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

Concentrix Corporation (NASDAQ:CNXC) Q2 2023 Earnings Call Transcript June 28, 2023

Concentrix Corporation beats earnings expectations. Reported EPS is $2.69, expectations were $2.52.

Operator: Good day and thank you for standing by. Welcome to Concentrix’s Fiscal Second Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, David Stein, Vice President of Investor Relations.

David Stein: Thank you and good evening. Welcome to the Concentrix second quarter fiscal 2023 earnings call. This call is the property of Concentrix and may not be recorded or rebroadcast without the written permission of Concentrix. This call contains forward-looking statements that address our expected future performance and that by their nature address matters that are uncertain. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements as a result of new information or future events or developments. Please refer to today’s earnings release and our most recent filings with the SEC for additional information regarding uncertainties that could affect our future financial results.

This includes the risk factors provided in our annual report on Form 10-K. Also during the call, we will discuss non-GAAP financial measures, including free-cash flow, non-GAAP operating income, adjusted EBITDA and adjusted EPS, as well as adjusted constant currency revenue growth. A reconciliation of these non-GAAP measures is available in the news release and on the Concentrix Investor Relations website under Financials. With me on the call today are Chris Caldwell, our President and Chief Executive Officer and Andre Valentine, our Chief Financial Officer. Chris will provide a summary of our operating performance and growth strategy and Andre will cover our financial results and business outlook. Then we’ll open the call for your questions.

Now I’ll turn the call over to Chris.

Christopher Caldwell: Thank you, David. Good evening, everyone, and welcome to our second quarter earnings call for fiscal 2023. During the quarter, we received many investor questions about the impacts of the ongoing macroeconomic environment, the status of our transformative combination with Webhelp and the emergence of generative AI technology. I will provide a briefed update on each of those topics today. I would also encourage those listening to download our updated ESG report from our website that we just released. Now, let’s begin with our Q2 results. While we were disappointed in not being within our guidance, I am pleased that as a team, we did grow and drive margin expansion and strong cash flow in the quarter, despite the fact that certain clients saw volumes that were well below their expectations entering the quarter.

Reported revenue in the second quarter was $1.6 billion, up 3%. On an organic constant currency basis, revenue grew by 1.6%. Our second quarter non GAAP operating income improved to $221 million , growing 3.6%. Adjusted EBITDA increased 3.5% to $259 million compared with last year and both our non GAAP OI and adjusted EBITDA margins were up 10 basis points over last year. This reflects our ability to manage our cost structure dynamically when volumes from clients are lower than their expectations. Non GAAP EPS was $2.69 per share compared with $2.93 per share last year, largely reflecting the expected impact of higher interest rates. While we continue to see volume softness we also experience relative strength across certain strategic verticals, particularly with clients in the healthcare, travel, insurance and certain parts of our technology portfolio.

The volume softness that we have seen in recent quarters in the retail, e-commerce, consumer electronics and telecom industries continued and in some cases intensified with certain clients despite us maintaining or growing share within those clients. From a catalyst perspective, our large project that we have talked about on past calls will have no further ramp this year reflecting conversations within the last few weeks, driven by budget pressures at the client. We are adjusting our outlook and cost structure accordingly. Regarding client driven provider consolidation opportunities within our existing base, we continue to see clients wanting to work with zero partners who can support end-to-end processes. This trend favors partners like Concentrix who have the breadth of capabilities to serve clients in the strategic partner role.

Currently, clients are faced with a dilemma regarding whether to cut costs by consolidating partners or holding excess capacity. These decisions are occurring more slowly than we originally expected. Additionally, while we are gaining share by winning provider consolidation opportunities, the volumes we are consolidating with clients are starting at a reduced level. We see these factors as temporary and if the softness persists, we expect clients will speed up their plans for consolidation, which we believe benefit us. From a sales perspective, we signed business with two dozen new logos in the quarter. The pipeline of new business has remained solid although clients are focuses on optimizing their cost structure rather than expansion, and we are seeing smaller deals and slower approval processes once we have been chosen as the partner.

From a Concentrix perspective — sorry, from a Catalyst perspective, we’re very happy with new wins coming in that combine our CX operations and digital IT service offerings. Again, these wins tend to be smaller as large transformational projects are taking much longer to transact. We also view this as temporary and believe digital transformation remains essential to clients in the long term. A few examples of our Q2 wins that demonstrate our broad set of capabilities include for a very large global generative AI provider, we were awarded and are now providing generative AI moderation services. We were selected due to our experience in critical trust and safety content support as well as our footprint in innovative ways we came up with to train the models.

For a large consumer electronics brand in Asia Pacific, we proposed a transformational omnichannel CX delivery model to drive improved customer experience, while lowering the cost to serve in high cost markets. We designed and built the solution with AI enabled translation services, which are providing an accelerated more profitable path to growth for our client. We were selected because of our domain knowledge, the ability to integrate complex technology and our understanding of the local markets they were looking to grow in. For a major airline operating in EMEA, we were selected to become the primary provider to drive improved experiences and drive better support across all key languages, incorporating net digital and AI powered capabilities and replacing other providers unable to provide a full solution.

We were selected because of our multilingual footprint, ability to integrate technology and the ability to lower the number of partners the airlines had to deal with to get a full solution. For large consumer communications brand in EMEA we won a significant new agreement to deliver reimagined service models for improved customer acquisition and retention using sophisticated analytics and AI enabled technologies. We were selected because of our understanding of the market, our robust sales capabilities and our ability to automate manual work they were currently challenged with. In Catalyst, we identified opportunities to improve a large transportation company’s software implementation, speed and support costs. Our proactive approach helped us secure the consulting engagement as the exclusive provider.

The client embraced our recommendations leading to a shift in their product strategy and further engagement around their product development. We were selected because of demonstrative expertise in software development, implementation practices and managed services of software environments, while having a focus on the customer experience of the user during transition of software. In all of these examples, the clients need is aligned to our sellers want approach, while demonstrating the effectiveness of our design, build, run go to market strategy. We have remained disciplined in our approach to pricing the current market and on selling profitable, sustainable programs for the future to build on our unique capabilities. From an operating perspective, we continue to achieve strong customer satisfaction and innovation scores, which we believe will again help us to be a continued partner of choice.

Moving to our proposed transformative combination with Webhelp. We recently filed our proxy statement that provides more insight into the transaction and have made great progress on integration planning since announcing the combination. Their share repurchase agreement has now been signed. We have started to receive approvals from various regulatory agencies and have made strong progress towards completing the financing. As we discussed on our last call, Webhelp will diversify our revenue, client base, vertical focus and global footprint. Webhelp will also add capabilities and deep domain expertise to our European, African and Latin American market presence. The potential combination has been very well received by clients of both companies and we believe there is a strong potential for growth in selling Webhelp’s capabilities into our client base, as well as selling our capabilities to the more than 1,000 additional Webhelp clients as we have successfully done in past combinations.

Webhelp also brings recognized and exceptionally technology enabled solutions including anti money laundering, know your customer and payment processing services and telehealth, which we believe we can expand into many Concentrix clients and regions. The combination is expected to be accretive from the outset. We project mid- to high single digit earnings per share accretion in the first year followed by double digit accretion in the second year. Additionally, we feel very confident about achieving cost synergies of $120 million by the third year through various measures such as IT systems harmonization and real estate footprint rationalization as two examples. Webhelp’s performance in the first quarter surpassed expectations with low double digit constant currency like for like growth.

This was above Webhelp’s planned growth for the quarter. We continue to expect that Webhelp will exceed 8% like for like revenue growth for the full year 2023 and will deliver approximately $500 million in 2023 adjusted EBITDA, consistent with our expectations when we announced the transaction back in March. Three months since signing the combination, we believe the rationale for the Webhelp transaction has only been strengthened and we look forward to realizing the benefits of the transaction for our clients, staff and shareholders. We expect — we continue to expect the combination to be completed by the end of this year. Now, I would like to spend a few minutes discussing our perspective on generative AI. As background, we have been using various forms of AI for over two years as a technology enabled industry leader, we already deploy AI tool across 60% of our business and are on track to have this close to 80% by year end.

Many of these tools help drive productivity and proficiency of our advisors, while some have completely automated work with machine learning chatbots and natural language processing IVRs. We have talked about a number of these use cases on prior earnings calls. Our depth of experience comes from trialing a myriad of AI tools in our business over the years and identifying tools that are scalable and secure for deployment. This gives us a rich understanding of the opportunities and challenges of sustainable deploying the technology in our clients’ environment and workflow. Our depth of experience with established forms of AI as well as our current client discussions have helped inform our point of view regarding generative AI in the current market.

We see generative AI as a continued evolution and enhancing solutions we can deliver to our clients. Our conversations about generative AI are centered around security, data management and how to fit the technology into the advisor and customer workflows we help our clients design, build and run. While harnessing this exciting advancement has the potential to drive substantial value for us and our clients, we believe there is some resistance to large scale deployments due to concerns about the ownership of data, the security of proprietary information, and customer exposure to AI hallucinations or brand damaging engagement. While we will help our clients navigate these concerns, we continue to believe that the near term focus for using this new technology will be on driving the productivity and proficiency of advisors before opportunities to fully automate work start to gain traction.

We have many use cases in place that are proving out our thesis that generative AI will create new revenue opportunities and greater margin expansion opportunities for us while saving our clients costs. Our processes and philosophies have proven successful with past technological advancements and we believe generative AI will be the same. In addition to the multiple examples of new business wins in the quarter that we called out earlier, most of which use machine learning AI in the solution, our generative AI proof of concepts also spend multiple industries and clients. A few example of our use cases that are currently being done, we are working on leveraging proprietary large language models to ensure accuracy and compliance and regulatory — regulated industries.

We have seen benefits of being able to review materials far faster than we can with current tools for compliance. We have a pilot currently where we are using generative AI to condense training materials and provide gen AI videos of courseware at a fraction of the cost that we can do currently. This already is being tested in production and we expect to ramp this up to thousands of staff over the coming months. We’re working with a large airline taking notes from interactions with customers and [indiscernible] down for training and coaching that provides insight into how an advisor is working. Our proof of concept is currently saving about 45 minutes to 60 minutes a day for our coaches on preparing materials for their sessions with the advisors.

We expect it to be rolled out across the entire program and other accounts starting in our fourth quarter. Lastly, using gen AI we have been able to greatly speed up a client’s ability to scan through their knowledge bases and provide summary information back to an advisor to help them with their conversation with customers. This use case went into production last week on a program and we’re seeing the desired results of faster time to serve with greater ability to solve the customer problems faster. In all of these, we are working with our clients to evaluate the cost structure of generative AI and determine if machine learning or other types of automation are more cost effective. Gen AI does have a cost factor to it and we expect that it will cause some clients to continue to look at other methods of automation or offshoring first as generative AI costs inevitably will come down.

Our investment in developing our Catalyst business has significantly expanded our capabilities in being able to design, build and run generative AI solutions at scale with thousands of staff able to deliver strategy, design and technically integrate the solutions when the need occurs. We view this as a unique capability that differentiates us significantly from our traditional CX peers. We believe that the role of Concentrix will remain crucial even as clients have the option to purchase large language models directly. Generative AI is not a plug and play technology in the enterprise environment and services are required to ensure a consistent and positive outcome when a company’s brand reputation is on the line. The implementation and last mile tasks such as model tuning, feedback gathering, training, exception handling are requiring human involvement and deep domain expertise.

As a result, we believe that Concentrix will play an indispensable role in assisting clients with these critical elements allowing us to add higher value services that don’t exist today so our clients can fully utilize the benefits of this technology. We have the experience, the expertise and the vision to leverage this technology to drive significant value for our clients and our business. Now with all automation, we expect some revenue impact over time, but we believe it will be offset by new work and increased margin potential. We expect a modest acceleration of the volume of transactions we already automate each year and the economics for us and our clients will depend on where those transactions are currently serviced from. We are committed to delivering outstanding outcomes and maintaining our leadership position in the AI and automation space.

In summary, despite facing macroeconomic challenges that have impacted volumes for some clients, we achieved revenue growth and margin expansion this quarter. We are successfully planning for the combination with Webhelp and investing in harnessing the power of generative AI, while continuing to drive strong positive cash flows. We are focused on aligning with the changing demands of our clients to enhance our long-term partnership for Concentrix and the market that we serve. Finally, I want to take a moment to express my appreciation to our dedicated award winning staff. Their hard work, resilience and unwavering commitment to excellence are the driving force behind our success. Also, I’d like to thank our clients for their trust and our talented Board of Directors for their support.

With that, I’ll turn the call over to Andre. Andre?

Andre Valentine: Thank you, Chris, and hello, everyone. I’ll begin with a look at our financial results for the second quarter and then discuss our business outlook for the third quarter and the full year 2023. We delivered revenue growth and margin progression in the second quarter. Revenue in the second quarter was $1.61 billion, up 3% on an as-reported basis. The improvement in reported revenue includes a 1.6 point negative impact from foreign currency fluctuations and a positive 3% impact from acquisitions. Organic constant currency growth was below our Q2 expectations for the quarter at 1.6%, a reflection of certain clients having lower volumes than they expected. The shortfalls to volume expectations were most pronounced with a few large clients in the communications and consumer electronics verticals and a number of clients across our retail vertical.

In Catalysts, we saw client spending reductions and the change in the large project that Chris mentioned earlier. In terms of client verticals, we grew in each of our four strategic verticals in the quarter, with revenue from health care clients leading the way, growing by approximately 11% on both an as-reported and organic constant currency basis. Revenue from retail, travel and e-commerce clients posted 4% growth as reported and 6% on constant currency organic growth as strong growth continued with travel clients. Revenue from banking, financial services and insurance clients grew by 2% on a reported basis and 4.5% on an organic constant currency basis. Revenue from technology and consumer electronics clients grew 8% as reported and about 1% on an organic constant currency basis.

Revenue from communications clients decreased by 6% as reported and on an organic basis. Revenue from clients in the other vertical decreased 8% as reported and about 7% on an organic constant currency basis in the second quarter, driven by reduced spending by one government client based on changing social spending priorities. Our new economy clients grew 2% year-over-year and represented 23% of second quarter revenue. While we saw growth with new economy clients, particularly in travel and e-commerce clients, this was partially offset by reduced year-over-year revenue from crypto and fintech clients that represented a 5 point year-over-year headwind on our new economy client revenue growth in the second quarter. Non-GAAP operating income was $221 million in the second quarter compared with $213 million last year.

Our non-GAAP operating margin of 13.7% was up 10 basis points from the second quarter last year. Adjusted EBITDA was $259 million compared with $250 million in the second quarter of last year. Our adjusted EBITDA margin of 16.0% was up 10 basis points from the second quarter last year. Non-GAAP net income in the second quarter was $141 million compared with $155 million last year. Earnings per share were $2.69 per share on a non-GAAP basis compared with $2.93 per share last year. GAAP results for the second quarter of 2023 included $39 million of amortization of intangibles, $11 million of share-based compensation expense and $32 million of acquisition and integration expenses. Of the transaction and integration costs incurred in Q2, approximately $8 million is reflected in GAAP operating income.

$12 million is reflected in interest expense and $12 million is reflected in other expense. The $12 million included in the interest expense relates to fees associated with the bridge financing that was put in place for the Webhelp transaction. The $12 million reflected in other expense relates to a mark-to-market loss on options that were purchased to hedge the FX impact of movements between sign and close on the portion of the Webhelp purchase price that is denominated in euros. Our GAAP tax rate was 25.6% in the second quarter and our non-GAAP tax rate was 25.3%. Turning to cash flow. Second quarter cash flow from operations totaled $133 million and capital expenditures were $32 million. This resulted in free cash flow of $101 million in the quarter.

Included in our free cash flow for the quarter were approximately $5 million of cash costs related to acquisitions. Our year-to-date free cash flow totals $166 million, approximately $24 million above the prior year period. We continue to expect free cash flow for the full year to exceed $500 million, excluding Webhelp transaction and integration costs. Moving to the balance sheet. At the end of the second quarter, cash and cash equivalents were $153 million and debt outstanding was $2.13 billion. Net debt was $1.98 billion at the end of the quarter. During the quarter, we paid a quarterly dividend of $0.275 per share. And today, our Board declared another quarterly dividend of $0.275 per share to be paid during the third quarter. We also repurchased 39,000 shares of our stock for approximately $5 million in the quarter at an average price of $126 per share under a 10b5-1 plan that we entered into earlier in the year.

Share repurchases under the plan ceased with the announcement of our Webhelp combination due to regulatory considerations related to the transaction. After filing our proxy statement last week, we expect to continue our share repurchase activity in the third quarter. We have $339 million remaining on our share repurchase authorization and has been our intent to repurchase shares to offset dilution. We believe that our shares are undervalued and that continued modest share repurchase at this valuation is warranted and will be accretive to EPS. At the end of the second quarter, gross leverage was approximately 2 times adjusted EBITDA and net leverage was approximately 1.9 times on a trailing four quarters pro forma basis. Our liquidity remains strong at approximately $1.4 billion, including our $1.043 billion undrawn line of credit, cash on hand and additional capacity under our AR securitization.

Now, I’ll take a moment to review elements of the Webhelp combination. As I said when we announced the combination, on a pro forma basis the combination of Webhelp will add $3 billion in 2023 revenue and approximately $500 million of 2023 adjusted EBITDA to Concentrix. The combined company will have $9.6 billion in revenue and almost $1.6 billion in combined EBITDA in fiscal year 2023 on a pro forma basis. We expect earnings per share accretion of mid- to high single digits in the first full year after close and double-digit accretion in the second year. We also expect to realize $75 million in synergies in the first year after close, growing to $120 million in synergies in year three. While not included in our model, identifiable revenue synergy upside exists related to opportunities that the companies couldn’t pursue separately prior to the combination.

When announced, the transaction was valued at $4.8 billion, which included approximately 14.9 million shares of Concentrix stock to be issued at closing, valued at $120 per share. EUR500 million in cash to be paid at closing, EUR700 million in deferred consideration in the form of a two year note payable to Webhelp shareholders that will bear interest of 2%. The 14.9 million shares to be delivered at closing is a fixed number of shares. It is not impacted by changes in our stock price post announcement. Accordingly, with the recent reduction in trading value of our common stock, the current value of the transaction is below the originally announced $4.8 billion. The transaction consideration also includes 750,000 additional Concentrix shares that will vest based on certain conditions, including if the Concentrix share price appreciates to over $170 per share within a specified period following closing.

The transaction was structured to maintain investment-grade rating for the debt that we will issue. Since we announced the transaction, we have amended and expanded our revolving credit facility to include an increase in our term loan A to up to $2.145 billion at the time that the combination closes. We have also increased the size of our undrawn revolver. In addition to the increased borrowings in our term loan A, we now expect to finance the transaction through the issuance of approximately $2.2 billion in senior unsecured bonds with maturities split between three years, five years and 10 years. As disclosed in our recently filed proxy statement and based on current market conditions and our investment-grade credit rating, we now forecast the financing that we will incur to complete the transaction will be at a weighted average interest rate of 6.175%, a little over 30 basis points below the rate we anticipated when we announced the combination.

We continue to estimate that our net debt to adjusted EBITDA will be about 3 times on a pro forma basis when the combination closes later this year. As we said at the time of our announcement of the combination, our strong free cash flow generation, and adjusted EBITDA growth gives us a clear path to reducing leverage, and we are committed to reducing our net leverage to about 2 times within two years after the transaction closes. Regarding our capital allocation priorities. After the transaction closes, our focus will be on organic growth, the successful integration of Webhelp, realizing the planned synergies and repaying debt. We are committed to investment-grade principles. We will prioritize paying down debt and reducing our net leverage while continuing our dividend and disciplined share repurchases to offset the dilution of equity grants.

As I mentioned on our last call, we plan to provide guidance for the combined business after the transaction closes. Now I’ll turn to our business outlook for the third quarter and for the full year fiscal 2023. For clarity, our guidance does not include any contribution from Webhelp or any costs that we will incur related to the combination. We are growing in each of our four strategic verticals, and we’re seeing growth across most of our regions. We’re seeing stability in revenue in Catalysts and expect sequential growth each quarter in Catalysts in the second half of 2023. However, we are seeing near-term impacts for certain clients. In communications, we are seeing a meaningful impact on our revenue expectations for the year for Catalyst driven by the delay to the large project that Chris discussed earlier.

We’re seeing lower-than-expected revenues from a few large clients we mentioned earlier, reflecting the lower volumes they are experiencing. Finally, our revenue expectations from retail clients have been reduced by larger-than-expected volumes across many clients in this vertical. Our expectations do not include any improvement in the macroeconomic environment and continue to reflect muted seasonal volumes in line with what we experienced in fiscal 2022. As a result of these factors, we are revising our revenue expectations for the fiscal year. However, we remain focused on maintaining our profit margins while confirming our expectations for strong free cash flow generation for the year. For the third quarter, we now expect organic constant currency revenue growth to be in a range of 1.5% to 2.5%.

Based on current exchange rates, we expect a [0.2 point] positive year-over-year impact on reported revenue in the third quarter. We expect the timing of our 2022 acquisitions to contribute approximately $28 million of incremental year-over-year revenue growth in the third quarter. Based on these assumptions, we expect reported third quarter revenue to be in the range of $1.635 billion to $1.650 billion based on current exchange rates. Our profitability expectations for the third quarter include non-GAAP operating income in a range of $225 million to $235 million. This equates to a non-GAAP operating margin of 14.0% at the midpoint of the range, similar to the third quarter last year. We expect interest expense in the third quarter to be approximately $35 million, excluding any impact related to the Webhelp combination.

We also expect an effective tax rate of 26% and a weighted average diluted share count of approximately 51.5 million shares. Moving to our outlook for the entire year. We now expect 2023 constant currency organic revenue growth to be in the range of 2% to 3%. Based on current exchange rates, we expect a 0.5 point negative impact on reported revenues for the full year. We expect the timing of our 2022 acquisitions to contribute approximately $156 million of incremental year-over-year revenue growth for the full year. This equates to reported full year revenue in a range of $6.575 billion to $6.640 billion. Our full year profitability expectations now include non-GAAP operating income in a range of $920 million to $945 million. This equates to a non-GAAP operating margin of 14.1% at the midpoint of the range, up 10 basis points from the prior year.

We expect full year interest expense to be approximately $138 million, excluding any impact related to the Webhelp combination. We also expect an effective tax rate of approximately 26% and a weighted average diluted share count of approximately 51.5 million shares, again, excluding any impact from the shares to be issued to complete the Webhelp combination. We continue to expect strong free cash flow for the year with free cash flow growing to over $500 million in 2023, an increase of at least 8% over 2022. Our business outlook does not include acquisition-related impacts or transaction and integration costs associated with our acquisition of Webhelp or any future acquisitions. Also not included in the guidance are impacts from future currency fluctuations or future share repurchases.

In closing, we are focused on margin expansion and cash flow generation, while taking advantage of a market opportunity that generative AI poses and completing and successfully integrating the Webhelp combination. We believe that our focus on these areas will position us for future growth and value creation. At this time, operator, please open the line for questions.

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Q&A Session

Operator: Thank you. [Operator Instructions] Our first question comes from Vincent Colicchio with Barrington. You may proceed.

Vincent Colicchio: Yes. Thank you for taking my questions. So Chris, part of your guidance, it looks like you’re expecting a meaningful pickup in sequential growth in Q4. What is driving that?

Christopher Caldwell: So Vince, as we talked about earlier, we do have two large contracts, one that we talked about in Catalyst, which will not ramp. The other one is at plan and has confirmed kind of ramping as we expect a plan for the rest of the year. As we talked about, that’s a fairly big driver of the growth that we’re seeing within Q4. And then also as we looked at the areas that are growing, they continue to grow. We’ve looked at obviously muting the expectations of the clients who have not been able to kind of meet their volume expectations that they’ve had, so that’s partly offset. But when you put the two together, that gives us what we’re seeing within the fourth quarter as you look at the guide for the year. .

Andre Valentine: Yes. I think one fairly sizable difference versus last year is our expectation. As I said, that we expect to see sequential growth within Catalyst quarterly as we go through the back half of the year. So that is different than what we were experiencing last year, and we’ll kind of be the thing that makes this year’s pattern look different than last year. Other than that, pretty much the same as last year’s pattern.

Vincent Colicchio: And in terms of the vendor consolidation discussions, I think you may have touched on this, but what portion of the amount that is not coming in this year do you think you may see in the next fiscal year?

Christopher Caldwell: So Vince, to be honest, it’s difficult to answer. What we’re having is sort of positive conversations. We’ve clearly won a bunch of the vendor consolidation business, although it’s coming in at lower volumes. But we have a number of clients who are kind of sitting on the fence, so to speak, and saying, look, if we continue to see the depressed volumes that we’re seeing, we’re definitely going to have to consolidate, but those — pulling the trigger is taking a little longer than expected. We are not anticipating anything meaningful in the next two quarters from a vendor consolidation perspective outside of ones that we’ve already been given and are ramping and are dealing with. I suspect that will roll into next year and probably the most appropriate time to talk about that is when we close the Webhelp combination and then kind of give a guide for what we see in the back half of the year — sorry, front half, back half of next year.

Vincent Colicchio: And then one last one. The — your strategic verticals are performing quite well. Should we expect that to continue in the second half? And the weakest, I think, of the four is the technology and consumer electronics side, should we expect that to continue?

Christopher Caldwell: Yes. So Vince, on sort of health care and some of the others, banking insurance, you’ll see what we foresee is that kind of continued sort of strength in the back half of the year. Consumer electronics and technology is a tale of two cities. Consumer electronics, we continue to see, frankly, as Andre called out, some of our larger clients suffering some fairly big volume declines within that space. But that’s offset by some of the technology space that we’ve seen, some very good, strong growth. And we expect to see probably that continue on in the back half of the year with continued muted consumer electronics, but some good strong growth in the technology side.

Vincent Colicchio: Okay. I’ll go back in the queue. Thank you.

Christopher Caldwell: Thank you, Vince.