Concentrix (NASDAQ:CNXC) reported fiscal first-quarter 2026 results that management said came in within its guidance ranges for both revenue and profit, while highlighting continued momentum in technology-led deals and a shift toward higher-solution mix work.
Revenue rose; mix varied by vertical
Chief Financial Officer Andre Valentine said the company delivered revenue of approximately $2.5 billion, up 1.9% on a constant-currency basis and “over 5%” on a reported basis. Performance differed by industry vertical:
- Banking and financial services: revenue grew 13% year over year on a constant-currency basis.
- Retail, travel, and e-commerce: revenue grew 6%, driven largely by travel and e-commerce clients.
- Media and communications: revenue grew 3%, largely with clients outside the U.S. and global entertainment and media companies.
- Technology and consumer electronics: revenue declined about 6%.
- Healthcare: revenue declined about 6%.
For technology and consumer electronics, Valentine said the decline reflected a combination of lower underlying volumes, some impact from automation, and offshore mix. He characterized the vertical as having shown volatility over the past eight quarters and said it “could go up or down” in the second half of fiscal 2026 depending on the pipeline and share gains within the client base.
Profitability in line with guidance; restructuring and asset sales affected GAAP
On profitability, Valentine reported non-GAAP operating income of $295 million, which he said was the midpoint of the company’s prior guidance range. Adjusted EBITDA was $348 million, representing a 13.9% margin. Non-GAAP diluted EPS was $2.61, which management said was in line with the guidance range provided in January.
GAAP results included a $6 million loss related to the sale of two small non-strategic businesses. One sale closed during the quarter, while the second is expected to close later in the year; the pending sale’s assets and liabilities were classified as held for sale on the balance sheet. Total net proceeds from the two divestitures are expected to be approximately $20 million.
Valentine also said GAAP results in the first quarter—and expected GAAP results in the second quarter—reflect restructuring charges tied to cost actions intended to “align our cost structure and invest in higher growth and higher profit areas.” He said actions taken in the first quarter and second quarter are expected to generate about $40 million in annualized savings “over and above investments in growth,” contributing to sequential profitability improvement in the second half of fiscal 2026.
AI and iX suite: deal activity increased; pricing described
President and CEO Chris Caldwell emphasized technology-led growth, saying overall wins with technology were up more than 61% year over year in the quarter. He also said signed annual contract value for solutions including AI more than doubled quarter over quarter, alongside sequential increases in AI license consumption across the client base.
Caldwell highlighted the company’s proprietary iX suite and partner ecosystem as differentiators that can help win “larger, more transformative deals,” while noting such programs may initially compress some revenue and margin until they scale. He said the company closed close to 60 enterprise iX suite deals during the quarter, including its largest iX Hero contracts to date with two Fortune 50 companies.
In response to an analyst question on pricing, Caldwell said iX Hello, the company’s fully autonomous solution, is priced based on consumption: the company implements it with “very small or de minimis fees” and then is paid based on the number of fully automated contacts. He said the margin can be negative early on, then becomes positive as usage scales, similar to a software business model.
For iX Hero, Caldwell said pricing is subscription-based on a per-seat model tied to how many people use the product. He reiterated prior commentary that the company ended fiscal Q4 with $60 million of annual recurring revenue and said the company expects to be at or above $100 million by the end of the fiscal year, adding that it was “a little ahead of plan” based on first-quarter sales and a strong pipeline entering the second quarter.
Asked to quantify first-quarter revenue tied to AI and the iX suite, Caldwell said the company does not break it out that way because clients often use multiple AI solutions across vendors and internal efforts. He instead pointed to broad adoption across the client base and said the company is seeing “very, very high success rates” in AI implementations.
Cash flow seasonality, capital returns, and debt actions
Adjusted free cash flow was negative $145 million in the quarter, which Valentine attributed to the timing of cash receipts that increased accounts receivable at quarter-end. He said the related receivables were collected in the first week of March and reiterated that the company’s free cash flow is seasonal—typically negative in the first quarter and stronger in subsequent quarters. Management maintained full-year adjusted free cash flow guidance of $630 million to $650 million.
Concentrix returned about $65 million to shareholders in the quarter, including $42 million in share repurchases (about 1.05 million shares at an average price of roughly $40) and $23 million through its quarterly dividend.
Valentine said the company issued $600 million of three-year senior notes in February, maturing March 1, 2029, with a 6.50% coupon. The proceeds were used to retire $600 million of 6.65% senior notes due in August 2026. An additional $200 million of the 6.65% notes remains outstanding, which the company expects to repay using free cash flow in the second and third quarters.
At quarter-end, cash and cash equivalents totaled $234 million, total debt was about $4.75 billion, and net debt was $4.51 billion. Off-balance-sheet factored accounts receivable borrowings were approximately $129 million. Liquidity was “nearly $1.4 billion,” including an undrawn $1.1 billion revolving credit facility. Valentine said the company is committed to reducing net leverage to below 2.6x adjusted EBITDA by the end of fiscal 2026.
Outlook: Q2 ranges, margin progression, and offshore shift
For the second quarter, management guided revenue of $2.46 billion to $2.485 billion, implying constant-currency growth of 1% to 2%. Valentine said the company is being prudent in its revenue guidance given the geopolitical situation and expects foreign exchange to provide an estimated 75-basis-point benefit versus the prior period based on current rates.
The company guided to second-quarter non-GAAP operating income of $290 million to $300 million, implying non-GAAP operating margin of 11.8% to 12.1%. Second-quarter non-GAAP EPS is expected to be $2.57 to $2.69, based on assumptions including approximately $67 million in interest expense, 60.9 million diluted shares, and a non-GAAP effective tax rate of about 25%.
Addressing margin cadence, Valentine said the company anticipated margin compression in the first half followed by sequential expansion in the second half, driven by cost actions, additional revenue coming online in the back half, and transformational deals reaching full production. He also said the company continues to see a trend toward moving work offshore, estimating that roughly 15% of revenue delivered from North America and Western Europe could shift over time, with about a two-point headwind embedded in its revenue guidance. He added that as offshore programs reach run rate, margins improve.
CEO Chris Caldwell said the company’s expectation is to return to historical margin levels and “progress past there” over time, while Valentine quantified excess physical capacity as a 20 to 40 basis-point margin impact in the quarter, with a similar magnitude of improvement expected in the second half as the company grows into that capacity.
On geopolitical exposure, Caldwell said the company had spoken with many clients and described impacts as “very de minimis so far,” adding that Middle Eastern operations represent about 1% of revenue and that the situation had been “fairly steady” to date.
About Concentrix (NASDAQ:CNXC)
Concentrix Inc (NASDAQ: CNXC) is a global business services company specializing in customer engagement solutions and technology‐driven business process outsourcing. The firm’s offerings encompass customer care delivered across voice and digital channels, back‐office processing, analytics and consulting, and automated workflow management. By integrating proprietary platforms, strategic partnerships and advanced automation, Concentrix helps clients enhance customer experiences and streamline operations.
Its capabilities extend to digital marketing and technology implementation, leveraging artificial intelligence, machine learning and data analytics to optimize customer journeys.
