Concentrix's (NASDAQ:CNXC) Q2 Sales Beat Estimates, Full-Year Outlook Exceeds Expectations

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2 days ago

Customer experience solutions provider Concentrix (NASDAQ:CNXC) reported Q2 CY2025 results topping the market's revenue expectations , with sales up 1.5% year on year to $2.42 billion. Guidance for next quarter's revenue was optimistic at $2.46 billion at the midpoint, 2.3% above analysts' estimates. Its non-GAAP profit of $2.70 per share was 1.7% below analysts' consensus estimates.
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Revenue: $2.42 billion vs analyst estimates of $2.39 billion (1.5% year-on-year growth, 1.2% beat)
Adjusted EPS: $2.70 vs analyst expectations of $2.75 (1.7% miss)
Adjusted EBITDA: $357.3 million vs analyst estimates of $376.8 million (14.8% margin, 5.2% miss)
The company lifted its revenue guidance for the full year to $9.77 billion at the midpoint from $9.56 billion, a 2.1% increase
Management raised its full-year Adjusted EPS guidance to $11.65 at the midpoint, a 1.5% increase
Operating Margin: 6.1%, in line with the same quarter last year
Free Cash Flow Margin: 7.5%, similar to the same quarter last year
Market Capitalization: $3.46 billion
'In the second quarter, we continued to outperform expectations on revenue growth despite some mid-quarter volatility,' said Chris Caldwell, President and CEO of Concentrix.
With a team of approximately 450,000 employees across 75 countries, Concentrix (NASDAQ:CNXC) designs and delivers customer experience solutions that help global brands manage their customer interactions across digital channels and contact centers.
Reviewing a company's long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
With $9.63 billion in revenue over the past 12 months, Concentrix is one of the larger companies in the business services industry and benefits from a well-known brand that influences purchasing decisions.
As you can see below, Concentrix grew its sales at an incredible 15.8% compounded annual growth rate over the last five years. This shows it had high demand, a useful starting point for our analysis.
Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. Concentrix's annualized revenue growth of 22% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.
This quarter, Concentrix reported modest year-on-year revenue growth of 1.5% but beat Wall Street's estimates by 1.2%. Company management is currently guiding for a 2.9% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 1.2% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and suggests its products and services will see some demand headwinds.
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Concentrix was profitable over the last five years but held back by its large cost base. Its average operating margin of 8.3% was weak for a business services business.
Looking at the trend in its profitability, Concentrix's operating margin decreased by 2.5 percentage points over the last five years. This raises questions about the company's expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Concentrix's performance was poor no matter how you look at it - it shows that costs were rising and it couldn't pass them onto its customers.
In Q2, Concentrix generated an operating margin profit margin of 6.1%, in line with the same quarter last year. This indicates the company's overall cost structure has been relatively stable.
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company's growth is profitable.
Concentrix's full-year EPS grew at an unimpressive 6.8% compounded annual growth rate over the last four years, in line with the broader business services sector.
In Q2, Concentrix reported EPS at $2.70, up from $2.69 in the same quarter last year. Despite growing year on year, this print slightly missed analysts' estimates. Over the next 12 months, Wall Street expects Concentrix's full-year EPS of $11.62 to grow 3.6%.
It was great to see Concentrix's revenue top analysts' expectations. We were also glad it raised its full-year revenue and EPS guidance. On the other hand, its EPS and EBITDA missed. Overall, this print was mixed but still had some key positives. Investors were likely hoping for more, and shares traded down 2% to $54.05 immediately following the results.
So should you invest in Concentrix right now? If you're making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it's free.