News Release Details

NEW YORK, May 1, 2012 /PRNewswire/ -- Genpact Limited (NYSE: G), a global leader in business process and technology management, today announced financial results for the first quarter ended March 31, 2012.

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Key Financial Results – First Quarter 2012

• Revenues were $435.5 million, up 31.7% from $330.6 million in the first quarter of 2011.  Revenues from Global Clients were up 46.6%, and business process management revenues from Global Clients were up 20.2%.
• Net income attributable to Genpact Limited shareholders was $38.5 million, up 6.7% from $36.1 million in the first quarter of 2011; net income margin for the first quarter of 2012 was 8.9%, compared to 10.9% in the first quarter of 2011.
• Diluted earnings per common share were $0.17, up 5.8% from $0.16 per share in the first quarter of 2011.
• Adjusted income from operations was $70.8 million, up 38.1% from $51.2 million in the first quarter of 2011.
• Adjusted income from operations margin was 16.3%, up from 15.5% in the first quarter of 2011.
• Adjusted diluted earnings per share were $0.21, up 13.4% from $0.18 in the first quarter of 2011.

N.V. "Tiger" Tyagarajan, Genpact's president and CEO said, "Genpact had a great first quarter, with more than 30% growth in both revenues and adjusted operating income. The market environment overall is stable, with increasing interest in long-term, transformative business process management engagements. We are seeing continued strong demand for our Smart Decision Services offerings and accelerating demand for our IT services. Our pipeline remains healthy, reflecting both the investments we have been making in the front end and the slow recovery in global markets." 

Revenues from Global Clients grew 46.6% over the first quarter of 2011. Business process management revenues from Global Clients grew by 20.2% and were led by 61.4% growth in Smart Decision Services, which is comprised of Genpact's reengineering, analytics, business consulting and enterprise risk consulting businesses.  

Revenues from Global Clients represented approximately 73.4% of Genpact's total revenues, with the remaining 26.6% of revenues, or $115.9 million, coming from GE. GE revenues increased 3.0% from the first quarter of 2011, adjusted for dispositions by GE.

As of March 31, 2012, 57 client relationships each contributed revenues of $5 million or more in the preceding twelve months, up from 45 such relationships as of March 31, 2011. As of March 31, 2012, 10 client relationships each contributed revenues of $25 million or more in the preceding twelve months, up from 5 such client relationships as of March 31, 2011.

Approximately 75.8% of Genpact's revenues for the quarter came from business process management services, compared to 87.2% for the first quarter of 2011.  Revenues from IT services were approximately 24.2% of total revenues for the first quarter of 2012, up from 12.8% for the first quarter of 2011.

Genpact generated $4.9 million of cash from operations in the first quarter of 2012, compared to $21.1 million in the first quarter of 2011. The year-over-year decline reflects increased working capital requirements and cash tax payments in the first quarter of 2012. Genpact had approximately $412 million in cash and cash equivalents and short term deposits as of March 31, 2012.

As of March 31, 2012, Genpact had approximately 56,500 employees worldwide, up from approximately 45,500 as of March 31, 2011. Genpact's employee attrition rate for the quarter was 23%, measured from day one of employment, down from 29% for the same period in 2011. Annualized revenue per employee for the three months ended March 31, 2012 was $32,200, up from $30,700 for the three months ended March 31, 2011.

2012 Outlook

Tyagarajan continued, "We continue to expect Genpact full year revenues of $1.84 – $1.88 billion, before the addition of at least $24 million from the Accounting Plaza acquisition. As a result, our current outlook for the year is revenues of $1.86 – $1.90 billion, and adjusted operating income margin of 16% – 16.5%."

Conference Call to Discuss Financial Results

Genpact management will host an hour-long conference call beginning at 8:00 a.m. ET on May 2, 2012 to discuss the company's performance for the first quarter of fiscal 2012. To participate, callers can dial 1 866-362-4820 from within the U.S. or 1-617-597-5345 from any other country. Thereafter, callers will be prompted to enter the participant code, 88451561. For those who cannot participate in the call, a replay and podcast will be available on Genpact's website, www.genpact.com, after the end of the call. A transcript of the call will also be made available on Genpact's website.

About Genpact

Genpact Limited (NYSE: G), a global leader in business process and technology management services, leverages the power of smarter processes, smarter analytics and smarter technology to help its clients drive intelligence across the enterprise.  Genpact's Smart Enterprise Processes (SEP^SM) framework, its unique science of process combined with deep domain expertise in multiple industry verticals, leads to superior business outcomes. Genpact's Smart Decision Services deliver valuable business insights to its clients through targeted analytics, reengineering expertise, and advanced risk management. Making technology more intelligent by embedding it with process and data insights, Genpact also offers a wide range of technology services.  Driven by a passion for process innovation and operational excellence built on its Lean and Six Sigma DNA and the legacy of serving GE for more than 15 years, the company's 56,000+ professionals around the globe deliver services to its more than 600 clients from a network of 64 delivery centers across 17 countries supporting more than 30 languages. For more information, visit www.genpact.com.

Safe Harbor

This press release contains certain statements concerning our future growth prospects and forward-looking statements, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those in such forward-looking statements. These risks and uncertainties include but are not limited to a slowdown in the economies and sectors in which our clients operate, a slowdown in the business process management and information technology services sectors, the risks and uncertainties arising from our past and future acquisitions, our ability to manage growth, factors which may impact our cost advantage, wage increases, changes in  tax rates and tax legislation, our ability to attract and retain skilled professionals, risks and uncertainties regarding fluctuations in our earnings, general economic conditions affecting our industry as well as other risks detailed in our reports filed with the U.S. Securities and Exchange Commission, including Genpact's Annual Report on Form 10-K. These filings are available at www.sec.gov. Genpact may from time to time make additional written and oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission and our reports to shareholders. Although Genpact believes that these forward-looking statements are based on reasonable assumptions, you are cautioned not to put undue reliance on these forward-looking statements, which reflect management's current analysis of future events and should not be relied upon as representing management's expectations or beliefs as of any date subsequent to the time they are made. Genpact does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of Genpact.

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Reconciliation of Adjusted Non-GAAP Financial Measures to GAAP Measures

To supplement the consolidated financial statements presented in accordance with GAAP, this press release includes the following measures defined by the Securities and Exchange Commission as non-GAAP financial measures: non-GAAP adjusted income from operations, adjusted net income attributable to shareholders of Genpact Limited, or adjusted net income, and adjusted diluted earnings per share attributable to shareholders of Genpact Limited, or adjusted diluted earnings per share. These non-GAAP 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 measures used by other companies. In addition, these non-GAAP measures, the financial statements prepared in accordance with GAAP and the reconciliations of Genpact's GAAP financial statements to such non-GAAP measures should be carefully evaluated.

For its internal management reporting and budgeting purposes, Genpact's management uses financial statements that do not include stock-based compensation expense, amortization of acquired intangibles at formation in 2004, expenses associated with the Company's March 2010 secondary offering and significant acquisition related expenses and amortization of acquired intangibles on such acquisitions, for financial and operational decision-making, to evaluate period-to-period comparisons or for making comparisons of Genpact's operating results to that of its competitors. Moreover, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use when adopting ASC 718 "Compensation-Stock Compensation", Genpact's management believes that providing financial statements that do not include stock-based compensation allows investors to make additional comparisons between Genpact's operating results to those of other companies. In addition, Genpact's management believes that providing non-GAAP financial measures that exclude amortization of acquired intangibles, expenses of the secondary offering and significant acquisition related expenses and amortization of acquired intangibles on such acquisitions, allows investors to make additional comparisons between Genpact's operating results to those of other companies. The Company also believes that it is unreasonably difficult to provide its financial outlook in accordance with GAAP for a number of reasons including, without limitation, the Company's inability to predict its future stock-based compensation expense under ASC 718, the amortization of intangibles associated with further acquisitions, significant acquisition related expenses and expenses of the secondary offering, if any. Accordingly, Genpact believes that the presentation of non-GAAP adjusted income from operations and adjusted net income, when read in conjunction with the Company's reported results, can provide useful supplemental information to investors and management regarding financial and business trends relating to its financial condition and results of operations.

A limitation of using non-GAAP adjusted income from operations and adjusted net income versus income from operations and net income attributable to shareholders of Genpact Limited calculated in accordance with GAAP is that non-GAAP adjusted income from operations and adjusted net income excludes costs, namely, stock-based compensation, that are recurring. Stock-based compensation has been and will continue to be a significant recurring expense in Genpact's business for the foreseeable future. Management compensates for this limitation by providing specific information regarding the GAAP amounts excluded from non-GAAP adjusted income from operations and adjusted net income and evaluating such non-GAAP financial measures with financial measures calculated in accordance with GAAP.

 

The following tables show the reconciliation of these adjusted financial measures from GAAP for the three months ended March 31, 2011 and 2012:

 

SOURCE Genpact Limited