Concentrix Corporation Common Stock Canaccord Genuity's 46th Annual Growth Conference

For sure. Let's talk about who we are and what we do. We're a leader in driving customer experiences globally. We're number 2 in the field. We operate in about 75 different countries around the world. We're just under $10 billion from a revenue perspective. When people think about customer experience, they tend to think about having a phone call, and that couldn't be farther from the truth. Our business is sort of deep integration with our clients, where we're delivering unique customer experiences, both from the back-office and front-office perspective, and it really is serviced by 3 individual pillars. One is sort of designing and building these systems that go into clients. Two is implementing the technology that enable these systems. Then 3 is actually providing the services that go along with the technology to deliver the systems for our clients around the world.

When you think about our business, the vast majority of our clients have long, long, long-term relationships with. Our average tenure of our top 25 clients is about 18 years, which is incredibly unique in our business. We're also very diversified from a client-based perspective and a revenue-based perspective. Our top 5 clients are really about less than 20%. Sorry, top 10 clients are less than 20% of our revenue. When you think of our revenue sources of where we drive revenue from a client base, we're unique in our industry, where about a third of our revenue comes from North American-based clients, a third of our revenue comes from European-based clients, and about a third of our revenue comes from Asia Pac clients. So a very nice customer mix from what it is.

In terms of what our business has changed, over the last 3 years since AI came out, which is always the topic of conversation when it comes in this theater. It's really evolved pretty significantly, but it hasn't dramatically changed. What I mean by that is that 3 years ago, we were as equally focused on automating as much as we could for clients. We were equally focused on driving a better cost of serve for our clients. We're equally focused as really driving better experiences. AI has just really enhanced that, enabled more of that to happen. Frankly, we see that as frankly, a good thing for our industry to evolve it because we tend to make more off of technology solutions than pure service solutions.

The other big change that's happened over the last sort of three years is from a client perspective, is sort of where they thought they would service clients, how they would service clients, how they thought the evolution would happen has dramatically changed. Now language barriers have come down. Now there's more automation ability with some of the AI solutions to go in to drive better experiences for a lower cost. Clients are, instead of procuring things with individual partners, maybe 20 partners in their ecosystem, 50 partners in their ecosystem, they're looking more for one or two partners in their ecosystem to drive the full solution for them, which we see is beneficial in our business.

When we look at our last quarter, from a performance perspective, revenue growth was relatively anemic, and we're okay to say that because what we're driving under the covers is significant progress in the AI deployments. Our AI solution contract booking was up 400% year-on-year. That's driving a significant, sticky type of revenue into our client base. We're seeing that drive a better margin improvement and getting some returns from our investments we've made over the last couple of years. We're seeing more opportunities for consolidation in our channel, which also benefits what we're trying to drive in our business.

Then obviously from a cash flow perspective, we had a very healthy cash flow quarter, which is historically we start to ramp our cash flow in the back three quarters of the year versus our Q1, which tends to be a flat to negative cash flow quarter.

For sure. Both of those trends, the increase in offshoring at an accelerated rate, and frankly, what we're seeing from a client's thinking about their customer segmentation is driven by the same thing, which is clients not getting value from some of their AI investments or not getting as much value as they need from some of their AI investments that are being done, frankly. From an accelerating of offshoring perspective, about 15% of our business can be delivered from another shore than it is. Something in North America could be delivered from someplace in Asia from a lower cost perspective. About 15% of our business is that. Through the course of this year, we've seen acceleration. We went into the year thinking it's about 200 basis points, which is up about 50 basis points from traditionally what we see to 300 basis points of headwind.

That's primarily driven by people thinking, "Hey, we need to seek some cost savings to be able to hit our numbers, and that's one of the easiest ways to be able to actually deliver those cost savings." From a company perspective, a dollar turns into $0.50, but from a gross margin dollar perspective, it's the same. So it's actually more accretive to us once we get the transition done, which generally takes three to four quarters. So we see that actually as a positive. We'll exit this year at around 11%, give or take, that's still able to be offshored from where it's currently being delivered. That gets to a smaller piece of the pie.

In terms of that trend continuing on, the reality is most clients are now delivering from the right shore out of the gate, and so we're not necessarily building more capacity in onshore locations where we're not going to need that. It's all based on the offshore, and so we see that as being more beneficial to our business. In terms of clients looking at customer segmentation, saying, "Where are we going to invest, where we're not?" This is somewhat very unique and came up within the quarter where we had some large clients who you all know who are spending a significant amount of money on AI data center build-outs, who said there are some segmentation in our customers that we just do not make money on, which tends to be the S of SMB.

They tend to be in higher-cost countries, in European countries and some Asia Pac countries where they go, "We're not going to see a return for that, so we're going to take some of this money and we're going to invest in the enterprise side," which comes back to us. But it's not as much as where they just looked at segments and said, "We're no longer going to support that." That's pretty narrow and focused on a specific customer set, and we don't see that expanding out into any of the rest of our clients that we operate with.