CNXC - NASDAQ

Good day, and thank you for standing by. Welcome to Concentrix Corporation'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. After the speakers' presentation, there will be a question and answer session. To withdraw your question, please press star one one again. 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 Corporation first quarter 2025 earnings call. This call is the property of Concentrix Corporation and may not be recorded or rebroadcast without the written permission of Concentrix Corporation. 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-Ks 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 margins, adjusted EBITDA, adjusted EBITDA margins, 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 financial results and business outlook. And then we will open up the call for your questions. Now I'll turn the call over 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 revenue 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 a 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 clients' 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 Gen AI solutions powered by our own and partner technology deployed at scale across our operations. With autonomous solutions and Gen AI platforms across hundreds of thousands of desktops that cover the majority of our clients, we believe we are among the largest scale proven Gen AI deployments in the world. With our decades of expertise and leading clients through their automation journey, we are 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 four hundred global enterprises. This is to identify sentiment, market trends, and our own brand recognition. While the survey is still in progress, early results show that many global enterprises view Concentrix Corporation 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 Gen AI. The headline-driven hype has abated with clients. They do not want flashy, unproven demos and cannot 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 the AI-powered world. This brings me to our AI products. We are pleased with our early results and adoption with thousands of seats now deployed across an increasing number of enterprise clients. While still de minimis to the size of the business we are, turning into deployments. This quarter we have started to monetize a number of clients as the pilot phases. 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 IXLO 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 twenty-five clients continues to outpace the growth rate of the rest of our business. Our ability to grow share through innovation and our ability to introduce 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 Corporation 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 the 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. Continue to lead our market in AgenTek AI solutions that 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 client success. And finally, we have strong fundamentals with durable recurring 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 their trust and 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 our first quarter financial results, 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 business to position us for accelerated growth in the long term. While growing margins and cash flow 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 twenty-five clients and the ramp-up of new programs won 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 a while. Healthcare was largely flat year on year due to short shift from a select few clients, media and communications was also flat on a constant currency basis. For clarity, we have 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 Gen AI 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 was $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 through debt repayment and lower rate 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 $1.04 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 to the year, and we're pleased with the progress we've made on our 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. Q2, we expect the following. Revenue of $2.37 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 a 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. Effective tax rate is expected to be approximately 26%. Our guidance for the full year 2025 is as follows. We 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 in a process 135 basis point negative impact to foreign exchange rates compared with the prior year period. Accordingly, we are reiterating our guidance constant currency revenue growth for the full year of 0% to 1.5%. Expect operating income of $669 million to $709 million and 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 Web Health synergies 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 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 three. In summary, our Q1 results exceeded 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.

Thank you. Our first question comes from Joseph Vafi with Canaccord Genuity. You may proceed.

Hey, guys. Good afternoon. Nice to see the solid results and the reiterated outlook for the year. Just thought maybe we drill down a little bit on the vertical market commentary, especially in consumer electronics, which you know, was flat, which I think is, you know, a better result than we've seen the last few quarters. Just wanted to drill down into that. Is it, you know, the year-over-year numbers are easier or is it, you know, are you starting to see some rebound there? And then, you know, are there any other callouts from what have been to me more weak verticals over the last few quarters. Now 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 offer that we have in that space. Started to sell more data annotation services into that vertical which is Allstate 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 the forecasts have been well off what the declines were expecting. So pretty happy from that perspective. Similarly in technology, like we're seeing, you know, some decent share gains within those client bases 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, you know, for the most part, we're seeing what we expect. You know, 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 within those verticals.

Great. Thanks, Chris. And then just on the AI suite, you know, if you could kinda just maybe kind of frame for us the different uses of your technology. You got the IXLO platform, which you're rolling out in, which is kind of a revenue-generating product, which I assume, you know, 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, you know, a broad majority of your agents that are also servicing clients. So just trying to understand better which AI solutions are used in which situations and you know, how does that relate to the revenue opportunity for IXLO over the medium term? Thanks.

Yeah. Thanks, sir. That's a great question. So just to be clear, our IXLO 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 a deploy it across their enterprise, frankly, deployed across competitors' enterprises because they 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 prospective competitors' environments. And so we're starting to see some very nice traction after our release in September last year. We've really 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 range with the client. But we see it as a very, very attractive area for us from a revenue generation perspective. Twenty twenty-five, we've 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.

Great. Thanks very much, Chris.

Thank you. Our next question comes from David Koning with Baird. You may proceed.

Yeah. Hey, guys. Great job. And, you know, maybe when we think a little bit about Gen AI in the context of the current environment, the macro environment, etcetera, 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 Gen AI 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 Gen AI or maybe it's even a tailwind because it looks like Q2 is very normal relative to, you know, history. So maybe putting all those in context, I'm just interested in your thoughts sequentially.

Yeah. So, Dave, to put it 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'd 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 Gen AI capabilities in it. And so to your point, it feels like it doesn't exist because it's pervasive through all of our solutions. And pervasive across, you know, more than fifty percent 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 can.

Gotcha. Well, no. That's great. And I guess secondly, just on margins, that's where you'd be us by the most. I mean, margins were really good in the quarter. I guess, how much is left in terms of the web help savings how much is generated by kind of the offshore ship 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, you know, as we closed out fiscal year 2024, we had reached a point where we had recognized about $95 million of synergies in fiscal 2024 and are projecting $120 million here this year. So you can kind of bake that into, you know, kind of the $25 million of improvement this year from Synergy attainment.

Gotcha. Thanks, guys. Great job in Q1.

Thank you very much.

Thank you. Next question comes from Ruplu Bhattacharya with Bank of America. You may proceed.

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

Yeah. Ruplu. So if we about what we did in 2024 where we said we spend an extra $50 million more than we expected at the beginning of the year on AI, development for our tools and that as we came to the end of the year, so December 2024, we would start to scale that down more in line with sort of the revenue that we were expecting as we get over the big humps of commercialization. And that's really where we are right now. So we're certainly less than that incremental $50 million run rate of pure Gen AI 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 much faster growth spurts than we expect from our Gen AI tools, which would be a good thing, and we'd call that out to investors. But in this case, we expect that to kind of come down not materially, but come down gently through the course of next quarter in a bit. While our revenue grows on our JAI IXLO product.

Okay. Can I ask last couple of quarters, you said that there were hundreds of Gen AI proof of concepts that your customers were running? Is a significant portion of that done? And have you seen any benefit or hurt your revenues from Gen AI has your thinking on that changed in terms of how much you think fiscal 2025 benefits or is hurt because of Gen AI?

Yeah. So, Ruplu, it's interesting. Like, we have still hundreds of POCs of Gen AI out there. Some have gone to deployment. Some are still in POCs where, you know, 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 Gen AI in deployment, in the business running the business each and every single day. There's clearly sometimes where we're putting in Gen AI solutions 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 service from us, etcetera, etcetera, etcetera. We really see honestly, Ruplu, Gen AI, similar to other automation technologies, is a net of net positive to our business. It will help us grow our revenue. It certainly helped us be more productive and internally. And obviously, with our new IXLO suite, and our technology partnerships with, you know, Salesforce and Genesis 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. It's all.

Okay. Thanks for the details, sir. Maybe I'll just ask one to Andre. I mean, I'm just Andre, help me understand the guidance a little bit better. So you beat 1Q earnings by 23 cents. 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, you know, step down in 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.

You know, we did say in my prepared remarks, Ruplu, that we didn't this early in the year, we were gonna leave guidance pretty much where it was. And so that is part of what you're seeing there. We do have, you know, 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, you know, kind of built into the guidance as well. But, you know, again, back to our guidance principles that we entered the year with, you know, 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, you know, being one quarter into the year, felt like it was the right thing to do just to leave the guidance for the full year where it was.

Okay. Alright. Thank you for all the details. Appreciate it.

Alright. Thanks, Ruplu.

Thank you. Our next question comes from Vincent Colicchio with Barrington Research. You may proceed.

Yes. Chris, you had mentioned last quarter that you had a healthy pipeline with new web help 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 delivery outside of the Americas is doing very well for us. And so we've got a healthy pipeline. As I called out in 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 the course of the year and margin expansion opportunities through the course of the year. And continued growth thereafter.

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

So Catalyst, a lot of the sales are integrated more in the transformational deals that we're doing. Overall, we've been very happy with it, and continue to be very happy with it this year. Our attach 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 like to see, and that will, I think, drive some very nice results through the course of the year.

You've been benefiting from a consolidation trend. It's become a very strong theme for you. I assume we're still early innings there. Is that right? And, you know, are you doing more consolidation? You benefit 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 has happened in the top twenty-five. They're the most ones who are really pushing the bare boundaries when it comes to Gen AI and capabilities. And so the fact that we're doing very, very well in that group of clients gives us a lot of confidence in what we can do in the rest of the tail of our client base. So they start to deal with consolidation. And the vast majority of what's pushing this consolidation is one, not an improving macro, so they're looking at trying to figure out how to drive more cost out of the cost structure. And two, really looking for new tech solutions around Gen AI that are practical and usable and actually drive returns versus just being flashy demos. And so we're seeing that kind of motivate some of our clients to consolidate with us.

Thank you. Nice quarter.

Thank you.

Thank you. And as a reminder, to ask a question, please press star one one on your telephone. Our next question comes from Divya Goyal with Scotiabank. You may proceed.

Good afternoon, everyone. 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 your 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?

Yes. So, Divya, we don't necessarily believe so. What we see is the ability to constant currency growth and as we talked about on the last earnings call, we've developed a lot of capabilities that support Gen AI deployments that didn't even make this sort of two years ago. And we talked about sort of all these new areas of business that was, you know, close to a billion or at a billion dollars in Q4. You know, data annotation, a lot more sophisticated analytics, some more technology deployments or design build, some of the data lake stuff that we're doing. All of that type of capabilities we think is gonna offset any kind of revenue headwinds that we're gonna see from Gen AI deployment. We also see this ability to drive more managed services with Gen AI 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 Gen AI. 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 web help note coming up, are you potentially gonna get it financed? And if that's the case, where would the leverage end with that?

Yeah. I have to do that. So you're right. We have an upcoming maturity of our seller's note. That's €700 million that comes due in September of this year. We are actively engaged right now with banks in discussions to refinance that. We feel good about the progress we're making there. And it'll 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 a 2% note. So we'll keep leaving it in place, but we'll have certainty here relatively soon about the refinancing plans for that. 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'll 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 gonna generate $625 to $650 this year. Yes. We're gonna spend be we're 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 clients' standpoint, the new business booking standpoint, how is the current macro trending for Concentrix Corporation 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.

Yeah. So, Divya, the macro outside of very few markets, primarily outside of Europe and outside of North America is muted, and we don't see that improving. 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 sort of onshore or even frankly nearshore delivery is much more muted. People are looking for sort of immediate cost savings of what they're doing. And I also mentioned that we're seeing the kind of capabilities 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 booking perspective. So overall, you know, we're pretty happy with the sort of a solid booking and pipeline of opportunities in front of us. There's no one marker or another that is exponentially bigger or materially different.

Thank you.