Genpact Limited Q3 FY2025 earnings call

• Q3 was a strong quarter for Genpact with revenue up 7% year-over-year to $1.291 billion, exceeding guidance. Advanced Technology Solutions revenue up 20% y-o-y, fifth consecutive quarter of accelerating growth. Gross margin 36.4% and adjusted operating income margin 17.7% exceeded expectations. Adjusted diluted EPS up 14% y-o-y to $0.97. • GenpactNext has 3 key elements: capabilities, clients and catalysts. Capabilities include advanced technology solutions and core business services. Hosted second annual AI Day, announced 3 major products. AI Gigafactory supports approx 100 clients, over 330 GenAI solutions in market. Agentic contract value growing rapidly, over 30% of awarded agentic contract value from new clients. • Core Business Services revenue grew 3% y-o-y with strength in Digital Operations and technology services. • Partner-related revenue grew 56% y-o-y in Q3. Aggressively investing in AI talent, on track to achieve 2025 targets.

Total revenue was $1.291 billion, up 6.6% year-over-year. Advanced Technology Solutions revenue, including data and AI, digital technologies, advisory and agentic solutions, accelerated again, up 20% to $311 million, representing 24% of third quarter revenue compared to 21% in 3Q 2024. Year-to-date, Advanced Technology Solutions has driven more than half of the total growth for Genpact. Core Business Services, including revenue from Digital Operations, decision support services and technology services, increased 3% to $980 million, driven by strength in Digital Operations and technology services. Data-Tech-AI increased 9.3% year-over-year to $622 million, and Digital Operations increased 4.3% year-over-year to $669 million. Non-FTE revenue, which includes fixed fee as well as outcome deals, accounted for 47% of third quarter revenue.

• Raised full year revenue outlook to 6.1% to 6.4% on as-reported basis, up from 4% to 6% previously. Raised adjusted diluted EPS outlook by $0.07 to $3.61 at midpoint. • Fourth quarter expected net revenue between $1.298 billion and $1.311 billion (4% to 5% growth). Advanced Technology Solutions expected to grow mid-teens, Core Business Services in low single digits. Gross margin expected to expand to 36.4% and adjusted operating income margin to 17.4%. Adjusted diluted EPS for fourth quarter expected $0.93 to $0.94. • Full year net revenue expected in range of $5.059 billion to $5.071 billion (6.1% to 6.4% growth). Advanced Technology Solutions mid- to high teens, Core Business Services low single digits. Full year gross margin expected 36%, adjusted operating income margin 17.4%. Adjusted diluted EPS expected $3.60 to $3.61. Operating cash flow expected approximately $650 million.

Actual results could differ materially due to a number of important risks and uncertainties, including the risk factors in our 10-K and 10-Q filings with the SEC.

Q: Bryan Bergin of TD Cowen asked about bookings performance, larger deal momentum and change in October and November.

A: Balkrishan Kalra said demand signals strong across board, sales cycles for large deals mixed, some accelerated, closed 5 large deals this quarter. Michael Weiner added strong demand in new and existing clients, medium-term targets for '26 and '27 still on track.

Q: Margaret Nolan of William Blair asked about reasons clients not ready to launch agentic operations, penetration in client base and expectations for adoption.

A: Balkrishan Kalra said it's a long-term trend, new clients often have data or process standardization issues, existing clients also being nudged. Michael Weiner added clients look for trusted partner, need process expertise, feel good about progression in core and advanced technology services.

Q: Surinder Thind of Jefferies asked about why over 30% of agentic contracts from new clients.

A: Balkrishan Kalra said strong traction with existing clients too, agentic solutions taking hold with new clients who are net new to Genpact or the solution, total addressable market increasing.

Q: Puneet Jain of JPMorgan asked about clients' readiness to move AI solutions into production and contract structuring.

A: Balkrishan Kalra said trust and last mile expertise matter, commercial models shifting towards non-FTE models, software-based and consumption-based structures. Michael Weiner added it's about Genpact's software and IP enabling ARR-type models.