Concentrix Corporation (NASDAQ:CNXC) Q2 2023 Earnings Call Transcript

Andre Valentine: Yes. So what we said was on like-for-like constant currency basis, low double-digit growth. And so that’s the growth rate in the first quarter. That is above expectations that Webhelp had for the quarter or that we had based on the diligence that we did. What we’ve built into our model for this year is 8% to 8.5% growth in the Webhelp business. So we remain very, very confident that they can deliver that. This really speaks to the quality of the asset here that we’re combining with their strong footprint in EMEA, particularly with nearshore and offshore offerings supporting European languages as well as the very, very strong operations and strong growth that they’re seeing in Latin America. If you look at kind of one of the rationales for this combination.

If you look at other public peers who break out their revenue growth rates by region, Europe is growing quite well as is Latin America. And frankly, we’re growing well there as well, but we are subscale. And so, that’s what I would read into their results, and it’s why we’re so excited about completing the combination, the great progress we’re seeing on the integration and then moving forward together.

Ruplu Bhattacharya: Okay. Thank you for taking my questions. Appreciate it.

Christopher Caldwell: Sure.

Operator: Thank you. [Operator Instructions] Our next question comes from Joseph Vafi with Canaccord Genuity. You may proceed.

Joseph Vafi: Hi, guys. Good afternoon. Thanks for taking the questions. Maybe just a couple ones based on your comments, Chris, on the AI front. Could you maybe perhaps give us a little more color? I know you mentioned cost being a factor in the technology and its implementation versus potentially other solutions. I think it’d be interesting to hear what — it’s early days, but the cost of some of this technology versus maybe traditional servicing of those volumes. And I have a couple of follow-ups.

Christopher Caldwell: Yes, for sure, Joe. So traditional and even sort of the, I don’t want to call it traditional AI, but the AI that we’ve deployed, that’s more machine-based learning or natural language processing, generally, the cost model is based on per seat, per license per current transaction and doesn’t necessarily have to deal with the type of transaction or the length of transaction that is being incurred. So for instance, asking a very simple question to having a back and forth at last 10 minutes, generally the same price and you get some variability out of that. The way generative AI is currently priced in the way the models work is that, you actually pay per sort of, and I’m very simplifying this, for character that you’re asking it to do and back and forth.

So longer queries take more time, take more money and cost more that kind of goes back and forth with it. Plus, as you look at the proprietary information that you’re uploading into the cloud for a storage perspective, you’re paying for the storage that kind of goes along with it. Then you’re paying for the technology licenses, the technology deploying to kind of give that last mile application to the client. So there’s a lot more costs associated with it. And so for some transactions or some productivity gains and proficiency gains that makes sense. For others, it doesn’t, because you don’t get the benefit of it. The real conversations we’re having with clients around generative AI right now though, cost is one factor, but it’s more about predictability of results where if — it’s not one or two questions coming up with the same answer.