Concentrix Corp. 10-Q Summary: Q1 2026
Business Context and Reporting Period
This filing covers the quarterly period ended February 28, 2026. Concentrix Corporation is a global technology and services leader providing customer experience (CX) process optimization, technology innovation, and business transformation services to over 2,000 clients across five primary verticals: technology/consumer electronics, retail/travel/e-commerce, communications/media, banking/financial services/insurance, and healthcare.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenue | $2,500.4 million | $2,372.2 million |
| Gross Profit | $849.7 million | $855.9 million |
| Gross Margin | 34.0% | 36.1% |
| Operating Income | $118.6 million | $168.9 million |
| Operating Margin | 4.7% | 7.1% |
| Net Income | $21.6 million | $70.3 million |
| Diluted EPS | $0.33 | $1.04 |
| Operating Cash Flow | ($83.2) million | $1.4 million |
| Free Cash Flow (Non-GAAP) | ($137.1) million | ($49.2) million |
| Total Debt (Current + Long-term) | $4,745.3 million | $4,638.5 million |
| Cash & Equivalents | $222.7 million | $327.3 million |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 5.4% year-over-year, driven by growth in retail, travel, e-commerce (+11.2%), and banking/financial services (+15.4%). This was partially offset by declines in technology/consumer electronics (-3.4%) and healthcare (-5.8%). Foreign currency fluctuations provided a positive impact of $82.1 million.
- Margin Compression: Gross margin declined to 34.0% from 36.1%, and operating margin fell to 4.7% from 7.1%. This was primarily due to increased restructuring costs ($34.9 million vs. $18.0 million), a $5.9 million loss on assets held for sale, and higher personnel costs.
- Profitability Decline: Net income dropped significantly to $21.6 million from $70.3 million, reflecting the margin compression and increased interest expense due to debt refinancing costs.
- Cash Flow Deterioration: Operating cash flow turned negative at ($83.2) million, compared to a positive $1.4 million in the prior year, driven by a decrease in net income and unfavorable working capital changes.
Guidance, Outlook, and Material Events
- Debt Refinancing: In February 2026, the company issued $600 million of 6.500% Senior Notes due 2029 to redeem $600 million of 6.650% Senior Notes due 2026. This incurred $6.3 million in debt extinguishment costs.
- Divestiture: The company entered an agreement to sell a non-core business for approximately €15 million. Assets and liabilities of $207.5 million and $174.9 million, respectively, are now classified as held for sale. A $5.9 million loss was recorded on this transaction.
- Restructuring: Acquisition-related, integration, and restructuring expenses increased to $34.9 million, primarily due to cost reduction initiatives, severance, and facility consolidation.
- Liquidity: Total liquidity stands at $1,378.5 million, including $1.1 billion in undrawn revolving credit capacity and $44.5 million in undrawn securitization capacity.
- Capital Allocation: The company repurchased $43.2 million of common stock and paid $23.1 million in dividends during the quarter. A quarterly dividend of $0.36 per share was declared for payment in May 2026.
- Risks: Key risks include foreign currency exchange rate fluctuations, geopolitical instability, labor cost inflation, and the impact of tariffs on client demand.
Investor Verification Checklist
- Working Capital Trends: Verify the sustainability of the negative operating cash flow and the drivers behind the increase in accounts receivable and other operating assets.
- Restructuring Execution: Monitor the timeline and cost savings realization from the announced cost reduction initiatives and facility consolidations.
- Divestiture Closing: Confirm the closing date and final proceeds of the non-core business sale currently held for sale.
- Debt Covenants: Review compliance with the consolidated leverage ratio (max 3.75:1) and interest coverage ratio (min 3.00:1) under the Restated Credit Agreement.
- FX Hedging Effectiveness: Assess the impact of the strengthening Euro on future margins given the company's significant non-U.S. revenue exposure.