What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-07-05 compared with 2024-04-05 · 146 added, 112 removed, 291 unchanged (47% of the section changed)

1 unchanged sentence

The discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes to those consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended November 30, 2023, as filed with the Securities and Exchange Commission on January 29, 2024.

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.

References to “we,” “our,” “us,” or “the Company” or “Concentrix” 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 and six months ended May 31, 2024 and 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.

GAAP for the periods, 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.

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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, should, and other similar expressions.

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, debt repayment, 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, 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 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 our combination with Webhelp on relationships with clients and other third parties;

risks related to 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;

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

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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;

the inability to execute on our strategy;

competitive conditions in our industry and consolidation of our competitors;

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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 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.

jurisdictions.

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.

Other names and marks are the property of their respective owners.

Overview and Basis of Presentation

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.

Concentrix is a global technology and services leader that designs, builds and runs fully integrated, end-to-end solutions at speed and scale across the enterprise, helping iconic and disruptive brands drive deep understanding, full lifecycle engagement, and differentiated experiences for their end-customers around the world.

We provide end-to-end capabilities, including customer experience (“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.

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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.

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

We generate revenue through the provision of CX solutions and technology to our clients pursuant to client contracts.

We generate revenue through the provision of technology and services to our clients pursuant to client contracts.

Our client contracts typically consist of a master services agreement, supported in most cases by multiple statements of work, which contain the terms and conditions of each contracted solution.

Our client contracts can range from less than one year to over five years in term and are subject to early termination by our clients for any reason, typically with 30 to 90 days’ notice.

Our CX solutions and technology are generally characterized by flat unit prices.

Our technology and services are generally characterized by flat unit prices.

Approximately 97% of our revenue is recognized as services are performed, based on staffing hours or the number of client customer transactions handled using contractual rates.

Remaining revenue from the sale of these solutions are typically recognized as the services are provided over the duration of the contract using contractual rates.

Our cost of revenue consists primarily of personnel costs related to the delivery of our solutions and technology.

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

Our cost of revenue consists primarily of personnel costs related to the delivery of our technology and services.

The costs of our revenue can be impacted by the mix of client contracts, where we deliver the technology and services, 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 second fiscal quarters of 2024 and 2023, approximately 79% and 80%, respectively, of our consolidated revenue was generated from our non-U.S.

operations, and approximately 50% and 68%, respectively, of our consolidated revenue was priced in U.S.

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

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

operations while being priced in U.S.

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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 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 gross margins fluctuate and can be impacted by the mix of client contracts, services provided, shifts in the geography from which our technology and 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 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.

Economic and Industry Trends

The CX solutions industry in which we operate is competitive, including on the basis of pricing terms, delivery capabilities, and quality of services.

The industry in which we operate is competitive, including on the basis of pricing terms, delivery capabilities, and quality of services.

Further, there can be competitive pressure for labor in various markets, which could result in increased labor costs.

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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.

We have significant concentrations in the Philippines, India, Brazil, the United States, Türkiye , 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.

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Critical Accounting Policies and Estimates

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)

During the three and six months ended May 31, 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 and Six Months Ended May 31, 2024 and 2023

Three Months Ended Six Months Ended

May 31, 2024 May 31, 2023 May 31, 2024 May 31, 2023

($ in thousands) ($ in thousands)

Revenue $ 2,380,716 $ 1,614,706 $ 4,783,464 $ 3,251,110

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Net income $ 66,834 $ 78,850 $ 118,936 $ 166,720

Three Months Ended % Change

February 29, 2024 February 28, 2023 2024 to 2023

Three Months Ended % Change Six Months Ended % Change

May 31, 2024 May 31, 2023 2024 to 2023

($ in thousands)

Industry vertical:

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Total $ 2,380,716 $ 1,614,706 47.4% $ 4,783,464 $ 3,251,110 47.1%

We generate revenue by delivering our CX solutions and technology to our clients categorized in the above primary industry verticals.

We generate revenue by delivering our technology and services to our clients categorized in the above primary industry verticals.

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

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.

Our revenue increased by 47.4% in the three months ended May 31, 2024, compared to the three months ended May 31, 2023, primarily as a result of the Webhelp Combination.

For the three months ended May 31, 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 $23.0 million, or 1.4%.

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.

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

If the Webhelp Combination had occurred at the beginning of fiscal year 2023, our revenue would have increased by 1.8% in the three months ended May 31, 2024.

Our revenue increased by 47.1% in the six months ended May 31, 2024, compared to the six months ended May 31, 2023, primarily as a result of the Webhelp Combination.

For the six months ended May 31, 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 $35.8 million, or 1.1%.

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

If the Webhelp Combination had occurred at the beginning of fiscal year 2023, our revenue would have increased by 1.8% in the six months ended May 31, 2024.

Cost of Revenue, Gross Profit and Gross Margin Percentage

Three Months Ended % Change

February 29, 2024 February 28, 2023 2024 to 2023

($ in thousands)

Three Months Ended % Change Six Months Ended % Change

May 31, 2024 May 31, 2023 2024 to 2023

($ in thousands) ($ in thousands)

Cost of revenue $ 1,523,147 $ 1,034,481 47.2% $ 3,069,366 $ 2,089,724 46.9%

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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 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.

Our cost of revenue increased by 47.2% in the three months ended May 31, 2024, compared to the three months ended May 31, 2023, primarily due to the increases in our revenue and personnel costs related to the Webhelp Combination.

The increases were partially offset by a $38.6 million, or 3.7%, 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 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.

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

If the Webhelp Combination had occurred at the beginning of fiscal year 2023, our cost of revenue would have increased by 1.5% in the three months ended May 31, 2024.

Our cost of revenue increased by 46.9% in the six months ended May 31, 2024, compared to the six months ended May 31, 2023, primarily due to the increases in our revenue and personnel costs related to the Webhelp Combination.

The increases were partially offset by a $61.0 million, or 2.9%, 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 Argentine peso, Egyptian pound and Philippine peso against the U.S.

If the Webhelp Combination had occurred at the beginning of fiscal year 2023, our cost of revenue would have increased by 1.5% in the six months ended May 31, 2024.

Our gross profit increased by 47.8% in the three months ended May 31, 2024, compared to the three months ended May 31, 2023, primarily due to the increase in revenue and the contributions from the Webhelp Combination and a net favorable foreign currency impact of $15.6 million on gross profit, partially offset by the increase in cost of revenue.

Our gross margin percentage for the three months ended May 31, 2024 increased to 36.0% from 35.9% in the prior fiscal year period due to changes in the mix of geographies where our services were delivered.

Our gross profit increased by 47.6% in the six months ended May 31, 2024, compared to the six months ended May 31, 2023, primarily due to the increase in revenue and the contributions from the Webhelp Combination and a net favorable foreign currency impact of $25.2 million on gross profit, partially offset by the increase in cost of revenue.

Our gross margin percentage for the six months ended May 31, 2024 increased to 35.8% from 35.7% in the prior fiscal year period due to changes in the mix of geographies where our services were delivered.

Selling, General and Administrative Expenses

Three Months Ended % Change

February 29, 2024 February 28, 2023 2024 to 2023

($ in thousands)

Three Months Ended % Change Six Months Ended % Change

May 31, 2024 May 31, 2023 2024 to 2023

($ in thousands) ($ 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 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.

Our selling, general and administrative expenses increased by 69.4% in the three months ended May 31, 2024, compared to the three months ended May 31, 2023, primarily due to incremental selling, general and administrative expenses associated with the Webhelp Combination, an increase in amortization expenses, primarily associated with the intangible assets from the Webhelp

Combination, of $76.5 million, and an increase in acquisition-related and integration expenses of $23.5 million.

These increases were partially offset by a $7.6 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 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.

As a percentage of revenue, selling, general and administrative expenses increased from 25.9% in the second fiscal quarter of 2023 to 29.7% in the second fiscal quarter of 2024 due to the net effect of the changes described.

Our selling, general and administrative expenses increased by 68.0% in the six months ended May 31, 2024, compared to the six months ended May 31, 2023, primarily due to incremental selling, general and administrative expenses associated with the Webhelp Combination, an increase in amortization expenses, primarily associated with the intangible assets from the Webhelp Combination, of $153.6 million and an increase in acquisition-related and integration expenses of $48.1 million.

These increases were partially offset by a $12.4 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 six months ended May 31, 2023 to 29.6% in the six months ended May 31, 2024 due to the net effect of the changes described.

Operating Income

Three Months Ended % Change

February 29, 2024 February 28, 2023 2024 to 2023

($ in thousands)

Three Months Ended % Change Six Months Ended % Change

May 31, 2024 May 31, 2023 2024 to 2023

($ in thousands) ($ in thousands)

Operating income $ 150,170 $ 162,566 (7.6)% $ 298,609 $ 318,613 (6.3)%

Operating margin 6.3 % 10.1 % 6.2 % 9.8 %

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.

Our operating income decreased during the three and six months ended May 31, 2024, compared to the three and six months ended May 31, 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 and six months ended May 31, 2024, compared to the three and six months ended May 31, 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

February 29, 2024 February 28, 2023 2024 to 2023

($ in thousands)

Three Months Ended % Change Six Months Ended % Change

May 31, 2024 May 31, 2023 2024 to 2023

($ in thousands) ($ in thousands)

Interest expense and finance charges, net $ 82,457 $ 47,213 74.6% $ 164,896 $ 81,203 103.1%

Percentage of revenue 3.5 % 2.9 % 3.4 % 2.5 %

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.

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”), interest expense on the promissory note issued by us to certain Sellers in connection with the Webhelp Combination (the “Sellers’ Note”) and financing expenses incurred in fiscal year 2023 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 and finance charges, net for the three months ended May 31, 2024, compared to the three months ended May 31, 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, partially offset by a decrease of Bridge Facility financing fees and credit facility amendment fees of $11.8 million incurred in the second quarter of 2023 that did not recur.

The increase in interest expense and finance charges, net for the six months ended May 31, 2024, compared to the six months ended May 31, 2023, was primarily due to interest expense on our senior notes of $73.6 million and interest expense, including imputed interest, associated with the Sellers’ Note of $16.0 million, each of which were not outstanding in the prior year period, partially offset by a decrease of Bridge Facility financing fees and credit facility amendment fees of $11.8 million incurred in the second quarter of 2023 that did not recur.

Other Expense (Income), Net

Three Months Ended % Change

February 29, 2024 February 28, 2023 2024 to 2023

($ in thousands)

Three Months Ended % Change Six Months Ended % Change

May 31, 2024 May 31, 2023 2024 to 2023

($ in thousands) ($ in thousands)

Other expense (income), net $ (19,415) $ 9,383 (306.9)% $ (26,239) $ 13,097 (300.3)%

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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.

Other expense (income), net in the three months ended May 31, 2024 was income of $19.4 million, compared to expense of $9.4 million in the three months ended May 31, 2023.

The change in other expense (income), net over the prior fiscal year period was primarily due to net foreign currency gains and income associated with the change in acquisition contingent consideration associated with the Webhelp Combination of $6.7 million during the three months ended May 31, 2024

Other expense (income), net in the six months ended May 31, 2024 was income of $26.2 million, compared to expense of $13.1 million in the six months ended May 31, 2023.

The change in other expense (income), net over the prior fiscal year period was primarily due to income associated with the change in acquisition contingent consideration associated with the Webhelp Combination of $21.6 million during the six months ended May 31, 2024 and net foreign currency gains.

Provision for Income Taxes

Three Months Ended % Change

February 29, 2024 February 28, 2023 2024 to 2023

($ in thousands)

Three Months Ended % Change Six Months Ended % Change

May 31, 2024 May 31, 2023 2024 to 2023

($ in thousands) ($ in thousands)

Provision for income taxes $ 20,294 $ 27,120 (25.2)% $ 41,016 $ 57,593 (28.8)%

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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 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.

Our provision for income taxes decreased in the three and six months ended May 31, 2024, compared to the three and six months ended May 31, 2023, primarily due to a decrease in income before taxes.

The effective tax rate for the three and six months ended May 31, 2024 decreased compared to the three and six months ended May 31, 2023, primarily due to the change in mix of income earned in different tax jurisdictions between periods.

Certain Non-GAAP Financial Information

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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

Three Months Ended Six Months Ended

May 31, 2024 May 31, 2023 May 31, 2024 May 31, 2023

($ in thousands, except per share amounts)

2 unchanged sentences

Step-up depreciation

2,482 — 4,983 —

Amortization of intangibles 115,969 39,426 232,271 78,686

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Step-up depreciation

2,482 — 4,983 —

Amortization of intangibles 115,969 39,426 232,271 78,686

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Step-up depreciation

2,482 — 4,983 —

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

— 11,840 — 11,840

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

— 12,429 — 12,429

Imputed interest related to Sellers' Note included in interest expense and finance charges, net 4,179 — 8,357 —

1 unchanged sentence

Foreign currency losses (gains), net (2)

(14,409) (3,954) (7,799) (1,452)

Amortization of intangibles 115,969 39,426 232,271 78,686

3 unchanged sentences

Non-GAAP net income $ 183,099 $ 137,622 $ 360,810 $ 273,536

Three Months Ended

February 29, 2024 February 28, 2023

Three Months Ended Six Months Ended

May 31, 2024 May 31, 2023 May 31, 2024 May 31, 2023

($ in thousands, except per share amounts)

2 unchanged sentences

Step-up depreciation

0.04 — 0.07 —

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

— 0.23 — 0.23

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

— 0.24 — 0.24

Imputed interest related to Sellers' Note included in interest expense and finance charges, net 0.06 — 0.12 —

1 unchanged sentence

Foreign currency losses (gains), net (2)

(0.21) (0.08) (0.11) (0.03)

Amortization of intangibles 1.71 0.75 3.41 1.50

3 unchanged sentences

Non-GAAP Diluted EPS $ 2.69 $ 2.63 $ 5.29 $ 5.22

(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.

(1) Included in these amounts are a) Bridge Facility financing fees expensed 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.

(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.

The reported amounts for non-GAAP net income and non-GAAP EPS for the three and six months ended May 31, 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 and six months ended May 31, 2023.

(3) 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.

Liquidity and Capital Resources

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

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 the three and six months ended May 31, 2024, we repurchased 662,580 and 899,685 shares, respectively, of our common stock under the share repurchase program for approximately $40.6 million and $62.3 million, respectively, in the aggregate.

During the three and six months ended May 31, 2023, we repurchased 39,084 and 110,424 shares, respectively, of our common stock under the share repurchase program for approximately $4.9 million and $14.9 million, respectively, in the aggregate.

At May 31, 2024, approximately $227.8 million remained available for share repurchases under the existing authorization from our board of directors.

During June 2024, we repurchased 215,452 shares of our common stock for an aggregate purchase price of $13.0 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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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.

March 26, 2024 April 26, 2024 $0.3025 May 7, 2024

On June 26, 2024, we announced a cash dividend of $0.3025 per share to stockholders of record as of the close of business on July 26, 2024, payable on August 6, 2024.

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

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Debt Arrangements

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”).

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.

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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.

During the three and six months ended May 31, 2024, we voluntarily prepaid $150 million and $250 million, respectively, of the principal balance on the Term Loan, without penalty, resulting in an outstanding balance at May 31, 2024 of approximately $1,700 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.

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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 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.

At May 31, 2024 and November 30, 2023, no amounts were outstanding under our revolving credit facility.

During the six months ended May 31, 2023, we voluntarily prepaid $25.0 million of the principal balance on the term loans under the Prior Credit Facility, without penalty.

Securitization Facility

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%.

On April 25, 2024, we entered into an amendment to the Securitization Facility to (i) increase the commitment of the lenders to provide available borrowings from up to $500 million to up to $600 million, (ii) extend the termination date of the Securitization Facility from July 5, 2024 to April 24, 2026, and (iii) amend the interest rate margins, such that borrowings under the Securitization Facility that are funded by certain lenders through such lenders’ issuance of commercial paper bear interest at the applicable commercial paper rate plus a spread of 0.80% and, otherwise, at a bank rate that includes a per annum rate equal to the applicable SOFR rate (subject to a SOFR related adjustment of 0.10%), plus a spread of 0.90%.

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

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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

As of May 31, 2024 and November 30, 2023, we were in compliance with the debt covenants related to our debt arrangements.

Cash Flows – Six Months Ended May 31, 2024 and 2023

The following summarizes our cash flows for the six months ended May 31, 2024 and 2023, as reported in our consolidated statement of cash flows in the accompanying consolidated financial statements.

Six Months Ended

May 31, 2024 May 31, 2023

($ in thousands)

Net cash provided by (used in) operating activities

Net cash provided by operating activities

$ 191,469 $ 237,328

Net cash used in investing activities (120,649) (71,781)

Net cash provided by (used in) financing activities

Net cash used in financing activities

(183,276) (162,019)

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Operating Activities

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.

Net cash provided by operating activities was $191.5 million for the six months ended May 31, 2024, compared to net cash provided by operating activities of $237.3 million for the six months ended May 31, 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 three months ended February 29, 2024 was $60.6 million, compared to $39.6 million for the three months ended February 28, 2023.

Net cash used in investing activities for the six months ended May 31, 2024 was $120.6 million, compared to $71.8 million for the six months ended May 31, 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 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

Net cash used in financing activities for the six months ended May 31, 2024 was $183.3 million, consisting of principal payments of $250.0 million made on term loan borrowings under our senior credit facility, cash paid for acquired earnout liabilities of $22.7, share repurchases of $62.3 million, a change in funds held for clients of $30.6 million, and dividends of $41.0 million partially offset by net borrowings of $223.0 million under our Securitization Facility.

Net cash used in financing activities for the six months ended May 31, 2023 was $162.0 million, consisting primarily of principal payments of $25.0 million made on the term loan borrowings under our senior credit facility, net repayments of $67.5 million under our Securitization Facility, share repurchases of $14.9 million, dividends of $28.6 million, and cash paid for debt issuance costs of $20.7 million related to financing fees for the Bridge Facility entered into in connection with the Webhelp Combination and fees related to our Restated Credit Agreement.

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

Three Months Ended

February 29, 2024 February 28, 2023

Six Months Ended

May 31, 2024 May 31, 2023

($ in thousands)

Net cash provided by (used in) operating activities

Net cash provided by operating activities

$ 191,469 $ 237,328

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$ 120,582 $ 165,547

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.

Our free cash flow was $75.3 million for the six months ended May 31, 2024 compared to $165.5 million for the six months ended May 31, 2023.

The decrease in free cash flow for the six months ended May 31, 2024 compared to the prior fiscal 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 $120.6 million for the six months ended May 31, 2024 compared to $165.5 million for the six months ended May 31, 2023.

The decrease in adjusted free cash flow for the six months ended May 31, 2024 compared to the prior year period was due to a decrease in free cash flow partially offset by a change in outstanding factoring balances of $45.3 million.

Capital Resources

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.

As of May 31, 2024, we had total liquidity of $1,498.3 million, which includes undrawn capacity on our revolving credit facility of $1,042.5 million, undrawn capacity of $248.5 million under our Securitization Facility and cash and cash equivalents.

Our cash and cash equivalents totaled $207.3 million and $295.3 million as of May 31, 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.

legal entities as of May 31, 2024 and November 30, 2023, respectively.

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

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis