Genpact Limited (G) Earnings Call Transcript & Summary

Hello, everybody, and thanks for joining Genpact's Q1 2026 earnings conference call this afternoon. Hopefully, you've already seen the earnings press release we put out, which is available in the investor relations area of genpact.com. Joining us today are BK Kalra, our President and CEO, and Mike Weiner, our Chief Financial Officer. BK is going to begin with a summary of how we performed, and after that, Mike will walk through the financials in more depth, and then we'll open things up for your questions. I want to mention that on this call, forward-looking statements will be made, covering topics such as our business outlook, our strategies, and our long-term goals. Those remarks reflect our plans, predictions, and expectations as of today, and they might change down the road. A number of significant risks and uncertainties, including the risk factors described in our 10-K and 10-Q filings with the SEC, could cause actual results to differ materially. We'll also be referring to some non-GAAP financial measures today. Reconciliations of those measures to the most directly comparable GAAP financial measures appear in our earnings press release. These non-GAAP measures shouldn't be viewed as a replacement for our GAAP results. You can find additional information about constant currency growth rates in our earnings press release and the fact sheet posted on our investor relations website. And lastly, a webcast of this entire call is being streamed from our website, with an audio replay and transcript to be posted there within a few hours. With all of that said, I'll hand things over to BK.

Thanks, Kyle. Good morning, everyone, and I appreciate you being here with us today. Q1 marked a record beginning to our fiscal year, and I want to state this plainly. My view is that we're in the early stages of something that will reshape this company's trajectory at a fundamental level. It's uncommon for a structural market shift, a distinctive set of capabilities, and the right strategic positioning to all converge simultaneously. When that happens, and when a company possesses the discipline and the courage to act, the advantage that follows compounds in ways that are hard to copy. That convergence is exactly what's happening for us now. This isn't a one-time event — it's sustained momentum, and we see it validated through our pipeline, our client discussions, and early outcomes. Genpact is becoming something new, and the numbers from Q1 make it evident that we're firmly positioned as a frontrunner in agentic and Advanced Technology Solutions. Strong demand combined with careful execution drove our total revenue up 6.7% compared with the same period last year, landing at $1.296 billion. Within that, Advanced Technology Solutions grew 24% year-over-year, reflecting how quickly we continue to bring powerful innovation to clients across our base. Our gross margin has now grown for 12 consecutive quarters, up over 100 basis points versus a year ago, giving us even more capacity to make meaningful investments aimed at long-term growth. For a second time, adjusted diluted EPS grew at a quicker pace than revenue, climbing 16.7% compared with the same period last year. The intentional emphasis and priority we place on producing growth that is high quality and sustainable shows up in both our top and bottom line results, as well as in forward-looking indicators of growth spanning booking, pipeline, and inflows. Clients, including a number of the biggest companies in the world, are choosing Genpact as a long-term strategic partner to reshape and run their mission-critical operations. Six large deals were signed by us in the quarter, and we hold a healthy pipeline of further large transformational deals, which sets us up for continued strength through the year. Contractually, we are changing the game. We're securing additional multi-year deals that bring in recurring revenue each year, which helps us establish a solid, long-lasting foundation to expand upon. There are encouraging initial indicators that we're achieving scale, since our workforce is expanding at a slower pace than sales, thanks to our extensive use of agentic and AI technologies that boost the efficiency of what we deliver. The upward trajectory in Advanced Technology Solutions is accelerating quickly. During the past 90 days, the number of potential deals in our pipeline increased by over 30%, driven by significantly rising need for our agentic offerings along with our data and AI know-how. An increasing share of what we book is coming from Advanced Technology Solutions, which strengthens our already record-breaking backlog, and it's also driving a larger portion of overall sales. As I mentioned, it rose 24% compared to the same period last year and currently makes up 27% of all revenue. Our clients keep getting greater benefits from these offerings, and they also produce premium income streams for Genpact. During Investor Day in June of last year, we described the approach as 2x 2x, 70/70. Here is what that means in practice: Advanced Technology Solutions brings in more than double the revenue per employee and achieves two times the revenue growth when compared with the entire company, while 70% of its revenue is annuitized and 70% derives from commercial models that are not based on FTEs. All of those measurements currently exceed the numbers we presented twelve months ago, underscoring even more how durable and premium-quality this operation truly is. What makes me most proud is the remarkable traction we are experiencing with agentic. These are not one-off projects. We're constructing a substantial, durable, annuitized business built on our own IP that's tightly woven into how our clients run their operations. Growth in our agentic solutions keeps speeding up. In this quarter by itself, we came close to doubling the total contract value of our agentic solutions compared with the entirety of 2025. Long-term demand for our agentic solutions is picking up serious momentum. A growing number of new clients are selecting Genpact because of our differentiated, domain-driven offerings, pulling us into their operations thanks to the expertise and outcomes that only we deliver. Customers familiar with us through the mission-critical operations they run are noticing a lot more innovation coming their way from our side, and they're eagerly integrating our agentic solutions, expanding either the breadth, the amount, or both, as they move forward with assurance toward operations that are driven by outcomes rather than led by FTEs. This kind of traction is quickly building a substantial recurring yearly revenue foundation for Genpact, and the margins tied to it keep improving as the business grows larger. Thanks to accounts payable, record-to-report, source-to-pay, insurance, along with the robust roadmap we have ahead, we are rapidly turning into the go-to agentic transformation partner for helping clients move from digital operations into agentic operations. We're steering clients toward a teamwork-based approach that brings agents together with human specialists. Our agents can now independently execute work inside redesigned workflows, while specialists handling last-mile issues check exceptional cases, help models improve through training, and lock in what's been learned — all governed by the responsible AI framework we've put in place. That approach is what we refer to as agentic operations. During the past two years or so, the sizable spending we directed toward growing our sophisticated technology capabilities has in effect constructed a flywheel that produces agentic operations along with autonomy that scales. None of this remarkable progress would have been possible if not for the many decades we've spent operating the mission-critical functions our clients depend on. Core Business Services plays a central role in how we grow. What sets us apart for clients is our process intelligence and our ability to codify it — that's what brings their AI to life and lets them reach genuine scale throughout their global organization. In Q1, Core Business Services revenue was up 1.4%, reflecting deliberate disruption on our part to generate exponential value for clients. Demand looks healthy and keeps expanding. Bookings and pipeline continue to demonstrate that our deep domain and industry expertise is magnifying the strength of our wider portfolio. We're taking our extensive roadmap out to clients, and we're seeing them move quickly to rotate and simultaneously help shape the agentic solutions we'll offer going forward. So because of this, we can now choose on purpose to put more resources behind growing our agentic and AI-driven services. That means we're favoring better quality and growth that lasts, the kind that keeps compounding for Genpact as time goes on. Everywhere, clients are choosing Genpact for more than just our expertise in running operations. What pulls them in is our technology, along with the way we gather process context at scale and stretch it further. Momentum with clients in the U.S. is still strong, but let me give two illustrations from different parts of the world, and both are recent. Let's begin with Europe. In this quarter, we closed a new strategic partnership with a global leader in insurance and financial services, meant to help them move toward global verticals. Our role involves operating and refining their business-critical processes, while also constructing future-ready functions, entrusted to serve every stakeholder group, from their customers to employees to shareholders. Together, we are rethinking the way their essential functions run and expand across the whole enterprise, planting agentic and AI-powered abilities right at the heart of our worldwide enterprise transformation. We're folding in Genpact's agentic finance IP offerings, such as accounts payable and record-to-report, alongside additional AI-driven solutions. What this produces is a profound change, turning these functions into forward-looking business allies, all while cutting transaction expenses and boosting compliance. Marrying an understanding of business context at the last mile, delivering the newest agentic breakthroughs, and solid cultural and workforce alignment paired with an outcomes focus builds a remarkably sturdy base for this strategic alliance. Our second illustration involves one of our fresh next-gen customers, representing the upcoming wave of market disruptors.

Bendigo Bank is a major Australian bank, and it's reshaping how it runs its business so it can build a leaner and tougher operational core, which frees up money to put into customer experience, data, and new product development. The bank signed a multi-year strategic partnership with Genpact aimed at boosting productivity while achieving better risk and control results throughout its core operations. Bendigo Bank chose Genpact because we can bring together deep expertise in Australian banking operations, a track record of innovation shown through actual AI and agentic case studies, and a mindset that balances risk — something essential in regulated industries. Those two examples highlight where we uniquely stand and show a clear flywheel effect. Many years of experience that turn into documented domain knowledge, paired with growing Advanced Technology Solutions skills and agentic operations — all of it keeps building on itself. Clients also tell us that their data, infrastructure, systems, and processes are complicated. They want assistance dealing with fast-moving technology shifts, and they want partners capable of linking things together across the wider ecosystem. We keep strengthening and broadening our partner ties with distinctive offerings, drawing on our obvious domain know-how and making connections for clients. During Q1, revenue tied to our partners rose 35% compared with the same period last year, and it now represents almost 13% of total revenue. We're still making solid headway on our partner strategy, and this week brings a major milestone. We've just revealed a strategic alliance with Google to build agentic and AI-driven solutions for the office of the CFO. This isn't merely a partnership announcement. It represents a deepening of a relationship that's already producing tangible results for clients. Only two weeks ago at Google Cloud Next, Google put a spotlight on Genpact's finance solutions, demonstrating how we help finance users obtain actionable insights from revenue and P&L data by having natural language conversations in Gemini Enterprise. The logic here is straightforward. Genpact's context-rich process intelligence, merged with Google Cloud's AI infrastructure, lets us push agentic transformation throughout the office of the CFO. Let me illustrate that with a client example. Cardinal Health makes and distributes medical and healthcare products, operates in 30 countries, and serves 90% of U.S. hospitals. We've had a long-standing relationship with Cardinal Health, collaborating on transformation spanning both finance and supply chain. The company aimed to further streamline manual processes to achieve meaningful quality, cost, and productivity improvements using AI. We worked together with Google Cloud to introduce an AI-led innovation, using deep process intelligence to identify the best place to begin. The results, for instance, from credit memo processing are evident. Our agentic solutions are producing a meaningful rise in touchless processing, quicker cycle times, and a substantial enhancement in cash flows. That's the sort of transformative change Genpact is delivering as we grow alongside partners throughout enterprise operations. I began today by talking about something uncommon: a moment when a structural shift in the market, an obvious opportunity, and a company's distinctive positioning all come together at once. The first quarter demonstrates that 2026 is turning out to be exactly that kind of pivotal time, and at Genpact we aren't merely observers of this shift — we're actively creating it. We know exactly where we're headed, the progress we're making can be quantified, and more and more, the marketplace perceives a Genpact that's fundamentally different. For many years, clients have relied on us for profound expertise in processes and for operating business-critical functions at significant scale. That base has grown even stronger. The difference now lies in what customers want us to accomplish using it. These days, they bring us in to unify workflows, tools, information, and people so we can produce results that previously fell outside the realm of possibility. As a result, we're securing fresh categories of engagements, having fresh categories of discussions, and growing the total opportunity available to us. Agentic operations sits at the heart of all this. Across the areas of our customers' operations that matter most, we design, coordinate, and responsibly oversee agentic systems; we're pairing AI with many years of specialized knowledge in a manner that's extraordinarily hard to copy. For us, this is far more than a theoretical idea. It's operating in real life, growing in scale, and appearing in our numbers. The impact on business quality is evident. How our business is composed is shifting in significant ways. The revenue we're generating is premium, longer lasting, and tougher for competitors to take away. Our margin structure is inherently more robust. We're pushing aggressively on our top strategic objectives, and that's creating real separation between Genpact and everyone else in the market; this quarter isn't a hope, it's hard evidence. A transformed Genpact has arrived, and our journey has barely begun; having said that, I'll now hand things over to Mike.

Good afternoon, everyone, and thanks for being with us today. We posted another robust quarter, one that underscores the incredible momentum we're seeing as we redefine the benchmark for AI-driven transformation. Total revenue was up 6.7% year-over-year, reaching $1.296 billion, with growth accelerating in Advanced Technology Solutions. Advanced Technology Solutions — that covers data and AI, digital technologies, advisory, and agentic — climbed 24% year-over-year to $345 million, with considerable strength in data and AI and agentic. Demand for our Advanced Technology Solutions is rising quickly, and the strategic investments we've made are delivering returns. Our advanced tech capabilities keep expanding, with obvious innovation across agentic and AI-led offerings. We're widening our total addressable market, bringing greater value to clients across end-to-end workflows, and generating high-value revenue for Genpact. As BK Kalra said, we keep making enormous progress in building a sticky, high-quality business. When it comes to Advanced Technology Solutions, 2x 2x, 70/ 70 just keeps getting better. In agentic operations, we are fast becoming the partner of choice for moving clients from traditional digital operations to agentic. In this quarter alone, the total contract value of our agentic solutions nearly doubled compared with 2025, and more than 50% of our cumulative awarded contract value came from new clients; that's a clear signal of our growing TAM and expanding wallet share. For existing accounts rotating from traditional to agentic delivery, net revenue growth and gross margin expansion are both well above what we reported at our Investor Day in June. This agentic momentum among new and existing clients alike is building a stronger annual recurring revenue base for Genpact, with higher gross margins that keep improving as scale grows. Core Business Services — comprising digital operations, decision support services, and technology services — rose 1.4% to $951 million in the first quarter, reflecting sustained client trust and continuing demand for our deep domain and industry experience, along with a deliberate focus on driving high-quality long-term growth for Genpact. Sales execution and demand stay strong across Advanced Technology Solutions and Core Business Services as we keep making headway with both new and existing clients. Net revenue retention remains accretive, and we feel good about our pricing as we continue delivering meaningful ROI to clients through their transformational journeys. Our large deal momentum also carries on; we signed six large deals in 1Q. We have a robust pipeline of additional large deals which, together with our record backlog, positions us very strongly for the rest of the year. As a reminder, large deals are $50 million or greater in total contract value. non-FTE revenue accounted for 48% of total revenue in 1Q, reflecting a strategic shift to fixed fee, consumption, and outcome-based models. With the tremendous momentum we're seeing in agentic, we're building a meaningful recurring annual revenue base decoupled from FTEs; we are effectively moving away from the productivity-dependent commercial models of the past. Looking at our segments, High Tech and Manufacturing posted an 8% increase, while Consumer and Healthcare came in at 6.1% growth and Financial Services at 5.4%. Now on the profitability side, gross margin went up yet again — roughly 110 basis points higher, reaching 36.4% — which bolsters our capacity to put money into long-term growth. That steady history of margin improvement speaks to how carefully we manage operations and pricing, plus a rising share of revenue from high-value Advanced Technology Solutions. And notably, we're already seeing encouraging early indicators that revenue can grow without a corresponding rise in headcount, since we're weaving AI and agentic solutions into how we run and deliver our own work. Let's shift to the remaining parts of the P&L. SG&A came in at 20.9% of revenue. Adjusted operating income reached $224 million, and the adjusted operating income margin was 17.3%, reflecting how we keep self-funding our strategic investments. For the first quarter, our effective tax rate was 23.7%. Net income during the 1st quarter totaled $148 million. Diluted EPS came to $0.86. Adjusted diluted EPS rose 16.7%, hitting $0.98 — once again expanding much more quickly than revenue for another quarter. Now on cash. Operations consumed $24 million in cash, consistent with normal 1st-quarter patterns, and we closed with $578 million in cash and cash equivalents, which is $16 million above where we were a year ago. We also gave back $102 million to shareholders in 1Q, split between $70 million of share repurchases and $32 million of dividends. Now for our outlook. Backlog, pipeline, and inflows have all hit record highs, with particularly remarkable momentum in agentic and Advanced Technology Solutions, which leaves us well positioned for the rest of the year. Consequently, we still anticipate delivering no less than 7% growth for 2026 on an as-reported basis. Because of the quickening momentum in agentic, our strengthening partnerships, and the healthy demand for data and AI that we observe, we now anticipate Advanced Technology Solutions will grow no less than 20%. Within Core Business Services, we anticipate that growth will carry on. This holds even while we assist clients in speeding up their AI-led transformation via agentic operations and sharpen our emphasis on generating sustainable growth through advanced technology innovations. Regarding margins, we still anticipate full-year gross margin will widen by 50 basis points to 36.5%, and adjusted operating income margin should rise 25 basis points to 17.7%. This mirrors our ongoing dedication to self-funding growth investments, and we anticipate adjusted diluted EPS will climb over 10%, which again outpaces revenue. Now looking at the second quarter on an as-reported basis. We anticipate total revenue landing somewhere between $1.324 billion and $1.336 billion, which equals 6% growth at the midpoint. We anticipate Advanced Technology Solutions will expand no less than 20% year-over-year, and we anticipate Core Business Services will keep growing; we anticipate gross margin widening to 36.4% and adjusted operating income margin rising to 17.4%. Last, we anticipate adjusted diluted EPS between $0.96 and $0.97 for the second quarter. To wrap up, as BK made clear, the shape of our business is changing. We're changing the way companies function, drawing on the power of our extensive sector and domain know-how while making substantial bets on Advanced Technology Solutions. We're setting ourselves apart in the marketplace, widening our TAM, speeding up revenue growth of high quality, and steadily growing margins — all of which let us keep producing double-digit increases in adjusted diluted EPS and lasting value for both clients and Genpact. Having said that, I'll now hand the call back to Kyle.

Great. Thank you, Mike. Operator, we are ready to go ahead and take questions.

Hello everyone, and good afternoon. Thanks for taking the call. To kick things off, I'd like a big-picture update on how clients are making decisions and where spending is trending from a macro perspective, since things have improved and clearly did so during April and May. The pipeline and large deals, along with sales activities, look quite healthy, but I just want to probe whether any areas stand out by Genpact, vertical or geography. I'll go ahead and put my second question out there now. Regarding the migration from CBS to ATS, could you elaborate a bit more on how much change is happening between the segments as you modernize delivery and reclassify things?

Thank you, Bryan. I'll handle that, BK. Looking at the demand environment overall, whether I look at the cohorts of Advanced Technology or Core Business Services, new clients, existing clients, the various segments we have, or geographies, it remains extremely strong, and both our pipeline and inflows are still at record levels. I'm really happy about that. Perhaps the way I'd address your second question is this: I believe our flywheel effect has started delivering results. That flywheel effect really begins with Core Business Services, where demand remains strong. The context-rich process intelligence we've built up over decades, which forms the foundation that, combined with modern data, reimagined workflows, cleaner architectures, and the way we pull all of it together to produce superior outcomes for our clients, is starting to pay off, and it's paying off disproportionately in Advanced Technology Solutions. Truly, I think we're now getting into newer kinds of conversations, with more emphasis not only on meeting clients where they are but also on getting them where they want to go much faster. I'm really pleased with where we stand and with how we're shaping the new Genpact.

Okay. Thanks.

Hey there, everybody. Appreciate you taking my question. Congratulations on the ATS acceleration. That's truly impressive. I wanted to ask about the visibility within that business and how much ATS depends on revenue growth tied to partners, plus the runway you see there, given it's 13% of revenue right now. Thank you.

Thank you, Sean. Once more, I'll handle this one, and Mike, jump in if you'd like. Every piece of Advanced tech, or for that matter Core, I'll make three points, Sean. First point, as I said, 2x 2x 70/70, a high share of all of Advanced tech is annuitized. We have, once again, quite strong visibility into it. I won't claim it's solely partner solutions. Yes, partner solutions is taking shape. What's gaining more and more traction is agentic as well as data and AI. All of these are inextricable in many ways. We leverage partner solutions, as I listed in my prepared remarks too; we feel really good about Advanced Technology Solutions visibility as well as Core Business Services.

Sure. One more point I’d add to that, if that’s all right, BK, is that regarding ATS, BK mentioned the 2x 2x, 70/ 70, and what stands out in particular—I want to say again—is that with 70% of that business being annuitized, we can forecast it quite well, in line with how we’ve managed to do so. I’d add that it’s also backed by a very solid pipeline and rising inflows, so we feel very good about it.

Excellent. Thanks a lot. I appreciate all the detail. Best of luck for the remainder of the year.

Thanks.