Financial Data and Key Metrics Changes - Revenues for Q3 FY 2026 were $5.1 billion, reflecting a sequential growth of 0.6% and a year-on-year growth of 1.7% in constant currency terms [5][11] - Adjusted operating margin for Q3 was 21.2%, with a reported margin of 18.4% impacted by changes in labor codes [11][12] - Free cash flow generated was $915 million, with an adjusted free cash flow conversion for nine months standing at 118% [15][16] - The company revised its revenue growth guidance for FY 2026 to 3%-3.5% in constant currency [9][21] Business Line Data and Key Metrics Changes - Large deal total contract value (TCV) for Q3 was robust at $4.8 billion, with 57% being net new deals [14][17] - Financial services vertical saw a year-on-year growth of 3.9% in constant currency terms, with Europe leading growth at 7.2% [12][17] - The healthcare sector benefited from a significant $1.6 billion deal with the National Health Service in the UK, contributing to incremental revenues [5][39] Market Data and Key Metrics Changes - The company signed 26 large deals during the quarter, with 10 in financial services and 16 in the Americas [17][18] - There is a noted shift in client priorities towards AI-led transformation and vendor consolidation across various sectors [19][20] - The manufacturing vertical is facing challenges due to tariff uncertainties, while the energy sector is witnessing increased demand driven by infrastructure investments [18][19] Company Strategy and Development Direction - The company is expanding its strategic partnerships with AI companies and has deepened its AI capabilities with the Topaz AI suite [6][8] - Six AI-led value pools have been identified as significant growth opportunities, including AI engineering services and legacy modernization [8][9] - The company aims to position itself as a leading AI value creator for global enterprises, with a focus on driving value realization from AI investments [9][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory for FY 2027, particularly in financial services and energy sectors, driven by strong deal wins [9][21] - The operating environment remains challenging, with a focus on cost discipline and efficiency among clients [20][21] - Management highlighted the importance of AI in driving future growth and the increasing demand for AI infrastructure and services [19][20] Other Important Information - The company completed its largest-ever buyback, returning INR 18,000 crores to shareholders, which is expected to aid in EPS accretion [16] - The labor code changes had a notable impact on operating profit, net profit, and free cash flow for the quarter [11][12] Q&A Session Summary Question: Why is the implied outlook for Q4 not stronger despite strong signings? - Management indicated that while there is strong momentum, the lower working day calendar in Q4 presents a headwind [25][29] Question: Are there signs of discretionary spending expanding beyond financial services and energy? - Management confirmed that growth is expected in financial services and energy, but other sectors are still emerging [25][26] Question: Is AI a headwind or tailwind for margins? - Management stated that AI projects are not negatively impacting pricing and are seen as accretive [30][32] Question: What is the outlook for North America and specific industries? - Management noted a contraction in North America due to lower third-party costs across segments [35][36] Question: How is the healthcare sector performing? - The healthcare sector saw significant growth, partly due to the NHS deal, with expectations for continued contribution [39][41] Question: What is the impact of new labor laws on margins? - The recurring impact of new labor laws is expected to be approximately 15 basis points on an ongoing basis [61][62]

Core Viewpoint - Genpact Limited (NYSE: G) is recommended as a buy due to its anticipated predictable, double-digit EPS growth driven by AI-led transformation and strong demand signals [1] Company Analysis - Genpact is entering a new phase characterized by predictable, double-digit EPS growth [1] - The management outlined their growth strategy during the investor day, emphasizing the role of AI in driving transformation [1] Investment Strategy - The investment approach focuses on long-term investments while also considering short-term opportunities to uncover alpha [1] - The analysis is based on a bottom-up approach, assessing the fundamental strengths and weaknesses of individual companies [1] - The investment duration is medium to long-term, targeting companies with solid fundamentals, sustainable competitive advantages, and growth potential [1]

Core Insights - Cognizant reported strong financial performance in Q1 2025, with revenue of $5.115 billion, reflecting a year-over-year increase of 7.5% and 8.2% in constant currency [3][9][40] - The company achieved a GAAP operating margin of 16.7%, up 210 basis points from the previous year, and an adjusted operating margin of 15.5%, which increased by 40 basis points year-over-year [3][9][40] - GAAP diluted EPS rose to $1.34, a 22% increase year-over-year, while adjusted diluted EPS increased by 10% to $1.23 [3][9][40] Financial Performance - Revenue growth was driven by recent acquisitions, contributing approximately 400 basis points to overall revenue growth [3][44] - The company returned $364 million to shareholders through share repurchases and dividends in Q1 2025, with a planned return of $1.7 billion for the full year [5][11] - Bookings for the trailing twelve months increased by 3% year-over-year to $26.7 billion, with a book-to-bill ratio of approximately 1.3x [6][9] Operational Highlights - The first quarter performance demonstrated strong operational rigor amid elevated uncertainty, with revenue exceeding guidance and adjusted operating margin expansion [5][9] - The company expects second quarter revenue to be between $5.14 billion and $5.21 billion, representing growth of 5.9% to 7.4% [15] - Full-year 2025 revenue guidance remains unchanged at $20.5 billion to $21.0 billion, with expected growth of 3.9% to 6.4% [15] Strategic Initiatives - Cognizant is focusing on AI-led transformation, leveraging its differentiated AI and platform capabilities to assist clients in navigating macroeconomic challenges [2][14] - Recent client agreements and partnerships include collaborations with Boehringer Ingelheim, Citizens Financial Group, and Docusign, aimed at enhancing operational efficiencies and driving innovation [16][20] - The company plans to establish a Cognizant Immersive Learning Center in Chennai, India, to train 100,000 individuals annually, reflecting its commitment to workforce development [20]