• Revenue: $1.21 billion, up 7% year-over-year.
• Gross Margin: 35.6%, up 10 basis points from the prior year.
• Adjusted Operating Income Margin: 17.6%, up 40 basis points year-over-year.
• Net Income: $133 million, a 13% increase year-over-year.
• Diluted EPS: $0.74, a 16% increase year-over-year.
• Adjusted Diluted EPS: $0.85, a 12% increase year-over-year.
• Operating Cash Flow: $228 million, a 41% increase year-over-year.
• Data-Tech-AI Revenue: $569 million, up 9% year-over-year.
• Digital Operations Revenue: $642 million, up 5% year-over-year.
• Cash and Cash Equivalents: Approximately $1 billion, up $541 million from a year ago.
• Net Debt to EBITDA Ratio: 0.8 times for the quarter.
• Attrition Rate: 25%, 100 basis points lower than the prior period.
• Full Year Revenue Guidance: Increased to 6% growth at the midpoint.
• Full Year Adjusted EPS Guidance: Raised to $3.24 at the midpoint.

• Warning! GuruFocus has detected 8 Warning Signs with PBI.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Genpact Ltd (NYSE:G) reported a strong quarter with revenue reaching $1.21 billion, up 7% year-over-year, exceeding the high end of their guidance range.
• The company achieved a gross margin of 35.6% and an adjusted operating income margin of 17.6%, both surpassing expectations.
• Genpact Ltd (NYSE:G) is on track to deliver 6% revenue growth in 2024, up from 2% in 2023, with adjusted EPS expected to grow faster than revenue for the fourth consecutive year.
• The company has made significant progress in partnerships, notably achieving GenAI competency in AWS Consulting Services and launching a proprietary Finance Data Hub.
• Genpact Ltd (NYSE:G) has seen a 9% year-over-year increase in Data-Tech-AI revenue, driven by comprehensive solutions and innovation in AI and data analytics.

Negative Points

• Despite the positive growth, the company acknowledges that there is significant work ahead and that they are still in the early stages of their transformation journey.
• The percentage of sole-source deals decreased slightly from 45% to 42%, indicating potential challenges in securing exclusive contracts.
• Attrition remains a concern with a rate of 25%, although it is 100 basis points lower than the prior period.
• The company is operating in a stable but not expanding business environment, with no signs of budget influx from clients.
• Outcome-based revenue, while growing, remains relatively flat sequentially at 20%, indicating a slow shift towards alternative commercial models.

Q & A Highlights

Q: Over the last 90 days, has there been any improvement in the short-cycle projects and advisory work? A: Balkrishan Kalra, President and CEO, noted strong execution driving results and a stable business environment. Michael Weiner, CFO, added that advanced technologies and AI initiatives are contributing to the strong performance in Data-Tech-AI.

Q: Can you provide an update on your progress on expanding partnership source revenue? A: Balkrishan Kalra highlighted partnerships with hyperscalers like AWS, Microsoft, and Google, as well as ServiceNow and Salesforce. These partnerships are crucial, with proprietary solutions enhancing revenue. Michael Weiner added that while partnership revenue is currently low, it is a significant growth driver.

Q: What parts of the Data-Tech-AI business are resonating most with clients? A: Balkrishan Kalra emphasized a holistic approach, integrating AI, data, and technology. Data-Tech-AI is a significant component in digital operations deals, driving growth and client engagement.

Q: Are customers becoming more comfortable with generative AI technology? A: Balkrishan Kalra acknowledged early days but noted increased adoption and production environment deployments. Client testimonials at AI Day highlighted the value generated by Genpact's solutions.

Q: Is the 6% year-over-year growth in Q4 a good starting point for 2025 growth expectations? A: Michael Weiner indicated that while formal guidance will be provided later, the stable buying environment and strong execution suggest a positive outlook. Balkrishan Kalra added that despite tougher comps, the company feels good about its position.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.