Concentrix Q3 Revenue Slips as Cash Flow and Adjusted EPS Rise

Concentrix Corp. (CNXC) reported a modest revenue decline for its fiscal third quarter, while higher non-GAAP operating income, stronger adjusted earnings per share and record third-quarter operating cash flow pointed to improved underlying profitability. The customer experience and business transformation provider also said half of its revenue now comes from business won and deployed over the past three years following the introduction of artificial intelligence.

Revenue for the three months ended Aug. 31 fell 1.2% to $2.45 billion from $2.48 billion a year earlier. On a constant-currency basis, revenue declined 0.5%.

Non-GAAP operating income increased 1.3% to $309.0 million, and the corresponding margin expanded by 30 basis points from the prior-year quarter. Non-GAAP diluted earnings rose 5% to $2.92 per share from $2.78. Concentrix said profit was above its guidance on an as-reported basis.

GAAP results were weighed down by a $1.05 billion impairment charge. The company recorded an operating loss of $910.3 million, compared with operating income of $147.0 million a year earlier. Its net loss was $988.1 million, or $16.24 per diluted share, versus net income of $88.1 million, or $1.34 per diluted share, in the third quarter of fiscal 2025.

Cash flow and debt

Net cash provided by operating activities reached a third-quarter record of $268.2 million, up from $224.8 million a year earlier. Free cash flow increased to $221.2 million from $159.7 million, while adjusted free cash flow rose to $218.3 million from $178.8 million.

Net debt declined by $358.0 million year over year to $4.12 billion. Shareholder returns totaled $23.1 million during the quarter, down from $63.5 million in the prior-year period.

For the first nine months of fiscal 2026, revenue increased 2% to $7.42 billion, or 0.7% in constant currency. Non-GAAP operating income declined to $896.0 million from $930.3 million, while adjusted free cash flow fell to $316.0 million from $339.3 million.

AI-influenced business reshapes revenue mix

Concentrix said approximately 50% of projected fiscal 2026 revenue is tied to business won since the start of fiscal 2023, revenue influenced by its iX product suite, and specialized offerings such as risk and compliance. The company estimates that this group of businesses will grow more than 30% in fiscal 2026 and has a revenue-retention rate more than four times that of its traditional business.

The company identified about $5 billion of current AI-influenced and newer revenue. That total includes $1.3 billion generated using its proprietary iX AI platform, $3 billion from new and existing clients involving significant transformation or AI influence, and $700 million from higher-value services in areas such as risk and compliance.

New-logo AI wins increased 63% from the second quarter. Concentrix said its AI solutions are deployed across more than 1,000 clients and over 400,000 desktops. Management described the shift as a deliberate effort to transform its traditional operations while expanding into newer services with stronger margins.

Industry performance was mixed, with banking, financial services and insurance revenue growing 12% year over year and travel and e-commerce increasing 6%. More than 90% of the company’s top 100 clients have expanded into additional services, while all five of its largest clients added new services over the past three years. Average annual client retention across fiscal 2024, fiscal 2025 and the year-to-date period of fiscal 2026 was 98%.

Fourth-quarter and longer-term outlook

For the fourth quarter ending Nov. 30, Concentrix expects revenue of $2.41 billion to $2.46 billion, representing a reported decline of 3.65% to 5.65% and a constant-currency decline of 3% to 5%. Non-GAAP operating income is forecast at $310 million to $320 million. GAAP operating income is expected to range from $174.4 million to $184.4 million.

Full-year fiscal 2026 revenue is projected at $9.83 billion to $9.88 billion, ranging from flat to 0.5% growth on a reported basis. At constant currency, management expects a decline of 0.3% to 0.8%. Full-year non-GAAP operating income is forecast at $1.21 billion to $1.22 billion, while the company expects a GAAP operating loss of $511.9 million to $521.9 million, reflecting the impairment and other adjustments.

Looking to fiscal 2027, Concentrix expects second-half revenue momentum with stable to growing margins. It is targeting more than $6 billion of revenue from new services and technologies, while identifying about 10% of revenue as having the potential to move offshore. The company also expects net leverage of approximately 2.2 times by the end of 2027 and is targeting a level below 2 times by the end of 2028. It projects roughly $2 billion of adjusted free cash flow over the next three years.

The outlook remains subject to economic and geopolitical conditions, changing client demand, foreign-exchange movements and competitive pressures. Concentrix also identified uncertainty surrounding the adoption of generative and agentic AI, cybersecurity threats, data-protection risks, labor costs, contract terminations and its ability to execute product launches and broader business strategy as factors that could affect future results.