Genpact Reports First Quarter 2024 Results

Total Revenue of $1.13 billion, Up 4%^1,2,3

Diluted EPS of $0.64, Up 12%; Adjusted Diluted EPS⁴ of $0.73, Up 7%

NEW YORK, May 9, 2024 /PRNewswire/ -- Genpact Limited (NYSE:G), a global professional services and solutions firm delivering outcomes that shape the future, today announced financial results for the first quarter ended March 31, 2024.

"Results for the first quarter were above the high end of our guidance range, driven by early signs of improving execution and better than expected performance across both Data-Tech-AI and Digital Operations," said Balkrishan "BK" Kalra, Genpact's President & CEO. "In the first quarter, we established our new '3+1 Execution Framework,' which is focused on building stronger partnerships, delivering more comprehensive Data-Tech-AI solutions, simplifying our sales and go-to-market structures, and enhancing our own operational efficiency through AI-led transformation. This work, while early, is delivering promising results and will be a key ingredient in putting us on the path to reach our full potential." 

Key Financial Highlights – First Quarter 2024

• Total revenue was $1.13 billion, up 4% year-over-year, both on an as reported and constant currency basis.^1,3  
• Data-Tech-AI revenue was $524 million, up 3% year-over-year, both on an as reported and constant currency basis,^1,3 representing 46% of total revenue.⁵
• Digital Operations revenue was $607 million, up 5% year-over-year (6% on a constant currency basis),¹ representing 54% of total revenue.⁵
• Gross profit was $396 million, up 7% year-over-year, with a corresponding margin of 35.0%.
• Net income was $117 million, up 10% year-over-year, with a corresponding margin of 10.3%.
• Income from operations was $160 million, up 10% year-over-year, with a corresponding margin of 14.1%.
• Adjusted income from operations was $182 million, up 2% year-over-year, with a corresponding margin of 16.1%.^6,7
• Diluted earnings per share was $0.64, up 12% year-over-year, and adjusted diluted earnings per share^4,6 was $0.73, up 7% year-over-year.
• Cash utilized in operations was $26 million, compared to $34 million utilized in operations in the first quarter of 2023.
• Genpact repurchased approximately 865,000 of its common shares during the quarter for total consideration of approximately $30 million at an average price per share of $34.67.

Outlook

Genpact's updated outlook for the full year 2024 is as follows:

• Total revenue in the range of $4.59 billion to $4.63 billion, representing year-over-year growth of approximately 2.5% to 3.5% as reported, or 2.7% to 3.7% on a constant currency basis,¹ up from the prior guidance of approximately 2.0% to 3.0% as reported.
  • Digital Operations revenue growth of approximately 3.6% year-over-year and Data-Tech-AI revenue growth of approximately 2.3% year-over-year at the midpoint of the range, as reported, up from the previous midpoints of 3.1% and 1.7%, respectively, on an updated classification basis.⁵
  • Digital Operations revenue growth of approximately 4.0% year-over-year and Data-Tech-AI revenue growth of approximately 2.4% year-over-year at the midpoint of the range, on a constant currency basis,¹ up from the previous midpoints of 3.2% and 1.9%, respectively, on an updated classification basis.⁵
• Gross margin of approximately 35.3%, up from the prior guidance of approximately 35.0%.
• Adjusted income from operations margin⁸ of approximately 17.0%.
• Adjusted diluted EPS⁹ in the range of $3.01 to $3.04, up from the prior range of $3.00 to $3.03.

Genpact's outlook for the second quarter of 2024 is as follows:

• Total revenue in the range of $1.143 billion to $1.148 billion, representing year-over-year growth of approximately 3.4% to 3.8% as reported, or 3.6% to 4.0% on a constant currency basis.¹
  • Digital Operations revenue growth of approximately 5.4% year-over-year and Data-Tech-AI revenue growth of approximately 1.6% year-over-year at the midpoint of the range, as reported.
  • Digital Operations revenue growth of approximately 5.7% year-over-year and Data-Tech-AI revenue growth of approximately 1.6% year-over-year at the midpoint of the range, on a constant currency basis.¹
• Gross margin of approximately 34.8%.
• Adjusted income from operations margin⁸ of approximately 16.5%.

The outlook presented above reflects the updated classification of Digital Operations and Data-Tech-AI revenue.⁵ 

Digital Operations and Data-Tech-AI revenue update⁵

The following tables provide Digital Operations and Data-Tech-AI revenue breakdowns for each quarter from the first quarter of 2022 through the first quarter of 2024, as originally reported and on an updated classification basis:

 

Conference Call to Discuss Financial Results

Genpact's management will host an hour-long conference call beginning at 5:00 p.m. ET on May 9, 2024 to discuss the company's performance for the first quarter ended March 31, 2024. Those who wish to participate can register here to receive a dial-in number and unique PIN to access the call seamlessly. It is recommended callers join 10 minutes prior to the start of the event (although you may register and dial in at any time during the call).  A live webcast of the call will also be made available on the Genpact Investor Relations website at https://www.genpact.com/investors. For those who cannot join the call live, a replay will be archived on the Genpact website after the end of the call. A transcript of the call will also be made available on the website.

About Genpact

Genpact (NYSE:G) is a global professional services and solutions firm delivering the outcomes that shape the future. Our 125,000+ people across 30+ countries are driven by our innate curiosity, entrepreneurial agility, and desire to create lasting value for clients. Powered by our purpose – the relentless pursuit of a world that works better for people – we serve and transform leading enterprises, including the Fortune Global 500, with our deep business and industry knowledge, digital operations services, and expertise in data, technology, and AI.

Safe Harbor

This press release contains certain statements concerning our future growth prospects, including our outlook for 2024, financial results and other forward-looking statements, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those in such forward-looking statements. These risks, uncertainties, and other factors include but are not limited to macroeconomic uncertainty and general economic conditions, any deterioration in the global economic environment and its impact on our clients, our ability to manage our CEO transition and retain senior management, technological innovation, including AI technology and future uses of generative AI and large language models, and our ability to invest in new technologies and adapt to industry developments at sufficient speed and scale, our ability to develop and successfully execute our business strategies, our ability to effectively price our services and maintain pricing and employee utilization rates, general inflationary pressures and our ability to share increased costs with our clients, wage increases in locations in which we have operations, our ability to attract and retain skilled professionals, our ability to protect our and our clients' data from security incidents or cyberattacks, the economic and other impacts of geopolitical conflicts and any related sanctions and other measures that have been or may be implemented or imposed in response thereto, as well as any potential expansion or escalation of existing conflicts or economic disruption beyond their current scope, a slowdown in the economies and sectors in which our clients operate, a slowdown in the sectors in which we operate, the risks and uncertainties arising from our past and future acquisitions or divestitures, our ability to convert bookings to revenues, our ability to manage growth, factors which may impact our cost advantage, changes in tax rates and tax legislation and other laws and regulations, our ability to effectively execute our tax planning strategies, risks and uncertainties regarding fluctuations in our earnings, foreign currency fluctuations, political, economic or business conditions in countries in which we operate, as well as other risks detailed in our reports filed with the U.S. Securities and Exchange Commission, including Genpact's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. These filings are available at www.sec.gov. Genpact may from time to time make additional written and oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission and our reports to shareholders. Although Genpact believes that these forward-looking statements are based on reasonable assumptions, you are cautioned not to put undue reliance on these forward-looking statements, which reflect management's current analysis of future events and should not be relied upon as representing management's expectations or beliefs as of any date subsequent to the time they are made. Genpact undertakes no obligation to update any forward-looking statements that may be made from time to time by or on behalf of Genpact.

Contacts

 

 

 

Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with GAAP, this press release includes the following non-GAAP financial measures: 

• Adjusted income from operations;
• Adjusted income from operations margin;
• Adjusted diluted earnings per share; and
• Revenue growth on a constant currency basis.

These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. Accordingly, these non-GAAP financial measures, the financial statements prepared in accordance with GAAP and the reconciliations of Genpact's GAAP financial statements to such non-GAAP financial measures should be carefully evaluated.

Given Genpact's acquisitions of varying scale and size, and the difficulty in predicting expenses relating to acquisitions and the amortization of acquired intangibles thereof, since July 2012 Genpact's management has used financial statements that exclude all acquisition-related expenses and amortization of acquired intangibles for its internal management reporting, budgeting and decision-making purposes, including comparing Genpact's operating results to those of its competitors. For the same reasons, since April 2016, Genpact's management has excluded the impairment of acquired intangible assets from the financial statements it uses for internal management purposes. Acquisition-related expenses are excluded in the period in which an acquisition is consummated. Genpact's management also uses financial statements that exclude stock-based compensation expense. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use when adopting ASC 718 "Compensation-Stock Compensation," Genpact's management believes that providing non-GAAP financial measures that exclude such expenses allows investors to make additional comparisons between Genpact's operating results and those of other companies.

During the second quarter of 2022, Genpact approved a plan to divest a business that was no longer deemed strategic. Given the specialized nature of this business, we anticipated completing a transaction within twelve months after the end of the second quarter of 2022, and therefore, we classified the revenues and expenses related to this business as held for sale with effect from April 1, 2022. During the first quarter of 2023, the Company consummated this transaction and recorded a loss on the sale of the business. Genpact's management believes that excluding such loss on the sale of the business and the revenues and expenses associated with the business previously designated as held for sale in calculating its non-GAAP financial measures provides useful information to both management and investors regarding the Company's financial performance and underlying business trends. Additionally, in its calculations of non-GAAP financial measures, Genpact's management has adjusted foreign exchange gains and losses, interest income and expense and income tax expenses from GAAP net income, and other income and expenses, and certain gains from GAAP income from operations, because management believes that the Company's results after taking into account these adjustments more accurately reflect the Company's ongoing operations. In its calculations of adjusted diluted earnings per share, Genpact's management adds back stock-based compensation expense, amortization and impairment of acquired intangible assets, acquisition-related expenses and the related tax impact of such adjustments from GAAP diluted earnings per share. For the purpose of calculating adjusted diluted earnings per share, the combined current and deferred tax effect is determined by multiplying each pre-tax adjustment by the applicable statutory income tax rate. 

Genpact's management provides information about revenues on a constant currency basis so that the revenues may be viewed without the impact of foreign currency exchange rate fluctuations compared to prior fiscal periods, thereby facilitating period-to-period comparisons of the Company's true business performance. Revenue growth on a constant currency basis is calculated by restating current-period activity using the prior fiscal period's foreign currency exchange rates adjusted for hedging gains/losses in such period.

Accordingly, Genpact believes that the presentation of adjusted income from operations, adjusted income from operations margin, adjusted diluted earnings per share and revenue growth on a constant currency basis, when read in conjunction with the Company's reported results, can provide useful supplemental information to investors and management regarding financial and business trends relating to its financial condition and results of operations.

A limitation of using adjusted income from operations and adjusted income from operations margin versus income from operations, income from operations margin, net income and net income margin calculated in accordance with GAAP is that these non-GAAP financial measures exclude certain recurring costs and certain other charges, namely stock-based compensation expense and amortization and impairment of acquired intangible assets. Management compensates for this limitation by providing specific information on the GAAP amounts excluded from adjusted income from operations and adjusted income from operations margin.

The following tables show the reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures for the three months ended March 31, 2023 and 2024:

               

 

The following tables show the reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP measures for the year ending December 31, 2024:

 

 

The following tables show the reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP measures for the quarter ending June 30, 2024:

 

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SOURCE Genpact