Sep 29, 2026 earnings call — Shift to AI-driven services and margin expansion
Management said 50% of revenue now comes from businesses generated in the last 3 years.
Revenue $2.5B (est $2.5B) · EPS $2.92 (est $2.71) · Next-quarter revenue outlook $2.4B–$2.5B
Key quotes
"This quarter, we crossed the mark that 50% of our revenue now comes from businesses that we generated in the last 3 years that is very different than our traditional business."
"As we have talked about, we are seeing the margin progression we've expected in our overall business with a 30 basis point improvement year-on-year in Q3."
"This puts us on track to reduce our net leverage to approximately 2.6x at year-end, with further significant debt and leverage reduction planned in 2027 to approximately 2.2x."
Analyst Q&A 3
Why 2027 growth is back-half weighted
Q (Ruplu Bhattacharya · BofA): What is causing growth to be weighted to the back half of 2027? The analyst asked about hyperscale customers reducing support and offshore moves. He also asked about Meta's Muse, agentic AI, iX Suite spend, and revenue and margin targets.
A: Management said two hyperscale clients are stopping support for some client sets, and that change will be finished by the end of Q4 so Q4 shows an oversized impact and Q1–Q2 see carryover. They said AI automation sales and faster deployments are driving growth into Q4 and Q1, and they reduced iX Suite spending while targeting an exit-2026 software ARR of about $120 million and $1.3 billion running through the platform with higher margins over time.
"Right now, the decision is really to have that completely finished by the end of Q4." — Christopher Caldwell (CEO)
Growth milestone and offshoring headwind
Q (Vincent Colicchio · Barrington): What level must you reach to sustain mid-single-digit growth? And how large will the offshoring headwind be in fiscal 2027?
A: Management said they hit the 50% milestone earlier than expected and need a couple more quarters of automation momentum; the meaningful growth momentum is likely in the back half of the year and may be more of a 2028 story. On offshoring, they said they are not guiding yet to fiscal 2027 but expect a similar headwind to this year, around a 3-point drag, maybe a touch lower, and that assumption is included in next year revenue expectations.
"So we have talked about this year, seeing that accelerate to being about a 3-point headwind on growth for us." — Andre Valentine (CFO)
Will AI reduce offshoring headwind and margins
Q (Jacob Haggarty · Robert W. Baird & Co): Will the offshoring revenue headwind abate as AI revenues grow and work becomes AI-assisted onshore? Also, how confident are you in margin stability into fiscal 2027 and beyond?
A: Management said the offshoring headwind should abate over time mainly because only about 10%, 11% of revenue is left that is likely movable offshore. They said clients are not bringing work back onshore when AI is applied; clients tend to leave the work where it resides. On margins, they said newer revenues (now over the 50% mark) have very stable, elevated margins, while margin pressure is on commoditized traditional business; as new revenues and automation grow, they expect margin stability in 2027.
"We do see it abating over time more because there's just not that much of it left to move as opposed to anything else." — Andre Valentine (CFO)