Concentrix (CNXC)

Customer experience solutions provider Concentrix (NASDAQ:CNXC) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 4% year on year to $2.48 billion. Guidance for next quarter’s revenue was better than expected at $2.54 billion at the midpoint, 0.7% above analysts’ estimates. Its non-GAAP profit of $2.78 per share was 3.1% below analysts’ consensus estimates.

Company Overview

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.

The sector stands to benefit from ongoing digital transformation, increasing corporate demand for cost efficiencies, and the growing complexity of regulatory and cybersecurity landscapes. For those that invest wisely, AI and automation capabilities could emerge as competitive advantages, enhancing process efficiencies for the companies themselves as well as their clients. On the flip side, AI could be a headwind as well as the technology could lower the barrier to entry in the space and give rise to more self-service solutions. Additional challenges in the years ahead could include wage inflation for highly skilled consultants and potential regulatory scrutiny on outsourcing practices—especially in industries like finance and healthcare where who has access to certain data matters greatly.

Concentrix competes with other customer experience providers like Teleperformance, TELUS International, TaskUs, and Foundever Group, as well as with IT and business process services companies including Accenture, Cognizant, and Genpact that offer complementary services in consulting, design, and analytics.

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years.

With $9.72 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 16% compounded annual growth rate over the last five years. This is an encouraging starting point for our analysis because it shows Concentrix’s demand was higher than many business services companies.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Concentrix’s annualized revenue growth of 22.1% 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 4% but beat Wall Street’s estimates by 1%. Company management is currently guiding for a 3.7% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 2.8% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and indicates its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Concentrix was profitable over the last five years but held back by its large cost base. Its average operating margin of 8.2% was weak for a business services business.

Analyzing the trend in its profitability, Concentrix’s operating margin decreased by 3.6 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.

This quarter, Concentrix generated an operating margin profit margin of 5.9%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Concentrix’s full-year EPS grew at an unimpressive 5.7% compounded annual growth rate over the last four years, worse than the broader business services sector.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

Concentrix’s EPS grew at a weak 2.5% compounded annual growth rate over the last two years, lower than its 22.1% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

Diving into the nuances of Concentrix’s earnings can give us a better understanding of its performance. We mentioned earlier that Concentrix’s operating margin was flat this quarter, but a two-year view shows its margin has declinedwhile its share count has grown 22.4%. This means the company not only became less efficient with its operating expenses but also diluted its shareholders.

In Q3, Concentrix reported adjusted EPS of $2.78, down from $2.87 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Concentrix’s full-year EPS of $11.53 to grow 6.9%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Concentrix has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 5.6% over the last five years, slightly better than the broader business services sector.

Concentrix’s free cash flow clocked in at $159.7 million in Q3, equivalent to a 6.4% margin. This result was good as its margin was 1 percentage points higher than in the same quarter last year. We hope the company can build on this trend.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although Concentrix has shown solid business quality lately, it historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 7.4%, somewhat low compared to the best business services companies that consistently pump out 25%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Concentrix’s ROIC averaged 4.8 percentage point decreases over the last few years. If its returns keep falling, it could suggest its profitable growth opportunities are drying up. We’ll keep a close eye.

Concentrix reported $350.3 million of cash and $4.83 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $1.49 billion of EBITDA over the last 12 months, we view Concentrix’s 3.0× net-debt-to-EBITDA ratio as safe. We also see its $152.5 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

Despite a slight revenue beat in the quarter, EPS missed. To make matters worse, full-year EPS guidance was lowered to levels below Wall Street's estimates. Overall, this was a weaker quarter. The stock traded down 21.2% to $43.33 immediately after reporting.

Updated: December 4, 2025 at 11:25 PM EST

Before making an investment decision, investors should account for Concentrix’s business fundamentals and valuation in addition to what happened in the latest quarter.

There are a lot of things to like about Concentrix. First off, its revenue growth was exceptional over the last five years. And while its diminishing returns show management's recent bets still have yet to bear fruit, its scale and strong customer awareness give it negotiating power. On top of that, its sturdy operating margins show it has disciplined cost controls.

Concentrix’s P/E ratio based on the next 12 months is 3.1x. Looking at the business services landscape right now, Concentrix trades at a pretty interesting price. If you’re a fan of the business and management team, now is a good time to scoop up some shares.

Wall Street analysts have a consensus one-year price target of $64.80 on the company (compared to the current share price of $36.96), implying they see 75.3% upside in buying Concentrix in the short term.