Summary of Genpact (G) 2025 Conference Call Company Overview - **Company**: Genpact - **Industry**: IT Services Key Points and Arguments Demand Environment for IT Services - Clients are increasingly focused on **value creation** rather than just cost or productivity improvements, with a notable shift towards discussions around **AI** and its potential to create value [6][9] - The conversation around AI has evolved, emphasizing the importance of **process intelligence** as a prerequisite for effective AI implementation [6][22] Growth Strategy and Performance - Genpact has consistently outperformed its IT services peers, attributed to a strong foundation in **process and data capabilities**, operational discipline, and client-centric culture [10][11] - The **Genpact Next** strategy focuses on advanced technology solutions (ATS), which includes data, AI, and digital technologies, aiming for a growth rate of at least **15%** in the coming years [11][14] Advanced Technology Solutions (ATS) - ATS has shown significant growth, with a reported **17% year-on-year increase** in the last quarter, and is expected to continue growing at a similar rate [14][18] - Currently, **46%** of Genpact's business is non-FTE based, with ATS representing **70%** of its revenue being non-FTE [18][19] Impact of Generative AI (GenAI) - GenAI is viewed as a **tailwind** for Genpact, with the company emphasizing the need for process and data debt liquidation to achieve ROI on technology investments [21][22] - While some areas of IT services may face challenges due to GenAI, Genpact's focus on **mission-critical processes** helps mitigate potential negative impacts [27] Partnerships and Growth - Partnerships have become a significant growth driver, with a **70% growth** in partner-influenced revenue, now accounting for **10%** of total revenues [34] - The company is in the early stages of leveraging partnerships as a catalyst for growth [34][35] Financial Guidance and Market Position - Genpact's guidance philosophy emphasizes **prudence**, with adjustments made based on client conversations and market conditions [36][38] - The company has successfully closed **four large deals** in the second quarter, indicating a positive trend in deal closure rates [40] Pricing Environment - Genpact does not observe irrational pricing behavior in the IT services sector, maintaining a rational pricing strategy [61] Cultural and Client Relationship Insights - The company's culture, characterized by a **client-first approach**, is a key differentiator in winning contracts, with **80%** of clients citing culture as a reason for choosing Genpact [66] Additional Important Insights - The company is focused on maintaining operational discipline and leveraging advanced technology solutions to enhance its margin profile [56] - Genpact is open to acquisitions that align with its strategic goals, particularly in data and technology domains [58][60] This summary encapsulates the key insights from the Genpact conference call, highlighting the company's strategic focus, growth drivers, and market positioning within the IT services industry.

Core Insights - The article compares Genpact (G) and Dynatrace (DT) to determine which stock offers better value for investors [1] - Genpact has a stronger Zacks Rank of 2 (Buy) compared to Dynatrace's 3 (Hold), indicating a more favorable earnings outlook for Genpact [3] - Value investors consider various fundamental metrics, including P/E ratio, P/S ratio, earnings yield, and cash flow per share, to identify undervalued stocks [4] Valuation Metrics - Genpact has a forward P/E ratio of 12.89, significantly lower than Dynatrace's forward P/E of 31.59, suggesting better value for Genpact [5] - The PEG ratio for Genpact is 1.40, while Dynatrace's PEG ratio is 2.47, indicating that Genpact is expected to grow earnings at a more attractive rate relative to its price [5] - Genpact's P/B ratio is 3.07, compared to Dynatrace's P/B of 5.66, further supporting the argument that Genpact is undervalued [6] Conclusion - Based on stronger estimate revision activity and more attractive valuation metrics, Genpact is deemed the superior option for value investors at this time [7]

Core Insights - Genpact has been recognized as a Leader in Trust and Safety (T&S) Services by Everest Group in its 2025 PEAK Matrix® Assessment, marking the fifth consecutive year of this distinction, highlighting its commitment to trust and safety across various industries [1][2] Group 1: Company Achievements - Genpact's advanced technology solutions portfolio now includes trust and safety as a core component, moving clients from reactive responses to proactive risk prevention [2] - The company offers end-to-end trust and safety services, including T&S benchmarking, guardrail design, transparency reporting, and regulatory risk assessment [3] - Genpact has established a partnership ecosystem for trust and safety, risk and threat intelligence, and analytics, enhancing its service offerings [4] Group 2: Industry Context - Everest Group evaluated 28 service providers for the 2025 PEAK Matrix®, assessing service scope, innovation, proprietary solutions, and proven impact across client engagements [3] - The focus on AI safety capabilities and generative AI-based tools is part of Genpact's strategy to strengthen its position in the trust and safety sector [4][8]

NEW YORK, Aug. 21, 2025 /PRNewswire/ -- Genpact (NYSE: G) today announced that its President and Chief Executive Officer, Balkrishan "BK" Kalra, will participate in a fireside chat at the Citi Global TMT Conference on Thursday, September 4, 2025, at 12:50 p.m. Eastern Time. The discussion will be webcast live on Genpact Investor Relations website. A replay will be available after the event concludes and will remain accessible until September 5, 2026. Get to know us at genpact.com and on LinkedIn, X, YouTube ...

Core Insights - Genpact has been recognized as one of Forbes America's Best Employers for Women in 2025, marking the third consecutive year for this distinction, which underscores the company's commitment to an inclusive workplace culture [1][2] - The recognition is based on a survey of over 150,000 women employed in U.S. companies with 1,000 or more employees, evaluating factors such as work environment, pay equity, and representation of women in leadership roles [2] Company Initiatives - Genpact is dedicated to fostering an inclusive environment through various ongoing programs aimed at attracting, developing, and training employees at all career stages [3] - The company implements supportive workplace policies that promote flexibility, well-being, and career continuity [6] - Initiatives include networking, mentoring, sponsorship, and leadership development efforts to assist women in navigating career transitions and growth opportunities [6] - Employee Resource Groups (ERGs) are established to provide spaces for connection, experience sharing, and advocacy, with business leaders actively supporting these goals [6]

Core Viewpoint - Investors in the Computers - IT Services sector should consider Genpact (G) and Dynatrace (DT) for potential value opportunities, with Genpact currently presenting a more favorable investment case [1] Group 1: Zacks Rank and Valuation Metrics - Genpact has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while Dynatrace holds a Zacks Rank of 3 (Hold) [3] - Value investors focus on various valuation metrics, including P/E ratio, P/S ratio, earnings yield, and cash flow per share to identify undervalued companies [4] Group 2: Valuation Comparisons - Genpact's forward P/E ratio is 12.63, significantly lower than Dynatrace's forward P/E of 29.85, suggesting that Genpact is more attractively priced [5] - Genpact has a PEG ratio of 1.37, while Dynatrace's PEG ratio is 2.33, indicating that Genpact offers better value relative to its expected earnings growth [5] - Genpact's P/B ratio is 2.99 compared to Dynatrace's P/B of 5.35, further supporting the argument that Genpact is the superior value option [6]

PART I Financial Information [Unaudited Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Consolidated%20Financial%20Statements) This section presents Genpact Limited's unaudited consolidated financial statements, detailing financial position, performance, and cash flows [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet reflects an increase in total assets, liabilities, and equity as of June 30, 2025, primarily influenced by acquisitions and debt changes Consolidated Balance Sheet Highlights (in thousands) | Account | As of December 31, 2024 | As of June 30, 2025 | | :--- | :--- | :--- | | **Total Current Assets** | $2,080,104 | $2,135,029 | | **Goodwill** | $1,669,769 | $1,793,903 | | **Total Assets** | **$4,987,153** | **$5,307,680** | | **Total Current Liabilities** | $963,739 | $1,392,439 | | **Total Liabilities** | **$2,597,542** | **$2,721,069** | | **Total Equity** | **$2,389,611** | **$2,586,611** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Net revenues and net income increased for both the second quarter and six months ended June 30, 2025, reflecting strong financial performance Q2 Financial Performance (in thousands, except EPS) | Metric | Q2 2024 | Q2 2025 | YoY Change | | :--- | :--- | :--- | :--- | | Net Revenues | $1,176,212 | $1,254,418 | +6.6% | | Gross Profit | $416,378 | $450,068 | +8.1% | | Income from Operations | $170,251 | $179,402 | +5.4% | | Net Income | $121,990 | $132,716 | +8.8% | | Diluted EPS | $0.67 | $0.75 | +11.9% | H1 Financial Performance (in thousands, except EPS) | Metric | H1 2024 | H1 2025 | YoY Change | | :--- | :--- | :--- | :--- | | Net Revenues | $2,307,449 | $2,469,344 | +7.0% | | Gross Profit | $812,856 | $879,062 | +8.1% | | Income from Operations | $330,237 | $363,104 | +10.0% | | Net Income | $238,937 | $263,569 | +10.3% | | Diluted EPS | $1.32 | $1.48 | +12.1% | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased, while investing activities saw a significant increase in cash usage due to acquisitions, and financing activities shifted to a net cash outflow Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2024 | 2025 | | :--- | :--- | :--- | | Net cash provided by operating activities | $183,713 | $217,801 | | Net cash used for investing activities | $(44,420) | $(104,420) | | Net cash (used for) provided by financing activities | $202,314 | $(106,673) | - The significant increase in cash used for investing activities was driven by an **$80.6 million** payment for business acquisitions, net of cash acquired[28](index=28&type=chunk) [Notes to the Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on accounting policies, business acquisitions, segment performance, debt structure, capital management, and derivative instruments - On **June 5, 2025**, the company acquired XponentL Data, Inc. for a total purchase consideration of **$159.8 million**, including **$82.3 million** in cash and **$77.5 million** in contingent earn-out consideration, resulting in **$111.9 million** in goodwill recognition[87](index=87&type=chunk)[89](index=89&type=chunk)[91](index=91&type=chunk) - Beginning in **Q2 2025**, the company began disaggregating revenue into 'Advanced Technology Solutions' and 'Core Business Services' in addition to its existing 'Data-Tech-AI' and 'Digital Operations' breakdown[222](index=222&type=chunk) - The company's long-term debt as of **June 30, 2025**, totaled approximately **$1.21 billion**, comprising a credit facility and two series of Senior Notes due in 2026 and 2029[143](index=143&type=chunk) - During the first six months of **2025**, the company repurchased **1.9 million** common shares for **$93.0 million** and paid dividends totaling **$59.4 million**[192](index=192&type=chunk)[198](index=198&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance for Q2 and H1 2025, highlighting revenue growth, margin improvements, and details on liquidity, capital allocation, and financing arrangements [Results of Operations](index=52&type=section&id=Results%20of%20Operations) Net revenues grew for the six months ended June 30, 2025, driven by Data-Tech-AI, with improvements in both gross and Adjusted Income from Operations margins H1 2025 vs H1 2024 Performance Summary (in millions, except percentages) | Metric | H1 2024 | H1 2025 | Change | | :--- | :--- | :--- | :--- | | Net Revenues | $2,307.4M | $2,469.3M | +7.0% | | Gross Margin | 35.2% | 35.6% | +40 bps | | Income from Operations | $330.2M | $363.1M | +10.0% | | Net Income | $238.9M | $263.6M | +10.3% | | AOI Margin | 16.5% | 17.3% | +80 bps | H1 2025 Revenue by Service Type (in millions) | Service Type | H1 2024 | H1 2025 | Growth | | :--- | :--- | :--- | :--- | | Data-Tech-AI | $1,069.9 | $1,181.2 | +10.4% | | Digital Operations | $1,237.6 | $1,288.1 | +4.1% | H1 2025 Revenue by Segment (in millions) | Segment | H1 2024 | H1 2025 | Growth | | :--- | :--- | :--- | :--- | | Financial Services | $625.6 | $665.8 | +6.4% | | Consumer and Healthcare | $827.4 | $849.0 | +2.6% | | High Tech and Manufacturing | $854.5 | $954.5 | +11.7% | [Liquidity and Capital Resources](index=61&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity, supported by operating cash flow, and continues capital allocation through dividends, share repurchases, and credit facilities - Cash and cash equivalents stood at **$663.3 million** as of **June 30, 2025**[316](index=316&type=chunk) - In **Q1 2025**, the board authorized a **$500 million** increase to the share repurchase program, bringing the total to **$2.75 billion**, with **$554.0 million** remaining available as of **June 30, 2025**[320](index=320&type=chunk) - The quarterly cash dividend was increased by **11%** to **$0.17 per share** in **February 2025**[319](index=319&type=chunk) - The company utilizes a **$650 million** revolving credit facility and accounts receivable-based facilities to manage liquidity[330](index=330&type=chunk)[341](index=341&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=67&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages market risks, primarily interest rate fluctuations on floating-rate debt, through the use of interest rate swaps and treasury rate locks - The company is exposed to interest rate risk on its floating-rate term loan and revolving credit facility, which are based on Term SOFR[355](index=355&type=chunk) - To manage this risk, the company uses interest rate swaps, with fixed payment rates ranging from **4.25%** to **4.72%**[356](index=356&type=chunk) [Controls and Procedures](index=67&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures are effective[361](index=361&type=chunk) - No material changes were made to the internal control over financial reporting during the quarter ended **June 30, 2025**[363](index=363&type=chunk) PART II Other Information [Legal Proceedings](index=69&type=section&id=Item%201.%20Legal%20Proceedings) There are no pending legal proceedings expected to have a material adverse effect on the company's business or financial condition - There are no legal proceedings pending against the company that are believed to be likely to have a material adverse effect on the business[365](index=365&type=chunk) [Risk Factors](index=69&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the detailed risk factors in the Annual Report on Form 10-K, with no material changes or new significant risks reported for the quarter - The company refers to the risk factors disclosed in its Annual Report on Form 10-K for the year ended **December 31, 2024**, implying no material updates for the current quarter[366](index=366&type=chunk) [Issuer Purchases of Equity Securities](index=69&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company repurchased common shares during Q2 2025 and increased its share repurchase program authorization Share Repurchase Activity (Q2 2025) | Period | Total Shares Purchased | Weighted Avg. Price Paid ($) | | :--- | :--- | :--- | | April 2025 | — | — | | May 2025 | 691,198 | 43.40 | | June 2025 | — | — | | **Total** | **691,198** | **43.40** | - In **February 2025**, the board increased the share repurchase program authorization by **$500 million** to a total of **$2.75 billion**[369](index=369&type=chunk) [Other Information](index=70&type=section&id=Item%205.%20Other%20Information) This section discloses the termination of a Rule 10b5-1 trading arrangement by the President and CEO on June 11, 2025 - On **June 11, 2025**, President and CEO Balkrishan Kalra terminated a Rule 10b5-1 trading arrangement that was intended for the sale of up to **54,400** common shares[370](index=370&type=chunk)

Core Insights - Genpact Limited reported strong second-quarter 2025 results, exceeding Zacks Consensus Estimates for both earnings and revenues, leading to a 4.4% stock rally post-earnings release [1] Financial Performance - For Q2 2025, Genpact's adjusted EPS was $0.88, surpassing the consensus estimate by 3.5% and reflecting an 11.4% year-over-year growth [3][7] - Revenues reached $1.25 billion, beating the consensus mark by 2% and increasing 6.7% from the previous year [3][7] Revenue Breakdown - Data-Tech-AI services revenues, accounting for 48% of total revenues, grew 9.7% year-over-year to $599 million, exceeding estimates [4] - Digital Operations services revenues, making up 52% of total revenues, rose 4% year-over-year to $655 million, also beating estimates [4] Operational Metrics - Adjusted income from operations was $217 million, a 9.5% increase year-over-year, with an operating income margin of 17.3% remaining flat [5] - Cash and cash equivalents at the end of the quarter were $648.6 million, down from $663.3 million in the prior quarter, with long-term debt at $1.2 billion [5] Cash Flow and Shareholder Returns - The company generated $183.7 million in cash from operating activities, with capital expenditures of $22 million [6] - Genpact returned $54.83 million in dividends and repurchased shares worth $30 million [6] Guidance - For Q3 2025, Genpact expects adjusted EPS in the range of $0.89 to $0.90, with the full year EPS anticipated between $3.51 and $3.58 [3][8] - Revenue guidance for Q3 is set between $1.26 billion and $1.27 billion, with full-year revenues projected between $4.96 billion and $5.05 billion [8]

Core Insights - Genpact reported quarterly earnings of $0.88 per share, exceeding the Zacks Consensus Estimate of $0.85 per share, and showing an increase from $0.79 per share a year ago, resulting in an earnings surprise of +3.53% [1] - The company achieved revenues of $1.25 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.92% and up from $1.18 billion year-over-year [2] - Genpact has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The sustainability of Genpact's stock price movement will largely depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.88 on revenues of $1.25 billion, while for the current fiscal year, the estimate is $3.49 on revenues of $4.98 billion [7] Industry Context - The Computers - IT Services industry, to which Genpact belongs, is currently ranked in the bottom 40% of over 250 Zacks industries, which may impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that investors should monitor these revisions closely [5][6]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 reached $1,250 million, up 7% year over year, with adjusted EPS growing 11% year over year to $0.88, exceeding guidance [7][23] - Gross and adjusted operating income margins improved by 50 and 40 basis points year over year, respectively [7][22] - Operating cash flow was $177 million, down from $209 million in the prior year [23] Business Line Data and Key Metrics Changes - Advanced technology solutions revenue was $293 million, up 17% year over year, representing 23% of total revenue [20] - Core business services revenue was approximately $962 million, up 4%, primarily driven by digital operations [20] - Data, Tech, and AI accounted for 48% of total revenue, growing 10% year over year [19] Market Data and Key Metrics Changes - Revenue growth was led by High-tech and Manufacturing at 13%, followed by Financial Services at 6%, and Consumer and Healthcare at 1% [22] - Non-FTE revenue accounted for 46% of Q2 revenue, consistent with the previous year [22] Company Strategy and Development Direction - The company introduced "Genpact Next," a strategy aimed at establishing itself as a leader in advanced technology solutions, focusing on capabilities, clients, and catalysts for growth [8] - Partnerships contributed significantly to growth, with partner-related revenues growing over 70% year over year, representing 10% of total revenue [15] Management's Comments on Operating Environment and Future Outlook - Management raised full-year revenue guidance to 4% to 6% growth, up from 2% to 5%, and adjusted operating income margin expectations to 17.4% [17][24] - The company is excited about its future as it transitions to an AI-first model, leveraging advanced technology solutions to enhance its competitive position [18][92] Other Important Information - The company closed four large deals in Q2, with a strong pipeline for future growth [21] - The AI Gigafactory is operational across all verticals, with over 45 clients onboarded and more than 270 GenAI solutions in production [11] Q&A Session Summary Question: Insights on pipeline conversion and new bookings - Management noted that inflow and conversion remain healthy, with several large deals closed in Q2 and ongoing discussions for others [32][33] Question: Impact of Gen AI on traditional contracting - Management indicated that Gen AI is a tailwind for the business, with incremental revenue from expanded scope and new clients [34][36] Question: Advanced technology solutions pipeline and project length - The pipeline for advanced technology solutions is growing rapidly, with faster conversion rates and a significant portion being amortized and non-FTE [42][43] Question: Growth rates across segments - Management reported strong growth across all segments, with high-tech and manufacturing leading at 13% [45] Question: Sequential trends and guidance implications - Management expressed confidence in achieving the full-year guidance, emphasizing a strong pipeline and execution [51][52] Question: AI adoption across processes and verticals - AI adoption is broad-based across sectors, with strong demand from both existing and new clients [69] Question: Pricing environment and irrational pricing behavior - Management did not observe any irrational pricing behavior, noting a shift towards value-focused pricing models [70][71] Question: Midterm growth targets and pipeline confidence - Management remains confident in achieving midterm growth targets, citing a healthy pipeline and strong execution [78][79] Question: Convergence of IT services and BPO due to AI - Management acknowledged a convergence in client needs, focusing on value delivery rather than traditional service categories [81][82]