Genpact Limited Q1 FY2026 earnings call

• Q1 was a record start to the fiscal year with total revenue growth of 6.7%. Advanced technology solutions growth accelerated to 24%. Gross margin expanded for the 12th quarter in a row. Adjusted diluted EPS grew 16.7%. - Signed six large deals in the quarter and has a healthy pipeline of other large transformational deals. - Advanced technology solutions pipeline grew more than 30% in the last 90 days. Agentic solutions growth is accelerating with nearly doubling of total contract value from 2025. - Core business services revenue increased 1.4% with healthy demand and growing booking and pipeline. - Entered new strategic partnerships in Europe and with Bendigo Bank. Partner-related revenues grew 35% year-over-year. - Announced strategic alliance with Google to create agentic and AI-led solutions for the Office of the CFO.

Total revenue grew 6.7% year-over-year to $1.296 billion. Advanced technology solutions revenue growth accelerated to 24% year-over-year, reaching $345 million, accounting for 27% of total revenue. Core business services revenue increased 1.4% in Q1 to $951 million. Partner-related revenues grew 35% year-over-year, now accounting for nearly 13% of total revenue. High tech and manufacturing grew 8%, followed by consumer and healthcare growth of 6.1%, and financial services growth of 5.4%. Gross margin expanded to 36.4%, up approximately 110 basis points. Adjusted diluted EPS increased 16.7% to 98 cents.

• Expect to deliver at least 7% growth for 2026 on an as-reported basis. - Advanced technology solutions expected to grow at least 20%. - Core business services growth to continue. - Full-year gross margin expected to expand by 50 basis points to 36.5%, adjusted operating income margin expected to increase 25 basis points to 17.7%. - Second quarter total revenue expected between $1.324 billion and $1.336 billion or 6% growth in the midpoint. Advanced technology solutions expected to grow at least 20% year over year. Gross margin expected to expand to 36.4% and adjusted operating income margin to increase to 17.4%. Adjusted diluted EPS expected 96 to 97 cents for the second quarter.

Q: Hi, all. Good afternoon. Thank you. So my first question, just really at a high level, status update on client decision-making and spending trends from a macro standpoint, given it picked up, and certainly picked up in April and May. I mean, pipeline and large deal sales activities came pretty solid, but just wanted to test any areas by impact, vertical or geography. And I'll ask my second question up front here, just as it relates to CVS to ATS kind of migration. Can you dig in a little bit more on the level of change between the segments as you modernize your delivery and kind of recategorize?

A: Thanks, Brian. I'll take it. So overall demand environment across the board, be it if I see in cohorts of advanced technology or core business services or new clients, existing clients, or various segments that we have, or geos, it continues to be very strong and continues our pipeline and inflows continue to be at record levels. So really pleased with that. And maybe how I'll respond to your second question is I think our flywheel effect has begun to show results. And the flywheel effect actually starts from core business services where demand continues to be strong, but our context-rich process intelligence that we harnessed for decades, and that is the core with which, in combination with modern data, reimagined workflows, cleaner architectures, and how we are bringing all of this together to deliver superior outcomes for our clients is beginning to show results, and it is showing in a disproportionate way in advanced technology solutions. And really, I think getting engaged into newer kind of conversations and more focused now on not just meeting the clients where they are, but also getting them where they want to be at a much faster pace. So really pleased with where we are and how we are shaping the new GenPact.

Q: Hi, everyone. Thanks for taking my question. So congrats on the ATS acceleration. Really impressive. I was wondering on the visibility in that business and how dependent ATS is on partner-related revenue growth and the runway you see there being 13% of revenue at the moment. Thank you.

A: Yeah, thanks, Sean. Again, I'll take it, and Mike, feel free to add. all of the components of advanced tech or for that metacore, I'll make three points, Sean. Point number one, just from, as I mentioned, 2x2x7070, high proportion of all of advanced tech is amutized. So we have, again, pretty strong visibility into it. And I won't say that it is only partner solutions. Yes, partner solutions is taking shape. What is gaining more and more traction is agentic as well as data and AI. And all of these are inexplicable in many ways. We leverage partner solutions, as I enumerated in my prepared remarks as well, but feel really good about advanced technology solution visibility as well as core business services. The only thing I'd kind of top that off, if you don't mind, BK, is when you think about ATS, BK alluded to the 2x, 2x, 70-70. Particularly of note, I just want to repeat, the 70% of that business being annuitized gives us very good ability to predict the business within how we've been able to do it. I would also say it's also supported by a really strong pipeline and inflows that are growing. So we feel great about it.

Q: So, BK, on the advanced technology solutions and kind of the 2x revenue per headcount, is that what you're initially seeing at this point? And is that what, like, how should we expect that to evolve over the coming years until I guess what I'm trying to get to is to get a better understanding of when a client kind of shifts from kind of their core operations to more agentic operations, like what percentage of that technology or revenues is more IP based? And then how do we think about the human component there and the ongoing maintenance and recalibration that's often required? And then when I think about Just the earlier commentary on demand, it seems like things relative to 60 days ago or 90 days ago hasn't really changed. Is that the messaging here? Because when we think about all of the messaging kind of from peers or competitors or I guess the industry, it just seems like everybody's seeing a little bit more weakness, a bit more delays in client decisioning. And that's kind of being reflected in guides and forward numbers. But just wanted to get your take if you guys are just seeing a completely different picture because of the nature of some of the work that you have.

A: I think there are many questions in that question, Surinder. So I'll pass that and let me know in case you have any follow-on. First, overall at a business level, we are seeing the early signs of decoupling and creating more leverage. Your revenue will grow faster than headcount. And it has begun to show results. I'll still say we are in the early stages of that point of move on. Point number two, I'll say to the specific question you asked, any of the agent tickets, all of those revenues have no bearing on headcount. It is all IP-based revenues, annuitized with minimum volume commitments, and it's more annuitized recurring revenues. So it has zero bearing on headcount, whatever. Obviously, there's a headcount deployed there. but as we drive more efficiency there, the revenue by headcount will only increase. Last point I'll make on overall advanced technology solution, it is greater than 2x, and we expect it to continue to grow better than 2x to better numbers, better numerics. Yeah, how I'll characterize this surrender is we hear some of that commentary too, but we have in our pipeline, in our inflows, we believe we have begun to demonstrate that we are separating from the pack. we see record levels of pipeline across cohorts, as I mentioned in my previous comment, and more of that flywheel effect taking shape because of potentially our context-rich process intelligence. We've been working on it for decades, and possibly the time has come to show as to what it means as we supplement it with technology investments. and ramp in our strategic areas and really demonstrate meaningful results to world's largest companies as these agents go live in their environments.

Q: Hi, thanks for taking my question. So BK, I was wondering if you can talk about the specific drivers for such strong traction in agentic services you are seeing this quarter. Was it in any way related to evolution in AI models, especially cloud and entropic? which could be driving clients to embrace some of these models, or it's just that with new budgets, clients have new urgency to push ahead with this? And if you can also talk about the operational structure of these deals, agentic deals. Do you purchase tokens, decide which models are relevant for clients, and manage the change management governance constraints that have kept adoption low in the past?

A: As we mentioned in our prepared remarks that we nearly doubled the agentic bookings, and all of these are in annualized recurring revenues. relative to whatever we did all in 2025. And I would not say that it is, yes, I mean, improved models, all of those help. We were in many cases using the models. But fundamentally, what has begun to show, as I was mentioning in our existing client base, as well as the new clients, the structural advantage that we have that is driven by context-rich process intelligence. I have always said there is no artificial intelligence without process intelligence. And it is beginning to show in our results. And if you think of, like you mentioned, models, process, people, technology, technology is becoming more and more ubiquitous. It is more available. Process is more intense. And I think that's where we live. That's where the intersection of AI needs to be. That's where we see the outcomes. and we are delivering superior outcomes, and that structural advantage has begun to show in its early days. Look, I think, again, maybe there are a couple parts of the question, if I hear you right, Puneet. One, obviously, we live in these client environments. So as I mentioned, we understand their data. We understand the friction points. We understand the process flows. We understand how upstream-downstream processes work, how the change dynamics have to work. And therefore, we handhold clients holistically to drive and embed data into the agentic systems and not just hand over the software and kind of go on. And whether, you know, what models, and it is a pretty structured process in which we are to use what models and how to bring, you know, we don't need to expose clients to these many tokens and these many things. Those are our internal things. Clients care for how we are driving outcomes. And restructure the commercial models in more annuitized recurring revenues with minimum volume commits.