What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-04-05 compared with 2023-10-06 · 180 added, 212 removed, 223 unchanged (64% of the section changed)

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References to “we,” “our,” “us,” “the Company” or “Concentrix + Webhelp” refer to Concentrix Corporation and its subsidiaries.

Certain comparisons of the year-over-year changes in revenue and cost of revenue in the discussion of our results of operations for the three months ended February 29, 2024 and February 28, 2023 include a supplemental comparison as if the Webhelp Combination had occurred at the beginning of fiscal year 2023.

These supplemental comparisons can be identified by the language “if the Webhelp Combination had occurred at the beginning of fiscal year 2023”.

The amounts used in these supplemental comparisons were determined by adding (a) the Webhelp results of operations for the relevant period in fiscal year 2023 prior to the Webhelp Combination and making reclassification and adjustments of International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) to U.S.

GAAP for the period, consistent with the adjustments made in our unaudited proforma condensed combined financial statements filed as Exhibit 99.2 to our Current Report on Form 8-K filed with the SEC on March 22, 2024 and (b) the Company’s consolidated results of operations for the relevant period in fiscal year 2023.

We believe the presentation of this supplemental information is useful because the Webhelp Combination had a significant impact on revenue and cost of revenue for the post-acquisition period and the supplemental comparison enables readers to better understand changes in the combined business.

These supplemental comparisons are provided for informational purposes only and may not necessarily reflect the results of operations that would have occurred had the Webhelp Combination actually occurred as of the beginning of the period referenced.

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Forward-looking statements include, but are not limited to, statements regarding our expected future financial condition, results of operations, effective tax rate, cash flows, leverage, liquidity, business strategy, competitive position, demand for our services and seasonality of our business, international operations, acquisition opportunities and the anticipated impact of acquisitions, capital allocation and dividends, growth opportunities, spending, capital expenditures and investments, competition and market forecasts, industry trends, our human capital resources and sustainability initiatives, and statements that include words such as believe, expect, may, will, provide, could and should and other similar expressions.

These forward-looking statements are inherently uncertain and involve substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.

Risks and uncertainties include, among other things:

risks related to the combination with Webhelp, including the ability to retain key employees and successfully integrate the Webhelp business;

our ability to realize estimated cost savings, synergies or other anticipated benefits of the combination, or that such benefits may take longer to realize than expected;

risks related to our combination with Webhelp, including the ability to retain key employees and successfully integrate the Webhelp business;

our ability to realize estimated cost savings, synergies or other anticipated benefits of our combination with Webhelp, or that such benefits may take longer to realize than expected;

diversion of management’s attention;

the potential impact of the consummation of the acquisition on relationships with clients and other third parties;

the unfavorable outcome of any legal proceedings that may be instituted against the Company;

risks related to general economic conditions, including consumer demand, interest rates, inflation, supply chains and the effects of the conflict in Ukraine;

the potential impact of the consummation of our combination with Webhelp on relationships with clients and other third parties;

risks related to general economic conditions, including consumer demand, interest rates, inflation, supply chains, and the effects of the conflicts in Ukraine and Gaza;

cyberattacks on our or our clients’ networks and information technology systems;

uncertainty around, and disruption from, new and emerging technologies, including the adoption and utilization of generative artificial intelligence;

the failure of our staff and contractors to adhere to our and our clients’ controls and processes;

the inability to protect personal and proprietary information;

the effects of communicable diseases or other public health crises, natural disasters, and adverse weather conditions;

geopolitical, economic and climate- or weather-related risks in regions with a significant concentration of our operations;

the inability to execute on our digital customer experience strategy;

competitive conditions in our industry and consolidation of our competitors;

variability in demand by our clients or the early termination of our client contracts;

the level of business activity of our clients and the market acceptance and performance of their products and services;

the demand for customer experience solutions and technology;

damage to our reputation through the actions or inactions of third parties;

changes in law, regulations or regulatory guidance;

the operability of our communication services and information technology systems and networks;

the loss of key personnel or the inability to attract and retain staff with the skills and expertise needed for our business;

increases in the cost of labor;

the effects of the COVID-19 pandemic and other communicable diseases, natural disasters, adverse weather conditions or public health crises;

geopolitical, economic and climate- or weather-related risks in regions with a significant concentration of our operations;

the inability to successfully identify complete and integrate strategic acquisitions or investments;

competitive conditions in our industry and consolidation of our competitors;

higher than expected tax liabilities;

the demand for customer experience solutions and technology;

variability in demand by our clients or the early termination of our client contracts;

the level of business activity of our clients and the market acceptance and performance of their products and services;

currency exchange rate fluctuations;

the operability of our communication services and information technology systems and networks;

changes in law, regulations or regulatory guidance;

damage to our reputation through the actions or inactions of third parties;

investigative or legal actions;

and other risks that are described under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended November 30, 2022 and “Risk Factors” in Part II, Item 1A of our Quarterly Report on Form 10-Q for the six months ended May 31, 2023.

and other risks that are described under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended November 30, 2023.

We do not intend to update forward-looking statements, which speak only as of the date hereof, unless otherwise required by law.

Concentrix, Webhelp, Concentrix + Webhelp, the Concentrix and Webhelp logos, and all other Concentrix + Webhelp company, product and services names and slogans are trademarks or registered trademarks of Concentrix Corporation and its subsidiaries.

Concentrix and the Concentrix Logo Reg.

Concentrix, Webhelp, Concentrix + Webhelp, the Concentrix logo, the Webhelp logo, and all other Concentrix company, product and services names and slogans are trademarks or registered trademarks of Concentrix Corporation and its subsidiaries.

Concentrix, Webhelp, the Concentrix logo and the Webhelp logo Reg.

and applicable non-U.S.

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Overview and Basis of Presentation

Concentrix + Webhelp is a leading global provider of Customer Experience (“CX”) solutions and technology that help iconic and disruptive brands drive deep understanding, full lifecycle engagement, and differentiated experiences for their end-customers.

Concentrix is a leading global provider of Customer Experience (“CX”) solutions and technology that help iconic and disruptive brands drive deep understanding, full lifecycle engagement, and differentiated experiences for their end-customers.

We provide end-to-end capabilities, including CX process optimization, technology innovation and design engineering, front- and back-office automation, analytics, and business transformation services to clients in five primary industry verticals.

Our differentiated portfolio of solutions supports Fortune Global 500 as well as new economy clients across the globe in their efforts to deliver an optimized, consistent brand experience across all channels of communication, such as voice, chat, email, social media, asynchronous

messaging, and custom applications.

We strive to deliver exceptional services globally supported by our deep industry knowledge, technology and security practices, talented people, and digital and analytics expertise.

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On September 25, 2023, we completed our acquisition (the “Webhelp Combination”) of all of the issued and outstanding capital stock (the “Shares”) of Marnix Lux SA, a public limited liability company ( société anonyme ) incorporated under the laws of the Grand Duchy of Luxembourg (“Webhelp Parent”) and the parent company of the Webhelp business (“Webhelp”), from the holders thereof (the “Sellers”).

The acquisition was completed pursuant to the terms and conditions of the Share Purchase and Contribution Agreement, dated as of June 12, 2023, as amended by First Amendment to Share Purchase and Contribution Agreement, dated as of July 14, 2023 by and among Concentrix, OSYRIS S.à r.l., a private limited liability company ( société à responsabilité limitée ) incorporated under the laws of the Grand Duchy of Luxembourg and a direct wholly owned subsidiary of Concentrix Corporation (“Purchaser”), Webhelp Parent, the Sellers, and certain representatives of the Seller.

Webhelp is a leading provider of CX solutions, including sales, marketing, and payment services, with significant operations and client relationships in Europe, Latin America, and Africa.

The preliminary purchase consideration for the acquisition of the Shares is valued at approximately $4 billion.

PK Acquisition

On December 27, 2021, we completed our acquisition of PK, a leading CX design engineering company with more than 5,000 staff in four countries, for total consideration of $1,573.3 million, net of cash and restricted cash acquired.

PK creates pioneering experiences that accelerate digital outcomes for their clients’ customers, partners and staff.

The acquisition of PK expanded our scale in the digital IT services market and supported our growth strategy of investing in digital transformation to deliver exceptional customer experiences.

The addition of the PK staff and technology to our team further strengthened our capabilities in CX design and development, artificial intelligence (“AI”), intelligent automation, and customer loyalty.

ServiceSource Acquisition

On July 20, 2022, we completed our acquisition of ServiceSource International, Inc.

(“ServiceSource”) for total consideration of $141.5 million, net of cash and restricted cash acquired.

ServiceSource is a global outsourced go-to-market services provider, delivering business-to-business (“B2B”) digital sales and customer success solutions that complemented our existing offerings in this area.

Since the closing of the Webhelp Combination, we have operated under the trade name “Concentrix + Webhelp” while we transition Webhelp operations and branding to the Concentrix name.

The preliminary purchase consideration for the acquisition of the Shares is valued at approximately $3,774.8 million, net of cash and restricted cash acquired.

Revenue and Cost of Revenue

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The costs of our revenue can be impacted by the mix of client contracts, where we deliver the CX solutions and technology, additional lead time for programs to be fully scalable, and transition and initial set-up costs.

Our cost of revenue as a percentage of revenue has also fluctuated in the past, based primarily on our ability to achieve economies of scale, the management of our operating expenses, and the timing and costs incurred related to our acquisitions and investments.

In the third fiscal quarter of 2023 and 2022, approximately 81% and 78%, respectively, of our consolidated revenue was generated from our non-U.S.

Our cost of revenue as a percentage of revenue has also fluctuated

in the past, based primarily on our ability to achieve economies of scale, the management of our operating expenses, and the timing and costs incurred related to our acquisitions and investments.

In both the first fiscal quarter of 2024 and 2023, approximately 79% of our consolidated revenue was generated from our non-U.S.

operations, and approximately 50% and 69%, respectively, of our consolidated revenue was priced in U.S.

dollars and we expect this to continue.

We expect that a majority of our revenue will continue to be generated from our non-U.S.

operations while being priced in U.S.

As a result, we have certain client contracts that are priced in non-U.S.

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Accordingly, our revenue may be earned in currencies that are different from the currencies in which we incur corresponding expenses.

Fluctuations in the value of currencies, such as the Philippine peso, the Indian rupee, and the Canadian dollar, against the U.S.

Fluctuations in the value of currencies, such as the Philippine peso, the Indian rupee, the euro, and the Canadian dollar, against the U.S.

dollar or other currencies in which we bill our clients, and inflation in the local economies in which these delivery centers are located, can impact the operating and labor costs in these delivery centers, which can result in reduced profitability.

As a result, our revenue growth, costs and profitability have been impacted, and we expect will continue to be impacted, by fluctuations in foreign currency exchange rates and inflation.

Our gross margins fluctuate and can be impacted by the mix of client contracts, services provided, shifts in the geography from which our CX services are delivered, client volume trends, the amount of lead time that is required for programs to become fully scaled, and transition and set-up costs.

Our gross margins fluctuate and can be impacted by the mix of client contracts, services provided, shifts in the geography from which our CX services and technology are delivered, client volume trends, the amount of lead time that is required for programs to become fully scaled, and transition and set-up costs.

Our operating margin fluctuates based on changes in gross margins as well as overall volume levels, as we are generally able to gain scale efficiencies in our selling, general and administrative costs as our volumes increase.

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Accordingly, we could be subject to pricing and labor cost pressures and may experience a decrease in revenue and operating income.

Our business operates in over 40 countries across 6 continents.

We have significant concentrations in the Philippines, India, the United States, the United Kingdom, Canada, throughout Europe, China and Japan.

Our business operates globally in over 70 countries across six continents.

We have significant concentrations in the Philippines, India, Brazil, the United States, Turkey, Colombia, Egypt, the United Kingdom, Morocco, China, and elsewhere throughout EMEA, Latin America, and Asia-Pacific.

Accordingly, we would be impacted by economic strength or weakness in these geographies and by the strengthening or weakening of local currencies relative to the U.S.

Our revenue and margins fluctuate with the underlying trends in our clients’ businesses and trends in the level of consumer activity.

As a result, our revenue and margins are typically higher in the fourth fiscal quarter of the year than in any other quarter.

As a result, our revenue and margins are typically higher in the fourth fiscal quarter of the year than in any other fiscal quarter.

Critical Accounting Policies and Estimates

During the three and nine months ended August 31, 2023, there were no material changes to our critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the fiscal year ended November 30, 2022.

Results of Operations – Three and Nine Months Ended August 31, 2023 and 2022

Three Months Ended Nine Months Ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

($ in thousands) ($ in thousands)

During the three months ended February 29, 2024, there were no material changes to our critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the fiscal year ended November 30, 2023.

Results of Operations – Three Months Ended February 29, 2024 and February 28, 2023

Three Months Ended

February 29, 2024 February 28, 2023

($ in thousands)

Revenue $ 2,402,748 $ 1,636,404

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Provision for income taxes 20,722 30,473

Net income before non-controlling interest 77,635 107,124 244,355 330,696

Net income attributable to non-controlling interest — 434 — 591

Net income attributable to Concentrix Corporation $ 77,635 $ 106,690 $ 244,355 $ 330,105

Three Months Ended % Change Nine Months Ended % Change

August 31, 2023 August 31, 2022 2023 to 2022

($ in thousands)

Net income $ 52,102 $ 87,870

Three Months Ended % Change

February 29, 2024 February 28, 2023 2024 to 2023

($ in thousands)

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Our solutions focus on customer engagement, process optimization, and back-office automation.

Our revenue increased by 3.4% in the three months ended August 31, 2023, compared to the three months ended August 31, 2022, which included incremental revenue from acquired operations of $26.8 million, or an increase of 1.7%, compared to the prior year period, resulting in increased volumes across the majority of our verticals over the prior year period.

The impact of the translation effects of foreign currencies was de minimis for the three months ended August 31, 2023 in comparison to the prior year period.

Our revenue increased by 4.3% in the nine months ended August 31, 2023, compared to the nine months ended August 31, 2022, which included incremental revenue from acquired operations of $154.9 million, or an increase of 3.3%, compared to the prior year period, resulting in increased volumes across the majority of our verticals over the prior year period.

These increases were partially offset by an unfavorable translation effect of foreign currencies of $64.7 million, or 1.4%.

The unfavorable foreign currency translation effect on revenue was primarily due to the weakening of the Japanese yen, Argentine peso and Australian dollar against the U.S.

For the three and nine months ended August 31, 2023, revenue in our technology and consumer electronics vertical increased as a result of contributions from acquired operations.

For the three and nine months ended August 31, 2023, revenue in our retail, travel and ecommerce vertical increased primarily due to increased volumes across several of our largest clients in this vertical over the prior year periods.

For the three and nine months ended August 31, 2023, revenue in our communications and media vertical decreased due to decreased volumes with several clients which more than offset volume increases across a number of clients.

For the three and nine

months ended August 31, 2023, revenue from clients in the banking, financial services and insurance vertical increased primarily due to increased volumes across the majority of our clients in this vertical over the prior year periods.

For the three and nine months ended August 31, 2023, revenue in our healthcare vertical increased due to increased volumes across the several of our largest healthcare clients over the prior year periods.

For the three and nine months ended August 31, 2023, revenue in our other vertical decreased primarily due to decreases in revenue from several clients, including government clients, over the prior year periods.

Our revenue increased by 46.8% in the three months ended February 29, 2024, compared to the three months ended February 28, 2023, primarily as a result of the Webhelp Combination.

For the three months ended February 29, 2024, revenue across all verticals increased, primarily as a result of the Webhelp Combination.

The increase in revenue was partially offset by the negative effect of foreign currency translation of $12.8 million, or 0.8%.

The unfavorable foreign currency translation effect on revenue was primarily due to the weakening of the Argentine peso, Japanese yen and Australian dollar against the U.S.

If the Webhelp Combination had occurred at the beginning of fiscal year 2023, our revenue would have increased by 1.7% in the first quarter of 2024.

Cost of Revenue, Gross Profit and Gross Margin Percentage

Three Months Ended % Change Nine Months Ended % Change

August 31, 2023 August 31, 2022 2023 to 2022

($ in thousands) ($ in thousands)

Three Months Ended % Change

February 29, 2024 February 28, 2023 2024 to 2023

($ in thousands)

Cost of revenue $ 1,546,219 $ 1,055,243 46.5%

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Gross margin can be impacted by resource location, client mix and pricing, additional lead time for programs to be fully scalable, and transition and initial set-up costs.

Our cost of revenue increased by 2.6% in the three months ended August 31, 2023, compared to the three months ended August 31, 2022, primarily due to the increase in our revenue and personnel costs related to staff supporting acquired operations.

The increases were partially offset by a $23.3 million, or 2.3%, reduction in our cost of revenue due to foreign currency translation.

The foreign currency translation impact on our cost of revenue was caused primarily by the weakening of the Egyptian pound, Philippine peso and Indian rupee against the U.S.

Our cost of revenue increased by 3.6% in the nine months ended August 31, 2023, compared to the nine months ended August 31, 2022, primarily due to the increase in our revenue and personnel costs related to staff supporting acquired operations.

Our cost of revenue increased by 46.5% in the three months ended February 29, 2024, compared to the three months ended February 28, 2023, primarily due to the increase in our revenue and personnel costs related to the Webhelp Combination.

The increases were partially offset by a $22.4 million, or 2.1%, reduction in our cost of revenue due to foreign currency translation.

The foreign currency translation impact on our cost of revenue was caused primarily by the weakening of the Philippine peso, Egyptian pound and Indian rupee against the U.S.

Our gross profit increased by 4.7% in the three months ended August 31, 2023, compared to the three months ended August 31, 2022, primarily due to the increase in revenue and the contributions from acquired operations and a net favorable foreign currency impact of $22.9 million on gross profit.

Our gross margin percentage for the three months ended August 31, 2023 increased to 36.4% from 35.9% in the prior year period due to changes in the mix of geographies where our services were delivered.

Our gross profit increased by 5.5% in the nine months ended August 31, 2023, compared to the nine months ended August 31, 2022, primarily due to the increase in revenue and the contributions from acquired operations and a net favorable foreign currency impact of $68.0 million on gross profit.

Our gross margin percentage for the nine months ended August 31, 2023 increased to 35.9% from 35.5% in the prior year period due to changes in the mix of geographies where our services were delivered.

The foreign currency translation impact on our cost of revenue was caused primarily by the weakening of the Argentine peso, Philippine peso and Japanese yen against the U.S.

If the Webhelp Combination had occurred at the beginning of fiscal year 2023, our cost of sales would have increased by 1.6% in the first quarter of 2024.

Our gross profit increased by 47.4% in the three months ended February 29, 2024, compared to the three months ended February 28, 2023, primarily due to the increase in revenue and the contributions from acquired operations and a net favorable foreign currency impact of $9.6 million on gross profit, partially offset by the increase in cost of revenue.

Our gross margin percentage for the three months ended February 29, 2024 increased to 35.6% from 35.5% in the prior year period due to changes in the mix of geographies where our services were delivered.

Selling, General and Administrative Expenses

Three Months Ended % Change Nine Months Ended % Change

August 31, 2023 August 31, 2022 2023 to 2022

($ in thousands) ($ in thousands)

Three Months Ended % Change

February 29, 2024 February 28, 2023 2024 to 2023

($ in thousands)

Selling, general and administrative expenses

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Selling, general and administrative expenses also include the cost of our global delivery facilities, utility expenses, hardware and software costs related to our technology infrastructure, legal and professional fees, depreciation on our technology and facility equipment, amortization of intangible assets resulting from acquisitions, marketing expenses, and acquisition-related and integration expenses.

Our selling, general and administrative expenses increased by 5.4% in the three months ended August 31, 2023, compared to the three months ended August 31, 2022, primarily due to incremental selling, general and administrative expenses associated with acquired operations and an increase in acquisition-related and integration expenses of $5.9 million.

Our selling, general and administrative expenses increased by 66.6% in the three months ended February 29, 2024, compared to the three months ended February 28, 2023, primarily due to incremental selling, general and administrative expenses associated with the Webhelp Combination, an increase in amortization expenses, primarily associated with the Webhelp Combination, of $77.0 million and an increase in acquisition-related and integration expenses of $24.6 million.

These increases were partially offset by a $4.7 million reduction in selling, general and administrative expenses due to foreign currency translation impacts.

As a percentage of revenue, selling, general and administrative expenses increased from 25.9% in the third fiscal quarter of 2022 to 26.4% in the third fiscal quarter of 2023 due to the net effect of the changes described.

Our selling, general and administrative expenses increased by 6.0% in the nine months ended August 31, 2023, compared to the nine months ended August 31, 2022, primarily due to incremental selling, general and administrative expenses associated with acquired operations and an increase in acquisition-related and integration expenses of $16.3 million.

These increases were partially offset by a $33.7 million reduction in selling, general and administrative expenses due to foreign currency translation.

As a percentage of revenue, selling, general and administrative expenses increased from 25.7% in the nine months ended August 31, 2022 to 26.1% in the nine months ended August 31, 2023 due to the net effect of the changes described.

As a percentage of revenue, selling, general and administrative expenses increased from 26.0% in the first fiscal quarter of 2023 to 29.5% in the first fiscal quarter of 2024 due to the net effect of the changes described.

Operating Income

Three Months Ended % Change Nine Months Ended % Change

August 31, 2023 August 31, 2022 2023 to 2022

($ in thousands) ($ in thousands)

Three Months Ended % Change

February 29, 2024 February 28, 2023 2024 to 2023

($ in thousands)

Operating income $ 148,439 $ 156,047 (4.9)%

Operating margin 6.2 % 9.5 %

Our operating income increased during the three and nine months ended August 31, 2023, compared to the three and nine months ended August 31, 2022, due to the increase in gross profit partially offset by the increase in selling, general and administrative expenses.

Our operating margin decreased slightly during three and nine months ended August 31, 2023, compared to the three and nine months ended August 31, 2022, due to the increase in gross margin percentage more than offset by the increase in selling, general and administrative expenses as a percentage of revenue.

Our operating income decreased during the three months ended February 29, 2024, compared to the three months ended February 28, 2023, due to the increase in selling, general and administrative expenses partially offset by the increase in gross profit.

Our operating margin decreased during the three months ended February 29, 2024, compared to the three months ended February 28, 2023, due to the increase in selling, general and administrative expenses as a percentage of revenue partially offset by the increase in gross margin percentage.

Interest Expense and Finance Charges, Net

Three Months Ended % Change Nine Months Ended % Change

August 31, 2023 August 31, 2022 2023 to 2022

($ in thousands) ($ in thousands)

Three Months Ended % Change

February 29, 2024 February 28, 2023 2024 to 2023

($ in thousands)

Interest expense and finance charges, net $ 82,439 $ 33,990 142.5%

Percentage of revenue 3.4 % 2.1 %

Amounts recorded in interest expense and finance charges, net consist primarily of interest on our senior notes issued in August 2023, interest on term loan borrowings under our senior credit facility, interest on borrowings under our accounts receivable securitization facility (the “Securitization Facility”) and financing expenses associated with our commitment letter dated March 29, 2023 (the “Bridge Commitment Letter,” and the commitments pursuant to the Bridge Commitment Letter, the “Bridge Facility”), entered into in connection with the Webhelp combination.

The increase in interest expense for the three months ended August 31, 2023, compared to the three months ended August 31, 2022, was due to Bridge Facility financing fees of $10.7 million, higher interest rates on increased outstanding term loan borrowings under our senior credit facility, higher interest rates on outstanding borrowings under our Securitization Facility and interest expense on our senior notes of $12.3 million partially offset by interest income related to the senior notes proceeds included in cash equivalents of $7.8 million.

The increase in interest expense for the nine months ended August 31, 2023, compared to the nine months ended August 31, 2022, was due to Bridge Facility financing fees and credit facility amendment fees of $22.5 million, higher interest rates on increased outstanding term loan borrowings under our senior credit facility, higher interest rates on outstanding borrowings under our Securitization Facility and interest expense on our senior notes of $12.3 million partially offset by interest income related to the senior notes proceeds included in cash equivalents of $7.8 million.

Amounts recorded in interest expense and finance charges, net consist primarily of interest on our senior notes issued in August 2023, interest expense on term loan borrowings under our senior credit facility, interest expense on borrowings under our accounts receivable securitization facility (the “Securitization Facility”) and interest expense on the promissory note issued by us to certain Sellers in connection with the Webhelp Combination (the “Sellers’ Note”).

The increase in interest expense and finance charges, net for the three months ended February 29, 2024, compared to the three months ended February 28, 2023, was primarily due to interest expense on our senior notes of $36.8 million and interest expense, including imputed interest, associated with the Sellers’ Note of $8.0 million, each of which were not outstanding in the prior year period.

Other Expense (Income), Net

Three Months Ended % Change Nine Months Ended % Change

August 31, 2023 August 31, 2022 2023 to 2022

($ in thousands) ($ in thousands)

Three Months Ended % Change

February 29, 2024 February 28, 2023 2024 to 2023

($ in thousands)

Other expense (income), net $ (6,824) $ 3,714 (283.7)%

Percentage of revenue (0.3) % 0.2 %

Amounts recorded as other expense (income), net include foreign currency transaction gains and losses other than cash flow hedges, non-designated hedging derivative activity, investment gains and losses, the non-service component of pension costs, and other non-operating gains and losses.

Other expense (income), net in the three months ended August 31, 2023 was an expense of $6.2 million, compared to income of $12.1 million in the three months ended August 31, 2022.

The change in other expense (income), net was primarily due to a loss on derivative contracts entered into in connection with the Webhelp combination of $2.0 million in addition to unfavorable foreign currency transaction changes compared to the prior year period.

Other expense (income), net in the nine months ended August 31, 2023 was an expense of $19.3 million, compared to income of $22.2 million in the nine months ended August 31, 2022.

The change in other expense (income), net was primarily due to a loss on derivative contracts entered into in connection with the Webhelp combination of $14.5 million in addition to unfavorable foreign currency transaction changes compared to the prior year period.

Three Months Ended % Change Nine Months Ended % Change

August 31, 2023 August 31, 2022 2023 to 2022

($ in thousands) ($ in thousands)

Amounts recorded as other expense (income), net primarily include foreign currency transaction gains and losses other than cash flow hedges, investment gains and losses, the non-service component of pension costs, other non-operating gains and losses, and changes in acquisition contingent consideration related to the Webhelp Combination.

Other expense (income), net in the three months ended February 29, 2024 was income of $6.8 million, compared to expense of $3.7 million in the three months ended February 28, 2023.

The change in other expense (income), net over the prior year period was primarily due to income associated with the change in acquisition contingent consideration associated with the Webhelp Combination of $14.9 million during the three months ended February 29, 2024, offset primarily by net foreign currency losses.

Provision for Income Taxes

Three Months Ended % Change

February 29, 2024 February 28, 2023 2024 to 2023

($ in thousands)

Provision for income taxes $ 20,722 $ 30,473 (32.0)%

Percentage of income before income taxes 28.5 % 25.7 %

Our provision for income taxes consists of our current and deferred tax expense resulting from our income earned in domestic and international jurisdictions.

Our provision for income taxes decreased in the three and nine months ended August 31, 2023, compared to the three and nine months ended August 31, 2022, primarily due to a decrease in income before taxes.

The effective tax rate for the three months ended August 31, 2023 decreased compared to the three months ended August 31, 2022 and increased for the nine months ended August 31, 2023 compared to the nine months ended August 31, 2022, primarily due to the change in mix of income earned in different tax jurisdictions between periods.

Our provision for income taxes decreased in the three months ended February 29, 2024, compared to the three months ended February 28, 2023, primarily due to a decrease in income before taxes.

The effective tax rate for the three months ended February 29, 2024 increased compared to the three months ended February 28, 2023, primarily due to the change in mix of income earned in different tax jurisdictions between periods.

Certain Non-GAAP Financial Information

In addition to disclosing financial results that are determined in accordance with GAAP, we also disclose certain non-GAAP financial information, including:

• Revenue in constant currency, which is revenue adjusted for the translation effect of foreign currencies so that certain financial results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of our business performance.

Revenue in constant currency is calculated by translating the revenue of each fiscal year in the billing currency to U.S.

dollars using the comparable prior year’s currency conversion rate.

Generally, when the U.S.

dollar either strengthens or weakens against other currencies, our revenue growth at constant currency rates or adjusting for currency will be higher or lower than our revenue growth reported at actual exchange rates.

• Revenue in adjusted constant currency, which is constant currency revenue excluding revenue from acquired operations in the current period for the twelve months following an acquisition and excluding revenue from divested operations in the comparative period for the twelve months preceding a divestiture.

Revenue in adjusted constant currency presents organic constant currency revenue growth for the business, without the impact of acquisitions and divestitures, thereby facilitating period-to-period comparisons of our business performance.

• Non-GAAP operating income, which is operating income, adjusted to exclude acquisition-related and integration expenses, including related restructuring costs, amortization of intangible assets and share-based compensation.

• Non-GAAP operating income, which is operating income, adjusted to exclude acquisition-related and integration expenses, including related restructuring costs, step-up depreciation, amortization of intangible assets and share-based compensation.

• Non-GAAP operating margin, which is non-GAAP operating income, as defined above, divided by revenue.

• Adjusted earnings before interest, taxes, depreciation, and amortization, or adjusted EBITDA, which is non-GAAP operating income, as defined above, plus depreciation.

• Adjusted earnings before interest, taxes, depreciation, and amortization, or adjusted EBITDA, which is non-GAAP operating income, as defined above, plus depreciation (exclusive of step-up depreciation).

• Adjusted EBITDA margin, which is adjusted EBITDA, as defined above, divided by revenue.

• Free cash flow, which is cash flows from operating activities less capital expenditures.

• Non-GAAP net income, which is net income excluding the tax effected impact of acquisition-related and integration expenses, including related restructuring costs, amortization of intangible assets, share-based compensation, imputed interest related to the Sellers’ note, change in acquisition contingent consideration and foreign currency losses (gains), net.

• Free cash flow, which is cash flows from operating activities less capital expenditures, and adjusted free cash flow, which is free cash flow excluding the effect of changes in the outstanding factoring balance.

We believe that free cash flow is a meaningful measure of cash flows since capital expenditures are a necessary component of ongoing operations.

However, free cash flow has limitations because it does not represent the residual cash flow available for discretionary expenditures.

For example, free cash flow does not incorporate payments for business acquisitions.

We believe that adjusted free cash flow is a meaningful measure of cash flows because it removes the effect of factoring which changes the timing of the receipt of cash for certain receivables.

However, free cash flow and adjusted cash flow have limitations because they do not represent the residual cash flow available for discretionary expenditures.

For example, free cash flow and adjusted free cash flow do not incorporate payments for business acquisitions.

• Non-GAAP diluted earnings per common share (“EPS”), which is diluted EPS excluding the per share, tax effected impact of acquisition-related and integration expenses, including related restructuring costs, step-up depreciation, amortization of intangible assets, share-based compensation, imputed interest related to the Sellers’ note, change in acquisition contingent consideration and foreign currency losses (gains), net.

Non-GAAP EPS excludes net income attributable to participating securities, and the per share, tax-effected impact of adjustments to net income described above reflect only those amounts that are attributable to common shareholders.

We believe that providing this additional information is useful to the reader to better assess and understand our base operating performance, especially when comparing results with previous periods and for planning and forecasting in future periods, primarily because management typically monitors the business adjusted for these items in addition to GAAP results.

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These non-GAAP financial measures exclude amortization of intangible assets.

Our acquisition activities have resulted in the recognition of intangible assets, which consist primarily of client relationships, technology and trade names.

Our acquisition activities have resulted in the recognition of intangible assets, which consist primarily of customer relationships, technology, and trade names.

Finite-lived intangible assets are amortized over their estimated useful lives and are tested for impairment when events indicate that the carrying value may not be recoverable.

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Intangible asset amortization excluded from the related non-GAAP financial measure represents the entire amount recorded within our GAAP financial statements, and the revenue generated by the associated intangible assets has not been excluded from the related non-GAAP financial measure.

Intangible asset amortization is excluded from the related non-GAAP financial measure because the amortization, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes

impaired or the estimated useful life of an intangible asset is revised.

These non-GAAP financial measures also exclude share-based compensation expense.

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As these non-GAAP financial measures are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies.

These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures and should be used as a complement to, and in conjunction with, data presented in accordance with GAAP.

Three Months Ended Nine Months Ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

These non-GAAP

financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures and should be used as a complement to, and in conjunction with, data presented in accordance with GAAP.

Three Months Ended

February 29, 2024 February 28, 2023

($ in thousands, except per share amounts)

Revenue $ 1,632,834 $ 1,579,602 $ 4,883,944 $ 4,683,755

Foreign currency translation 405 — 64,727 —

Revenue in constant currency $ 1,633,239 $ 1,579,602 $ 4,948,671 $ 4,683,755

Effect of excluding revenue of acquired and divested businesses (26,833) (142,525) (154,850) (349,684)

Revenue in adjusted constant currency $ 1,606,406 $ 1,437,077 $ 4,793,821 $ 4,334,071

Operating income $ 148,439 $ 156,047

Acquisition-related and integration expenses 30,173 5,543

Step-up depreciation

Amortization of intangibles 116,302 39,260

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Net income $ 52,102 $ 87,870

Net income attributable to non-controlling interest — 434 — 591

Interest expense and finance charges, net 82,439 33,990

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Acquisition-related and integration expenses 30,173 5,543

Step-up depreciation

Amortization of intangibles 116,302 39,260

Share-based compensation 21,646 16,754

Depreciation 38,246 36,933 114,632 110,107

Depreciation (exclusive of step-up depreciation)

65,257 38,175

Adjusted EBITDA $ 384,318 $ 255,779

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Acquisition-related and integration expenses 30,173 5,543

Acquisition-related expenses included in interest expense and finance charges, net (1)

13,716 — 25,556 —

Acquisition-related expenses included in other expense (income), net (1)

2,064 — 14,493 —

Step-up depreciation

Imputed interest related to Sellers' Note included in interest expense and finance charges, net 4,178 —

Change in acquisition contingent consideration included in other expense (income), net (14,897) —

Foreign currency losses (gains), net (2)

Amortization of intangibles 116,302 39,260

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Non-GAAP net income $ 175,655 $ 135,914

Three Months Ended Nine Months Ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

Three Months Ended

February 29, 2024 February 28, 2023

($ in thousands, except per share amounts)

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Acquisition-related and integration expenses 0.44 0.11

Acquisition-related expenses included in interest expense and finance charges, net (1)

0.26 — 0.49 —

Acquisition-related expenses included in other expense (income), net (1)

0.04 — 0.28 —

Step-up depreciation

Imputed interest related to Sellers' Note included in interest expense and finance charges, net 0.06 —

Change in acquisition contingent consideration included in other expense (income), net (0.22) —

Foreign currency losses (gains), net (2)

Amortization of intangibles 1.70 0.75

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Non-GAAP Diluted EPS $ 2.57 $ 2.59

(1) Included in these amounts are a) Bridge Facility financing fees expensed and interest expenses associated with the senior notes, net of interest earnings on invested proceeds incurred in advance of the Webhelp combination, and b) losses associated with non-designated call option contracts put in place to hedge foreign exchange movements in connection with the Webhelp combination that are included within interest expense and finance charges, net and other expense (income), net, respectively, in the consolidated statement of operations.

(1) The tax effect of taxable and deductible non-GAAP adjustments was calculated using the tax deductible portion of the expenses and applying the entity specific, statutory tax rates applicable to each item during the respective periods.

(2) Foreign currency losses (gains), net are included in other expense (income), net and primarily consist of gains and losses recognized on the revaluation and settlement of foreign currency transactions and realized and unrealized gains and losses on derivative contracts that do not qualify for hedge accounting.

The reported amounts for non-GAAP net income and non-GAAP EPS for the three months ended February 29, 2024 include adjustments to exclude these foreign currency losses (gains), net, which were not adjusted in similar non-GAAP measures previously reported for the corresponding period in fiscal year 2023.

In order to enhance comparability, similar adjustments were made for non-GAAP net income and non-GAAP EPS for the three months ended February 28, 2023.

Liquidity and Capital Resources

Our primary uses of cash are working capital, capital expenditures to expand our delivery footprint and enhance our technology solutions, debt repayments and acquisitions, including our combination with Webhelp in September 2023 and our acquisitions of PK and ServiceSource in fiscal year 2022.

Our financing needs for these uses of cash have been a combination of operating cash flows and third-party debt arrangements.

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In September 2021, considering our strong free cash flow, low leverage and adequate liquidity to support capital return to stockholders while maintaining flexibility to pursue acquisitions, our board of directors authorized a share repurchase program.

Under the share repurchase program, the board of directors authorized us to purchase up to $500 million of our common stock from time to time as market and business conditions warrant, including through open market purchases or Rule 10b5-1 trading plans.

Under the share repurchase program, the board of directors authorized the repurchase of up to $500 million of our common stock from time to time as market and business conditions warrant, including through open market purchases or Rule 10b5-1 trading plans.

The share repurchase program has no termination date and may be suspended or discontinued at any time.

During the three and nine months ended August 31, 2023, we purchased 320,105 and 430,529 shares, respectively, of our common stock under the share repurchase program for approximately $27.0 and $41.9 million, respectively, in the aggregate.

During the three and nine months ended August 31, 2022, we purchased 359,355 and 726,059 shares, respectively, of our common stock under the share repurchase program for approximately $49.0 and $106.8 million, respectively, in the aggregate.

At August 31, 2023, approximately $312.1 million remained available for share repurchases under the existing authorization from our board of directors.

During September 2023, we repurchased 95,111 shares of our common stock for an aggregate purchase price of $7.1 million.

During the three months ended February 29, 2024 and February 28, 2023, we repurchased 237,105 and 71,340 shares, respectively, of our common stock under the share repurchase program for approximately $21.7 million and $10.0 million, respectively, in the aggregate.

At February 29, 2024, approximately $268.5 million remained available for share repurchases under the existing authorization from our board of directors.

During March 2024, we repurchased 184,251 shares of our common stock for an aggregate purchase price of $12.0 million.

During fiscal years 2024 and 2023, we have paid the following dividends per share approved by our board of directors:

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September 27, 2023 October 27, 2023 $0.3025 November 7, 2023

January 19, 2023 January 30, 2023 $0.275 February 10, 2023

March 29, 2023 April 28, 2023 $0.275 May 9, 2023

June 28, 2023 July 28, 2023 $0.275 August 8, 2023

On September 27, 2023, we announced a cash dividend of $0.3025 per share to stockholders of record as of October 27, 2023, payable on November 7, 2023.

January 24, 2024 February 5, 2024 $0.3025 February 15, 2024

On March 26, 2024, we announced a cash dividend of $0.3025 per share to stockholders of record as of April 26, 2024, payable on May 7, 2024.

We expect that future cash dividends will be paid on a quarterly basis.

However, any decision to pay future cash dividends will be subject to our board of directors’ approval, and will depend on many factors, such as our financial condition, earnings, capital requirements, debt service obligations, restrictive covenants in our debt agreements, industry practice, legal requirements, regulatory constraints, and other factors that our board of directors deems relevant.

Our ability to pay dividends will depend on our ongoing

ability to generate cash from operations and on our access to the capital markets.

Our ability to pay dividends will depend on our ongoing ability to generate cash from operations and on our access to the capital markets.

We cannot guarantee that we will continue to pay a dividend in the future.

Debt Arrangements

On August 2, 2023, the Company issued and sold (i) $800 million aggregate principal amount of 6.650% Senior Notes due 2026 (the “2026 Notes”), (ii) $800 million aggregate principal amount of 6.600% Senior Notes due 2028 (the “2028 Notes”) and (iii) $550 million aggregate principal amount of 6.850% Senior Notes due 2033 (the “2033 Notes” and, together with the 2026 Notes and 2028 Notes, the “Senior Notes”).

The Senior Notes were sold in a registered public offering pursuant to the Company’s Registration Statement on Form S-3, which became effective upon filing, and a Prospectus Supplement dated July 19, 2023, to a Prospectus dated July 17, 2023.

On August 2, 2023, we issued and sold (i) $800 million aggregate principal amount of 6.650% Senior Notes due 2026 (the “2026 Notes”), (ii) $800 million aggregate principal amount of 6.600% Senior Notes due 2028 (the “2028 Notes”) and (iii) $550 million aggregate principal amount of 6.850% Senior Notes due 2033 (the “2033 Notes”) and, together with the 2026 Notes and 2028 Notes, the “Senior Notes”).

The Senior Notes were sold in a registered public offering pursuant to our Registration Statement on Form S-3, which became effective upon filing, and a Prospectus Supplement dated July 19, 2023, to a Prospectus dated July 17, 2023.

The Senior Notes were issued pursuant to, and are governed by, an indenture, dated as of August 2, 2023 (the “Base Indenture”), between Concentrix and U.S.

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The Indenture also provides for customary events of default.

In connection with the closing of the Webhelp Combination, we entered into cross-currency swap arrangements for a total notional amount of $500 million of the Senior Notes.

In addition to aligning the currency of a portion of our interest payments to our euro-denominated cash flows, the arrangements effectively converted $250 million of each of the 2026 Notes and 2028 Notes into synthetic fixed Euro-based debt at weighted average interest rates of 5.12% and 5.18%, respectively.

Bridge Facility and Restated Credit Facility

To provide the debt financing required to consummate the Webhelp Combination, we entered into a commitment letter dated March 29, 2023 (the “Bridge Commitment Letter,” and the commitments pursuant to the Bridge Commitment Letter, the “Bridge Facility”), under which certain financing institutions committed to provide a 364-day bridge loan facility in an aggregate principal amount of $5,290 million consisting of (i) a $1,850 million tranche of term bridge loans (the “Term Loan Amendment Tranche”), (ii) a $1,000 million tranche of revolving commitments (the “Revolver Amendment Tranche”) and (iii) a $2,440 million tranche of term bridge loans (the “Acquisition Tranche”), each subject to the satisfaction of certain customary closing conditions, including the consummation of the Webhelp Combination.

The incurrence of the acquisition-related indebtedness that would be funded by the Acquisition Tranche of the Bridge Facility (or permanent financing in lieu thereof) and the promissory note to be issued by Concentrix Corporation to certain Sellers at the closing of the Webhelp Combination was not permitted under our prior credit agreement dated as of October 16, 2020 (the “Prior Credit Facility”).

Therefore, on April 21, 2023, we entered into an Amendment and Restatement Agreement (the “Amendment Agreement”) with the lenders party thereto, JPMorgan Chase and Bank of America, N.A.

In connection with the closing of the Webhelp Combination, we entered into cross-currency swap arrangements with certain financial institutions for a total notional amount of $500 million of the Senior Notes.

In addition to aligning the currency of a portion of our interest payments to our euro-denominated cash flows, the arrangements effectively converted $250 million aggregate principal amount of the 2026 Notes and $250 million aggregate principal amount of the 2028 Notes into synthetic fixed euro-based debt at weighted average interest rates of 5.12% and 5.18%, respectively.

Restated Credit Facility

On April 21, 2023, we entered into an Amendment and Restatement Agreement (the “Amendment Agreement”) with the lenders party thereto, JPMorgan Chase Bank, N.A.

and Bank of America, N.A.

to amend and restate the Prior Credit Facility (as amended and restated, the “Restated Credit Facility”).

As a result of having entered into the Amendment Agreement, among other things, we obtained requisite lender consent to incur acquisition-related indebtedness, and pursuant to the terms of the Bridge Commitment Letter, the commitments with respect to the Term Loan Amendment Tranche and the Revolver Amendment Tranche of the Bridge Facility were each reduced to zero, and the Acquisition Tranche was reduced by approximately $294.7 million.

On August 2, 2023, the remaining outstanding commitment of approximately $2.15 billion under the Bridge Commitment Letter was reduced to zero in connection with the issuance of the Senior Notes previously described.

The Restated Credit Facility provides for the extension of a senior unsecured revolving credit facility not to exceed an aggregate principal amount of $1,042.5 million.

The Restated Credit Facility also provides for a senior unsecured term loan facility in an

aggregate principal amount not to exceed approximately $2,144.7 million, of which $1,850 million was outstanding as of August 31, 2023 and approximately $294.7 million was drawn on a delayed draw basis on the closing date of the Webhelp Combination.

The Restated Credit Facility also provides for a senior unsecured term loan facility in an aggregate principal amount not to exceed approximately $2,144.7 million (the “Term Loan”), of which $1,850 million was incurred upon the amendment and approximately $294.7 million was drawn on a delayed draw basis (the “Delayed Draw Term Loans”) on the Closing Date.

Aggregate borrowing capacity under the Restated Credit Facility may be increased by up to an additional $500 million by increasing the amount of the revolving credit facility or by incurring additional term loans, in each case subject to the satisfaction of certain conditions set forth in the Restated Credit Facility, including the receipt of additional commitments for such increase.

In September 2023, we prepaid $69.7 million of the principal balance on the term loan facility, without penalty, resulting in an outstanding balance of approximately $2,075 million.

As of November 30, 2023, the outstanding principal balance on the Term Loan was $1,950 million.

During the three months ended February 29, 2024, we voluntarily prepaid $100 million of the principal balance on the Term Loan, without penalty, resulting in an outstanding balance at February 29, 2024 of approximately $1,850 million.

The maturity date of the Restated Credit Facility remains December 27, 2026, subject, in the case of the revolving credit facility, to two one-year extensions upon our prior notice to the lenders and the agreement of the lenders to extend such maturity date.

The outstanding principal amount of the term loan is payable in quarterly installments in an amount equal to 1.25% of the existing principal balance, plus the Delayed Draw Term Loans advanced on the closing date of the Webhelp Combination, commencing on December 31, 2024, with the outstanding principal amount of the term loans due in full on the maturity date.

Due to the voluntary prepayments previously described, no principal payment on the term loans is due until fiscal year 2026 with the remaining outstanding principal amount due in full on the maturity date.

Borrowings under the Restated Credit Facility bear interest, in the case of SOFR rate loans, at a per annum rate equal to the applicable SOFR rate (but not less than 0.0%), plus an applicable margin, which ranges from 1.125% to 2.000%, based on the credit ratings of our senior unsecured non-credit enhanced long-term indebtedness for borrowed money plus a credit spread adjustment to the SOFR rate of 0.10%.

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The Restated Credit Facility contains certain loan covenants that are customary for credit facilities of this type and that restrict our ability to take certain actions, including the creation of liens, mergers or consolidations, changes to the nature of our business, and, solely with respect to our subsidiaries, incurrence of indebtedness.

In addition, the Restated Credit Facility contains financial covenants that require us to maintain at the end of each fiscal quarter, (i) a consolidated leverage ratio (as defined in the Restated Credit Facility) not to exceed 3.75 to 1.0 (or for certain periods following certain qualified acquisitions, including the Webhelp Combination, 4.25 to 1.0) and (ii) a consolidated interest coverage ratio (as defined in the Restated Credit Facility) equal to or greater than 3.00 to 1.0.

In addition, the Restated Credit Facility contains financial covenants that require us to maintain at the end of each fiscal quarter, (i) a consolidated leverage ratio (as defined in the Restated

Credit Facility) not to exceed 3.75 to 1.0 (or for certain periods following certain qualified acquisitions, including the Webhelp Combination, 4.25 to 1.0) and (ii) a consolidated interest coverage ratio (as defined in the Restated Credit Facility) equal to or greater than 3.00 to 1.0.

The Restated Credit Facility also contains various customary events of default, including payment defaults, defaults under certain other indebtedness, and a change of control of Concentrix Corporation.

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From August 31, 2022 through the date of the Amendment Agreement, the outstanding principal of the term loans under the Prior Credit Facility was payable in quarterly installments of $26.25 million.

At August 31, 2023 and November 30, 2022, no amounts were outstanding under our revolving credit facility.

During the nine months ended August 31, 2023, we paid $25.0 million of voluntary principal prepayments, without penalty, on the term loans under the Prior Credit Facility.

At February 29, 2024 and November 30, 2023, no amounts were outstanding under our revolving credit facility.

During the three months ended February 28, 2023, the Company voluntarily prepaid $25,000 of the principal balance on the term loans under the Prior Credit Facility, without penalty.

Securitization Facility

On July 6, 2022, we entered into an amendment to our Securitization Facility, which was initially entered into on October 30, 2020, to (i) increase the commitment of the lenders to provide available borrowings from up to $350 million to up to $500 million, (ii)

extend the termination date of the Securitization Facility from October 28, 2022 to July 5, 2024, and (iii) replace LIBOR with SOFR as one of the reference rates used to calculate interest on borrowings under the Securitization Facility.

In addition, the interest rate margins were amended, such that borrowings under the Securitization Facility that are funded through the issuance of commercial paper bear interest at the applicable commercial paper rate plus a spread of 0.70% and, otherwise, at a per annum rate equal to the applicable SOFR rate (which includes a SOFR related adjustment of 0.10%), plus a spread of 0.80%.

We have an amended Securitization Facility that provides for available borrowings of up to $500 million with a termination date of July 5, 2024.

Borrowings under the Securitization Facility that are funded through the issuance of commercial paper bear interest at the applicable commercial paper rate plus a spread of 0.70% and, otherwise, at a per annum rate equal to the applicable SOFR rate (which includes a credit spread adjustment to the SOFR rate of 0.10%), plus a spread of 0.80%.

Under the Securitization Facility, Concentrix Corporation and certain of its U.S.

based subsidiaries (the “Originators”) sell or otherwise transfer all of their accounts receivable to a special purpose bankruptcy-remote subsidiary of Concentrix Corporation that grants a security interest in the receivables to the lenders in exchange for available borrowings of up to $500 million.

based subsidiaries sell or otherwise transfer all of their accounts receivable to a special purpose bankruptcy-remote subsidiary of Concentrix Corporation that grants a security interest in the receivables to the lenders in exchange for available borrowings of up to $500 million.

Borrowing availability under the Securitization Facility may be limited by our accounts receivable balances, changes in the credit ratings of our clients comprising the receivables, client concentration levels in the receivables, and certain characteristics of the accounts receivable being transferred (including factors tracking performance of the accounts receivable over time).

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Sellers’ Note

On September 25, 2023, as part of the consideration for the Webhelp Combination, we issued a promissory note in the aggregate principal amount of €700 million (the “Sellers’ Note”) to certain Sellers (the “Noteholders”).

Pursuant to the Sellers’ Note, the unpaid principal amount outstanding will accrue interest from time to time at a rate of two percent (2%) per annum, and all principal and accrued interest will be due and payable on September 25, 2025.

As of August 31, 2023 and November 30, 2022, we were in compliance with the debt covenants related to our debt arrangements.

Cash Flows – Nine Months Ended August 31, 2023 and 2022

The following summarizes our cash flows for the nine months ended August 31, 2023 and 2022, as reported in our consolidated statement of cash flows in the accompanying consolidated financial statements.

Nine Months Ended

August 31, 2023 August 31, 2022

On September 25, 2023, as part of the consideration for the Webhelp Combination, we issued the Sellers’ Note in the aggregate principal amount of €700 million to certain Sellers.

Pursuant to the Sellers’ Note, the unpaid principal amount outstanding accrues interest at a rate of two percent (2%) per annum, and all principal and accrued interest will be due and payable on September 25, 2025.

The stated rate of interest is below our expected borrowing rate.

As a result, we discounted the Sellers’ Note by €31,500.

The discounted value is being amortized into interest expense over the two-year term.

As of February 29, 2024 and November 30, 2023, we were in compliance with the debt covenants related to our debt arrangements.

Cash Flows – Three Months Ended February 29, 2024 and February 28, 2023

The following summarizes our cash flows for the three months ended February 29, 2024 and February 28, 2023, as reported in our consolidated statement of cash flows in the accompanying consolidated financial statements.

Three Months Ended

February 29, 2024 February 28, 2023

($ in thousands)

Net cash provided by operating activities $ 448,744 $ 365,041

Net cash provided by (used in) operating activities

$ (46,870) $ 103,893

Net cash used in investing activities (60,562) (39,597)

Net cash provided by financing activities

Net cash provided by (used in) financing activities

14,444 (34,526)

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Operating Activities

Net cash provided by operating activities was $448.7 million for the nine months ended August 31, 2023, compared to $365.0 million for the nine months ended August 31, 2022.

The increase in net cash provided by operating activities over the prior year period was primarily due to favorable changes in working capital partially offset by a decrease in net income over the prior year period.

Net cash used in operating activities was $46.9 million for the three months ended February 29, 2024, compared to net cash provided by operating activities of $103.9 million for the three months ended February 28, 2023.

The change over the prior year period was primarily due to unfavorable changes in working capital and the decrease in net income.

Investing Activities

Net cash used in investing activities for the nine months ended August 31, 2023 was $115.7 million, compared to $1,803.7 million for the nine months ended August 31, 2022.

The decrease in net cash used in investing activities over the prior year period primarily related to the aggregate cash of $1,705.4 million paid in connection with our acquisitions of PK and ServiceSource in the prior year period.

Net cash used in investing activities for the three months ended February 29, 2024 was $60.6 million, compared to $39.6 million for the three months ended February 28, 2023.

The increase in net cash used in investing activities over the prior year period primarily related to an increase in capital expenditures as a result of the expanded business due to the Webhelp Combination and payment of deferred cash consideration of $4.5 million related to the Webhelp Combination in the first quarter of 2024.

Financing Activities

Net cash provided by financing activities for the nine months ended August 31, 2023 was $1,636.3 million, consisting primarily of proceeds, before expenses, of $2,137.0 million from the issuance of the Senior Notes in August 2023, partially offset by principal payments of $25.0 million made on term loan borrowings under our senior credit facility, net repayments of $356.5 million under our Securitization Facility, share repurchases of $41.9 million, dividends of $42.9 million, and cash paid of $30.5 million related to debt issuance costs for the Senior Notes, financing fees for the Bridge Facility and amendment fees related to our Restated Credit Facility.

Net cash provided by financing activities for the nine months ended August 31, 2022 was $1,456.0 million, consisting primarily of net proceeds from the refinancing of the term loan facility under our senior credit facility of $1,400.0 million and net proceeds from the Securitization Facility of $335.0 million, offset by repayments of $125.0 million on the term loan, share repurchases of $106.8 million, cash paid for debt issuance costs of $9.3 million and dividends of $39.1 million.

We believe our current cash balances and credit availability are enough to support our operating activities for at least the next twelve months.

Free Cash Flow (a non-GAAP measure)

Nine Months Ended

August 31, 2023 August 31, 2022

Net cash provided by financing activities for the three months ended February 29, 2024 was $14.4 million, consisting primarily of net borrowings of $197.5 million under our Securitization Facility partially offset by principal payments of $100.0 million made on term loan borrowings under our senior credit facility, share repurchases of $21.7 million, a change in funds held for clients of $37.9 million, and dividends of $20.6 million.

Net cash used in financing activities for the three months ended February 28, 2023 was $34.5 million, consisting primarily of principal payments of $25.0 million made on the Term Loan, share repurchases of $10.0 million and dividends of $14.3 million, partially offset by net proceeds of $20.5 million from borrowings under the Securitization Facility

Free Cash Flow and Adjusted Free Cash Flow (non-GAAP measures)

Three Months Ended

February 29, 2024 February 28, 2023

($ in thousands)

Net cash provided by operating activities $ 448,744 $ 365,041

Net cash provided by (used in) operating activities

$ (46,870) $ 103,893

Purchases of property and equipment (56,059) (39,597)

Free cash flow (a non-GAAP measure) $ (102,929) $ 64,296

Our free cash flow was $333.0 million for the nine months ended August 31, 2023 compared to $267.8 million for the nine months ended August 31, 2022.

The increase in free cash flow for the nine months ended August 31, 2023 compared to the prior year period was due to the increase in cash provided by operating activities partially offset by an increase in capital expenditures.

Change in outstanding factoring balances

Adjusted free cash flow (a non-GAAP measure)

$ (81,305) $ 64,296

Our free cash flow was a use of cash of $102.9 million for the three months ended February 29, 2024 compared to generation of cash of $64.3 million for the three months ended February 28, 2023.

The decrease in free cash flow for the three months ended February 29, 2024 compared to the prior year period was due to the decrease in cash provided by operating activities and an increase in capital expenditures resulting from the Webhelp Combination.

Our adjusted free cash flow was a use of cash of $81.3 million for the three months ended February 29, 2024 compared to generation of cash of $64.3 million for the three months ended February 28, 2023.

The decrease in adjusted free cash flow for the three months ended February 29, 2024 compared to the prior year period was due to a decrease in free cash flow offset by the change in outstanding factoring balances of $21.6 million.

Capital Resources

Excluding cash held related to Senior Notes proceeds that were subsequently used to fund the combination with Webhelp, as of August 31, 2023, we had total liquidity of $1,766.3 million, which includes undrawn capacity on our revolving credit facility of $1,042.5 million, undrawn capacity of $500.0 million under our Securitization Facility and remaining cash and cash equivalents.

Our cash and cash equivalents totaled $2,112.8 million and $145.4 million as of August 31, 2023 and November 30, 2022, respectively.

Cash and cash equivalents included $1,889.0 of Senior Notes proceeds that were subsequently used to fund the combination with Webhelp.

Of our total cash and cash equivalents, excluding the Senior Notes proceeds, 99% and 97% were held by our non-U.S.

legal entities as of August 31, 2023 and November 30, 2022, respectively.

As of February 29, 2024, we had total liquidity of $1,451.3 million, which includes undrawn capacity on our revolving credit facility of $1,042.5 million, undrawn capacity of $174.0 million under our Securitization Facility and cash and cash equivalents.

Our cash and cash equivalents totaled $234.8 million and $295.3 million as of February 29, 2024 and November 30, 2023, respectively.

Of our total cash and cash equivalents, 98% and 99% were held by our non-U.S.

legal entities as of February 29, 2024 and November 30, 2023, respectively.

The cash and cash equivalents held by our non-U.S.

12 unchanged sentences

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What changed 10-Q

Item 2. Management’s Discussion and Analysis