we've talked about sort of all of these new areas of business that was.
Speaker Change: Close to 1 billion around $1 billion.
Speaker Change: In Q4.
Speaker Change: Data annotation, a lot more sophisticated analytics some of our technology deployments or design build some of the daylight stuff that we're doing all of that type of capabilities.
We think it's going to offset any kind of revenue headwinds that we're going to see from jet AI deployments. We also.
Speaker Change: See this ability to drive more managed services with Gen. AI deployments a lot of people think it's like one and done you put it in and it just runs and the reality is far from that it really does require professional services. It really does require a lot of kind of ongoing tuning in order to drive the experience that people are looking for from jet AI.
Speaker Change: And so all of these caveats with the growth of some of those capabilities underlying in our revenues.
Speaker Change: Really make us believe that we can continue to accelerate our growth as we get out of 2025.
Speaker Change: Okay. That's good to know.
Vincent Colicchio: My other question is for Andre and could you help us understand the debt positioning of the company on a go forward basis and then what.
Speaker Change: So that's not coming up.
Speaker Change: You potentially going to get it financed and if thats, the case, where would the leverage and with that.
Speaker Change: Yes happy to do that so you are right, we have an upcoming maturity of our sellers note that $700 million euros that comes due in.
Speaker Change: Kimber of this year.
Speaker Change: Our.
Speaker Change: Actively engaged right now with banks in discussions to refinance that we feel good about the progress we're making there.
Speaker Change: And it'll be done in such a way that note will stay in place until.
Speaker Change: It matures in September we wanted to take advantage of the low interest rate. It's only a 2% notes will keep leave it in place, but we will have certainty.
Speaker Change: Here.
Speaker Change: Relatively soon about.
Speaker Change: The refinancing plans for that and again feel really good about the progress we're making there. So it will not be a situation where it takes our leverage up.
Speaker Change: It will be effectively a refinancing a replacement from a overall leverage perspective, we're very much focused on driving strong free cash flow, we're going to generate 625 to 650. This year, yes, we're going to be committed to over $240 million of catheter return that leaves a lot of cash leftover for paying down debt and bring.
Speaker Change: <unk> down our leverage and we're focused on doing all those things.
Speaker Change: That's great maybe I'll ask just one last question here and Thats, a very broad macro question. So from a booking standpoint from your.
Speaker Change: The relationship with the existing client standpoint, our new business bookings standpoint, how is the current macro trending for Concentrix as a company what are some of the key growth geographies that you are seeing and noting that you talked about Europe, and APAC, but give us a broader understanding on a global basis how are you.
Speaker Change: <unk> been trending from a bookings momentum standpoint, and Thats all for me. Thank you.
Speaker Change: Yes.
Speaker Change: The macro.
Speaker Change: Outside of very few markets, primarily outside of Europe and outside of North America is muted and we don't see that improvement.
Speaker Change: Being said, we are doing as I mentioned very well in Asia Pac, we're doing very well in Europe and the bookings are actually quite strong out of North America, but the bookings are all focused on offshore delivery. None are focused on sort of onshore or even frankly nearshore delivery is much more muted since people are looking for sort of.
Speaker Change: Cost savings of what Theyre doing as I also mentioned that we're seeing the.
Speaker Change: Kind of.
Speaker Change: Capabilities from our catalyst team.
Speaker Change: As a percentage of our bookings increase so the attach rate has increased in Q1 as Andreas talked about it it's meaningful.
Speaker Change: We expect that trend to continue as people are looking for more unique solutions and those solutions ultimately are either to drive revenue or take out cost for our clients.
Speaker Change: None of it is like for like when.
Speaker Change: When we're thinking from a booking perspective, so overall.
Speaker Change: We're pretty happy with sort of a solid bookings and pipeline of opportunities in front of us, but there is no one market or another that is exponentially bigger or materially different.
Speaker Change: Thank you.
Speaker Change: Thank you. This concludes the conference. Thank you for your participation you may now disconnect.
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