Concentrix Corp

Previous wording

Certain comparisons of the year-over-year changes in revenue and cost of revenue in the discussion of our results of operations for the three and six months ended May 31, 2024 and 2023 include a supplemental comparison as if the Webhelp Combination had occurred at the beginning of fiscal year 2023. These supplemental comparisons can be identified by the language “if the Webhelp Combination had occurred at the beginning of fiscal year 2023”. The amounts used in these supplemental comparisons were determined by adding (a) the Webhelp results of operations for the relevant period in fiscal year 2023 prior to the Webhelp Combination and making reclassification and adjustments of International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) to U.S. GAAP for the periods, consistent with the adjustments made in our unaudited proforma condensed combined financial statements filed as Exhibit 99.2 to our Current Report on Form 8-K filed with the SEC on March 22, 2024 and (b) the Company’s consolidated results of operations for the relevant period in fiscal year 2023. We believe the presentation of this supplemental information is useful because the Webhelp Combination had a significant impact on revenue and cost of revenue for the post-acquisition period and the supplemental comparison enables readers to better understand changes in the combined business. These supplemental comparisons are provided for informational purposes only and may not necessarily reflect the results of operations that would have occurred had the Webhelp Combination actually occurred as of the beginning of the period referenced.

Current wording

Certain comparisons of the year-over-year changes in revenue and cost of revenue in the discussion of our results of operations for the three and nine months ended August 31, 2024 and 2023 include a supplemental comparison as if the Webhelp Combination had occurred at the beginning of fiscal year 2023. These supplemental comparisons can be identified by the language “if the Webhelp Combination had occurred at the beginning of fiscal year 2023”. The amounts used in these supplemental comparisons were determined by adding (a) the Webhelp results of operations for the relevant period in fiscal year 2023 prior to the Webhelp Combination and making reclassification and adjustments of International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) to U.S. GAAP for the periods, consistent with the adjustments made in our unaudited proforma condensed combined financial statements filed as Exhibit 99.2 to our Current Report on Form 8-K filed with the SEC on March 22, 2024 and (b) the Company’s consolidated results of operations for the relevant period in fiscal year 2023. We believe the presentation of this supplemental information is useful because the Webhelp Combination had a significant impact on revenue and cost of revenue for the post-acquisition period and the supplemental comparison enables readers to better understand changes in the combined business. These supplemental comparisons are provided for informational purposes only and may not necessarily reflect the results of operations that would have occurred had the Webhelp Combination actually occurred as of the beginning of the period referenced.

Previous wording

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include, but are not limited to, statements regarding our expected future financial condition, results of operations, effective tax rate, cash flows, leverage, liquidity, business strategy, competitive position, demand for our services and seasonality of our business, international operations, acquisition opportunities and the anticipated impact of acquisitions, capital allocation and dividends, growth opportunities, spending, capital expenditures and investments, debt repayment, competition and market forecasts, industry trends, our human capital resources and sustainability initiatives, and statements that include words such as believe, expect, may, will, provide, could, should, and other similar expressions. These forward-looking statements are inherently uncertain and involve substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Risks and uncertainties include, among other things: risks related to our ability to realize estimated cost savings, synergies or other anticipated benefits of our combination with Webhelp, or that such benefits may take longer to realize than expected; risks related to general economic conditions, including consumer demand, interest rates, inflation, supply chains, and the effects of the conflicts in Ukraine and Gaza; cyberattacks on our or our clients’ networks and information technology systems; uncertainty around, and disruption from, new and emerging technologies, including the adoption and utilization of generative artificial intelligence; the failure of our staff and contractors to adhere to our and our clients’ controls and processes; the inability to protect personal and proprietary information; the effects of communicable diseases or other public health crises, natural disasters, and adverse weather conditions; geopolitical, economic and climate- or weather-related risks in regions with a significant concentration of our operations; the inability to execute on our strategy; competitive conditions in our industry and consolidation of our competitors; variability in demand by our clients or the early termination of our client contracts; the level of business activity of our clients and the market acceptance and performance of their products and services; the demand for customer experience solutions and technology; damage to our reputation through the actions or inactions of third parties; changes in law, regulations or regulatory guidance; the operability of our communication services and information technology systems and networks; the loss of key personnel or the inability to attract and retain staff with the skills and expertise needed for …

Excerpt shortened here; the source contains the full paragraph.

Current wording

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include, but are not limited to, statements regarding our expected future financial condition, results of operations, effective tax rate, cash flows, leverage, liquidity, business strategy, competitive position, demand for our services and seasonality of our business, international operations, acquisition opportunities and the anticipated impact of acquisitions, capital allocation and dividends, growth opportunities, spending, capital expenditures and investments, debt repayment, competition and market forecasts, industry trends, our human capital resources and sustainability initiatives, and statements that include words such as believe, expect, may, will, provide, could, should, and other similar expressions. These forward-looking statements are inherently uncertain and involve substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Risks and uncertainties include, among other things: risks related to our ability to realize estimated cost savings, synergies or other anticipated benefits of our combination with Webhelp, or that such benefits may take longer to realize than expected; risks related to general economic conditions, including consumer demand, interest rates, inflation, supply chains, and the effects of the conflicts in Ukraine and Gaza; cyberattacks on our or our clients’ networks and information technology systems; uncertainty around, and disruption from, new and emerging technologies, including the adoption and utilization of generative artificial intelligence; the failure of our staff and contractors to adhere to our and our clients’ controls and processes; the inability to protect personal and proprietary information; the effects of communicable diseases or other public health crises, natural disasters, and adverse weather conditions; geopolitical, economic and climate- or weather-related risks in regions with a significant concentration of our operations; the ability to successfully execute our strategy; competitive conditions in our industry and consolidation of our competitors; variability in demand by our clients or the early termination of our client contracts; the level of business activity of our clients and the market acceptance and performance of their products and services; the demand for customer experience solutions and technology; damage to our reputation through the actions or inactions of third parties; changes in law, regulations or regulatory guidance; the operability of our communication services and information technology systems and networks; the loss of key personnel or the inability to attract and retain staff with the skills and expertise nee…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

On September 25, 2023, we completed our acquisition (the “Webhelp Combination”) of all of the issued and outstanding capital stock (the “Shares”) of Marnix Lux SA, a public limited liability company (société anonyme) incorporated under the laws of the Grand Duchy of Luxembourg (“Webhelp Parent”) and the parent company of the Webhelp business (“Webhelp”), from the holders thereof (the “Sellers”). The acquisition was completed pursuant to the terms and conditions of the Share Purchase and Contribution Agreement, dated as of June 12, 2023, as amended by First Amendment to Share Purchase and Contribution Agreement, dated as of July 14, 2023 by and among Concentrix, OSYRIS S.à r.l., a private limited liability company (société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg and a direct wholly owned subsidiary of Concentrix Corporation (“Purchaser”), Webhelp Parent, the Sellers, and certain representatives of the Sellers.

Current wording

On September 25, 2023, we completed our acquisition (the “Webhelp Combination”) of all of the issued and outstanding capital stock (the “Shares”) of Marnix Lux SA, a public limited liability company (société anonyme) incorporated under the laws of the Grand Duchy of Luxembourg (“Webhelp Parent”) and the parent company of the Webhelp business (“Webhelp”), from the holders thereof (the “Sellers”). Webhelp was a leading provider of CX solutions, including sales, marketing, and payment services, with significant operations and client relationships in Europe, Latin America, and Africa. The acquisition was completed pursuant to the terms and conditions of the Share Purchase and Contribution Agreement, dated as of June 12, 2023, as amended by First Amendment to Share Purchase and Contribution Agreement, dated as of July 14, 2023 by and among Concentrix, OSYRIS S.à r.l., a private limited liability company (société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg and a direct wholly owned subsidiary of Concentrix Corporation (“Purchaser”), Webhelp Parent, the Sellers, and certain representatives of the Sellers.

Previous wording

Webhelp is a leading provider of CX solutions, including sales, marketing, and payment services, with significant operations and client relationships in Europe, Latin America, and Africa. The preliminary purchase consideration for the acquisition of the Shares is valued at approximately $3,774.8 million, net of cash and restricted cash acquired.

Current wording

The purchase consideration for the acquisition of the Shares is valued at approximately $3,774.8 million, net of cash and restricted cash acquired.

Previous wording

In the second fiscal quarters of 2024 and 2023, approximately 79% and 80%, respectively, of our consolidated revenue was generated from our non-U.S. operations, and approximately 50% and 68%, respectively, of our consolidated revenue was priced in U.S. dollars. We expect that a significant amount of our revenue will continue to be generated from our non-U.S. operations while being priced in U.S. dollars. As a result, we have certain client contracts that are priced in non-U.S. dollar currencies for which a substantial portion of the costs to deliver the services are in other currencies. Accordingly, our revenue may be earned in currencies that are different from the currencies in which we incur corresponding expenses. Fluctuations in the value of currencies, such as the Philippine peso, the Indian rupee, the euro, and the Canadian dollar, against the U.S. dollar or other currencies in which we bill our clients, and inflation in the local economies in which these delivery centers are located, can impact the operating and labor costs in these delivery centers, which can result in reduced profitability. As a result, our revenue growth, costs and profitability have been impacted, and we expect will continue to be impacted, by fluctuations in foreign currency exchange rates and inflation.

Current wording

Through the third quarter of fiscal years 2024 and 2023, approximately 87% and 81%, respectively, of our consolidated revenue was generated from our non-U.S. operations, and approximately 50% and 68%, respectively, of our consolidated revenue was priced in U.S. dollars. We expect that a significant amount of our revenue will continue to be generated from our non-U.S. operations while being priced in U.S. dollars. As a result, we have certain client contracts that are priced in non-U.S. dollar currencies for which a substantial portion of the costs to deliver the services are in other currencies. Accordingly, our revenue may be earned in currencies that are different from the currencies in which we incur corresponding expenses. Fluctuations in the value of currencies, such as the Philippine peso, the Indian rupee, the euro, and the Canadian dollar, against the U.S. dollar or other currencies in which we bill our clients, and inflation in the local economies in which these delivery centers are located, can impact the operating and labor costs in these delivery centers, which can result in reduced profitability. As a result, our revenue growth, costs, and profitability have been impacted, and we expect will continue to be impacted, by fluctuations in foreign currency exchange rates and inflation.

Previous wording

During the three and six months ended May 31, 2024, there were no material changes to our critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the fiscal year ended November 30, 2023.

Current wording

During the three and nine months ended August 31, 2024, there were no material changes to our critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the fiscal year ended November 30, 2023.

Previous wording

Results of Operations – Three and Six Months Ended May 31, 2024 and 2023

Current wording

Results of Operations – Three and Nine Months Ended August 31, 2024 and 2023

Previous wording

Our revenue increased by 47.4% in the three months ended May 31, 2024, compared to the three months ended May 31, 2023, primarily as a result of the Webhelp Combination. For the three months ended May 31, 2024, revenue across all verticals increased, primarily as a result of the Webhelp Combination. The increase in revenue was partially offset by the negative effect of foreign currency translation of $23.0 million, or 1.4%. The unfavorable foreign currency translation effect on revenue was primarily due to the weakening of the Argentine peso and Japanese yen against the U.S. dollar. If the Webhelp Combination had occurred at the beginning of fiscal year 2023, our revenue would have increased by 1.8% in the three months ended May 31, 2024.

Current wording

Our revenue increased by 46.2% in the three months ended August 31, 2024, compared to the three months ended August 31, 2023, primarily as a result of the Webhelp Combination. For the three months ended August 31, 2024, revenue across all verticals increased, primarily as a result of the Webhelp Combination. The increase in revenue was partially offset by the negative effect of foreign currency translation of $22.5 million, or 1.4%. The unfavorable foreign currency translation effect on revenue was primarily due to the weakening of the Argentine peso and Japanese yen against the U.S. dollar. If the Webhelp Combination had occurred at the beginning of fiscal year 2023, our revenue would have increased by 0.9% in the three months ended August 31, 2024.

Previous wording

Our revenue increased by 47.1% in the six months ended May 31, 2024, compared to the six months ended May 31, 2023, primarily as a result of the Webhelp Combination. For the six months ended May 31, 2024, revenue across all verticals increased, primarily as a result of the Webhelp Combination. The increase in revenue was partially offset by the negative effect of foreign currency translation of $35.8 million, or 1.1%. The unfavorable foreign currency translation effect on revenue was primarily due to the weakening of the Argentine peso and Japanese yen against the U.S. dollar. If the Webhelp Combination had occurred at the beginning of fiscal year 2023, our revenue would have increased by 1.8% in the six months ended May 31, 2024.

Current wording

Our revenue increased by 46.8% in the nine months ended August 31, 2024, compared to the nine months ended August 31, 2023, primarily as a result of the Webhelp Combination. For the nine months ended August 31, 2024, revenue across all verticals increased, primarily as a result of the Webhelp Combination. The increase in revenue was partially offset by the negative effect of foreign currency translation of $58.3 million, or 1.2%. The unfavorable foreign currency translation effect on revenue was primarily due to the weakening of the Argentine peso and Japanese yen against the U.S. dollar. If the Webhelp Combination had occurred at the beginning of fiscal year 2023, our revenue would have increased by 1.5% in the nine months ended August 31, 2024.

Previous wording

Our cost of revenue increased by 47.2% in the three months ended May 31, 2024, compared to the three months ended May 31, 2023, primarily due to the increases in our revenue and personnel costs related to the Webhelp Combination. The increases were partially offset by a $38.6 million, or 3.7%, reduction in our cost of revenue due to foreign currency translation. The foreign currency translation impact on our cost of revenue was caused primarily by the weakening of the Argentine peso, Egyptian pound and Philippine peso against the U.S. dollar. If the Webhelp Combination had occurred at the beginning of fiscal year 2023, our cost of revenue would have increased by 1.5% in the three months ended May 31, 2024.

Current wording

Our cost of revenue increased by 46.6% in the three months ended August 31, 2024, compared to the three months ended August 31, 2023, primarily due to the increases in our revenue and personnel costs from the Webhelp Combination. The increases were partially offset by a $42.2 million, or 4.1%, reduction in our cost of revenue due to foreign currency translation. The foreign currency translation impact on our cost of revenue was caused primarily by the weakening of the Argentine peso, Egyptian pound, and Philippine peso against the U.S. dollar. If the Webhelp Combination had occurred at the beginning of fiscal year 2023, our cost of revenue would have increased by 1.2% in the three months ended August 31, 2024.

Previous wording

Our cost of revenue increased by 46.9% in the six months ended May 31, 2024, compared to the six months ended May 31, 2023, primarily due to the increases in our revenue and personnel costs related to the Webhelp Combination. The increases were partially offset by a $61.0 million, or 2.9%, reduction in our cost of revenue due to foreign currency translation. The foreign currency translation impact on our cost of revenue was caused primarily by the weakening of the Argentine peso, Egyptian pound and Philippine peso against the U.S. dollar. If the Webhelp Combination had occurred at the beginning of fiscal year 2023, our cost of revenue would have increased by 1.5% in the six months ended May 31, 2024.

Current wording

Our cost of revenue increased by 46.8% in the nine months ended August 31, 2024, compared to the nine months ended August 31, 2023, primarily due to the increases in our revenue and personnel costs from the Webhelp Combination. The increases were partially offset by a $103.2 million, or 3.3%, reduction in our cost of revenue due to foreign currency translation. The foreign currency translation impact on our cost of revenue was caused primarily by the weakening of the Argentine peso, Philippine peso, and Egyptian pound against the U.S. dollar. If the Webhelp Combination had occurred at the beginning of fiscal year 2023, our cost of revenue would have increased by 1.4% in the nine months ended August 31, 2024.

Previous wording

Our gross profit increased by 47.8% in the three months ended May 31, 2024, compared to the three months ended May 31, 2023, primarily due to the increase in revenue and the contributions from the Webhelp Combination and a net favorable foreign currency impact of $15.6 million on gross profit, partially offset by the increase in cost of revenue. Our gross margin percentage for the three months ended May 31, 2024 increased to 36.0% from 35.9% in the prior fiscal year period due to changes in the mix of geographies where our services were delivered.

Current wording

Our gross profit increased by 45.6% in the three months ended August 31, 2024, compared to the three months ended August 31, 2023, primarily due to the increase in revenue, contributions from the Webhelp Combination, and a net favorable foreign currency impact of $19.7 million on gross profit, partially offset by the increase in cost of revenue. Our gross margin percentage for the three months ended August 31, 2024 decreased to 36.2% from 36.4% in the prior fiscal year period due to changes in the mix of geographies where our services were delivered.

Previous wording

Our gross profit increased by 47.6% in the six months ended May 31, 2024, compared to the six months ended May 31, 2023, primarily due to the increase in revenue and the contributions from the Webhelp Combination and a net favorable foreign currency impact of $25.2 million on gross profit, partially offset by the increase in cost of revenue. Our gross margin percentage for the six months ended May 31, 2024 increased to 35.8% from 35.7% in the prior fiscal year period due to changes in the mix of geographies where our services were delivered.

Current wording

Our gross profit increased by 46.9% in the nine months ended August 31, 2024, compared to the nine months ended August 31, 2023, primarily due to the increase in revenue, profit contributions from the Webhelp Combination, and a net favorable foreign currency impact of $44.9 million on gross profit, partially offset by the increase in cost of revenue. Our gross margin percentage for the nine months ended August 31, 2024 increased to 36.0% from 35.9% in the prior fiscal year period due to changes in the mix of geographies where our services were delivered.

Previous wording

Our selling, general and administrative expenses increased by 69.4% in the three months ended May 31, 2024, compared to the three months ended May 31, 2023, primarily due to incremental selling, general and administrative expenses associated with the Webhelp Combination, an increase in amortization expenses, primarily associated with the intangible assets from the Webhelp

Current wording

Our selling, general and administrative expenses increased by 64.8% in the three months ended August 31, 2024, compared to the three months ended August 31, 2023, primarily due to incremental selling, general and administrative expenses associated with the Webhelp Combination, an increase in amortization expenses of $77.0 million, primarily associated with the intangible assets from the

Previous wording

Combination, of $76.5 million, and an increase in acquisition-related and integration expenses of $23.5 million. These increases were partially offset by a $7.6 million reduction in selling, general and administrative expenses due to foreign currency translation impacts. As a percentage of revenue, selling, general and administrative expenses increased from 25.9% in the second fiscal quarter of 2023 to 29.7% in the second fiscal quarter of 2024 due to the net effect of the changes described.

Current wording

Webhelp Combination, and an increase in acquisition-related and integration expenses of $17.6 million. These increases were partially offset by a $9.5 million reduction in selling, general and administrative expenses due to foreign currency translation impacts. As a percentage of revenue, selling, general and administrative expenses increased from 26.4% in the third fiscal quarter of 2023 to 29.8% in the third fiscal quarter of 2024 due to the net effect of the changes described.

Previous wording

Our selling, general and administrative expenses increased by 68.0% in the six months ended May 31, 2024, compared to the six months ended May 31, 2023, primarily due to incremental selling, general and administrative expenses associated with the Webhelp Combination, an increase in amortization expenses, primarily associated with the intangible assets from the Webhelp Combination, of $153.6 million and an increase in acquisition-related and integration expenses of $48.1 million. These increases were partially offset by a $12.4 million reduction in selling, general and administrative expenses due to foreign currency translation impacts. As a percentage of revenue, selling, general and administrative expenses increased from 25.9% in the six months ended May 31, 2023 to 29.6% in the six months ended May 31, 2024 due to the net effect of the changes described.

Current wording

Our selling, general and administrative expenses increased by 66.9% in the nine months ended August 31, 2024, compared to the nine months ended August 31, 2023, primarily due to incremental selling, general and administrative expenses associated with the Webhelp Combination, an increase in amortization expenses of $230.6 million, primarily associated with the intangible assets from the Webhelp Combination, and an increase in acquisition-related and integration expenses of $65.7 million. These increases were partially offset by a $21.9 million reduction in selling, general and administrative expenses due to foreign currency translation impacts. As a percentage of revenue, selling, general and administrative expenses increased from 26.1% in the nine months ended August 31, 2023 to 29.7% in the nine months ended August 31, 2024 due to the net effect of the changes described.

Previous wording

Our operating income decreased during the three and six months ended May 31, 2024, compared to the three and six months ended May 31, 2023, due to the increase in selling, general and administrative expenses partially offset by the increase in gross profit.

Current wording

Our operating income decreased during the three and nine months ended August 31, 2024, compared to the three and nine months ended August 31, 2023, due to the increase in selling, general and administrative expenses partially offset by the increase in gross profit.

Previous wording

Our operating margin decreased during the three and six months ended May 31, 2024, compared to the three and six months ended May 31, 2023, due to the increase in selling, general and administrative expenses as a percentage of revenue partially offset by the increase in gross margin percentage.

Current wording

Our operating margin decreased during the three and nine months ended August 31, 2024, compared to the three and nine months ended August 31, 2023, due to the increase in selling, general and administrative expenses as a percentage of revenue partially offset by the increase in gross margin percentage.

Previous wording

The increase in interest expense and finance charges, net for the six months ended May 31, 2024, compared to the six months ended May 31, 2023, was primarily due to interest expense on our senior notes of $73.6 million and interest expense, including imputed interest, associated with the Sellers’ Note of $16.0 million, each of which were not outstanding in the prior year period, partially offset by a decrease of Bridge Facility financing fees and credit facility amendment fees of $11.8 million incurred in the second quarter of 2023 that did not recur.

Current wording

The increase in interest expense and finance charges, net for the three months ended August 31, 2024, compared to the three months ended August 31, 2023, was primarily due to an increase in interest expense on our senior notes of $24.6 million, interest expense, including imputed interest, associated with the Sellers’ Note of $8.1 million, and a decrease in interest income related to the senior notes proceeds of $7.8 million incurred in the prior year period that did not recur. The senior notes were outstanding for only a portion of the prior year period and the Sellers’ Note was not outstanding in the prior year period. These changes were partially offset by a decrease of Bridge Facility financing fees of $10.7 million incurred in the third quarter of fiscal year 2023 that did not recur in the current period.

Previous wording

The increase in interest expense and finance charges, net for the three months ended May 31, 2024, compared to the three months ended May 31, 2023, was primarily due to interest expense on our senior notes of $36.8 million and interest expense, including imputed interest, associated with the Sellers’ Note of $8.0 million, each of which were not outstanding in the prior year period, partially offset by a decrease of Bridge Facility financing fees and credit facility amendment fees of $11.8 million incurred in the second quarter of 2023 that did not recur.

Current wording

The increase in interest expense and finance charges, net for the nine months ended August 31, 2024, compared to the nine months ended August 31, 2023, was primarily due to an increase in interest expense on our senior notes of $98.2 million, interest expense, including imputed interest, associated with the Sellers’ Note of $24.0 million and a decrease in interest income related to the senior notes proceeds of $7.8 million incurred in the prior year period that did not recur. The senior notes were outstanding for only a portion of the prior year period and the Sellers’ Note was not outstanding in the prior year period. These changes were partially offset by a decrease of Bridge Facility financing fees and credit facility amendment fees of $22.5 million incurred in the nine months ended August 31, 2023 that did not recur.

Previous wording

Other expense (income), net in the three months ended May 31, 2024 was income of $19.4 million, compared to expense of $9.4 million in the three months ended May 31, 2023. The change in other expense (income), net over the prior fiscal year period was primarily due to net foreign currency gains and income associated with the change in acquisition contingent consideration associated with the Webhelp Combination of $6.7 million during the three months ended May 31, 2024

Current wording

Other expense (income), net in the three months ended August 31, 2024 was expense of $46.0 million, compared to expense of $6.2 million in the three months ended August 31, 2023. The change in other expense (income), net over the prior fiscal year period was primarily due to net foreign currency losses and expense of $10.5 million due to the change in acquisition contingent consideration associated with the Webhelp Combination during the three months ended August 31, 2024

Previous wording

Other expense (income), net in the six months ended May 31, 2024 was income of $26.2 million, compared to expense of $13.1 million in the six months ended May 31, 2023. The change in other expense (income), net over the prior fiscal year period was primarily due to income associated with the change in acquisition contingent consideration associated with the Webhelp Combination of $21.6 million during the six months ended May 31, 2024 and net foreign currency gains.

Current wording

Other expense (income), net in the nine months ended August 31, 2024 was expense of $19.8 million, compared to expense of $19.3 million in the nine months ended August 31, 2023. The change in other expense (income), net over the prior fiscal year period was primarily due to net foreign currency losses primarily offset by income of $11.1 million due to the change in acquisition contingent consideration associated with the Webhelp Combination during the nine months ended August 31, 2024.

Previous wording

Our provision for income taxes decreased in the three and six months ended May 31, 2024, compared to the three and six months ended May 31, 2023, primarily due to a decrease in income before taxes. The effective tax rate for the three and six months ended May 31, 2024 decreased compared to the three and six months ended May 31, 2023, primarily due to the change in mix of income earned in different tax jurisdictions between periods.

Current wording

Our provision for income taxes decreased in the three and nine months ended August 31, 2024, compared to the three and nine months ended August 31, 2023, primarily due to a decrease in income before taxes. The effective tax rate for the three and nine months ended August 31, 2024 increased compared to the three and nine months ended August 31, 2023, primarily due to the change in mix of income earned in different tax jurisdictions between periods.

Previous wording

•Non-GAAP net income, which is net income excluding the tax effected impact of acquisition-related and integration expenses, including related restructuring costs, amortization of intangible assets, share-based compensation, imputed interest related to the Sellers’ note, change in acquisition contingent consideration and foreign currency losses (gains), net.

Current wording

•Non-GAAP net income, which is net income excluding the tax effected impact of acquisition-related and integration expenses, including related restructuring costs, amortization of intangible assets, share-based compensation, imputed interest related to the sellers’ note issued in connection with the combination with Webhelp (the “sellers’ note”), change in acquisition contingent consideration and foreign currency losses (gains), net. Non-GAAP net income also excludes the income tax effect of certain legal entity restructuring activity.

Previous wording

•Non-GAAP diluted earnings per common share (“EPS”), which is diluted EPS excluding the per share, tax effected impact of acquisition-related and integration expenses, including related restructuring costs, step-up depreciation, amortization of intangible assets, share-based compensation, imputed interest related to the Sellers’ note, change in acquisition contingent consideration and foreign currency losses (gains), net. Non-GAAP EPS excludes net income attributable to participating securities, and the per share, tax-effected impact of adjustments to net income described above reflect only those amounts that are attributable to common shareholders.

Current wording

•Non-GAAP diluted earnings per common share (“EPS”), which is diluted EPS excluding the per share, tax effected impact of acquisition-related and integration expenses, including related restructuring costs, step-up depreciation, amortization of intangible assets, share-based compensation, imputed interest related to the Sellers’ note, change in acquisition contingent consideration and foreign currency losses (gains), net. Non-GAAP EPS also excludes the per share income tax effect of certain legal entity restructuring activity. Non-GAAP EPS excludes net income attributable to participating securities, and the per share, tax-effected impact of adjustments to net income described above reflect only those amounts that are attributable to common shareholders.

Previous wording

(2)Foreign currency losses (gains), net are included in other expense (income), net and primarily consist of gains and losses recognized on the revaluation and settlement of foreign currency transactions and realized and unrealized gains and losses on derivative contracts that do not qualify for hedge accounting. The reported amounts for non-GAAP net income and non-GAAP EPS for the three and six months ended May 31, 2024 include adjustments to exclude these foreign currency losses (gains), net, which were not adjusted in similar non-GAAP measures previously reported for the corresponding period in fiscal year 2023. In order to enhance comparability, similar adjustments were made for non-GAAP net income and non-GAAP EPS for the three and six months ended May 31, 2023.

Current wording

(2)Foreign currency losses (gains), net are included in other expense (income), net and primarily consist of gains and losses recognized on the revaluation and settlement of foreign currency transactions and realized and unrealized gains and losses on derivative contracts that do not qualify for hedge accounting. The reported amounts for non-GAAP net income and non-GAAP EPS for the three and nine months ended August 31, 2024 include adjustments to exclude these foreign currency losses (gains), net, which were not adjusted in similar non-GAAP measures previously reported for the corresponding period in fiscal year 2023. In order to enhance comparability, similar adjustments were made for non-GAAP net income and non-GAAP EPS for the three and nine months ended August 31, 2023.

Previous wording

Our primary uses of cash are working capital, capital expenditures to expand our delivery footprint and enhance our technology solutions, debt repayments, and acquisitions, including our combination with Webhelp in September 2023. Our financing needs for these uses of cash have been a combination of operating cash flows and third-party debt arrangements. Our working capital needs are primarily to finance accounts receivable. When our revenue is increasing, our net investment in working capital typically increases. Conversely, when revenue is decreasing, our net investment in working capital typically decreases. To increase our market share and better serve our clients, we may further expand our operations through investments or acquisitions. We expect that such expansion would require an initial investment in working capital, personnel, facilities, and operations. These investments or acquisitions would likely be funded primarily by our existing cash and cash equivalents, available liquidity, including capacity on our debt arrangements, or the issuance of securities. We funded the Webhelp Combination through (i) proceeds from our August 2023 offering and sale of senior notes, (ii) term loan borrowings under our senior credit facility, and (iii) cash on hand.

Current wording

Our primary uses of cash are working capital, capital expenditures to expand our delivery footprint and enhance our technology solutions, debt repayments, and acquisition and integration expenses, including in connection with our September 2023 combination with Webhelp. Our financing needs for these uses of cash have been a combination of operating cash flows and third-party debt arrangements. Our working capital needs are primarily to finance accounts receivable. When our revenue is increasing, our net investment in working capital typically increases. Conversely, when revenue is decreasing, our net investment in working capital typically decreases. To increase our market share and better serve our clients, we may further expand our operations through investments or acquisitions. We expect that such expansion would require an initial investment in working capital, personnel, facilities, and operations. These investments or acquisitions would likely be funded primarily by our existing cash and cash equivalents, available liquidity, including capacity on our debt arrangements, or the issuance of securities. We funded the Webhelp Combination through (i) proceeds from our August 2023 offering and sale of senior notes, (ii) term loan borrowings under our senior credit facility, and (iii) cash on hand.

Previous wording

In September 2021, considering our strong free cash flow, low leverage and adequate liquidity to support capital return to stockholders while maintaining flexibility to pursue acquisitions, our board of directors authorized a share repurchase program. Under the share repurchase program, the board of directors authorized the repurchase of up to $500 million of our common stock from time to time as market and business conditions warrant, including through open market purchases or Rule 10b5-1 trading plans. The share repurchase program has no termination date and may be suspended or discontinued at any time. During the three and six months ended May 31, 2024, we repurchased 662,580 and 899,685 shares, respectively, of our common stock under the share repurchase program for approximately $40.6 million and $62.3 million, respectively, in the aggregate. During the three and six months ended May 31, 2023, we repurchased 39,084 and 110,424 shares, respectively, of our common stock under the share repurchase program for approximately $4.9 million and $14.9 million, respectively, in the aggregate. At May 31, 2024, approximately $227.8 million remained available for share repurchases under the existing authorization from our board of directors.

Current wording

In September 2021, considering our strong free cash flow, low leverage, and adequate liquidity to support capital return to stockholders while maintaining flexibility to pursue acquisitions, our board of directors authorized a share repurchase program. Under the share repurchase program, the board of directors authorized the repurchase of up to $500 million of our common stock from time to time as market and business conditions warrant, including through open market purchases or Rule 10b5-1 trading plans. The share repurchase program has no termination date and may be suspended or discontinued at any time. During the three and nine months ended August 31, 2024, we repurchased 607,298 and 1,506,983 shares, respectively, of our common stock under the share repurchase program for approximately $39.3 million and $101.6 million, respectively, in the aggregate. During the three and nine months ended August 31, 2023, we repurchased 320,105 and 430,529 shares, respectively, of our common stock under the share repurchase program for approximately $27.0 million and $41.9 million, respectively, in the aggregate. At August 31, 2024, approximately $188.5 million remained available for share repurchases under the existing authorization from our board of directors.

Previous wording

During June 2024, we repurchased 215,452 shares of our common stock for an aggregate purchase price of $13.0 million.

Current wording

During September 2024, we repurchased 161,613 shares of our common stock for an aggregate purchase price of $10.6 million.

Previous wording

On June 26, 2024, we announced a cash dividend of $0.3025 per share to stockholders of record as of the close of business on July 26, 2024, payable on August 6, 2024.

Current wording

On September 25, 2024, we announced a cash dividend of $0.33275 per share to stockholders of record as of the close of business on October 25, 2024, payable on November 5, 2024.

Previous wording

As of November 30, 2023, the outstanding principal balance on the Term Loan was $1,950 million. During the three and six months ended May 31, 2024, we voluntarily prepaid $150 million and $250 million, respectively, of the principal balance on the Term Loan, without penalty, resulting in an outstanding balance at May 31, 2024 of approximately $1,700 million.

Current wording

As of November 30, 2023, the outstanding principal balance on the Term Loan was $1,950 million. During the three and nine months ended August 31, 2024, we voluntarily prepaid $100 million and $350 million, respectively, of the principal balance on the Term Loan, without penalty, resulting in an outstanding balance at August 31, 2024 of approximately $1,600 million.

Previous wording

During the six months ended May 31, 2023, we voluntarily prepaid $25.0 million of the principal balance on the term loans under the Prior Credit Facility, without penalty.

Current wording

During the nine months ended August 31, 2023, we voluntarily prepaid $25.0 million of the principal balance on the term loans under the Prior Credit Facility, without penalty.

Previous wording

On September 25, 2023, as part of the consideration for the Webhelp Combination, we issued the Sellers’ Note in the aggregate principal amount of €700 million to certain Sellers. Pursuant to the Sellers’ Note, the unpaid principal amount outstanding accrues interest at a rate of two percent (2%) per annum, and all principal and accrued interest will be due and payable on September 25, 2025.

Current wording

On September 25, 2023, as part of the consideration for the Webhelp Combination, we issued the Sellers’ Note in the aggregate principal amount of €700 million to certain Sellers. Pursuant to the Sellers’ Note, the unpaid principal amount outstanding accrues interest at a rate of two percent (2%) per annum, and all principal and accrued interest will be due and payable on September 25, 2025. The stated rate of interest is below our expected borrowing rate. As a result, we discounted the Sellers’ Note by €31,500. The discounted value is being amortized into interest expense over the two-year term.

Previous wording

The following summarizes our cash flows for the six months ended May 31, 2024 and 2023, as reported in our consolidated statement of cash flows in the accompanying consolidated financial statements.

Current wording

The following summarizes our cash flows for the nine months ended August 31, 2024 and 2023, as reported in our consolidated statement of cash flows in the accompanying consolidated financial statements.

Previous wording

Net cash provided by operating activities was $191.5 million for the six months ended May 31, 2024, compared to net cash provided by operating activities of $237.3 million for the six months ended May 31, 2023. The change over the prior year period was primarily due to unfavorable changes in working capital and the decrease in net income.

Current wording

Net cash provided by operating activities was $383.1 million for the nine months ended August 31, 2024, compared to net cash provided by operating activities of $448.7 million for the nine months ended August 31, 2023. The change over the prior year period was primarily due to unfavorable changes in working capital and the decrease in net income.

Previous wording

Net cash used in investing activities for the six months ended May 31, 2024 was $120.6 million, compared to $71.8 million for the six months ended May 31, 2023. The increase in net cash used in investing activities over the prior year period primarily related to an increase in capital expenditures as a result of the expanded business due to the Webhelp Combination and payment of deferred cash consideration of $4.5 million related to the Webhelp Combination in the first quarter of 2024.

Current wording

Net cash used in investing activities for the nine months ended August 31, 2024 was $183.4 million, compared to $115.7 million for the nine months ended August 31, 2023. The increase in net cash used in investing activities over the prior year period primarily related to an increase in capital expenditures as a result of the expanded business due to the Webhelp Combination and payment of deferred cash consideration of $4.5 million related to the Webhelp Combination in the first quarter of fiscal year 2024.

Previous wording

Net cash used in financing activities for the six months ended May 31, 2024 was $183.3 million, consisting of principal payments of $250.0 million made on term loan borrowings under our senior credit facility, cash paid for acquired earnout liabilities of $22.7, share repurchases of $62.3 million, a change in funds held for clients of $30.6 million, and dividends of $41.0 million partially offset by net borrowings of $223.0 million under our Securitization Facility.

Current wording

Net cash used in financing activities for the nine months ended August 31, 2024 was $268.1 million, consisting of principal payments of $350.0 million made on term loan borrowings under our senior credit facility, cash paid for acquired earnout liabilities of $22.7, share repurchases of $101.6 million, a change in funds held for clients of $25.8 million, and dividends of $61.2 million partially offset by net borrowings of $290.5 million under our Securitization Facility.

Previous wording

Net cash used in financing activities for the six months ended May 31, 2023 was $162.0 million, consisting primarily of principal payments of $25.0 million made on the term loan borrowings under our senior credit facility, net repayments of $67.5 million under our Securitization Facility, share repurchases of $14.9 million, dividends of $28.6 million, and cash paid for debt issuance costs of $20.7 million related to financing fees for the Bridge Facility entered into in connection with the Webhelp Combination and fees related to our Restated Credit Agreement.

Current wording

Net cash provided by financing activities for the nine months ended August 31, 2023 was $1,636.3 million, consisting primarily of proceeds, before expenses, of $2,137.0 million from the issuance of Senior Notes in August 2023, partially offset by principal payments of $25.0 million made on the term loan borrowings under our senior credit facility, net repayments of $356.5 million under our Securitization Facility, share repurchases of $41.9 million, dividends of $42.9 million, and cash paid of $30.5 million related to debt issuance costs for the Senior Notes, financing fees for the Bridge Facility and amendment fees related to our Restated Credit Agreement.

Previous wording

Our free cash flow was $75.3 million for the six months ended May 31, 2024 compared to $165.5 million for the six months ended May 31, 2023. The decrease in free cash flow for the six months ended May 31, 2024 compared to the prior fiscal year period was due to the decrease in cash provided by operating activities and an increase in capital expenditures resulting from the Webhelp Combination.

Current wording

Our free cash flow was $204.2 million for the nine months ended August 31, 2024 compared to $333.0 million for the nine months ended August 31, 2023. The decrease in free cash flow for the nine months ended August 31, 2024 compared to the prior fiscal year period was due to the decrease in cash provided by operating activities and an increase in capital expenditures as a result of the expanded business due to the Webhelp Combination.

Previous wording

Our adjusted free cash flow was $120.6 million for the six months ended May 31, 2024 compared to $165.5 million for the six months ended May 31, 2023. The decrease in adjusted free cash flow for the six months ended May 31, 2024 compared to the prior year period was due to a decrease in free cash flow partially offset by a change in outstanding factoring balances of $45.3 million.

Current wording

Our adjusted free cash flow was $255.8 million for the nine months ended August 31, 2024 compared to $333.0 million for the nine months ended August 31, 2023. The decrease in adjusted free cash flow for the nine months ended August 31, 2024 compared to the prior year period was due to a decrease in free cash flow partially offset by a change in outstanding factoring balances of $51.6 million.