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Concentrix is trading sharply lower after a disappointing Q3 (Aug) earnings report, marking its second consecutive EPS miss — and this one was worse than Q2. Revenue rose 4.0% yr/yr to $2.48 bln, which was in line, but downside Q4 EPS guidance rattled investors.

• EPS fell short again, raising concerns after a second straight miss and weaker Q4 EPS outlook.
• Revenue growth was led by banking, financial services, and insurance, with continued traction in integrated, higher-complexity offerings.
• CNXC is actively reducing exposure to low-complexity transactions while expanding its tech-enabled, AI-driven services.
• Management says AI is proving to be a tailwind, not a threat, helping win major accounts and secure new business.

What went wrong?

Margins were the main issue. Non-GAAP operating income came in at $305 mln, below guidance, mainly due to excess capacity. CNXC overestimated volume recovery from clients affected by tariffs in Q2 and expected faster volume consolidation — which didn't materialize. A smaller margin hit came from accelerating tech transformation initiatives for clients. CNXC expects modest sequential margin improvement over the next few quarters as volume ramps or capacity is reduced.

Briefing.com Analyst Insight:

While Concentrix continues to position itself as a differentiated AI-powered CX provider, the back-to-back EPS misses and weak Q4 EPS outlook raise questions about operational execution. Margin headwinds — particularly excess capacity — suggest the business may take a few quarters to stabilize. With the stock already punished and AI traction promising long-term, patient investors might be intrigued, but near-term caution is warranted.