Genpact Reports Second Quarter 2024 Results
Total Revenue of
Diluted EPS of
"Following another quarter of better-than-expected results and a robust first half performance, we are raising our earnings expectations for the year," said Balkrishan "BK" Kalra,
Key Financial Highlights – Second Quarter 2024
- Total revenue was
$1.18 billion , up 6% year-over-year on an as reported basis and 7% on a constant currency basis.1 - Data-Tech-AI revenue was
$546 million , up 4% year-over-year, both on an as reported and constant currency basis,1 representing 46% of total revenue.3 - Digital Operations revenue was
$630 million , up 9% year-over-year, both on an as reported and constant currency basis,1 representing 54% of total revenue.3 - Gross profit was
$416 million , up 7% year-over-year, with a corresponding margin of 35.4%. - Net income was
$122 million , up 5% year-over-year, with a corresponding margin of 10.4%. - Income from operations was
$170 million , up 8% year-over-year, with a corresponding margin of 14.5%. - Adjusted income from operations was
$198 million , up 7% year-over-year, with a corresponding margin of 16.9%.4,5 - Diluted earnings per share was
$0.67 , up 6% year-over-year. - Adjusted diluted earnings per share2,4 was
$0.79 , up 10% year-over-year. - Cash flow from operations was
$209 million , up from$171 million in the second quarter of 2023. Genpact repurchased approximately 1.9 million common shares during the quarter for total consideration of approximately$63 million at an average price per share of$32.63 .
_________________________________ |
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 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. |
3 |
4 Income from operations and diluted earnings per share in the second quarter of 2023 include a |
5 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
$1.180 billion to$1.186 billion , representing year-over-year growth of approximately 3.9% to 4.4% as reported, or 4.2% to 4.7% on a constant currency basis.1- Digital Operations revenue growth of approximately 3.8% year-over-year and Data-Tech-AI revenue growth of approximately 4.6% year-over-year at the midpoint of the range, as reported.
- Digital Operations revenue growth of approximately 4.2% year-over-year and Data-Tech-AI revenue growth of approximately 4.7% year-over-year at the midpoint of the range, on a constant currency basis.1
- Gross margin of approximately 35.4%.
- Adjusted income from operations margin6 of approximately 17.2%.
- Total revenue in the range of
$4.656 billion to$4.701 billion , representing year-over-year growth of approximately 4.0% to 5.0% as reported, or 4.2% to 5.2% on a constant currency basis,1 up from the prior guidance of approximately 2.5% to 3.5% as reported.- Digital Operations revenue growth of approximately 5.2% year-over-year and Data-Tech-AI revenue growth of approximately 3.8% year-over-year at the midpoint of the range, as reported, up from the previous midpoints of 3.6% and 2.3%, respectively.
- Digital Operations revenue growth of approximately 5.5% year-over-year and Data-Tech-AI revenue growth of approximately 3.9% year-over-year at the midpoint of the range, on a constant currency basis,1 up from the previous midpoints of 4.0% and 2.4%, respectively.
- Gross margin of approximately 35.3%.
- Adjusted income from operations margin6 of approximately 17.0%.
- Adjusted diluted EPS7 in the range of
$3.14 to$3.18 , up from the prior range of$3.01 to$3.04 .
Second Quarter 2024 Earnings Call
______________________________ |
6 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. |
7 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. |
About Genpact
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 (908) 418-2995 |
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Media |
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+1 (718) 561-9843 |
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GENPACT LIMITED AND ITS SUBSIDIARIES |
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Consolidated Balance Sheets |
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As of |
As of |
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Assets |
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Current assets |
||||
Cash and cash equivalents |
$ 583,670 |
$ 914,171 |
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Accounts receivable, net of allowance for credit losses of and respectively |
1,116,273 |
1,159,787 |
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Prepaid expenses and other current assets |
191,566 |
192,123 |
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Total current assets |
$ 1,891,509 |
$ 2,266,081 |
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Property, plant and equipment, net |
189,803 |
199,533 |
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Operating lease right-of-use assets |
186,167 |
194,624 |
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Deferred tax assets |
298,921 |
276,981 |
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Intangible assets, net |
53,028 |
39,841 |
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1,683,782 |
1,677,866 |
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Contract cost assets |
202,543 |
203,402 |
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Other assets, net of allowance for credit losses of |
299,960 |
319,937 |
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Total assets |
$ 4,805,713 |
$ 5,178,265 |
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Liabilities and equity |
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Current liabilities |
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Short-term borrowings |
$ 10,000 |
$ — |
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Current portion of long-term debt |
432,242 |
425,918 |
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Accounts payable |
27,739 |
28,430 |
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Income taxes payable |
38,458 |
43,779 |
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Accrued expenses and other current liabilities |
759,180 |
653,676 |
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Operating leases liability |
50,313 |
45,879 |
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Total current liabilities |
$ 1,317,932 |
$ 1,197,682 |
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Long-term debt, less current portion |
824,720 |
1,207,610 |
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Operating leases liability |
168,015 |
175,693 |
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Deferred tax liabilities |
11,706 |
10,118 |
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Other liabilities |
234,948 |
249,403 |
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Total liabilities |
$ 2,557,321 |
$ 2,840,506 |
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Shareholders' equity |
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Preferred shares, |
— |
— |
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Common shares, and 178,177,581 issued and outstanding as of |
1,789 |
1,776 |
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Additional paid-in capital |
1,883,944 |
1,900,015 |
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Retained earnings |
1,085,209 |
1,176,459 |
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Accumulated other comprehensive income (loss) |
(722,550) |
(740,491) |
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Total equity |
$ 2,248,392 |
$ 2,337,759 |
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Total liabilities and equity |
$ 4,805,713 |
$ 5,178,265 |
GENPACT LIMITED AND ITS SUBSIDIARIES |
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Consolidated Statements of Income |
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Three months ended |
Six months ended |
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2023 |
2024 |
2023 |
2024 |
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Net revenues |
$ 1,105,524 |
$ 1,176,212 |
$ 2,194,843 |
$ 2,307,449 |
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Cost of revenue |
715,484 |
759,834 |
1,434,562 |
1,494,593 |
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Gross profit |
$ 390,040 |
$ 416,378 |
$ 760,281 |
$ 812,856 |
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Operating expenses: |
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Selling, general and administrative expenses |
229,426 |
239,642 |
445,911 |
474,673 |
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Amortization of acquired intangible assets |
8,257 |
6,558 |
16,512 |
13,485 |
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Other operating (income) expense, net |
(4,963) |
(73) |
(4,574) |
(5,539) |
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Income from operations |
$ 157,320 |
$ 170,251 |
$ 302,432 |
$ 330,237 |
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Foreign exchange gains (losses), net |
1,763 |
2,454 |
723 |
3,291 |
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Interest income (expense), net |
(12,138) |
(13,538) |
(21,765) |
(23,780) |
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Other income (expense), net |
3,425 |
3,250 |
7,455 |
9,037 |
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Income before income tax expense |
$ 150,370 |
$ 162,417 |
$ 288,845 |
$ 318,785 |
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Income tax expense |
34,118 |
40,427 |
66,492 |
79,848 |
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Net income |
$ 116,252 |
$ 121,990 |
$ 222,353 |
$ 238,937 |
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Earnings per common share |
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Basic |
$ 0.63 |
$ 0.68 |
$ 1.21 |
$ 1.33 |
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Diluted |
$ 0.63 |
$ 0.67 |
$ 1.19 |
$ 1.32 |
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Weighted average number of common shares used in |
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Basic |
183,230,252 |
179,651,702 |
183,512,828 |
180,034,120 |
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Diluted |
185,825,117 |
180,912,267 |
186,705,697 |
181,424,912 |
GENPACT LIMITED AND ITS SUBSIDIARIES |
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Consolidated Statements of Cash Flows |
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Six months ended |
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2023 |
2024 |
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Operating activities |
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Net income |
$ 222,353 |
$ 238,937 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
36,845 |
34,542 |
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Amortization of debt issuance costs |
978 |
1,037 |
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Amortization of acquired intangible assets |
16,512 |
13,485 |
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Loss on the sale of the business classified as held for sale |
802 |
— |
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Allowance for credit losses |
6,521 |
12,638 |
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Unrealized gain on revaluation of foreign currency assets/liabilities |
(2,249) |
(7,214) |
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Stock-based compensation expense |
41,536 |
27,550 |
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Deferred tax (benefit) expense |
(2,957) |
15,873 |
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Others, net |
1,147 |
173 |
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Change in operating assets and liabilities: |
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Increase in accounts receivable |
(26,891) |
(54,326) |
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Increase in prepaid expenses, other current assets, contract cost assets, operating lease right-of-use |
(62,006) |
(22,823) |
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Increase in accounts payable |
5,742 |
997 |
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Decrease in accrued expenses, other current liabilities, operating lease liabilities and other liabilities |
(150,087) |
(82,850) |
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Increase in income taxes payable |
49,136 |
5,694 |
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Net cash provided by operating activities |
$ 137,382 |
$ 183,713 |
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Investing activities |
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Purchase of property, plant and equipment |
(24,033) |
(43,276) |
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Payment for internally generated intangible assets (including intangibles under development) |
(1,705) |
(1,260) |
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Proceeds from sale of property, plant and equipment |
17 |
116 |
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Payment for business acquisitions, net of cash acquired |
(682) |
— |
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Payment for divestiture of business |
(19,510) |
— |
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Net cash used for investing activities |
$ (45,913) |
$ (44,420) |
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Financing activities |
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Repayment of finance lease obligations |
(6,856) |
(5,569) |
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Payment of debt issuance and refinancing costs |
— |
(3,305) |
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Proceeds of long-term debt |
— |
400,000 |
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Repayment of long-term debt |
(13,250) |
(19,875) |
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Proceeds from short-term borrowings |
148,000 |
50,000 |
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Repayment of short-term borrowings |
(196,000) |
(60,000) |
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Proceeds from issuance of common shares under stock-based compensation plans |
31,928 |
9,720 |
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Payment for net settlement of stock-based awards |
(18,317) |
(21,142) |
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Payment of earn-out consideration |
(2,399) |
— |
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Dividend paid |
(50,286) |
(54,829) |
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Payment for stock repurchased and retired (including expenses related to stock repurchase) |
(150,548) |
(92,686) |
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Net cash (used for) provided by financing activities |
$ (257,728) |
$ 202,314 |
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Net (decrease) increase in cash and cash equivalents |
(166,259) |
341,607 |
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Effect of exchange rate changes |
10,802 |
(11,106) |
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Cash and cash equivalents at the beginning of the period |
646,765 |
583,670 |
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Cash and cash equivalents at the end of the period |
$ 491,308 |
$ 914,171 |
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Supplementary information |
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Cash paid during the period for interest |
$ 22,550 |
$ 30,625 |
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Cash paid during the period for income taxes, net of refund |
$ 66,819 |
$ 45,883 |
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 and six months ended
Reconciliation of Net Income/Margin to Adjusted Income from Operations/Margin |
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Three months ended |
Six months ended |
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2023 |
2024 |
2023 |
2024 |
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Net income |
$ 116,252 |
$ 121,990 |
$ 222,353 |
$ 238,937 |
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Foreign exchange (gains) losses, net |
(1,763) |
(2,454) |
(723) |
(3,291) |
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Interest (income) expense, net |
12,138 |
13,538 |
21,765 |
23,780 |
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Income tax expense |
34,118 |
40,427 |
66,492 |
79,848 |
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Stock-based compensation expense |
21,832 |
18,369 |
41,536 |
27,550 |
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Amortization and impairment of acquired intangible assets |
8,257 |
6,544 |
16,400 |
13,469 |
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Restructuring (income) expense |
(4,874) |
— |
(4,874) |
— |
||||
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 |
— |
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Adjusted income from operations |
$ 185,960 |
$ 198,414 |
$ 364,952 |
$ 380,293 |
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Net income margin |
10.5 % |
10.4 % |
10.1 % |
10.4 % |
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Adjusted income from operations margin |
16.8 % |
16.9 % |
16.6 % |
16.5 % |
Reconciliation of Income from Operations/Margin to Adjusted Income from Operations/Margin |
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Three months ended |
Six months ended |
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2023 |
2024 |
2023 |
2024 |
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Income from operations |
$ 157,320 |
$ 170,251 |
$ 302,432 |
$ 330,237 |
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Stock-based compensation expense |
21,832 |
18,369 |
41,536 |
27,550 |
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Amortization and impairment of acquired intangible assets |
8,257 |
6,544 |
16,400 |
13,469 |
||||
Other income (expense), net |
3,425 |
3,250 |
7,455 |
9,037 |
||||
Restructuring (income) expense |
(4,874) |
— |
(4,874) |
— |
||||
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 |
$ 185,960 |
$ 198,414 |
$ 364,952 |
$ 380,293 |
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Income from operations margin |
14.2 % |
14.5 % |
13.8 % |
14.3 % |
||||
Adjusted income from operations margin |
16.8 % |
16.9 % |
16.6 % |
16.5 % |
Reconciliation of Diluted EPS to Adjusted Diluted EPS8 |
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Three months ended |
Six months ended |
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2023 |
2024 |
2023 |
2024 |
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Diluted EPS |
$ 0.63 |
$ 0.67 |
$ 1.19 |
$ 1.32 |
||||
Stock-based compensation expense |
0.12 |
0.10 |
0.22 |
0.15 |
||||
Amortization and impairment of acquired intangible assets |
0.04 |
0.04 |
0.09 |
0.07 |
||||
Restructuring (income) expense |
(0.03) |
— |
(0.03) |
— |
||||
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 |
(0.03) |
(0.02) |
(0.07) |
(0.01) |
||||
Tax impact on amortization and impairment of acquired intangible assets |
(0.01) |
(0.01) |
(0.02) |
(0.02) |
||||
Tax impact on restructuring income (expense) |
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 |
$ 0.72 |
$ 0.79 |
$ 1.40 |
$ 1.51 |
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8 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 Margin9 |
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Year ending |
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Net income margin |
10.4 % |
|
Estimated interest (income) expense, net |
1.2 % |
|
Estimated income tax expense |
3.4 % |
|
Foreign exchange (gains)/losses |
(0.1) % |
|
Estimated stock-based compensation expense |
1.5 % |
|
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 |
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Year ending |
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Income from operations margin |
14.6 % |
|
Estimated stock-based compensation expense |
1.5 % |
|
Estimated amortization and impairment of acquired intangible assets |
0.6 % |
|
Estimated other income (expense), net |
0.3 % |
|
Adjusted income from operations margin |
17.0 % |
Reconciliation of Outlook for Diluted EPS to Adjusted Diluted EPS9 |
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Year ending |
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Lower |
Upper |
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Diluted EPS |
$ 2.69 |
$ 2.72 |
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Estimated stock-based compensation expense |
0.40 |
0.40 |
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Estimated amortization and impairment of acquired intangible assets |
0.15 |
0.15 |
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Estimated tax impact on stock-based compensation expense |
(0.06) |
(0.06) |
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Estimated tax impact on amortization and impairment of acquired intangible assets |
(0.04) |
(0.04) |
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Adjusted diluted EPS |
$ 3.14 |
$ 3.18 |
____________________________ |
9 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 Margin10 |
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Quarter ending |
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Net income margin |
9.9 % |
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Estimated interest (income) expense, net |
1.3 % |
|
Estimated income tax expense |
3.4 % |
|
Estimated stock-based compensation expense |
2.0 % |
|
Estimated amortization and impairment of acquired intangible assets |
0.5 % |
|
Adjusted income from operations margin |
17.2 % |
Reconciliation of Outlook for Income from Operations Margin to Adjusted Income from |
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Quarter ending |
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Income from operations margin |
14.3 % |
|
Estimated stock-based compensation expense |
2.0 % |
|
Estimated amortization and impairment of acquired intangible assets |
0.5 % |
|
Estimated other income (expense), net |
0.3 % |
|
Adjusted income from operations margin |
17.2 % |
_________________________________ |
10 Due to rounding, the numbers presented in this table may not add up precisely to the totals provided. |
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