Q3 2025 Concentrix Corp Earnings Call

We are in a listen only mode.

After the presentation, there will be a question and answer session to participate you will need to press star one one on your telephone you will then hear a message advice senior hand. These raced to withdraw your question simply press Star. One again. Please note that this conference is being recorded.

Now, it's my pleasure to turn the call over to the Vice President of Investor Relations Sara Buda. Please go ahead.

Great. Thank you operator, and good evening welcome to the Concentrix third quarter 2025 earnings call. This call is the property of Concentrix and 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 that are uncertain.

Speaker #1: Good day, everyone, and welcome to Concentrix's third quarter 2025 financial results conference call. At this time, all participants are in a listen-only mode.

Operator: Good day, everyone, and welcome to Concentrix's third quarter 2025 financial results conference call. At this time, all participants are in a listen-only mode. After the presentation, there will be a question and answer session. To participate, you will need to press *11 on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, simply press *11 again. Please note that this conference is being recorded. Now, it's my pleasure to turn the call over to the Vice President of Investor Relations, Sara Buda. Please go ahead.

Speaker #1: After the presentation, there will be a question-and-answer session. To participate, you will need to press *11 on your telephone; you will then hear a message advising that your hand is raised.

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.

Speaker #1: To withdraw your question, simply press *11 again. Please note that this conference is being recorded. Now, it's my pleasure to turn the call over to the Vice President of Investor Relations, Sara Buda.

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 our other public filings with the SEC.

Speaker #1: Please go ahead.

Speaker #2: Great, thank you, Operator, and good evening. Welcome to the Concentrix third quarter 2025 earnings call. This call is the property of Concentrix and may not be recorded or rebroadcast without the written permission of Concentrix.

Sara Buda: Great. Thank you, operator, and good evening. Welcome to the Concentrix third quarter 2025 earnings call. This call is the property of Concentrix and may not be recorded or rebroadcast without the 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 our 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 and non-GAAP operating margin adjusted EBITDA adjusted EBITDA margin non-GAAP net income non-GAAP EPS in constant currency revenue growth.

Speaker #2: 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 from those expressed in our forward-looking statements.

A reconciliation of these non-GAAP measures is available in the news release and on the company's Investor Relations website under financials.

Speaker #2: 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.

With me on the call today are Chris Caldwell, our president and CEO 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 up for your questions and so now I will turn the call over to Chris. Thank you very much Sarah Hello, everyone and thank you for joining us today for our third.

Speaker #2: This includes the risk factors provided in our annual report on Form 10-K and our 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.

Sara Buda: 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's investor relations website under financials. With me on the call today are Chris Caldwell, our President and CEO, 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. We will open the call up for your questions. Now I'll turn the call over to Chris.

Third quarter 2025 earnings call.

In Q3, we exceeded our revenue guidance once again with solid year on year growth across the board, we're gaining share in securing new wins by combining AI CX.

Speaker #2: A reconciliation of these non-GAAP measures is available in the news release and on the company's Investor Relations website under Financials. With me on the call today are Christopher Caldwell, our President and CEO, and Andre Valentine, our Chief Financial Officer.

<unk> ICT services into a powerful tightly integrated solution.

Adjacent offerings continued to scale and complement our traditional business and we believe our IX suite, giving us clear competitive differentiation in front of clients overall I am pleased with our strong market position and our revenue momentum.

Speaker #2: 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 up for your questions. So now, I'll turn the call over to Chris.

Turning to profit margins were below plan in the quarter, which Andre will provide more details in his comments what is important to understand is that we have line of sight to modest sequential quarterly margin improvement over the next few quarters, even as we continue to lean into growth and believe we can drive further margin expansion from there.

Speaker #3: Thank you very much, Sara. Hello, everyone, and thank you for joining us today for our third quarter 2025 earnings call. In Q3, we exceeded our revenue guidance once again, with solid year-on-year growth across the board.

Chris Caldwell: Thank you very much, Sara. Hello everyone, and thank you for joining us today for our third quarter 2025 earnings call. In Q3, we exceeded our revenue guidance once again with solid year-on-year growth across the board. We're gaining share and securing new wins by combining AI, CX, and IT services into a powerful, tightly integrated solution. Our adjacent offerings continue to scale and complement our traditional business, and we believe our IX suite is giving us clear, competitive differentiation in front of clients. Overall, I am pleased with our strong market position and our revenue momentum. Turning to profit, margins were below plan in the quarter, which Andre will provide more details in his comments.

Speaker #3: We are gaining share in securing new wins by combining AI, CX, and IT services into a powerful, tightly integrated solution. Our adjacent offerings continue to scale and complement our traditional business, and we believe our IX suite is giving us clear competitive differentiation in front of clients.

Let's dive into the details of our demand environment and how we see our business evolving.

The positive revenue momentum we've seen this year is a direct reflection of our commitment to establish concentrix before front of the change happening in our industry. We believe we are becoming a leader in solutions that combine proximal AI human intelligence where applicable.

Speaker #3: Overall, I am pleased with our strong market position and our revenue momentum. Turning to profit, margins were below plan in the quarter, which Andre will provide more details on in his comments.

Global scale as a result, we are well positioned to be a trusted strategic partner clients rely on to support their business. In these times of change in fact, almost 40% of our new wins. This year include our AI technology platform as part of the solution.

Speaker #3: What is important to understand is that we have line of sight to modest sequential quarterly margin improvement over the next few quarters, even as we continue to lean into growth and believe we can drive further margin expansion from there.

Chris Caldwell: What is important to understand is that we have line of sight to modest sequential quarterly margin improvement over the next few quarters, even as we continue to lean into growth and believe we can drive further margin expansion from there. Now, let's dive into the details of our demand environment and how we see our business evolving. The positive revenue momentum we've seen this year is a direct reflection of our commitment to establish Concentrix at the forefront of the change happening in our industry. We believe we are becoming a leader in solutions that combine practical AI, human intelligence, where applicable, at global scale. As a result, we are well positioned to be a trusted strategic partner clients rely on to support their business in these times of change.

This percentage only increases as we include our partners technology as a reminder, our IX.

Speaker #3: Now, let's dive into the details of our demand environment and how we see our business evolving. The positive revenue momentum we've seen this year is a direct reflection of our commitment to establish Concentrix at the forefront of the change happening in our industry.

Our IX AI technology suite addresses client's needs for both fully automation of tasks that can be handled completely autonomous Lee and for partial automation using AI in a gentex to supercharge human advisers to make them more effective and efficient within a year of commercially availability. Our IX suite of AI solutions are ramping.

Speaker #3: We believe we are becoming a leader in solutions that combine practical AI and human intelligence, where applicable, at a global scale. As a result, we are well-positioned to be a trusted strategic partner that clients rely on to support their business in these times of change.

And on track to be accretive as we exit this year. This achievement in its own right sets us apart from many of our pure AI players and from traditional <unk> players in the space.

Speaker #3: In fact, almost 40% of our new wins this year include our AI technology platforms as part of the solution. This percentage only increases as we include our partners' technology.

Chris Caldwell: In fact, almost 40% of our new wins this year include our AI technology platforms as part of the solution. This percentage only increases as we include our partners' technology. As a reminder, our IX AI technology suite addresses clients' needs for both fully automation of tasks that can be handled completely autonomously and for partial automation using AI and agentics to supercharge human advisors to make them more effective and efficient. Within a year of commercial availability, our IX suite of AI solutions are ramping and on track to be accretive as we exit this year. This achievement in its own right sets us apart from many of our pure AI players and from traditional CX players in this space. Clients recognize that they need partners to help them convert AI promises into reality.

Clients recognize that they need partners to help them convert AI promises into reality a recent study showed that only 33% of AI projects built internally are succeeding unplanned. Conversely, the same study showed that externally sourced AI projects with strategic partners succeeded about 67% of the time.

Speaker #3: As a reminder, our IX HAI technology suite addresses clients' needs for both fully automating tasks that can be handled completely autonomously and for partial automation using AI and agentics to supercharge human advisors, making them more effective and efficient.

More than double the success rate.

Speaker #3: Within a year of commercial availability, our IX suite of AI solutions is ramping and on track to be accretive as we exit this year.

Our rate of success with our deployment is even higher with early data showing that the vast majority of our use cases result in a documented positive outcome for the client through improved revenue better CSR or process efficiency.

Speaker #3: This achievement, in its own right, sets us apart from many of our pure AI players and from traditional CX players in this space. Clients recognize that they need partners to help them convert AI promises into reality.

This is reflective of our ability to deliver pragmatic AI solutions that are aligned with what clients need and what they value. Most the strategic role of partners that can combine AI with CX services has supported our ongoing study.

Speaker #3: A recent study from MIT showed that only 33% of AI projects built internally are succeeding on plan. Conversely, the same study showed that externally sourced AI projects with strategic partners succeeded about 67% of the time, more than double the success rate.

Chris Caldwell: A recent study from MIT showed that only 33% of AI projects built internally are succeeding on plan. Conversely, the same study showed that externally sourced AI projects with strategic partners succeeded about 67% of the time, more than double the success rate. Our rate of success with our deployments is even higher, with early data showing that the vast majority of our use cases result in a documented positive outcome for the client through improved revenue, better CSAT, or process efficiency. This is reflective of our ability to deliver pragmatic AI solutions that are aligned with what clients need and what they value most. The strategic role of partners that can combine AI with CX and IT services has support of our own blind study of 450 global enterprises that stated by an overwhelming majority clients plan to increase their outsourcing spend as they deploy AI.

450 Global enterprises that stated by an overwhelming majority clients plan to increase their outsourcing spend as they deploy AI.

We absolutely are focused on capturing as much of this growth as we can and I am confident that we are in a strong position to make that happen.

Speaker #3: Our rate of success with our deployments is even higher, with early data showing that the vast majority of our use cases result in a documented positive outcome for the client through improved revenue, better CSAT, or process efficiency.

In summary, our strategy is paying off despite all the market speculation about the negative impacts of AI on our business. We have shown that AI is indeed, a positive tailwind we are growing our major accounts and securing new wins with our integrated offerings with a strong competitive position, we are leaning into growth delivering solutions that align with our clients' business needs.

Speaker #3: This is reflective of our ability to deliver pragmatic AI solutions that are aligned with what clients need and what they value most. The strategic role of partners that can combine AI with CX and IT services has the support of our own blind study of 450 global enterprises, which stated that, by an overwhelming majority, clients plan to increase their outsourcing spend as they deploy AI.

Is gaining share and scaling our business. This gives us the foundation to support our progression towards a higher growth rate in coming years, while generating strong cash flow lastly, I would like to thank our game changes across more than 70 countries for their commitment to client success and welcome our new team members from SA digital who joined us.

Speaker #3: We absolutely are focused on capturing as much of this growth as we can, and I am confident that we are in a strong position to make that happen.

Chris Caldwell: We absolutely are focused on capturing as much of this growth as we can, and I am confident that we are in a strong position to make that happen. In summary, our strategy is paying off. Despite all the market speculation about the negative impacts of AI on our business, we have shown that AI is indeed a positive tailwind. We are growing our major accounts and securing new wins with our integrated offerings. With a strong competitive position, we are leaning into growth, delivering solutions that align with our clients' business needs, gaining share, and scaling our business. This gives us the foundation to support our progression toward the higher growth rate in coming years while generating strong cash flow.

Speaker #3: In summary, our strategy is paying off. Despite all the market speculation about the negative impacts of AI on our business, we have shown that AI is indeed a positive tailwind.

September I'm optimistic about our strategy as we capitalize on the opportunities we have in front of US today now let me turn it over to Andre for details of the quarter and our outlook.

Speaker #3: We are growing our major accounts and securing new wins with our integrated offerings. With a strong competitive position, we are leaning into growth, delivering solutions that align with our clients' business needs, gaining share, and scaling our business.

Chris and Hello, everyone.

The details of the third quarter, and then discuss our outlook for the fourth quarter.

We're in a positive position for revenue growth as we enter the final months of 2025 as we focus on improving margins, we're capturing the growth opportunities in the current environment and our cash flow continues to increase.

Speaker #3: This gives us the foundation to support our progression towards a higher growth rate in the coming years while generating strong cash flow. Lastly, I would like to thank our game changers across more than 70 countries for their commitment to client success and welcome our new team members from SAI Digital, who joined us in September.

Chris Caldwell: Lastly, I would like to thank our game changers across more than 70 countries for their commitment to client success and welcome our new team members from SAI Digital who joined us in September. I'm optimistic about our strategy as we capitalize on the opportunities we have in front of us today. Now, let me turn over to Andre for details of the quarter and our outlook.

Accordingly, we are winning the right kind of revenue that reflects the value of our differentiated offerings.

Now, let me get into some details on the quarter, we delivered revenue of approximately $2 $48 billion, an increase of two 6% year on year on a constant currency basis, and 4% year on year as reported we delivered revenue above our guidance range as we have done for the past several quarters.

Speaker #3: I'm optimistic about our strategy as we capitalize on the opportunities we have in front of us today. Now, let me turn it over to Andre for details of the quarter and our outlook.

Speaker #4: Thank you, Chris, and hello, everyone. I'll review the details of the third quarter and then discuss our outlook for the fourth quarter. We're in a positive position for revenue growth as we enter the final months of 2025.

Andre Valentine: Thank you, Chris, and hello everyone. I'll review the details of the third quarter and then discuss our outlook for the fourth quarter. We're in a positive position for revenue growth as we enter the final months of 2025. As we focus on improving margins, we're capturing the growth opportunities in the current environment, and our cash flow continues to increase. Importantly, we're winning the right kind of revenue that reflects the value of our differentiated offerings. Now, let me get into some details on the quarter. We delivered revenue of approximately $2.48 billion, an increase of 2.6% year-on-year on a constant currency basis and 4% year-on-year as reported. We delivered revenue above our guidance range, as we have done for the past several quarters. Looking at growth by vertical, our growth in the quarter was led by growth in banking, financial services, and insurance.

Looking at growth by vertical or growth in the quarter was led by growth in banking financial services insurance.

Speaker #4: As we focus on improving margins, we're capturing the growth opportunities in the current environment, and our cash flow continues to increase. Importantly, we are winning the right kind of revenue that reflects the value of our differentiated offerings.

Other verticals were solid as well driven by continued demand for our integrated offerings and ongoing growth in our adjacent solutions.

Specific constant currency revenue growth by vertical was as follows revenue.

Speaker #4: Now, let me get into some details on the quarter. We delivered revenue of approximately $2.48 billion, an increase of 2.6% year-on-year on a constant currency basis, and 4% year-on-year as reported.

Revenue from banking and financial services and insurance clients grew 8% year on year.

Media and communications clients grew 7% year on year, largely driven by clients outside of the U S and global Entertainment Slash media companies.

Speaker #4: We delivered revenue above our guidance range, as we have done for the past several quarters. Looking at growth by vertical, our growth in the quarter was led by growth in banking, financial services, and insurance.

Revenue from retail travel and E. Commerce clients grew 3% largely driven by travel which continues to be a strong vertical for us and our technology and consumer electronics vertical and our healthcare vertical were both essentially flat.

Speaker #4: Other verticals were solid as well, driven by continued demand for our integrated offerings and ongoing growth in our adjacent solutions. Specific constant currency revenue growth by vertical was as follows: Revenue from banking and financial services and insurance clients grew 8% year-on-year.

Andre Valentine: Other verticals were solid as well, driven by continued demand for our integrated offerings and ongoing growth in our adjacent solutions. Specific constant currency revenue growth by vertical was as follows: revenue from banking and financial services and insurance clients grew 8% year-on-year. Media and communications clients grew 7% year-on-year, largely driven by clients outside of the U.S. and global entertainment/media companies. Revenue from retail, travel, and e-commerce clients grew 3%, largely driven by travel, which continues to be a strong vertical for us, and our technology and consumer electronics vertical and our healthcare vertical were both essentially flat. Turning to profitability, our non-GAAP operating income was $305 million, which was below the guidance range we provided on our last call. This was largely due to two factors. First, excess capacity.

Turning to profitability, our non-GAAP operating income was $305 million, which was below the guidance range. We provided on our last call. This was largely due to two factors.

First excess capacity.

For context, when we set our guidance for the quarter, we expected a faster return to stability with a handful of clients impacted by tariffs in the second quarter and a slight deconsolidation of additional client volume to occur more quickly to optimize the resources we were holding.

Speaker #4: Median Communications clients grew 7% year-on-year, largely driven by clients outside of the U.S. and global entertainment/media companies. Revenue from retail, travel, and e-commerce clients grew 3%, largely driven by travel, which continues to be a strong vertical for us.

We're doing the right thing for our clients long term, but in quarter volumes didn't materialize, how the clients or are we envisioned.

Speaker #4: And our technology and consumer electronics vertical and our healthcare vertical were both essentially flat. Turning to profitability, our non-GAAP operating income was $305 million, which was below the guidance range we provided in our last call.

This excess capacity accounted for the majority of the shortfall.

A distant second factor for the margin variance was some in quarter decisions to accelerate transformation opportunities to help clients realize technology benefits more quickly.

Speaker #4: This was largely due to two factors: first, excess capacity. For context, when we set our guide for the quarter, we expected a faster return to stability, with a handful of clients impacted by tariffs in Q2.

We are confident that we can deliver modest sequential quarter profitability improvement in the next few quarters as we resolve the capacity issue as committed volume migrates to us or we remove the excess capacity proactively.

Andre Valentine: For context, when we set our guide for the quarter, we expected a faster return to stability with a handful of clients impacted by tariffs in the second quarter and expected consolidation of additional client volume to occur more quickly to optimize the resources we were holding. We were doing the right thing for our clients long-term, but in-quarter volumes didn't materialize how the clients or we envisioned. This excess capacity accounted for the majority of the shortfall. A distant second factor for the margin variance was some in-quarter decisions to accelerate transformation opportunities to help clients realize technology benefits more quickly. We are confident that we can deliver modest sequential quarter profitability improvement in the next few quarters as we resolve the capacity issue as committed volume migrates to us or we remove the excess capacity proactively.

Speaker #4: An expected consolidation of additional client volume was anticipated to occur more quickly to optimize the resources we were holding. We were doing the right thing for our clients long-term, but in-quarter volumes didn't materialize as the clients or we envisioned.

On a year on year basis, our non-GAAP operating income was impacted by the factors I, just mentioned as well as $8 million and additional investments in cyber security for generative AI and a $4 million negative currency impact.

Speaker #4: This excess capacity accounted for the majority of the shortfall. A distant second factor for the margin variance was some in-quarter decisions to accelerate transformation opportunities to help clients realize technology benefits more quickly.

Adjusted EBITDA in the quarter was $359 million a margin of 14, 5%.

non-GAAP diluted earnings per share was $2 78 per share <unk> <unk> below our guidance range as a lower effective tax rate, partially offset the non-GAAP operating income variance.

Speaker #4: We are confident that we can deliver modest sequential quarter profitability improvement in the next few quarters as we resolve the capacity issue, as committed volume migrates to us or we remove the excess capacity proactively.

GAAP net income was $88 million for the quarter and GAAP diluted earnings per share was $1 34 per share.

Speaker #4: On a year-on-year basis, our non-GAAP operating income was impacted by the factors I just mentioned, as well as $8 million in additional investments in cybersecurity for generative AI and a $4 million negative currency impact.

Andre Valentine: On a year-on-year basis, our non-GAAP operating income was impacted by the factors I just mentioned, as well as $8 million in additional investments in cybersecurity for generative AI and a $4 million negative currency impact. Adjusted EBITDA in the quarter was $359 million, a margin of 14.5%. Non-GAAP earnings per share was $2.78 per share, $0.02 below our guidance range, as a lower effective tax rate partially offset the non-GAAP operating income variance. GAAP net income was $88 million for the quarter, and GAAP diluted earnings per share was $1.34 per share. Reconciliations of non-GAAP measures to the comparable GAAP measures are provided in today's earnings release. Adjusted free cash flow was $179 million in the quarter, an increase of about $44 million year-on-year. Year to date, our adjusted free cash flow increased $83 million.

Reconciliations of non-GAAP measures to the comparable GAAP measures are provided in today's earnings release.

Adjusted free cash flow was $179 million in the quarter, an increase of about $44 million year on year.

Speaker #4: Adjusted EBITDA in the quarter was $359 million, a margin of 14.5%. Non-GAAP diluted earnings per share were $2.78, 2 cents below our guidance range, as a lower effective tax rate partially offset the non-GAAP operating income variance.

Year to date, our adjusted free cash flow increased $83 million.

We returned approximately $64 million to shareholders in the quarter, which included repurchasing $42 million of common shares or approximately 800000 shares at an average price of approximately $53 per share.

Speaker #4: GAAP net income was $88 million for the quarter, and GAAP diluted earnings per share were $1.34 per share. Reconciliations of non-GAAP measures to the comparable GAAP measures are provided in today's earnings release.

The remaining $22 million in shareholder return was in the form of our quarterly dividend.

I am pleased to share that our board has authorized an increase to our quarterly dividend to <unk> 36 per share.

At the end of the third quarter cash and cash equivalents were $350 million and total debt was $4 8 billion.

Speaker #4: Adjusted free cash flow was $179 million in the quarter, an increase of about $44 million year-on-year. Year-to-date, our adjusted free cash flow increased by $83 million.

Our net debt to $4 5 billion.

We also reduced the amount of our off balance sheet factored accounts receivable to approximately $127 million at the end of the quarter.

Speaker #4: We returned approximately $64 million to shareholders in the quarter, which included repurchasing $42 million of common shares, or approximately 800,000 shares at an average price of approximately $53 per share.

Andre Valentine: We returned approximately $64 million to shareholders in the quarter, which included repurchasing $42 million of common shares, or approximately 800,000 shares at an average price of approximately $53 per share. The remaining $22 million in shareholder return was in the form of our quarterly dividend. I'm pleased to share that our board has authorized an increase to our quarterly dividend to $0.36 per share. At the end of the third quarter, cash and cash equivalents were $350 million, and total debt was $4.8 billion, bringing our net debt to $4.5 billion. We also reduced the amount of our off-balance sheet factored accounts receivable to approximately $127 million at the end of the quarter. To summarize, in Q3, we delivered strong revenue above expectations. We are lessening our exposure to low-complexity transactions and growing our higher-complexity integrated solutions.

To summarize in Q3, we delivered strong revenue above expectations, we are lessening our exposure to low complexity transactions and growing our higher complexity integrated solutions, we continue to be on our funds regenerative AI using it to our advantage to secure highly strategic tech enabled CX program.

Speaker #4: The remaining $22 million in shareholder return was in the form of our quarterly dividend. I'm pleased to share that our board has authorized an increase to our quarterly dividend to $0.36 per share.

Speaker #4: At the end of the third quarter, cash and cash equivalents were $35 million, and total debt was $4.8 billion, bringing our net debt to $4.5 billion.

While scaling our adjacent services.

Now I'll turn to our outlook.

For Q4, and the full year 2025, we expect the following.

Q4 revenue of 2.5 dollars 55 to 2550 or $1 billion base.

Speaker #4: We also reduced the amount of our off-balance sheet factored accounts receivable to approximately $127 million at the end of the quarter. To summarize, in Q3, we delivered strong revenue above expectations.

Based on current exchange rates. These expectations assume an approximately 160 basis point positive impact of foreign exchange rates in Q4, compared with the prior year period.

Speaker #4: We are lessening our exposure to low-complexity transactions and growing our higher-complexity integrated solutions. We continue to be on our front foot with generative AI, using it to our advantage to secure highly strategic tech-enabled CX programs while scaling our adjacent services.

This guidance implies constant currency revenue growth for the quarter ranging from one 5% to two 5%.

Andre Valentine: We continue to be on our front foot with generative AI, using it to our advantage to secure highly strategic tech-enabled CX programs while scaling our adjacent services. Now, I'll turn to our outlook. For Q4 and the full year 2025, we expect the following: Q4 revenue of $2.525 to $2.550 billion. Based on current exchange rates, these expectations assume an approximate 160 basis point positive impact of foreign exchange rates in Q4 compared with the prior year period. This guidance implies constant currency revenue growth for the quarter ranging from 1.5% to 2.5%. As we've said, our goal is to be conservative in our revenue guidance. This leads to fiscal year 2025 revenue of $9.798 billion to $9.823 billion based on current exchange rates, which assume an approximate 10 basis point positive impact of foreign exchange rates compared with the prior year.

As we've said our goal is to be conservative in our revenue guidance.

This leads to fiscal year 2025 revenue of $9 $798 billion to $9 $8 3 billion base.

Speaker #4: Now, I'll turn to our outlook. For Q4 and the full year 2025, we expect the following: Q4 revenue of $2.525 to $2.55 billion. Based on current exchange rates, these expectations assume an approximate 160 basis point positive impact of foreign exchange rates in Q4 compared with the prior year period.

Based on current exchange rates, which assume an approximate 10 basis point positive impact of foreign exchange rates compared with the prior year.

As such we are increasing our guidance for the full year to 175% to 2% constant currency revenue growth.

For Q4, we expect non-GAAP operating income of $320 million to $330 million. This drives full year non-GAAP operating income 212, 5 billion to $1 two 6 billion.

Speaker #4: This guidance implies constant currency revenue growth for the quarter, ranging from 1.5% to 2.5%. As we've said, our goal is to be conservative in our revenue guidance.

Speaker #4: This leads to fiscal year 2025 revenue of $9.798 billion to $9.823 billion, based on current exchange rates, which assume an approximate 10 basis point positive impact of foreign exchange rates compared with the prior year.

This translates into expected non-GAAP earnings per share of $2 85 to $2 96 for Q4.

<unk> approximately $67 million in non-GAAP interest expense.

Two 4 million diluted common shares outstanding at approximately five 5% of net income attributable to participating securities.

Speaker #4: As such, we're increasing our guidance for the full year to 1.75% to 2% constant currency revenue growth. For Q4, we expect non-GAAP operating income of $320 million to $330 million.

Andre Valentine: As such, we're increasing our guidance for the full year to 1.75% to 2% constant currency revenue growth. For Q4, we expect non-GAAP operating income of $320 million to $330 million. This drives full-year non-GAAP operating income to $1.25 billion to $1.26 billion. This translates into expected non-GAAP earnings per share of $2.85 to $2.96 for Q4, assuming approximately $67 million in non-GAAP interest expense, 62.4 million diluted common shares outstanding, and approximately 5.5% of net income attributable to participating securities. For fiscal year 2025, we expect full-year non-GAAP EPS of $11.11 per share to $11.23 per share, assuming non-GAAP interest expense of $273 million, approximately 63.1 million diluted common shares outstanding, and approximately 5% of net income attributable to participating securities. The non-GAAP effective tax rate is expected to be approximately 25% for Q4 and 24% for the full year.

For fiscal year 2025.

We expect full year non-GAAP EPS of $11 11 per share to $11 23 per share assuming non-GAAP interest expense.

Speaker #4: This drives full-year non-GAAP operating income to $1.25 billion to $1.26 billion. This translates into expected non-GAAP earnings per share of $2.85 to $2.96 for Q4, assuming approximately $67 million in non-GAAP interest expense, 62.4 million diluted common shares outstanding, and approximately 5.5% of net income attributable to participating securities.

$273 million approximately $63 1 million diluted common shares outstanding and approximately 5% of net income attributable to participating securities. The.

The non-GAAP effective tax rate is expected to be approximately 25% for Q4 and 24% for the full year.

And finally, we've modified our expectations for full year adjusted free cash flow to be between $585 million to $610 million an increase of between 110.

Speaker #4: For fiscal year 2025, we expect full-year non-GAAP EPS of $11.11 per share to $11.23 per share. Assuming non-GAAP interest expense of $273 million, approximately 63.1 million diluted common shares outstanding, and approximately 5% of net income attributable to participating securities.

$135 million year on year. This implies a continuation of our year over year improvement in adjusted free cash flow in the fourth quarter.

Regarding capital allocation priorities, we are on track to meet our commitment to return over $240 million to shareholders. This year, a combination of over $150 million in spending to repurchase our shares and approximately $90 million in dividends.

Speaker #4: The non-GAAP effective tax rate is expected to be approximately 25% for Q4 and 24% for the full year. Finally, we have modified our expectations for full-year adjusted free cash flow to be between $585 million and $610 million, an increase of between $110 million and $135 million year-on-year.

And today, we repaid the $700 million euros seller's note related to the web help combination through our previously committed new term loan borrowings that we discussed in our last earnings call.

Andre Valentine: Finally, we've modified our expectations for full-year adjusted free cash flow to be between $585 million to $610 million, an increase of between $110 million to $135 million year-on-year. This implies a continuation of our year-over-year improvement in adjusted free cash flow in the fourth quarter. Regarding capital allocation priorities, we are on track to meet our commitment to return over $240 million to shareholders this year, a combination of over $150 million in spending to repurchase our shares and approximately $90 million in dividends. Today, we repaid the €700 million seller's note related to the WebHelp combination through our previously committed new term loan borrowings that we discussed in our last earnings call. Looking to next year, we will prioritize debt repayment while supporting our dividend and our share repurchase program. In summary, our overall demand environment remains positive as we enter the last part of 2025.

Looking at next year, we will prioritize debt repayment, while supporting our dividend.

And our share repurchase program.

Speaker #4: This implies a continuation of our year-over-year improvement in adjusted free cash flow in the fourth quarter. Regarding capital allocation priorities, we are on track to meet our commitment to return over $240 million to shareholders this year, a combination of over $150 million in spending to repurchase our shares and approximately $90 million in dividends.

In summary, our overall demand environment remains positive as we enter the last part of 2025.

We had some margin headwinds in the quarter, but see a path to modest sequential.

Quarter improvement moving forward, we continue to drive strong cash flow growth year on year and as Chris mentioned, we are in a strong competitive position to drive long term outperformance with all of this we are feeling positive about 2026 and look forward to providing detailed guidance for 2020 on our next call.

Speaker #4: And today, we were paid the $700 million euro seller's note related to the Webhelp combination through our previously committed new term loan borrowings that we discussed in our last earnings call.

Now operator, please open the line for questions.

Speaker #4: Looking to next year, we will prioritize debt repayment while supporting our dividend and our share repurchase program. In summary, our overall demand environment remains positive as we enter the last part of 2025.

Thank you so much and as a reminder to ask a question simply press star one one on your telephone.

<unk> for your name to be announced to remove yourself with star one again, one moment for our first question.

Speaker #4: We had some margin headwinds in the quarter but see a path to modest sequential quarter improvement moving forward. We continue to drive strong cash flow, growth year-on-year, and, as Chris mentioned, we are in a strong competitive position to drive long-term outperformance.

Andre Valentine: We had some margin headwinds in the quarter, but see a path to modest sequential quarter improvement moving forward. We continue to drive strong cash flow growth year-on-year, and as Chris mentioned, we are in a strong competitive position to drive long-term outperformance. With all of this, we are feeling positive about 2026 and look forward to providing detailed guidance for 2026 on our next call. Now, operator, please open the line for questions.

And it comes from the line of Luke Morison.

With Canaccord Genuity. Please proceed.

Hey, guys. Thanks for taking the question here. So maybe we can start with the margin guide down. So you, obviously highlighted excess capacity from tariff impacted clients as the main driver there.

Speaker #4: With all of this, we are feeling positive about 2026 and look forward to providing detailed guidance for 2026 on our next call. Now, Operator, please open the line for questions.

Along with some drag from those accelerating transformation program can you just unpack that a little more detail.

Speaker #1: Thank you so much. As a reminder, to ask a question, simply press *11 on your telephone and wait for your name to be announced.

Operator: Thank you so much. As a reminder, to ask a question, simply press *11 on your telephone and wait for your name to be announced. To remove yourself, press *11 again. One moment for our first question. It comes from the line of Luke Morrison with Canaccord Genuity. Please proceed.

Were there any additional tariff related headwinds from new round.

Speaker #1: To remove yourself, press *11 again. One moment for our first question. And it comes from the line of Luke Morrison with Canaccord Genuity. Please proceed.

From the new round that went into effect in August there was the impact.

All carryover from last quarter as client positive.

And then on the excess capacity how quickly do you expect that to normalize.

Is this more of a one or two quarter issue or something that linger and then finally on the transformation programs can you just give us more color on what those were and whether they should be thought of as near term margin headwinds or flip to revenue over time.

Speaker #5: Hey, guys. Thanks for taking the question here. So, maybe we can start with the margin guide down. You obviously highlighted excess capacity from tariffs impacting clients as the main driver there.

[Analyst 1]: Hey, guys. Thanks for taking the question here. Maybe we can start with the margin guide down. You obviously highlighted excess capacity from tariff-impacted clients as the main driver there, along with some drives from those accelerating transformation programs. Can you just unpack that in a little more detail? Were there any additional tariff-related headwinds from the new round that went into effect in August, or was this impact all carryover from last quarter's client pauses? On the excess capacity, how quickly do you expect that to normalize? Is this more of a one or two-quarter issue or something that can linger? Finally, on the transformation programs, can you just give us more color on what those were and whether they should be thought of as near-term margin headwinds or flipped to revenue over time?

Speaker #5: Along with some drag from those accelerating transformation programs, can you just unpack that in a little more detail? Were there any additional tariff-related headwinds from the new round that went into effect in August?

Yeah for sure look as Chris So if you remember when we talked about in Q3, we talked to that we were under from a year over year profitability perspective, when the tariffs were first announced with sort of excess capacity that we have and our expectations were and what our clients were messaging.

Speaker #5: Or was this impact all carryover from last quarter's client pauses? And then, on the excess capacity, how quickly do you expect that to normalize?

That they thought that they would be normal or normalized in Q3, and we talked about sort of.

Being a little under in the first month of the quarter sort of on part of the second month and over on the on the third month and what happened was with some of the additional noise with tariffs within the third quarter by the second month, we still we're in seeing that uptick coming through from the clients the clients like thing that uptick either.

Speaker #5: Is this more of a one- or two-quarter issue, or something that can linger? And then finally, on the transformation programs, can you just give us more color on what those were and whether they should be thought of as near-term margin headwinds or flip to revenue over time?

Speaker #3: Yeah, for sure, Luke. It's Chris. So, if you remember, when we talked about Q3, we noted that we were under from a year-over-year profitability perspective regarding the tariffs that were first announced, along with the sort of excess capacity that we had.

Chris Caldwell: Yeah, for sure, Luke. It's Chris. If you remember what we talked about in Q3, we talked that we were under from a year-over-year profitability perspective when the tariffs were first announced with sort of excess capacity that we had. Our expectations were, and what our clients were messaging us was, that they thought that they would be more normalized in Q3. We talked about being a little under in the first month of the quarter, sort of on par the second month, and over on the third month. What happened was, with some of the additional noise with tariffs within the third quarter, by the second month, we still weren't seeing that uptick coming through from the clients. The clients weren't seeing that uptick either.

Also seeing that they were taking a little longer to move volume that they're committed to consolidating to us just from.

The ability to move it from other providers to us that's already started.

But it delayed us from getting that kickstart and we've had multiple conversations with them on a daily basis.

Okay do you want us to remove capacity you wanted to keep capacity and really the overall.

Belief was to keep capacity because these are highly trained individuals.

Are there sort of global roles and they are tightly integrating the supply chain and that they needed to balance. This out so from our perspective, we are seeing sort of momentum. We won we do think it will be multi quarter.

Chris Caldwell: We were also seeing that they were taking a little longer to move volume that they'd committed to consolidating to us just from an ability to move it from other providers to us. That's already started, but it delayed us from getting that kickstart. We had multiple conversations with them on a daily basis saying, "Okay, do you want us to remove capacity? Do you want us to keep capacity?" The overall belief was to keep capacity because these are highly trained individuals and they're in global roles and they're tightly integrated into the supply chain and they needed to balance this out. From our perspective, we are seeing the momentum we want. We do think it'll be multi-quarter normalization.

Sure.

Normalization and as Andrea pointed out if we don't sort of see and we're measuring.

Daily basis, we don't see sort of the expectation come into their clients. Since your expectations. Then we'll start to rationalize the excess capacity through the quarter and into into next quarter.

There was a bit of additional noise before August on tariffs frankly, the additional noise in August was only slightly uptick but really clients are looking at this more holistically about sort of a new reality of where they are where they are operating in and so it didn't get worse by any stretch of imagination. It was it didn't get better.

The clients that we expected and again just to be very clear on this.

Chris Caldwell: As Andre pointed out, if we don't see, and we're measuring this on a daily basis, if we don't see the expectations come in and our clients don't see the expectations, then we'll start to rationalize the excess capacity through the quarter and into next quarter. There was a bit of additional noise before August on tariffs, frankly. The additional noise in August was only a slight uptick, but clients are looking at this more holistically about the new reality of where they're operating in. It didn't get worse by any stretch of the imagination. It didn't get as better as either the clients or we expected. Just to be very clear on this, it was a small group, handful of clients, very defined clients that we're working through with this.

As a small group handful of clients very defined clients that we're working through with us.

On your second question, sorry talk to your second question.

There'd be a lingering impact we don't we don't believe so from a transformational perspective.

We have some clients who were in the process of looking at different.

Our technology partners.

We're able to present and put in our technology into the solution right away.

We're excited about it and so they wanted to kind of get it in the quarter and we were able to achieve that.

Similarly, what happens when you put that in and we're able to remove head count normally that would be a couple of quarter process of planning our guidance.

What happened was we were able to put the technology in successfully and we have some overcapacity, which were already in the process of dealing with so to your point, we don't see it as impacting our margins going forward you wouldn't normally notice if we had made the decision premium quarter and they would've been.

Chris Caldwell: On your second question, I'm sorry, that talks to your second question to get whether there would be a lingering impact. We don't believe so. From a transformation perspective, we had some clients who were in the process of looking at different AI technology partners. We were able to present and put in our technology into the solution right away. The clients were excited about it, and they wanted to kind of get it in in the quarter, and we were able to achieve that. Similarly, what happens when we put that in and we're able to remove headcount? Normally, that would be a couple-of-quarter process and plan in our guidance. What happened was we were able to put the technology in successfully, and we had some overcapacity, which we're already in the process of dealing with. To your point, we don't see it as impacting our margins going forward.

Sort of.

In line or accretive to our existing underlying business margins hopefully.

But hopefully that explains where we are.

<unk>.

Yes Super Super helpful. Thank you and then maybe just a follow up I'd love to get a little more color on how your IX suite is ramping here.

What does pipeline and win rates look like here, what's the relative demand between Hello in euro.

And to what extent are those deployment being price discretely versus being bundled into broader deal.

Yeah for sure. So a couple of things when we talk about when you look across the course of the year and you have to remember we probably started at a smaller percentage when we first announced to where we are now, but literally 40% of our new wins have our technology our platform integrated into the new wins and it's a combination of both where it's discrete billing as well as work.

Chris Caldwell: You wouldn't normally notice it if we had made the decision pre-quarter, and they would have been sort of in line or accretive to our existing underlying business margins. Hopefully, a lot of color, but hopefully that explains where we're at.

On your second question. Uh, sorry that talk to your second question to get whether, um, there would be a lingering impact. We don't, we don't believe. So, from a transformation perspective. Um, we had some clients who were in the process of looking at different, uh, uh, AI technology Partners. Uh, we were able to present and put in our, our, uh, technology, uh, into the solution right away. Uh, the clients were excited about it and so they wanted to kind of get it in in the quarter and we were able to achieve that. Um, similarly, what happens when we put that in and we're able to, uh, remove headcount normally that would be a couple of quarter process and plan in our guidance. Um, what happened was, we were able to put the technology in successfully and we had some over capacity withdrawing in the process of dealing with. So to your point uh we don't see it as um, impacting our margins going forward. You wouldn't normally notice it. If we had made the decision pre-quarter and uh they would have been um sort of the inline or creative to our existing uh, underlying business margins. Hopefully, a lot of

[Analyst 1]: Yeah, super helpful. Thank you. Maybe just a follow-up. I'd love to get a little more color on how your IX suite is ramping here. You know, what does pipeline and win rates look like here? What's the relative demand between Hello and Hero? To what extent are those deployments being priced discretely versus being bundled into broader deals?

Color. But hopefully that explains where we're at?

Bundled in the majority is still at this point are aware, we're bundling it in and using as a differentiator in service, but we see that inflection point coming relatively quickly where there'll be more discrete billing then from a from a bundled offering even though frankly the clients see the value in it because theyre, giving us the business too.

To do it in terms of the two products, we're seeing far more traction with Hello, sorry, with hero, Hello, and I just want to kind of explain this a little bit below the fully autonomous product, where we're putting a product, which basically remove human interaction. So think of a multimodal bought that can be.

Chris Caldwell: Yeah, for sure, Luke. A couple of things. As we talk about, when we look across the course of the year, and you have to remember, we probably started at a smaller % when we first announced to where we are now, but literally 40% of our new wins have our technology, our platform integrated into the new wins. It's a combination of both where it's discrete billing as well as where it's bundled in. The majority still at this point are where we're bundling it in and using it as a differentiated service. We see that inflection point coming relatively quickly where there will be more discrete billing than from a bundled offering, even though, you know, frankly, the client sees the value in it because they're giving us the business to do it. In terms of the two products, we're seeing far more traction with Hero than Hello.

Yeah, super, super helpful. Thank you! And then maybe just a follow-up. I'd love to get a little more color on how your ex-suite is ramping here. You know, what do the pipeline and win rates look like? What's the relative demand between Hello and Hero? And to what extent are those deployments being priced discreetly versus being bundled into broader deals?

Carload can pick calls coming in or chats or whatever the case may be the commercial model for that product is evolving where it's much more gaining share where we're putting it in.

Similarly, I think competitors are pure competitors are doing the same thing where it's more of a.

We'll take the so we'll take a percentage of the transactions that we're saving you being fully or partly because we think that will continue continue on with that revenue model on the.

Chris Caldwell: I just want to kind of explain this a little bit. Hello is the fully autonomous product where we're putting in a product which basically removes human interaction. Think of a multimodal bot that can be, you know, call out, can take calls coming in or chats or whatever the case may be. The commercial model for that product is evolving where it's much more gain share where we're putting it in. Similarly, I think competitors, pure AI competitors, are doing the same thing where it's more of a, you know, we'll take this out. We'll take a percentage of the transactions that we're saving you being fully autonomous. We think that'll continue on with that revenue model.

The hero product, we're seeing much stronger traction because clients see this product as being able to work immediately and their environment drive significant benefits from a quality and automation perspective and proficiency perspective.

Think of a multimodal bought that can be cut.

<unk> can take calls coming in or chats or whatever the case may be the commercial model for that product is evolving where it's much more gaining share where we're putting it in and similarly I think competitors are pure competitors are doing the same thing where it's more of a.

In that they are able to sell more be more efficient take up more costs drive <unk> and we have so many demonstratable cases of that is very very very very compelling and what we're happy about is that clients are now starting to see.

We'll take the so we'll take a percentage of the transactions that we're saving you being fully a part of it and we think that will continue continue on with that revenue model.

Deploy this across my entire infrastructure, including.

Internal.

Capabilities as well as other partner capabilities.

And that is as a SaaS model a typical SaaS model, where we're charging proceed and we will continue that model based on based on what we're seeing.

Chris Caldwell: On the Hero product, we're seeing much stronger traction because clients see this product as being able to work immediately in their environment, drive significant benefits from a quality and automation perspective and proficiency perspective, meaning that they're able to sell more, be more efficient, take out more costs, drive CSAT. We have so many demonstrable cases of that. It's very, very, very, very compelling. What we're happy about is that clients are now starting to see, "Hey, I can deploy this across my entire infrastructure, including my internal capabilities as well as other partner capabilities." That is as a SaaS model, a typical SaaS model where we're charging per seat, and we'll continue that model based on what we're seeing with it. Our pipeline just continues to build and get stronger.

The hero product, we're seeing much stronger traction because clients see this product as being able to work immediately and their environment drive significant benefits from a quality and automation perspective, and proficiency perspective, meaning that they are able to sell more be more efficient take out more cost drive.

And our pipeline just continues to build and get stronger and as I mentioned at the beginning.

While 40% of new wins that you have to imagine that in the last quarter was a lot higher and we're going to continue to drive that forward and as we talked about in the prepared remarks expect to be.

And we have so many demonstratable cases of that is very very very very compelling and what we're happy about is it points are now starting to see.

Mildly modestly whichever modifier you want accretive.

At the end of Q4.

Deploy this across my entire infrastructure, including my internal capabilities.

Excellent. Thank you.

Thank you so much our next question.

Capabilities as well as other partner capabilities.

Comes from the line of Dave Koning with W. Baird. Please go ahead.

That is as a SaaS model a typical SaaS model, where we're charging proceed and we will continue that model based on based on what we're seeing.

Yeah, Hey, guys. Thank you.

Yes. My first question, just kind of the bridge to margins and how we how we get back.

And our pipeline just continues to build and get stronger and as I mentioned at the beginning while 40% of the new wins that you have to imagine that in the last quarter was a lot higher and we're going to continue to drive that forward and as we talked about in the prepared remarks I expect to be.

Chris Caldwell: As I mentioned at the beginning, while 40% of the new wins are that, you have to imagine that in the last quarter it was a lot higher, and we're going to continue to drive that forward. As we talked about in the prepared remarks, expect to be, you know, mildly, modestly, whichever modifier you want, accretive at the end of Q4.

I think we were at 13, 4% or around there was your previous guidance now we're maybe at 12, 8% margin guidance something in that ballpark. So we've come down 60 bps is it fair to say the sound pretty like one off type things is it fair to say that 13, 4% or somewhere around there what your old guidance would be the baseline from which to.

Mildly modestly whichever modifier you want accretive.

End of Q4.

[Analyst 1]: Excellent. Thank you.

Excellent. Thank you.

Operator: Thank you so much. Our next question comes from the line of David Koning with Baird. Please go ahead.

Thank you so much our next question.

Grow next year and then as you we have some of the journey II projects on that should carry a higher margin, we could have a pretty outsized margin improvement next year.

It comes from the line of Dave Koning with W. Baird. Please go ahead.

Andre Valentine: Yeah. Hey, guys. Thank you. I guess my first question, just kind of the bridge to margins and, you know, how we get back, you know, I think we were at 13.4% or around there was your previous guidance. Now we're maybe at 12.8% margin guidance, something in that ballpark. We've come down 60 bps. Is it fair to say these sound pretty like one-off type things? Is it fair to say that 13.4% or somewhere around there, what your old guidance would be, is the baseline from which to grow next year? As you weave some of the Gen AI projects on, that should carry a higher margin, we could have a pretty outsized margin improvement next year as things normalize, or is some of the one-off stuff really going to kind of recur for a little bit?

Yeah, Hey, guys. Thank you.

Things normalize or is some of the one off stuff really going to recur for a little bit.

I guess my first question, just kind of the bridge to margins and how we how do we get back.

Now, let me talk about the market environment.

I think we were at 13, 4% or around there was your previous guidance now we're maybe at 12, 8% margin guidance something in that ballpark. So we've come down 60 bps is it fair to say the sound pretty like one off type things is it fair to say that 13, 4% or somewhere around there what your old guidance would be the baseline from which to.

Andre do the bridge.

These are one off items and as we've talked about they are pretty defined but where we're seeing them and when we look at our business.

Clients outside of these impacted clients are providing in driving the margin, but historically, we see and then also new wins that are coming in as they ramp and get the scale are providing the margins that we want to we want to see in <unk>.

To grow next year and then as you we have some of the journey II projects and that should carry a higher margin. We could have a pretty outsized margin improvement next year as things normalize or is some of the one off stuff really going to recur for a little bit.

We do expect that the.

Platforms will continue to help us as they become more accretive I don't know how accretive they will be in the 2026 timeframe I just want to temper that a little bit.

Chris Caldwell: Yeah, Dave, let me talk about the market environment. I'll let Andre do the bridge. These are one-off items, and as we talk about, they're pretty defined about where we're seeing them. When we look at our business, clients outside of these impacted clients are providing and driving the margins that historically we see. Also, new wins that are coming in as they ramp and get to scale are providing the margins that we want to see and are driving. We do expect that the AI platforms will continue to help us as they become more accretive. I don't know how accretive they will be in the 2026 timeframe. I just want to temper that a little bit. What we're focused on doing is driving back to where historically we were, as we talked about. We do see an additional opportunity to grow our margins.

Now, let me talk about the market environment I'll, let Andre.

We're focused on doing is driving back to where historically we were as we talked about and then we do see additional opportunity to grow our margin, but the combination though of not only our tech solutions also the areas, where we're winning new deals in the solutions and transformation deals that we're winning.

Bridge.

These are one off items and as we've talked about they are pretty defined but where we're seeing them and when we look at our business.

Clients outside of these impacted clients are providing in driving the margin, but historically, we see and then also new wins that are coming in as they ramp and get the scale of providing the margins that we want to we want to see and are driving we do expect that the.

And some of the new Exhilarate services that we've talked about but a higher margin around AI enablement.

Q4, yes.

Yes.

Pretty much covered it.

AI platforms will continue to.

Yes, David.

I think it will take a couple of quarters as we've said to kind of take care of kind of these one off items, which are just a handful of clients.

Help us as they become more accretive I don't know how accretive they will be in the 2026 timeframe I just want to temper that a little bit.

So I don't know that I would say that they go away completely and we're completely at run rate as we as we entered 2026, so there'll be a bit of a build there.

We're focused on doing is driving back to where historically we were as we talked about and then we do see additional opportunity to grow our margin. That's a combination of not only our tech solutions also the areas, where we're winning new deals in the solutions and transformation deals that we're winning.

Chris Caldwell: That's a combination of not only our tech solutions, but also the areas where we're winning new deals and the solutions and transformation deals that we're winning, and some of the new auxiliary services that we've talked about that are higher margin around AI enablement. I'll pass it to you for the bridge.

There I think though I think the margin levers and the things that gives us the confidence that we can get margins moving back in the right direction. Most of the things that Chris just alluded to we should see we should.

And some of the new Exhilarate services that we've talked about but a higher margin around AI enablement.

See some contribution as a software revenue ramps we will.

See more contribution as we deploy more technology into our solutions were reducing the kind of low complexity commoditized work.

Andre Valentine: Yeah, you pretty much covered it. Yes, David, I think it'll take a couple of quarters, as we've said, to kind of take care of these one-off items, which are with just a handful of clients. I don't know that I would say that they go away completely and we're completely at run rate as we enter 2026. There'll be a bit of a build there. From there, I think the margin levers and the things that give us the confidence that we can get margins moving back in the right direction are most of the things that Chris has just alluded to. We should see some contribution as software revenue ramps. We'll see more contribution as we deploy more technology into our solutions.

Yes, you pretty much covered it so yes David.

I think it will take a couple of quarters as we've said to you kind of take care of kind of these one off items, which are just a handful of clients.

And replacing it with faster growth higher.

Higher margin work, including work in some of the adjacent areas that we've talked about short movement continues to be.

So I don't know that I would say that they go away completely and we're completely at run rate.

A driver for us with margin improvement and then as we continue our growth rate up from where we will exit this year should be able to start seeing some leverage on our G&A. So all of those things have us confident that while we will.

As we entered 2026, so there'll be a bit of a build there from there I think though I think the margin levers and the things that gives us the confidence that we can get margins moving back in the right direction are most of the things that Chris just alluded to we should see.

Worked for a quarter or two here to get margins back related to these one time kind of a one off.

Should see some contribution.

Our software revenue ramps, we will see more contribution as we deploy more technology into our solutions were reducing the kind of low complexity commoditized work.

Items on these handful of clients once we get there we can keep margins moving in the right direction.

Andre Valentine: We're reducing the kind of low-complexity commoditized work and replacing it with faster growth, higher margin work, including the work in some of the adjacent areas that we've talked about. Shore movement continues to be a driver for us of margin improvement. As we continue to move our growth rate up from where we'll exit this year, we should be able to start seeing some leverage on our G&A. All of those things have us confident that, while we will work for a quarter or two here to get margins kind of back related to these one-time kind of one-off items on these handful of clients, once we get there, we can keep margins moving in the right direction.

Got you. Thank you for that and then maybe my follow up you had really good sequential movement in your retail travel E Com business and then your communications and media that those two segments had big sequential step ups.

Replacing it with faster growth higher margin work, including work in some of the adjacent areas that we've talked about short movement continues to be.

A driver for us with margin improvement and then as we continue our growth rate up from where we will exit this year should be able to start seeing some leverage on our G&A. So all of those things have us confident that while we will.

Anything to that anything one off or is that sustainable.

Those maybe some lower margin businesses, and maybe created a little bit of a mixed pressure.

Worked for a quarter or two here to get margins back related to these one time kind of a one off.

You are right. So we have seen a nice sequential step ups in those those are not one off things, it's pretty broad based across across the verticals you've mentioned.

Items on these handful of clients once we get there we can keep margins moving in the right direction.

A little bit commented a little bit on the drivers of the growth in.

[Analyst 1]: Thank you for that. Maybe my follow-up, you had really good sequential movement in your retail travel e-comm business and then your communications and media. Those two segments had big sequential step-ups. Anything to that? Anything one-off, or is that sustainable? You know, are those maybe some lower margin businesses and maybe created a little bit of a mixed pressure?

Got you. Thank you for that and then maybe my follow up you had really good sequential movement in your retail travel E Com business and then your communications and media that those two segments had big sequential step ups.

<unk> com's again, mostly clients outside of the U S as well as some media Slash entertainment.

Global Media Entertainment companies in retail travel ecommerce that it's been pretty broad based as well spread between that travel and ecommerce clients. So.

Anything to that anything one off or is that sustainable.

And then from a margin profile perspective, <unk>, something we really want to emphasize the work that we're winning we're winning at the right long term margins and so while we may be see some some contracts, where there's a bit more upfront investment on our part to two.

Are those maybe some lower margin businesses, and maybe created a little bit of a mixed pressure.

Andre Valentine: You're right. We have seen nice sequential step-ups in those. Those are not one-off things. It's pretty broad-based across the verticals you've mentioned. I talked a little bit, commented a little bit on the drivers of the growth in media and comms. Again, mostly clients outside of the U.S., as well as some media/entertainment, global media entertainment companies. In retail travel e-commerce, that has been pretty broad-based as well, spread between travel and e-commerce clients. From a margin profile perspective, something we really want to emphasize, the work that we're winning, we're winning at the right long-term margins. While we maybe see some constructs where there's a bit more upfront investment on our part to get to that run rate, the deals, as they are priced, when they get to full scale, are at the right margins and should be accretive as we go forward.

You are right. So we have seen a nice sequential step ups in those those are not a one off thing so it's pretty broad based across across the verticals you've mentioned.

To get to that run rate the deals as they are as they are priced.

Talk a little bit commented a little bit on the drivers of the growth in.

Get to.

Full scale are at the right margins and should be accretive as we go forward.

<unk> com's again, mostly clients outside of the U S as well as some media Slash entertainment.

And then the only other comment I'll make is that when we look at the adoption of some of our IX technology platforms.

Global Media Entertainment companies and retail travel ecommerce that it's been pretty broad based as well spread between that travel and e-commerce clients. So.

We're doing well in travel with them, we're doing well in e-commerce with them, we're doing well in consumer electronics with them because they tend to be faster adopting sort of this new technology, while we're making good inroads in <unk> with it and Thats actually driving some some wins those deployments are a little behind just because of the regulatory and compliance that you'd have to go through with that with any wins within that space.

And then from a margin profile perspective, that's something we really want to emphasize the work that we're winning we're winning at the right long term margins and so while we may be see some some contracts, where there's a bit more upfront investment on our part too.

To get to that run rate the deals as they are as.

<unk>.

Got you well thanks guys.

They are priced kind of when they get to.

Sure.

One moment for our next question.

Full scale are at the right margins and should be accretive as we go forward.

Okay.

It comes from Vincent Colicchio with Barrington Research. Please proceed.

Chris Caldwell: The only other comment I'll make is that, you know, when we look at the adoption of some of our IX technology platforms, we're doing well in travel with them. We're doing well in e-commerce with them. We're doing well in consumer electronics with them because they tend to be faster at adopting sort of this new technology. We're making good inroads in BFSI with it, and that's actually driving some wins. Those deployments are a little behind just because of the regulatory and compliance that you have to go through with any wins within that space.

And then the only other comment I'll make is that.

When we look at the adoption of some of our IX technology platforms.

Yes, Chris.

Curious if the consolidation situation remains robust and we're still in early innings there.

We're doing well in travel with them, we're doing well in e-commerce with them, we're doing well in consumer electronics with them because they tend to be faster at adopting sort of this new technology, while we're making good inroads in <unk> and that's actually driving some some wins those deployments are a little behind just because of the regulatory and compliance that you'd have to go through with that with any wins within that.

Yes, Vince.

We do think that consolidation will continue to impact our industry.

It caused them to be quite honest and we continue to see it being primarily driven by clients, who are looking for fewer partners and deeper relationships with those partners.

Base.

Andre Valentine: Gotcha. Thanks, guys.

Got you well thanks guys.

We have a more robust offering from those for those partners and so I think we're still in early innings, especially with sort of now as clients are procuring services across multiple different different disciplines together.

Sure.

Operator: One moment for our next question. It comes from Vincent Colicchio with Barrington Research. Please proceed.

One moment for our next question.

Okay.

It comes from Vincent Colicchio with Barrington Research. Please proceed.

And do you expect.

[Analyst 2]: Yeah, Chris, curious if the consolidation situation remains robust and if we're still in the early innings there.

Yes, Chris.

Two to continue for the next.

Curious if the consolidation situation remains robust and we're still in early innings there.

Frankly.

436 months and probably a heightened fashion.

And then the overall sales pipeline is that.

Chris Caldwell: Yeah, Vince, we do think that consolidation will continue to impact our industry, and we see it as sort of a positive, to be quite honest. We continue to see it being primarily driven by clients who are looking for fewer partners and deeper relationships with those partners and sort of a more robust offering for those partners. I think we're still in early innings, especially now as clients are procuring services across multiple different disciplines together. We do expect that to continue for the next, you know, frankly, 24, 36 months in probably a heightened fashion.

Yes, Vince.

We do think that consolidation will continue to impact our industry and we see sort of a positive to be quite honest and we continue to see it being primarily driven by clients, who are looking for fewer partners and deeper relationships with those partners.

Shipments at a healthy level.

Is that broad based or is it the three segments that were strong this quarter will continue to be strong and some of the others are lagged.

No, we're really happy with our pipeline and it's like there's a couple of things that we've been doing through the course of the year that are starting to pay off we really brought in a lot of sort of deep domain expertise within a number of our verticals.

Or a more robust offering from those for those partners and so I think we're still in early innings, especially with sort of now as clients are procuring services across multiple different different disciplines together.

Talent, both from a technical sales and sort of consultation back.

And do you expect that.

Background, that's really driving some nice pipeline both from a transformation perspective, and an integrated offering perspective, and so that we are seeing the benefits of and that's pretty broad based across our strategic protocols. We're also seeing good momentum in all of our Geos.

Two to continue for the next.

Frankly.

<unk> hundred 36 months and probably a heightened fashion.

[Analyst 2]: The overall sales pipeline, is that, I assume it's at a healthy level. Is that broad-based, or is it the three segments that were strong this quarter will continue to be strong and some of the others will lag?

And then.

The overall sales pipeline is that.

It's at a healthy level.

Is that broad based or is it the three segments that were strong this quarter will continue to be strong and some of the others are lagged.

All of our major regions with EMEA.

The Americas and Asia Pacific.

We're seeing some very very nice momentum from that perspective, and as Andrea pointed out not only the margin profile of these new deals as well as our pipeline is where we want to see it but the length of the contracts the stickiness of the deals.

Chris Caldwell: No, we're really happy with our pipeline. There's a couple of things that we've been doing through the course of the year that are starting to pay off. We've really brought in a lot of sort of deep domain expertise within a number of our verticals of talent both from a technical sales and sort of consultation background that's really driving some nice pipeline both from a transformation perspective and an integrated offering perspective. We're seeing the benefits of that. That's pretty broad-based across our strategic verticals. We're also seeing good momentum in all of our major regions like EMEA and the Americas and then Asia-Pacific. We're seeing some very, very nice momentum from that perspective.

No, we're really happy with our pipeline and it's like there's a couple of things that we've been doing through the course of the year that are starting to pay off we really brought in a lot of sort of deep domain expertise within a number of our verticals.

Talent, both from a technical sales and sort of consultation.

And frankly, the complexity of these deals are really where we are driving in the business.

Background, that's really driving some nice pipeline both from a transformation perspective, and an integrated offering perspective. So that we are seeing the benefits of and that's pretty broad based across our strategic verticals. We're also seeing good momentum in all of our Geos are sort of all of our major regions with EMEA.

Good to hear.

<unk>.

Thank you so much.

Our last question comes from <unk> <unk> with Bank of America. Please proceed.

Thanks for taking my questions.

Chris I wanted to ask a question on risk management. So obviously volumes were lower from some clients this quarter, but the company decided to invest in some transformational items for other customers. So I'm just trying to understand can you talk about the decision criteria for doing such investments like what ROI are you expecting from those.

The Americas and Asia Pacific.

We're seeing some very very nice momentum from that perspective, and as Andre pointed out not only the margin profile of these new deals as well as our pipeline is where we want to see it but the length of the contracts the stickiness of the deals.

Chris Caldwell: As Andre Valentine pointed out, not only the margin profile of these new deals, as well as our pipeline, is where we want to see it, but the length of the contracts, the stickiness of the deals, and frankly, the complexity of these deals are really where we are driving as a business.

And frankly, the complexity of these deals are really where we are driving the business.

Tumors and just when you look in terms of making such investments obviously, it hurts margins in the near term, but can you talk about what long term benefit you expect to get and I have a couple of follow ups. Thank you.

[Analyst 2]: Good to hear. Thanks.

Good to hear.

Thanks.

Sure.

Operator: Thank you so much. Our last question comes from Ruplu Bhattacharya with Bank of America. Please proceed.

Thank you so much.

Our last question comes from <unk> <unk> with Bank of America. Please proceed.

For sure that's a great question a couple of things when we look at our business as a whole one thing that we're very focused on is driving more share gains within our client and long long term relationships. If you look at our top 25 that is over a 17 year tenure.

[Analyst 3]: Hi. Thanks for taking my questions. Chris, I want to ask a question on risk management. Obviously, volumes were lower from some clients this quarter, but the company decided to invest in some transformational items for other customers. I'm just trying to understand, can you talk about the decision criteria for doing such investments? What ROI are you expecting from those customers? In terms of making such investments, obviously, it hurts margins in the near term, but can you talk about what long-term benefit you expect to get? I have a couple of follow-ups. Thank you.

Hi, Thanks for taking my questions.

Chris I wanted to ask a question on risk management. So obviously volumes were lower from some clients this quarter, but the company decided to invest in some transformational items for other customers. So I'm just trying to understand can you talk about the decision criteria for doing such investments like what ROI are you expecting from those.

Those two we believe in these long term relationships through thick and thin because they benefit us as we've also talked about when we look at our top 25 accounts, they're growing very well frankly, a little higher than the rest of the client base and these are very sophisticated buyers that very complex bar at the very.

Tumors and just when you look in terms of making such investments obviously, it hurts margins in the near term, but can you talk about what long term benefit you expect to get and I have a couple of follow ups. Thank you.

Large buyers and so when we look at making those investments you can think that the clients that we do that with our clients who have been with a long time at multiple different offerings in really their key go to market partner and we see a lot more opportunity to grow within that business and as painful as it is to kind of deal with some of these things in period, we really look.

Chris Caldwell: Yeah, for sure, Ruplu, that's a great question. A couple of things. When we look at our business as a whole, one thing that we're very focused on is driving more shared gains within a client and long-term relationships. If you look at our top 25, that is over a 17-year tenure. It kind of goes to we believe in these long-term relationships through thick and thin because they benefit us. We've also talked about when we look at our top sort of 25 accounts, they're growing very well, frankly, a little higher than the rest of the client base. These are very sort of sophisticated buyers. They're very complex buyers. They're very large buyers.

For sure that's a great question a couple of things when we look at our business as a whole one thing that we're very focused on is driving more share gains within our client and long long term relationships. If you look at our top 25 that is over a 17 year tenure.

Goes to we believe in these long term relationships through thick and thin because they benefit us as we've also talked about.

Looking at longer term and where those clients wanted to reciprocate our investments are around either more volume more opportunities.

We look at our top 25 accounts, they're growing very well frankly, a little higher than the rest of the client base and these are very sophisticated buyers that very complex bar at the very large buyers and so when we look at making those investments you can think that the clients that we do that with our clients who have been with a long time.

Consolidating smaller partners et cetera, et cetera et cetera. So that's how we how we look at it we don't do it on.

Clients, who want a heartbeat or business every every quarter or not.

Chris Caldwell: When we look at making those investments, you can think that the clients that we do that with are clients who we've been with a long time, had multiple different offerings in, really their key go-to-market partner, and we see a lot more opportunity to grow within that business. As painful as it is to kind of deal with some of these things in period, we're really looking at longer term. Where those clients want to reciprocate our investments are around either more volume, more opportunities, and consolidating out smaller partners, etc., etc., etc. That's how we look at it. We don't do it on clients who want to RFP their business every quarter or are not sort of like-minded from a long-term partnership perspective.

Sort of like minded from a long term partnership.

<unk> from the transformation.

<unk> different offerings in really their key go to market partner and we see a lot more opportunity to grow within that business somewhat as painful as it is to kind of deal with some of these things in period, we're really looking at longer term and where those clients wanted to reciprocate our investments around either more volume more opportunity.

Right.

Frankly, the way we look at it is if we do the right thing with the client.

They will reward us with more business over the longer term and the clients that we had kind of spinoffs and transformation in quarter.

Honestly they were focused on saying hey, we need to do this can we do this right away and if we can it'll be a big benefit and we could have said well we can start it next quarter or whatever the case may be that also allows the competitor to come in and say Hey, we can do it.

<unk>.

And consolidating a smaller partners et cetera, et cetera et cetera. So that's how we how we look at it we don't do it on.

Sooner and so from our perspective, we want to keep these clients focused on us we want them on our technology and our platforms.

Clients, who want a heartbeat business every every quarter or not.

Sort of like minded from a long term partnership perspective from the transformation.

So we're willing to take the pain to get them across to our platforms.

Chris Caldwell: From the transformation clients, frankly, the way we look at it is that if we do the right thing with the client, they will reward us with more business over the longer term. The clients that we kind of sped up some transformation in quarter, honestly, they were focused on saying, "Hey, we need to do this. Can we do this right away? If we can, it would be a big benefit." We could have said, "We can start it next quarter," or whatever the case may be. That also allows the competitor to come in and say, "Hey, we can do it sooner." From our perspective, we want to keep these clients focused on us. We want them on our technology and our platforms. We're willing to take the pain to get them across to our platforms from a relationship perspective.

From a from a relationship perspective.

Right.

Frankly, the way we look at it is if we do the right thing with the client.

Time has shown us.

Over 20 years in this industry has shown us when we do the right thing with our clients, we get rewarded over the longer term and we're seeing that even with sort of the conversations about how to deal with this excess capacity right now.

They will reward us with more business over the longer term and the clients that we kind of split up some transformation in quarter.

Honestly they were focused on saying hey, we need to do this can we do this right away and if we can it will be a big benefit and we could have said well we can start it next quarter or whatever the case might be but also allows a competitor to come in and say hey, we can do it.

They are they are collaborative they are engaged and they're all focused about trying to make sure that we're booking the right things for each other.

Okay. Thanks for the details there can I ask a similar question on the IX suite of software that Youre investing in so you're investing $50 million incremental on the software versus the 50 million base level of Capex that you typically have or investments that you typically have do you still expect to get to breakeven.

Sooner and so from our perspective, we want to keep these clients focused on us we want them on our technology and our platforms.

So we're willing to take the pain to get them across to our platforms.

From a from a relationship perspective.

Chris Caldwell: Time has shown us, over 20 years in this industry, time has shown us when we do the right thing with our clients, we get rewarded over the longer term. We're seeing that even with sort of the conversations about how to deal with this excess capacity right now, that they are collaborative, they are engaged, and they're all focused about trying to make sure that we're both doing the right things for each other.

Time has shown us.

Over 20 years in this industry time has shown us when we do the right thing with our clients, we get rewarded over the longer term and we're seeing that even with sort of the conversations about how to deal with this excess capacity right now.

Even in fiscal <unk> and what level of investments should we expect going forward and what's the criteria for you to either increase or decrease that Ben and I have a follow up final for Andre.

Yes so.

They are collaborative they are engaged and they're all focused about trying to make sure that we're booking things for each other.

A couple of things.

We absolutely expect to be on track as we talked about in our prepared remarks to be breakeven modestly accretive at the end of Q4 as we exit on our <unk> suite of products you are correct.

[Analyst 3]: Okay. Thanks for the details there. Can I ask a similar question on the IX suite of software that you're investing in? You're investing $50 million incremental on the software versus the $50 million base level of CapEx that you typically have or investments that you typically have. Do you still expect to get to break even in fiscal Q4? What level of investment should we expect going forward? What's the criteria for you to either increase or decrease that spend? I have a follow-up final for Andre.

Okay. Thanks for the details there can I ask a similar question on the IX suite of software that Youre investing in so you're investing $50 million incremental on the software versus the 50 million base level of Capex that you typically have or investments that you typically have do you still expect to get to breakeven.

It's about $50 million incremental spend has popped up a little bit it's gone down a little bit but the reality is is that it.

It's in that ballpark and so when you think of from an accretive nature perspective, that's where we're at we do expect that we're going to need to continue to increase investments, but I want to be very clear about this it's in line with our revenue growth on the products that we're doing as we install our IX Hello product, we absorb the cost for that.

Even in fiscal <unk> and what level of investments should we expect going forward and what's the criteria for you to either increase or decrease that Ben and I have a follow up final for Andre.

Chris Caldwell: Yeah. A couple of things. We absolutely expect to be on track, as we talked about in our prepared remarks, to be break even, modestly accretive at the end of Q4 as we exit on our IX suite of products. You are correct. Roughly, it's about $50 million incremental spend. It has popped up a little bit. It's gone down a little bit. The reality is that it's in that ballpark. When you think of from an accretive nature perspective, that's where we're at. We do expect that we're going to need to continue to increase investments. I want to be very clear about this. It's in line with our revenue growth on the products that we're doing. As we install our IX Hello product, we absorb the cost for that as we put it in. More and more projects, there will be a cost to it.

Yes so.

A couple of things.

As we put it in and so more and more products there will be a cost to it and then we get the revenue from the run rate perspective, it would be the software on the hallo product, we get sort of the license revenue or kind of right out of the gate as we as we sign those deals. So it's a bit of a difference between the products, but the criteria is it becomes a scalable business.

We absolutely expect to be on track as we talked about in our prepared remarks to be breakeven to modestly accretive at the end of Q4 as we exit on our <unk> suite of products you are correct.

It's about $50 million incremental spend has popped up a little bit it's gone down a little bit but the reality is is that it.

We're going to invest as we continue to drive scale in that business.

It's in that ballpark and so when you think of from an accretive nature perspective, that's where we're at we do expect that we're going to need to continue to increase investments, but I want to be very clear about this it's in line with our revenue growth on the products that we're doing as we install our IX Hello product, we absorb the cost for that as we put it in.

But as you've seen us in the past, we want to make an economic return on that.

Investments and so we'll do so as we as we go.

Thank you and maybe the last question I have for Andre.

It looks like you're taking down free cash flow guidance, a little bit how should we think about free cash flow going forward and it looks like you also raised the dividend so what was.

And so more and more products there will be a cost to it and then we get the revenue from a run rate perspective, it would be the software on the Halo product.

Chris Caldwell: We get the revenue from the run rate perspective of the software. On the Hello product, we get sort of the license revenue kind of right out of the gate as we sign those deals. It's a bit of a difference between the products. The criteria is it becomes a scalable business. We're going to invest as we continue to drive scale in that business. As you've seen us in the past, we want to make an economic return on those investments. We'll do so as we go.

The rationale for doing that now and how should we be thinking about capital returns going forward. Thank you for all the detail.

We had sort of a license revenue kind of right out of the gate as we as we sign those deals. So it's a bit of a difference between the products, but the criteria is it becomes a scalable business.

Sure happy to do that so as we think about free cash flow beyond 2025, we're still very optimistic that we can drive.

Going to invest as we continue to drive scale in that business, but as you've seen us in the past we want to make an economic return on that.

Some.

Increase the free cash flow in 2026 drivers there are coming to the very end of integration activities. A lot of this spending is cash so that should be a help to us as we go out to next year Secondly.

On those investments and so we'll do so as we as we go.

[Analyst 3]: Okay. Thank you. Maybe the last question I have for Andre. Andre, it looks like you know you're taking down free cash flow guidance a little bit. How should we think about free cash flow going forward? It looks like you also raised the dividend. What was the rationale for doing that now? How should we think about capital returns going forward? Thank you for all the details.

Okay. Thank you and maybe the last question I have for Andre.

I know it looks like you are taking down free cash flow guidance, a little bit how should we think about free cash flow going forward and it looks like you also raised the dividend until what was.

Cash interest should drop next.

Next year as we continue to pay down debt, maybe get some help from from interest rates as well. So those things that is positive. We also think we will continue to grow the top line and make progress with the margin and that will help the drop in our.

The rationale for doing that now and how should we be thinking about capital returns going forward. Thank you for all the detail.

Andre Valentine: Sure. Happy to do that. As we think about free cash flow beyond 2025, we're still very optimistic that we can drive some increase to free cash flow in 2026. Drivers there, you know, we're coming to the very end of integration activities. A lot of this spending is cash. That should be a help to us as we go out to next year. Secondly, our cash interest should drop next year as we continue to pay down debt and maybe get some help from interest rates as well. Those things have us positive. We also think we'll continue to grow the top line and make progress with the margin, and that will help. The drop in our guidance for Q4 is being driven by the margin pressures that we've seen and the drop in our profitability expectations for the full year.

Sure happy to do that so as we think about free cash flow beyond 2025, we're still very optimistic that we can drive.

Our guidance for Q4 is being driven by the margin pressures that we've seen the drop in.

Some.

Increase to free cash flow in 2026 drivers there.

Our profitability expectations for the full year.

Our capital allocation priorities as we go forward, we will remain balanced so again, we're going to generate more free cash flow next year and with that we are going to prioritize repayment of debt.

Coming to the very end of integration activities and a lot of this spending is cash.

That should be a help to us as we go out to next year secondly.

Our cash interests should drop next year.

While supporting our dividend.

As we continue to pay down debt, maybe get some help from from interest rates as well. So those things that is positive. We also think we will continue to grow the top line and make progress with the margin and that will help the drop in our.

And <unk>.

Continuing our share repurchase program I don't know that we'll see share repurchase dollars go up dramatically next year.

I think we will prioritize more taking some of the increase in cash flow and putting it towards our debt, but and then lastly, the dividend look.

Our guidance for Q4 is being driven by the margin pressures that we've seen the drop in.

We have investors, who are very appreciative of the dividend and they are appreciative of our cadence of annual increases were confident in Austria.

Our profitability expectations for the full year.

Andre Valentine: Our capital allocation priorities as we go forward will remain balanced. Again, we're going to generate more free cash flow next year. With that, we are going to prioritize repayment of debt while supporting our dividend and, you know, continuing our share repurchase program. I don't know that we'll see share repurchase dollars go up dramatically next year. I think we'll probably prioritize more taking some of the increase in cash flow and putting it towards our debt, and then lastly, the dividend. Look, we have investors who are very appreciative of the dividend. They are appreciative of our cadence of annual increases. We're confident in our ability to generate strong free cash flow, not only this year where we've driven a pretty sizable increase, but drive an increase in the next year as well. All of that is part of the decision to increase the dividend.

Our capital allocation priorities as we go forward, we will remain balanced so again, we're going to generate more free cash flow next year and with that we're going to prioritize repayment of debt.

Really to generate strong free cash flow not only this year, where we've driven a pretty sizable increase but drive.

An increase in the next year as well all of that is part of the decision to increase the dividend.

While supporting our dividend.

Okay. Thanks for all the because I appreciate it.

And could.

Continuing our share repurchase program I don't know that we'll see share repurchase dollars go up dramatically next year I think we will prioritize more taking some of the increase in cash flow and putting it towards our debt, but and then lastly, the dividend look.

Sure.

Thank you.

And this concludes our Q&A session and conference for today. Thank you for participating you may now disconnect.

We have investors, who are very appreciative of the dividend and they are appreciative of our cadence of annual increases we're confident in our shares.

Ability to generate strong free cash flow not only this year, where we've driven a pretty sizable increase but drive.

An increase in the next year as well all of that is part of the decision to increase the dividend.

[Analyst 3]: Okay, thanks for all the details. Appreciate it.

Okay. Thanks, Ravi because I appreciate it.

Andre Valentine: Sure.

Sure.

Operator: Thank you. This concludes our Q&A session and conference for today. Thank you for participating. You may now disconnect.

Thank you.

And this concludes our Q&A session and conference for today. Thank you for participating you may now disconnect.

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