Genpact Reports First Quarter 2024 Results
Total Revenue of
Diluted EPS of
"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,
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 share4,6 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 .
__________________________________ |
1 Revenue growth on a constant currency basis is a non-GAAP measure and 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. |
2 Both on an as reported and constant currency basis. |
3 Total revenue and Data-Tech-AI revenue for the first quarter 2023 includes |
4 Adjusted diluted earnings per share is a non-GAAP measure. A reconciliation of GAAP diluted earnings per share to adjusted diluted earnings per share is attached to this release. |
5 Genpact updated the classification of certain service revenues from Digital Operations to Data-Tech-AI in the quarter ended |
6 Income from operations and diluted earnings per share for the first quarter of 2023 include a |
7 Adjusted income from operations and adjusted income from operations margin are non-GAAP measures. Reconciliations of each of GAAP income from operations and GAAP net income to adjusted income from operations and GAAP income from operations margin and GAAP net income margin to adjusted income from operations margin are attached to this release. |
Outlook
- 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 .
- 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:
As Originally Reported: |
Q1'22 |
Q2'22 |
Q3'22 |
Q4'22 |
Q1'23 |
Q2'23 |
Q3'23 |
Q4'23 |
Q1'24 |
Digital Operations revenue |
602 |
601 |
601 |
608 |
604 |
605 |
636 |
639 |
630 |
YoY % |
5.0 % |
3.3 % |
2.4 % |
3.3 % |
0.4 % |
0.7 % |
5.8 % |
5.1 % |
4.2 % |
QoQ % |
2.2 % |
(0.2) % |
0.1 % |
1.1 % |
(0.6) % |
0.1 % |
5.2 % |
0.4 % |
(1.5) % |
Data-Tech-AI revenue |
467 |
489 |
510 |
495 |
485 |
501 |
500 |
507 |
502 |
YoY % |
25.1 % |
20.2 % |
18.9 % |
2.3 % |
4.0 % |
2.5 % |
(2.0) % |
2.5 % |
3.4 % |
QoQ % |
(3.5) % |
4.7 % |
4.3 % |
(2.9) % |
(1.9) % |
3.2 % |
(0.2) % |
1.5 % |
(1.1) % |
________________________________ |
8 Adjusted income from operations margin is a non-GAAP measure. A reconciliation of the outlook for each of GAAP income from operations margin and GAAP net income margin to adjusted income from operations margin is attached to this release. |
9 Adjusted diluted earnings per share is a non-GAAP measure. A reconciliation of the outlook for GAAP diluted earnings per share to adjusted diluted earnings per share is attached to this release. |
Updated Classification: |
Q1'22 |
Q2'22 |
Q3'22 |
Q4'22 |
Q1'23 |
Q2'23 |
Q3'23 |
Q4'23 |
Q1'24 |
Digital Operations revenue |
581 |
580 |
578 |
583 |
579 |
581 |
612 |
615 |
607 |
YoY % |
5.1 % |
3.1 % |
1.9 % |
3.2 % |
(0.3) % |
0.2 % |
6.0 % |
5.5 % |
4.8 % |
QoQ % |
2.9 % |
(0.3) % |
(0.4) % |
1.0 % |
(0.6) % |
0.2 % |
5.5 % |
0.4 % |
(1.2) % |
Data-Tech-AI revenue |
487 |
509 |
533 |
519 |
510 |
525 |
523 |
531 |
524 |
YoY % |
24.0 % |
19.6 % |
18.9 % |
2.4 % |
4.7 % |
3.0 % |
(1.9) % |
2.3 % |
2.7 % |
QoQ % |
(3.9) % |
4.6 % |
4.7 % |
(2.6) % |
(1.8) % |
2.9 % |
(0.3) % |
1.5 % |
(1.4) % |
Conference Call to Discuss Financial Results
About
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
Contacts
Investors |
|
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+1 (614) 625-6485 |
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Media |
+1 (718) 561-9843 |
GENPACT LIMITED AND ITS SUBSIDIARIES |
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As of |
As of |
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Assets |
||||
Current assets |
||||
Cash and cash equivalents |
$ 583,670 |
$ 478,398 |
||
Accounts receivable, net of allowance for credit losses of |
1,116,273 |
1,147,233 |
||
Prepaid expenses and other current assets |
191,566 |
204,811 |
||
Total current assets |
$ 1,891,509 |
$ 1,830,442 |
||
Property, plant and equipment, net |
189,803 |
193,805 |
||
Operating lease right-of-use assets |
186,167 |
199,118 |
||
Deferred tax assets |
298,921 |
281,945 |
||
Intangible assets, net |
53,028 |
46,305 |
||
|
1,683,782 |
1,679,720 |
||
Contract cost assets |
202,543 |
204,918 |
||
Other assets, net of allowance for credit losses of |
299,960 |
304,389 |
||
Total assets |
$ 4,805,713 |
$ 4,740,642 |
||
Liabilities and equity |
||||
Current liabilities |
||||
Short-term borrowings |
$ 10,000 |
$ 50,000 |
||
Current portion of long-term debt |
432,242 |
425,768 |
||
Accounts payable |
27,739 |
28,032 |
||
Income taxes payable |
38,458 |
39,373 |
||
Accrued expenses and other current liabilities |
759,180 |
595,350 |
||
Operating leases liability |
50,313 |
46,879 |
||
Total current liabilities |
$ 1,317,932 |
$ 1,185,402 |
||
Long-term debt, less current portion |
824,720 |
818,327 |
||
Operating leases liability |
168,015 |
180,724 |
||
Deferred tax liabilities |
11,706 |
11,589 |
||
Other liabilities |
234,948 |
246,230 |
||
Total liabilities |
$ 2,557,321 |
$ 2,442,272 |
||
Shareholders' equity |
||||
Preferred shares, |
— |
— |
||
Common shares, |
1,789 |
1,794 |
||
Additional paid-in capital |
1,883,944 |
1,879,099 |
||
Retained earnings |
1,085,209 |
1,144,671 |
||
Accumulated other comprehensive income (loss) |
(722,550) |
(727,194) |
||
Total equity |
$ 2,248,392 |
$ 2,298,370 |
||
Total liabilities and equity |
$ 4,805,713 |
$ 4,740,642 |
GENPACT LIMITED AND ITS SUBSIDIARIES |
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Three months ended |
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2023 |
2024 |
|||
Net revenues |
$ 1,089,319 |
$ 1,131,237 |
||
Cost of revenue |
719,078 |
734,759 |
||
Gross profit |
$ 370,241 |
$ 396,478 |
||
Operating expenses: |
||||
Selling, general and administrative expenses |
216,485 |
235,031 |
||
Amortization of acquired intangible assets |
8,255 |
6,927 |
||
Other operating (income) expense, net |
389 |
(5,466) |
||
Income from operations |
$ 145,112 |
$ 159,986 |
||
Foreign exchange gains (losses), net |
(1,040) |
837 |
||
Interest income (expense), net |
(9,627) |
(10,242) |
||
Other income (expense), net |
4,030 |
5,787 |
||
Income before income tax expense |
$ 138,475 |
$ 156,368 |
||
Income tax expense |
32,374 |
39,421 |
||
Net income |
$ 106,101 |
$ 116,947 |
||
Earnings per common share |
||||
Basic |
$ 0.58 |
$ 0.65 |
||
Diluted |
$ 0.57 |
$ 0.64 |
||
Weighted average number of common shares used in computing earnings per |
||||
Basic |
183,795,404 |
180,416,537 |
||
Diluted |
187,586,277 |
181,937,555 |
GENPACT LIMITED AND ITS SUBSIDIARIES |
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Three Months ended |
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2023 |
2024 |
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Operating activities |
||||
Net income |
$ 106,101 |
$ 116,947 |
||
Adjustments to reconcile net income to net cash used for operating activities: |
||||
Depreciation and amortization |
18,757 |
17,280 |
||
Amortization of debt issuance costs |
487 |
488 |
||
Amortization of acquired intangible assets |
8,255 |
6,927 |
||
Loss on the sale of the business classified as held for sale |
802 |
— |
||
Allowance for credit losses |
3,324 |
10,897 |
||
Unrealized gain on revaluation of foreign currency assets/liabilities |
(2,994) |
(6,700) |
||
Stock-based compensation expense |
19,704 |
9,181 |
||
Deferred tax expense |
1,710 |
11,510 |
||
Others, net |
454 |
167 |
||
Change in operating assets and liabilities: |
||||
Increase in accounts receivable |
(17,794) |
(40,148) |
||
Increase in prepaid expenses, other current assets, contract cost assets, operating lease right-of-use |
(11,424) |
(22,495) |
||
Increase (decrease) in accounts payable |
(13,261) |
285 |
||
Decrease in accrued expenses, other current liabilities, operating lease liabilities and other liabilities |
(167,217) |
(131,129) |
||
Increase in income taxes payable |
19,032 |
1,229 |
||
Net cash used for operating activities |
$ (34,064) |
$ (25,561) |
||
Investing activities |
||||
Purchase of property, plant and equipment |
(12,578) |
(24,005) |
||
Payment for internally generated intangible assets (including intangibles under development) |
(828) |
(667) |
||
Proceeds from sale of property, plant and equipment |
9 |
— |
||
Payment for business acquisitions, net of cash acquired |
(682) |
— |
||
Payment for divestiture of the business |
(19,510) |
— |
||
Net cash used for investing activities |
$ (33,589) |
$ (24,672) |
||
Financing activities |
||||
Repayment of finance lease obligations |
(3,705) |
(3,433) |
||
Repayment of long-term debt |
(6,625) |
(13,250) |
||
Proceeds from short-term borrowings |
75,000 |
50,000 |
||
Repayment of short-term borrowings |
(46,000) |
(10,000) |
||
Proceeds from issuance of common shares under stock-based compensation plans |
15,924 |
6,797 |
||
Payment for net settlement of stock-based awards |
(18,172) |
(20,820) |
||
Payment of earn-out consideration |
(2,399) |
— |
||
Dividend paid |
(25,255) |
(27,492) |
||
Payment for stock repurchased and retired (including expenses related to stock repurchase) |
(30,013) |
(30,002) |
||
Net cash used for financing activities |
$ (41,245) |
$ (48,200) |
||
Net decrease in cash and cash equivalents |
(108,898) |
(98,433) |
||
Effect of exchange rate changes |
14,414 |
(6,839) |
||
Cash and cash equivalents at the beginning of the period |
646,765 |
583,670 |
||
Cash and cash equivalents at the end of the period |
$ 552,281 |
$ 478,398 |
||
Supplementary information |
||||
Cash paid during the period for interest |
$ 6,112 |
$ 11,393 |
||
Cash paid during the period for income taxes, net of refund |
$ 23,001 |
$ 20,108 |
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
Given
During the second quarter of 2022,
Accordingly,
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
Reconciliation of Net Income/Margin to Adjusted Income from Operations/Margin |
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Three months ended |
||||
2023 |
2024 |
|||
Net income |
$ 106,101 |
$ 116,947 |
||
Foreign exchange (gains) losses, net |
1,040 |
(837) |
||
Interest (income) expense, net |
9,627 |
10,242 |
||
Income tax expense |
32,374 |
39,421 |
||
Stock-based compensation expense |
19,704 |
9,181 |
||
Amortization and impairment of acquired intangible assets |
8,143 |
6,925 |
||
Operating loss from the business classified as held for sale |
1,201 |
— |
||
Loss on the sale of the business classified as held for sale |
802 |
— |
||
Adjusted income from operations |
$ 178,992 |
$ 181,879 |
||
Net income margin |
9.7 % |
10.3 % |
||
Adjusted income from operations margin |
16.4 % |
16.1 % |
Reconciliation of Income from Operations/Margin to Adjusted Income from Operations/Margin |
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Three months ended |
||||
2023 |
2024 |
|||
Income from operations |
$ 145,112 |
$ 159,986 |
||
Stock-based compensation expense |
19,704 |
9,181 |
||
Amortization and impairment of acquired intangible assets |
8,143 |
6,925 |
||
Other income (expense), net |
4,030 |
5,787 |
||
Operating loss from the business classified as held for sale |
1,201 |
— |
||
Loss on the sale of the business classified as held for sale |
802 |
— |
||
Adjusted income from operations |
$ 178,992 |
$ 181,879 |
||
Income from operations margin |
13.3 % |
14.1 % |
||
Adjusted income from operations margin |
16.4 % |
16.1 % |
Reconciliation of Diluted EPS to Adjusted Diluted EPS10 |
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Three months ended |
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2023 |
2024 |
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Diluted EPS |
$ 0.57 |
$ 0.64 |
||
Stock-based compensation expense |
0.11 |
0.05 |
||
Amortization and impairment of acquired intangible assets |
0.04 |
0.04 |
||
Operating loss from the business classified as held for sale |
0.01 |
— |
||
Loss on the sale of the business classified as held for sale |
0.00 |
— |
||
Tax impact on stock-based compensation expense |
(0.04) |
0.01 |
||
Tax impact on amortization and impairment of acquired intangible assets |
(0.01) |
(0.01) |
||
Tax impact on operating loss from the business classified as held for sale |
(0.00) |
— |
||
Tax impact on loss on the sale of the business classified as held for sale |
(0.00) |
— |
||
Adjusted diluted EPS |
$ 0.68 |
$ 0.73 |
________________________________ |
10 Due to rounding, the numbers presented in this table may not add up precisely to the totals provided. |
The following tables show the reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP measures for the year ending
Reconciliation of Outlook for Net Income Margin to Adjusted Income from Operations Margin11 |
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Year ending |
||
Net income margin |
10.1 % |
|
Estimated interest (income) expense, net |
1.3 % |
|
Estimated income tax expense |
3.3 % |
|
Estimated stock-based compensation expense |
1.8 % |
|
Estimated amortization and impairment of acquired intangible assets |
0.6 % |
|
Adjusted income from operations margin |
17.0 % |
Reconciliation of Outlook for Income from Operations Margin to Adjusted Income from |
||
Year ending |
||
Income from operations margin |
14.4 % |
|
Estimated stock-based compensation expense |
1.8 % |
|
Estimated amortization and impairment of acquired intangible assets |
0.6 % |
|
Estimated other income (expense), net |
0.2 % |
|
Adjusted income from operations margin |
17.0 % |
Reconciliation of Outlook for Diluted EPS to Adjusted Diluted EPS11 |
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Year ending |
||||
Lower |
Upper |
|||
Diluted EPS |
$ 2.56 |
$ 2.59 |
||
Estimated stock-based compensation expense |
0.44 |
0.44 |
||
Estimated amortization and impairment of acquired intangible assets |
0.14 |
0.14 |
||
Estimated tax impact on stock-based compensation expense |
(0.10) |
(0.10) |
||
Estimated tax impact on amortization and impairment of acquired intangible assets |
(0.04) |
(0.04) |
||
Adjusted diluted EPS |
$ 3.01 |
$ 3.04 |
________________________________ |
11 Due to rounding, the numbers presented in this table may not add up precisely to the totals provided. |
The following tables show the reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP measures for the quarter ending
Reconciliation of Outlook for Net Income Margin to Adjusted Income from Operations Margin12 |
||
Quarter ending |
||
Net income margin |
9.6 % |
|
Estimated interest (income) expense, net |
1.4 % |
|
Estimated income tax expense |
3.0 % |
|
Estimated stock-based compensation expense |
1.9 % |
|
Estimated amortization and impairment of acquired intangible assets |
0.6 % |
|
Adjusted income from operations margin |
16.5 % |
Reconciliation of Outlook for Income from Operations Margin to Adjusted Income from |
||
Quarter ending |
||
Income from operations margin |
13.8 % |
|
Estimated stock-based compensation expense |
1.9 % |
|
Estimated amortization and impairment of acquired intangible assets |
0.6 % |
|
Estimated other income (expense), net |
0.2 % |
|
Adjusted income from operations margin |
16.5 % |
__________________________________ |
12 Due to rounding, the numbers presented in this table may not add up precisely to the totals provided. |
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