Genpact(G) - 2025 Q2 - Quarterly Report

PART I Financial Information Unaudited Consolidated Financial Statements This section presents Genpact Limited's unaudited consolidated financial statements, detailing financial position, performance, and cash flows Consolidated Balance Sheets 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 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 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] Notes to the Consolidated Financial Statements 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][89][91] - 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] - 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] - 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][198] Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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 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] - 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] - The quarterly cash dividend was increased by 11% to $0.17 per share in February 2025[319] - The company utilizes a $650 million revolving credit facility and accounts receivable-based facilities to manage liquidity[330][341] Quantitative and Qualitative Disclosures About Market Risk The company manages market risks, primarily interest rate fluctuations on floating-rate debt, through the use of interest rate swaps and treasury rate locks - The company is exposed to interest rate risk on its floating-rate term loan and revolving credit facility, which are based on Term SOFR[355] - To manage this risk, the company uses interest rate swaps, with fixed payment rates ranging from 4.25% to 4.72%[356] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures are effective[361] - No material changes were made to the internal control over financial reporting during the quarter ended June 30, 2025[363] PART II Other Information Legal Proceedings There are no pending legal proceedings expected to have a material adverse effect on the company's business or financial condition - There are no legal proceedings pending against the company that are believed to be likely to have a material adverse effect on the business[365] Risk Factors This section refers to the detailed risk factors in the Annual Report on Form 10-K, with no material changes or new significant risks reported for the quarter - The company refers to the risk factors disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024, implying no material updates for the current quarter[366] Issuer Purchases of Equity Securities The company repurchased common shares during Q2 2025 and increased its share repurchase program authorization Share Repurchase Activity (Q2 2025) | Period | Total Shares Purchased | Weighted Avg. Price Paid ($) | | :--- | :--- | :--- | | 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] Other Information 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]