Why Business Services Company Concentrix's Shares Are Falling Today

Concentrix Corporation CNXC reported third-quarter FY23 sales growth of 3.4% year-on-year to $1.63 billion, missing the analyst consensus estimate of $1.64 billion.

Adjusted EPS of $2.71 missed the analyst consensus of $2.84.

Gross profit rose 5% to $593 million with a profit margin of 36.3%.

The operating income for the quarter increased 3% to $162.3 million, and the operating margin contracted 10 basis points to 9.9%.

Adjusted EBITDA climbed 4.2% to $269.3 million and the adjusted EBITDA margin expanded 10 basis points to 16.5%.

Operating cash flow for the quarter was $211.4 million, with a free cash flow of $167.5 million.

The company held $2.1 billion in cash and equivalents as of August 31, 2023.

The company's Board of Directors has declared a quarterly dividend of $0.3025 per share, a 10% increase, payable on November 7, 2023, to shareholders of record at the close of business on October 27, 2023.

At August 31, 2023, the company's remaining share repurchase authorization was $312.1 million.

"We have experienced progress in deploying generative AI with select clients and sequential growth with our digital IT services business. We're also benefiting from the vendor consolidation trend which we believe will create opportunities for revenue growth and margin expansion in the future," said President and CEO Chris Caldwell.

Outlook: Concentrix sees Q4 Adjusted EPS of $3.03 - $3.15 versus the consensus of $3.32. It expects Q4 revenue of $2.190 billion - $2.215 billion, against the consensus of $1.7 billion.

Price Action: CNXC shares are trading lower by 7.05% at $68.75 in premarket on the last check Thursday.