Concentrix Corp (CNXC) 2025 Q1 法說會逐字稿

Good day, and thank you for standing by. Welcome to Concentrix's first-quarter 2025 earnings call. At this time, all participants are in a listen only mode. Please be advised that today's conference is being recorded. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Sara Buda, Vice President, Investor Relations.

Great. Thank you, operator, and good evening. Welcome to the Concentrix first-quarter 2025 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 expectations, 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 and other public filings with the SEC.

Also during the call, we will discuss non-GAAP financial measures, including adjusted free cash flow, non-GAAP operating income, non-GAAP operating margin, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income, non-GAAP EPS, and constant currency revenue growth. A reconciliation of these non-GAAP measures is available in the news release and on the company's Investor Relations website under Financials.

With me today on the call are Chris Caldwell, our President and CEO; 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 and then we will open up the call for your questions.

Now, I'll turn to Chris.

Thank you very much, Sara. Hello, everyone, and thank you for joining us today for our first-quarter 2025 earnings call. Let me start with a summary of the positive trends in our business. As evidenced by our Q1 results showing year-over-year revenues and profitability growth above guidance, we have confidence in our ongoing revenue, margin, and cash flow growth for the remainder of the year. We saw solid demand environment in Q1, with our focus on winning consolidation opportunities, cross-selling our offerings into our existing accounts, and expanding our pipeline of transformative deals we have made progress across all areas in the quarter.

As a reminder, our strategy for long-term accelerated growth with a margin expansion centers around two primary topics: First, bringing integrated AI solutions that align with client needs; and second, expanding the value we provide clients across a broader portfolio of business solutions to grow our share of wallet.

On the first point, we now have GenAI solutions powered by our own and partner technology deployed at scale across our operations. With autonomous solutions and GenAI platforms across hundreds of thousands of desktops that cover the majority of our clients, we believe we are among the largest scale, proven GenAI deployment in the world. With our decades of expertise in leading clients through their automation journey, we're becoming a trusted provider for companies seeking pragmatic real-world AI solutions.

In fact, we recently commissioned a third-party adviser to conduct a blind survey of more than 400 global enterprises. This is to identify sentiments, market trends, and our own brand recognition. While a survey is still in progress, early results show that many global enterprises view Concentrix as a well-known trusted partner of choice when it comes to global-scale AI solutions that are enterprise-ready, secure, practical, and deployable.

Clearly, the market is entering a more mature phase of GenAI. The headline-driven hype has abated with clients. They don't want flashy, unproven demos and can't afford more failed AI pilots. They want results and are turning to the partners they trust. Partners that combine human intelligence, domain expertise, global scale, and advanced AI productivity tools to take the promise of AI into reality. This is where we are positioned to outperform in AI-powered world.

This brings me to our AI products -- AI, sorry, iX Hello products. We are pleased with our early results and adoption with thousands of seats now deployed across an increasingly number of enterprise clients. While still de minimus to the size of the business we are, this quarter, we have started to monetize a number of clients as the pilot phases turn into deployments.

As a reminder, we are focused on our iX suite being accretive to our earnings by the end of fiscal 2025. Recently, we introduced new features of iX Hello with smarter, multimodal customer-facing assistance that are easy to create, customize, and integrate across the enterprise. We have an aggressive feature release schedule through the year focused on solving real-world client challenges.

On the second part of our strategy, our expanding value for our clients with broader offerings, in the first quarter, our revenue for our top 25 client continues to outpace the growth rate of the rest of our business. Our ability to grow share through innovation and our ability to induce a broad range of business services has allowed us to consolidate volume from other partners.

As a reminder, we offer a broad range of business solutions, from strategy and design services, to data analytics, to enterprise technology transformation, and digital operations. Our differentiated engagement is helping Concentrix stand out from traditional CX providers, and, more importantly, grow our share of client spending.

In summary, we're starting to see a solid start to the year, reaffirming our confidence that we have a right strategy and the right model to drive long-term sustainable growth. In Q1, we delivered solid financial results with revenue and profit above forecast and year-on-year growth across all key financial metrics. We continue to lead our market and agentic AI solutions and drive results, demonstrating once again that AI is a win-win for us and our clients. We are expanding our share of wallet and share of market with a broader array of business services that power our clients' success.

And finally, we have strong fundamentals with durable reoccurring revenue streams, long-standing clients, and a track record of strong cash flow generation and shareholder returns. I'm pleased with our progress as we begin the year. And I'd like to thank our dedicated game changers for their hard work and commitment to excellence and our clients for the trust in business.

Now, I'll turn the call over to Andre to review our first-quarter financial results and our outlook for the remaining of the year.

Thank you, Chris. I'll start with a review of our financial priorities for 2025, and then provide a review of first-quarter financial results and outlook for the second quarter and remainder of the year. As I referenced in January, our financial priorities for 2025 are to ensure that we're making the right investments in the business to position us for accelerated growth in the long term, while growing margins and cash flow and driving value for shareholders. I'm pleased with our progress against these goals.

In the first quarter, we delivered revenue of approximately $2.37 billion, growing 1.3% year over year on a constant currency basis, which exceeded the high end of the expectations we discussed on our January earnings call. The growth in the quarter was driven by a combination of solid growth from our top 25 clients and the ramp-up of new programs, one in 2024, that are beginning to scale.

Looking at our first quarter revenue growth by vertical, on a constant currency basis, revenue from retail, travel, and e-commerce clients grew 4% year over year, led by travel clients. Revenue from banking, financial services, and insurance grew 3%. Our tech vertical grew about 1%, led by consumer electronics, which is nice to see as that sector has lagged for a while. Healthcare was largely flat year on year, due to shore shift from a select few clients. And media and communications was also flat on a constant currency basis. For clarity, we had no exposure to US government contracts at this time.

Turning to profitability, our non-GAAP operating income was $322 million. This is above the guidance range we provided on our last call and a modest increase year over year, as we realize the benefits of our synergies while continuing to support our GenAI and our strategy to drive long-term growth.

Non-GAAP operating income margin was 13.6%, an increase of 30 basis points from Q1 last year. Adjusted EBITDA in the quarter is $374 million, a margin of 15.8%. Non-GAAP net income was $188 million in the quarter, an increase of about $12 million, compared to the first quarter last year. Non-GAAP diluted EPS was $2.79. This reflects a nearly 9% increase year over year, as we benefit from higher operating profit, lower interest expense to debt repayment, and lower rates on our variable rate debt, and a lower share count as we continue to repurchase our shares.

GAAP net income was $70 million for the quarter, and GAAP diluted EPS was $1.4 per share. Reconciliations for GAAP and non-GAAP measures are provided in today's earnings release. Adjusted free cash flow was a use of $40 million in the quarter, an improvement of $41 million from last year and above our expectations. As a reminder, the first quarter is our lowest cash flow quarter. We are on track to deliver strong sequential growth in cash flow starting in Q2 to achieve our target of $625 million to $650 million of adjusted free cash flow for the full year.

We returned approximately $48 million to shareholders in the quarter. We repurchased $26 million of our common shares, or approximately 550,000 shares at an average price of approximately $48 per share. The remaining $22 million in shareholder return was in the form of our quarterly dividend.

At the end of the first quarter, cash and cash equivalents were $308 million and total debt was $4.9 billion, bringing our net debt to just under $4.6 billion. We reduced the amount of our off balance sheet factored accounts receivable by $9 million in the quarter with the balance standing at approximately $152 million at quarter's end. Our liquidity remains strong at approximately $1.5 billion, including our over $1 billion line of credit, which is undrawn.

Overall, Q1 was a good quarter. We delivered first-quarter results that exceeded our expectations. We continue to grow our revenue on a constant currency basis, with ongoing cash flow improvement.

As Chris mentioned, our top accounts continue to grow faster than the rest of the business, reflecting our ability to grow share as we introduce unique AI solutions, and as we introduce a broader set of offerings. Partner consolidation remains a strong trend in our sector, and we continue to enjoy a high win rate. Our growth is well balanced, as we benefit from the strong enduring relationships with top clients and as we ramp new programs on plan.

Now, I'll turn my attention to our outlook. We've had a solid start for the year, and we're pleased with the progress we've made on all fronts. Long term, we continue to believe we can generate mid-single digit growth as we deliver on our strategy, and as we drive down the lower complexity revenue that we continue to decrease as a percentage of our overall business.

With our solid start to the year, we're confident in the trajectory of the business. Given where we are at this early point in the year, we are not revising our full-year guidance and continue to take a conservative approach to our outlook.

With that context, here is our guidance for the second quarter and fiscal 2025. For Q2, we expect the following. Revenue of $2.37 billion to $2.39 billion. Based on current exchange rates, these expectations assume an approximate 90-basis point negative impact of foreign exchange rates compared with the prior year period. The guidance implies constant currency revenue growth for the quarter ranging from 0.5% to 1.25%.

We expect operating income of $155 million to $165 million and non-GAAP operating income margin -- non-GAAP operating income of $315 million to $325 million. This translates into expected non-GAAP EPS of $2.69 to $2.80, assuming approximately $70 million in non-GAAP interest expense, 63.5 million diluted common shares outstanding and approximately 5% of net income attributable to participating securities. The effective tax rate is expected to be approximately 26%.

Our guidance for the full-year 2025 is as follows. Reported revenue of $9.49 billion to $9.635 billion, a slight increase from our prior guidance based on more favorable exchange rates than we had initially forecast. Based on current exchange rates, these expectations assume an approximate 135-basis point negative impact of foreign exchange rates compared with the prior year period.

Accordingly, we are reiterating our guidance for constant currency revenue growth for the full year of 0% to 1.5%. We expect operating income of $669 million to $709 million, a non-GAAP operating income of $1,300 million to $1,340 million, and we expect modest growth in our non-GAAP profit margin as we continue to recognize the benefits of Webhelp synergies and as the pace of our technology investments moderates in accordance with our plan.

Our guidance for non-GAAP EPS is $11.18 to $11.77, assuming non-GAAP interest expense of $273 million, approximately 63.6 million diluted common shares outstanding, and approximately 5% of net income attributable to participating securities. The effective tax rate for the full year is expected to be approximately 25.5% to 26.5%. And finally, we continue to expect adjusted free cash flow of approximately $625 million to $650 million based on synergy savings, lower integration spending, and lower cash interest expense.

In regard to our capital allocation priorities, as we said in January, we expect our spending on share repurchases to modestly exceed last year, taking advantage of the disconnect that we see between the fundamentals of our business and our current valuation, while continuing to pay down debt on plan. We remain committed to maintaining investment-grade principles, and of course, we will continue to support our dividend, which currently has a yield of nearly 3%.

In summary, our Q1 results exceeded our expectations. We are winning the right kind of business, and we're confident in our strategy. We are making the right investments in the business, while growing margins and cash flow. And we remain committed to having the right capital structure and continued capital return through a combination of share repurchases and dividends while reducing our leverage.

And now, Josh, let's open the line for questions.

(Operator Instructions) Joseph Vafi, Canaccord Genuity.

Nice to see the solid results and the reiterated outlook for the year. Just thought maybe we'd drill down a little bit on the vertical market commentary, especially in consumer electronics, which was flat, which I think is a better result than we've seen the last few quarters. Just want to drill down into that. Is it the year-over-year numbers are easier or is it -- are you starting to see some rebound there? And then are there any other callouts from what have been so many more weak verticals over the last few quarters? And I have a quick follow-up. Thanks.

Yeah, Joe. It's Chris. So just in consumer electronics, primarily where we're seeing flat is we are taking share from competitors with some of the offerings that we have in that space. We have started to sell more data annotation services into that vertical, which is obviously growing while some of the volume is kind of muted from just a sell-through perspective. And we're starting to see more, I'll call it, stability in that sector versus some of the things that we've seen in the past, where are the forecasts have been well off what the clients we are expecting. So pretty happy from that perspective.

Similarly, in technology, like we're seeing some decent share gains within those client base. That's providing some better stability than what we've seen in the last couple of quarters, where primarily transaction volume is down. In terms of other verticals, for the most part, we're seeing what we expect. Healthcare is probably the only one I'd call out that I think we've got some opportunity to grow faster, and we're not executing as well as we would like. But otherwise, I think we're doing very well in the verticals by taking share and getting net new clients in those verticals.

Great. Thanks, Chris. And then just on the AI suite, if you could kind of just maybe kind of frame for us the different uses of your technology. You got the iX Hello platform, which you're rolling out, which is kind of a revenue-generating product, which I assume some customers are using, that you're also potentially using in providing service to customers, but then you've got some of your internal solutions that you're using across a broad majority of your agents that are also servicing clients. So just trying to understand better which AI solutions were used in which situations? And how does that relate to the revenue opportunity for iX Hello over the medium term? Thanks.

Thanks for that. That's a great question. So just to be clear, our iX Hello suite of products that we've been developing and starting to deploy now really came from the internal use cases. Since we deployed so much of our own technology across our enterprise, we started getting clients who are asking for deployed across their enterprise, frankly deployed across competitors enterprises, because I saw the value that we were getting from these products.

And that was really our increase in spend last year, was to effectively commercialize those products. And what we're seeing now is not only are we continuing to deploy our own internal products across the enterprise to drive better productivity for our team. But the iX Hello products that we're specifically calling out are the commercialized version of those that can be deployed against our clients' environments internally, as well as from a prospective competitors' environments.

And so we're starting to see some very nice traction after our release in September last year. We've literally got thousands upon thousands of seats deployed that will turn into hopefully all revenue-generating opportunities and more client wins coming along the way as they deploy it.

Long term, Joe, all this internal deployment will effectively be changed over to our iX Hello product suite, and at some point, that will either turn into some billable revenue opportunity as they continue to grow or be split out from the bundled services that we're doing right now, depending on what the commercial arrangement with the client. But we see it as a very, very attractive area for us from a revenue generation perspective.

And 2025, you just called out that we expected to be accretive to our earnings. But clearly, we have bigger plans for it longer term, and right now, the market acceptance of it, we're very happy with.

David Koning, Baird.

Yeah. Hey, guys, great job. And maybe when we think a little bit about GenAI in the context of the current environment, the macro environment, et cetera, when we look at Q2, sequentially, you're guiding to very normal revenue growth relative to like the last four years. It's very normal. It would almost look as if GenAI didn't exist. Obviously, it does.

Is there something either about what you're doing right now or macro getting better or something that's either offsetting GenAI, or maybe it's even a tailwind? Because it looks like Q2 is very normal relative to history. So maybe putting all those in context, I'm just interested in your thoughts sequentially.

Yeah. So Dave, to put in perspective, we do not see any macro improvement really, and nor are we budgeting that into our plan for 2025. If there's a big macro improvement, that would be great. And we certainly see that as help as we continue to go through the course of the year.

I think what most people might not appreciate is that for the last kind of year, almost every solution that we put in has some GenAI capabilities in it. And so to your point, it feels like it doesn't exist because it's evasive through all of our solutions and pervasive across more than 50% of our client base to where now this is the new net normal. And what we're growing is kind of AI-enabled as we continue to drive. I think that's what's kind of seeing more normal in the seasonality than what you would expect.

Got you. Well, no, that's great. And I guess secondly, just on margins, that's where you beat us by the most. I mean, margins are really good in the quarter. I guess, how much is left in terms of the Webhelp savings? How much is generated by kind of the offshore shift? And how much is just scale? Maybe kind of putting all those in context, it just seems like margins are in a really good spot and continuing to improve.

David, this is Andre. So from a synergy perspective, as we closed out fiscal year '24, we had reached a point where we recognized about $95 million of synergies in fiscal '24 and are projecting $120 million here this year. So you can kind of bake that into kind of the $25 million of improvement this year from synergy attainment.

Got you. Thanks, guys. Great job in Q1.

Ruplu Bhattacharya, Bank of America.

Hi, thanks for taking my questions. Chris, I wanted to ask you, how much do you expect to spend this year on AI-related investment, such as software product development? And what guardrails do you have around that? I mean, what metrics do you look at to judge how much you should be spending on such product development? And so, if you can help us quantify that a little bit.

Yeah, Ruplu. So if we think about what we did in 2024, where we said we would spend an extra $50 million more than we expect at the beginning of the year on AI development for our tools, and that as we came to the end of the year, so in December 2024, we will start to scale that down more in line with sort of the revenue that we were expecting as we get into the big humps of commercialization. And that's really where we are right now.

So we are certainly less than that incremental $50 million run rate of pure GenAI tools, and that will kind of creep down over the course of the next quarter, quarter and a half, unless suddenly we start to see me much faster growth spurts than we expect from our GenAI tools, which would be a good thing and we'd call that out to investors. But at this case, we expect that to kind of come down, not materially, but come down gently through the course of next quarter and a bit, while our revenue grows on our GenAI iX Hello product.

Okay. Can I ask? Last couple of quarters, you saw that there were hundreds of GenAI proof of concept that your customers were running. Is a significant portion of that done? And have you seen any benefit or hurt your revenues from GenAI? And has your thinking on that changed in terms of how much do you think fiscal '25 benefits or is hurt because of GenAI?

Yeah. So Ruplu, it's interesting. We have still hundreds of POCs of GenAI out there. Some have gone to deployment, some are still in POCs where there's some funding required, or honestly, the clients, we need to reengineer some of their data and reengineer some of their systems. So it's not a quick deployment to get kind of real returns. And we expect that to kind of be on an ongoing basis in place.

But a lot, clearly, as we've called out over half of our client base has GenAI in deployment in the business, running the business each and every single day. There's clearly sometimes, where we're putting in GenAI solutions, we called out a number of examples over the last couple of earnings calls, where it has impacted revenue initially negatively. But then through the course of a couple of quarters, we've grown with that client because we've taken more share and they've got more services from us, et cetera, et cetera, et cetera.

We really see, honestly, Ruplu, GenAI similar to other automation technologies as a net positive to our business. It will help us grow our revenue. It certainly helped us be more productive and proficient internally. And obviously, with our new iX Hello suite and our technology partnerships with Salesforce and Genesys, and Microsoft, and Google, and AWS, they're allowing us to tap into new revenue streams. So we're, again, quite excited about it and don't see it as a negative in 2025 at all.

Thanks for the details there. Maybe I'll just ask one to Andre. I mean, just, Andre, help me understand the guidance a little bit better. So you beat 1Q earnings by $0.23 at the midpoint of your guidance. You're keeping the full year unchanged. Operating margin for 2Q seems to be 13.4% versus 13.6% in 1Q on similar revenues.

What is causing that step down and a little bit step down in operating margin in 2Q? And is there any incremental weakness in the second half? Or is it purely just conservatism on your part for keeping the full year unchanged? Thanks for all the details.

We did say in my prepared remarks, Ruplu, that we didn't -- this early in the year, we were going to leave guidance pretty much where it was. And so that is part of what you're seeing there. As we win new business and as we grow, we have some ramp costs that are pressuring margins a touch in Q2, as well as including the build out of some additional facilities around the globe, where we have demand.

So that's kind of built in the guidance as well. But again, back to our guidance principles that we entered the year with, we want to be conservative. We want to be in a situation where we're very much focused on certainly the top half of the range of the guidance, if not, the top end of the range. And just being one quarter into the year, it's not like it was the right thing to do just to leave the guidance for the full year, where it was.

Vincent Colicchio, Barrington Research.

Yes. Chris, you had mentioned last quarter that you had healthy pipeline with new Webhelp clients in Europe. Is that still the case? And will that be an important driver this year?

Yeah, Vince. So Europe is doing very well for us. But so, frankly, is Asia-Pac, and even the Americas as a sales market for delivery outside of the Americas is doing very well for us. And so we've got a healthy pipeline. As I called out my prepared remarks, what we're very happy to see is more of the transformational deals that kind of are an integrated level of service for us.

And so that is also giving us a kind of confidence that we continue to talk about constant currency growth through the course of the year, and margin expansion plus opportunities through the course of the year, and the continued growth thereafter.

And how did Catalyst perform in the quarter? And what are your thoughts on the balance of the year?

So Catalyst, a lot of the sales are integrated more into the transformational deals that we're doing. Overall, we've been very happy with it and continue to be very happy with this year. Our tax rate in our first quarter in terms of Catalyst services into the rest of our services was up, Andre, a little meaningfully in the first quarter, which is what we'd like to see. And that will, I think, drive some very nice results through the course of the year.

You've been benefiting from consolidation trend, it's become some very strong theme for you. I assume we're still early innings there. Is that right? And are you doing more consolidation? Are you benefitting from consolidation more now than a year ago?

We're certainly benefiting from consolidation now more than a year ago. And we do think we're in early innings. We don't think we're anywhere near close to what the possibilities are.

As we've called out, a lot of the consolidation was happening with top 25. They're the most sophisticated purchasers, they are the most demanding purchasers, they are the most -- ones who are really pushing the boundaries when it comes to GenAI and capabilities. And so the fact that we're doing very, very well in that group of clients gives us a lot of confidence of what we can do in the rest of the tail of our client base as they start to deal with consolidation.

And the vast majority of what's pushing this consolidation is, one, not improving macros. So they're looking at trying to figure out how to drive more costs out of the cost structure; and two, really looking for new tech solutions around GenAI that are practical and usable and actually drive returns versus just being flashy demos. And so we are seeing that kind of motivate some of our clients to consolidate with us.

Thank you. Nice quarter.

(Operator Instructions) Divya Goyal, Scotiabank.

So Chris, one thing that I wanted to confirm on this AI revenue and margin discussion that we had, and I suppose we've had this discussion in the past, as you continue to deploy some of these new AI products, you will be cannibalizing some of the existing revenues. So is it fair to assume that the revenue growth might stay muted for a while, while the margins continue to grow given the nature of the business here?

Yeah. So Divya, we don't necessarily believe so. What we see is ability to constant currency growth. And as we talked about on the last earnings call, we've developed a lot of capabilities that support GenAI's deployments that didn't even exist two years ago.

And we've talked about sort of all these new areas of business that was close to $1 billion -- or at $1 billion in Q4, data annotation, a lot more sophisticated analytics, some of our technology deployments, our design build, some of the data lake stuff that we're doing. All of that type of capabilities, we think, is going to offset any kind of revenue headwinds that we're going to see from GenAI deployments.

We also see this ability to drive more managed services with GenAI deployments. A lot of people think it's like one and done, you put it in and it just runs. And the reality is far from that. It really does require professional services. It really does require a lot of kind of ongoing tuning in order to drive the experience that people are looking for from GenAI. And so all of these caveats with the growth of some of those capabilities underlying in our revenues really make us believe that we can continue to accelerate our growth as we get out of 2025.

Okay. That's good to know. Other question is for Andre. Andre, could you help us understand the debt positioning of the company on a go-forward basis? And then, with the Webhelp note coming up, are you potentially going to get it financed? And if that's the case, where would the leverage end with that?

Yeah, happy to do that. So you're right. We have an upcoming maturity of our sellers note, that's EUR700 million that comes due in September of this year. We are actively engaged right now with banks in discussion to refinance that. We feel good about the progress we're making there.

And it will be done in such a way that that note will stay in place until it matures in September. We want to take advantage of the low interest rate. It's only 2% note. So we'll keep leaving it in place, but we'll have certainty here relatively soon about the refinancing plans for that. And again, feel really good about the progress we're making there. So it will not be a situation where it takes our leverage up. It will be effectively a refinancing and a replacement.

From an overall leverage perspective, we're very much focused on driving the strong free cash flow. We're going to generate $625 million to $650 million this year. Yes, we're going to be committed to over $240 million of capital return. That leaves a lot of cash left over for paying down debt and bringing down our leverage and we're focused on doing all those things.

That's great. Maybe I'll ask just one last question here, and that's a very broad macro question. So from a booking standpoint, from the relationship with the existing client standpoint, the new business bookings standpoint, how is the current macro trending for Concentrix as a company? What are some of the key growth geographies that you're seeing and noting? And I know you talked about Europe and APAC. But give us a broader understanding on a global basis how are you seeing things trending from a bookings momentum standpoint? And that's all for me. Thank you.

So the macro, outside the very few markets, primarily outside of Europe and outside of North America, is muted and we don't see that improving. With that being said, we are doing, as I mentioned, very well in Asia-Pac, we're doing very well in Europe, and the bookings are actually quite strong out of North America. But the bookings are all focused on offshore delivery. None are focused on onshore -- or even frankly, nearshore delivery is much more muted since people are looking for immediate cost savings of what they're doing.

As I also mentioned that we're seeing the kind of capability from our Catalyst team as a percentage of our bookings increase. So the attach rate has increased in Q1, as Andre has talked about, it's meaningful. And we expect that trend to continue as people are looking for more unique solutions. And those solutions, ultimately, are either to drive revenue or take out cost for our clients. None of it is like for like when we're thinking it from a bookings perspective. So overall, we're pretty happy with the sort of solid booking and pipeline of opportunities in front of us. But there's no one market or another that is exponentially bigger or materially different.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.