Genpact Limited (G) Earnings Call Transcript & Summary

Good afternoon, everyone, and thank you for joining Genpact's Q3 2026 Earnings Conference Call. We hope you've had an opportunity to review the earnings press release we posted in the Investor Relations section of our website, genpact.com. Joining us today are BK Kalra, our President and CEO, and Sumita Pandit, our Chief Financial Officer. BK will begin with an overview of our results, and Sumita will then walk through our financial performance in more detail before we open the line for your questions. Please be aware that during this call, we will make forward-looking statements, including statements regarding our business outlook, strategies and long-term goals. Those remarks reflect our plans, predictions and expectations as of today, and they may change over time. Actual results could differ materially because of a number of important risks and uncertainties, including the risk factors described in our 10-K and 10-Q filings with the SEC. During this call, we will also discuss certain non-GAAP financial measures. We have reconciled those measures to the most directly comparable GAAP financial measures in our earnings press release. These non-GAAP measures are not meant to serve as a substitute for our GAAP results. Supplemental investor information is also available in our earnings press release, fact sheet and investor presentation, which are posted to our Investor Relations website. And finally, this call in its entirety is being webcast from our website. An audio replay and transcript will be available shortly after the call. With that, I'd like to turn it over to BK.

Thanks, Kyle. Hello everyone, and I appreciate you joining us today. First off, I want to welcome Sumita on her debut earnings call as our Chief Financial Officer. Sumita joined Genpact at a pivotal time for the company, and having her here makes us very excited. She will be speaking with you in a little while. For Genpact, Q3 was yet another robust quarter, which highlights even more our transformation into the agentic operations company. Total revenue rose 7.3% compared with a year earlier. Revenue from Advanced Technology Solutions sped up to 30.3% year-over-year, showing broad-based strength in each element of the fly in, and gross margin went up for a 14th quarter in a row, which lets us invest considerably more in future growth. Looking ahead to the remainder of 2026, robust and rising demand, paired with disciplined execution, should allow us to achieve no less than 7% growth, even while we move away from engagements that don't fit our agentic operation strategy. Given solid organic revenue gains, meaningful margin improvement and obvious earnings leverage so far this year, we're positioned well to carry that momentum forward into 2027. Genpact is the Agentic operations company. We are not the organization you previously knew. We're creating a new Genpact within a fundamentally different category, one where TAM is expanding and the market is shifting, and we're deliberately disrupting ourselves in order to lead it. We've spent 30 years focused on handling operations that are essential to the biggest global companies in areas like finance, risk, supply chain, procurement, HR, banking, and insurance. That experience has given us exceptionally solid ties with our clients. Because of where we come from in Lean Six Sigma, we don't simply execute the work — we track it, down to each transaction, each exception, and each control. That discipline explains why our agentic efforts begin with genuine process intelligence rather than starting from scratch. We're now turning that process intelligence into proprietary agentic solutions, delivering greater value to clients across end-to-end workflows, doing the foundational work to get data ready for AI, and building an AI-ready workforce that brings deep domain, technical and functional expertise to our clients—while activating our partner ecosystem through innovative solutions. A distinct set of advantages allows us to move fast, execute with conviction, and scale effectively. We're adding exceptional technology and operational leaders to our team, actively shifting toward our product and platform-led future, with a focus on agentic operations. We benefit from a combination of scale and agility — large enough to fund investments and win global mandates, but nimble enough to act quickly and treat each client as important. We also tend to favor speed; we're ready to rewrite our own playbooks and take something from concept to scale fast. Together, these factors reinforce our belief in the strategy and give us the confidence to commit further to speeding up the move toward agentic operations. Agentic Operations is our new operating model, and it introduces two key changes. The first: rather than having people process and validate the work, we're moving to machine processing with humans in the loop — AI agents take on the volume, while our domain experts provide judgment and accountability. It's model agnostic and responsibly governed, designed for enterprise scale and clear auditability. Second, on the commercial side: we're generating durable, multiyear recurring annual revenue that seems no longer tied to headcount. Client value shows up in 3 outcomes: our clients grow faster, they run leaner, and we help them turn more into cash. Agentic operations is also accretive to revenue and margin for Genpact and widens our addressable market by a large factor. And since it rests on our process intelligence, which compounds with each deployment, it becomes very hard to replicate. The momentum in agentic solutions that we're seeing confirms our pivot is working. Last quarter, I stated that we're on track to surpass $1 billion in Agentic Solutions bookings for 2026. That momentum has only gotten stronger. Now I'm pleased to report we will beat that figure by a margin. That's over 5x what we booked in 2025; this tremendous growth comes from both the TAM and the wallet share we're capturing at speed. To date, over half of our agentic bookings have originated with new clients, and among the clients who rotate, we keep seeing both revenue and gross margin expansion. And our growing road map of Genpact solutions will help deliver even more going forward. This isn't only a matter of serving clients wherever they happen to be right now. We're also accelerating how quickly they can embed AI straight into their operations, and we do that by acting on a straightforward truth. Artificial intelligence can't exist without process intelligence — and that is exactly the reason a growing number of clients pick Genpact, and hand us larger mandates. Our starting point is client outcomes, and we pull process context, data, technology, operating model and organizations into one shared set of conversations so results actually get driven. Across the last few years, we have methodically expanded what we can do and gone deeper in the areas where we're strongest. That effort has produced a potent flywheel, which today powers agentic operations as we generate added value for new clients and existing ones alike. There are three ways our flywheel drives growth. First, we rotate our base—moving the existing book of business to agentic operations quickly. Client relationships now involve higher-value work, with contracts lasting the same or longer. Second, we expand within clients. As our agents demonstrate their value, clients entrust us with additional processes, functions, and geographies. Third, we open net new TAM. Agentic operations allow us to reach new buyers, technology budgets, and process areas that labor-based models could never address. At a macro level, the picture matches what we described last quarter. Demand remains very strong even as AI redraws markets. The conversation is shifting toward ROI, not just embedding AI in every function. Fresh buying centers are emerging, spreading the decision past the usual services purchaser, and the delivery model itself is being rethought. What clients want from partners goes beyond merely implementing AI—they're looking for someone to reimagine workflows end to end, delivering quicker, superior outcomes that can genuinely be measured. We're positioned favorably on that divide, and the figures confirm it. During Q3, Advanced Technology Solutions saw revenue growth accelerate past 30%, an unmistakable indicator of the remarkable demand our flywheel is producing; we recorded yet another highly robust quarter across bookings, backlog and pipeline. That strength across core and advanced tech continues to demonstrate just how strong and growing the appetite is for our deep domain and industry know-how. In Q3 we signed another 5 large deals, and our pipeline of transformational deals is substantial, which sets us up nicely for solid growth going forward. Non-FTE revenue accounted for more than 55% of total revenue, and our top-line growth continues to decouple from headcount. We're fundamentally reshaping the game by building a durable multiyear revenue base that's no longer tethered to headcount, with margin leverage as we achieve meaningful scale. Clients are choosing impact over traditional and new competitors alike, entrusting us with more of their workflows and a bigger share of a transformation. Woolworths Group — a major retailer in Australia — brought Genpact on board to overhaul its finance and people operations throughout Australia and New Zealand, building a scalable, technology-driven base for what lies ahead. Nestle Group has likewise tapped Genpact to set up a fresh global capability center in India, which will act as an innovation hub, boosting digital adoption along with operational visibility and consistency across Nestle's worldwide network. Volkswagen Financial Services, Portugal also picked Genpact as a strategic partner to design, build and run an agentic trade cycle management platform on Salesforce; those are merely a handful of illustrations of how clients are applying Agentic operations. The market is taking note of this shift too. HSBC Research has picked Genpact as the winner in the Best Services Eating Software category at the 2026 SFS services software awards, which underscores how strong our agentic operations are. This award acknowledges our offerings that are enabled by products and platforms, combining AI agents with human expert judgment and accountability so we can drive outcomes that are measurable. Also, last month Everest Group gave Genpact its growth honor of the year, recognizing Genpact for delivering the strongest organic constant currency revenue growth among global services providers with about $5 billion in revenue. To close, this quarter offers one more proof point that we have the right strategic positioning, with a differentiated capability set in our rapidly expanding market, and that we are transforming with speed. We've consistently met our commitments each quarter, and our results have beaten the industry. That steady execution gives us the confidence to move faster still. We're grabbing this moment and setting the pace in agentic operations by putting more weight behind the priorities that matter most strategically—to speed up the flywheel, rotating our base and growing new buying centers into high-quality, durable revenue that compounds and is harder to replicate, producing structurally richer margins and widening the gap between Genpact and the rest of the market. We're building a fundamentally new Genpact, and the best is yet to come. With that, I'll hand the call over to Sumita.

Good afternoon, everyone, and thanks for being with us today. Thank you, BK, for that warm welcome. It's a pleasure to be here with all of you on my first earnings call since becoming Genpact's CFO. We had a strong third quarter. Total revenue rose 7.3% year-over-year. Margins expanded once more, with gross margin reaching 38% and adjusted operating income margin climbing to 17.8%. Adjusted diluted earnings per share came in at $1.07, an increase of 10.3% year-over-year. Turning to the revenue drivers: total revenue for Q3 came in at $1.385 billion, and that 7.3% increase versus the prior year occurred even though we absorbed about 2 points of impact from pulling back on work that isn't consistent with our agentic operations strategy. Customers want a wide spectrum of solutions across different stages of readiness, and what still sets us apart is the trust clients have placed in us over many decades, together with our extensive domain and industry know-how. While we rebalance our current book and chase new opportunities involving advanced technology solutions, our core business services continue to bring in additional clients. On core business services — that's digital operations, decision support services, and technology services — revenue came in flat compared with a year ago at $980 million. That figure includes roughly 3 points of impact from work we moved away from. Over on Advanced Technology Solutions, which covers data and AI, digital technologies, advisory, and agentic, revenue reached $405 million for the quarter, a 30.3% increase year-over-year. That pace was faster than the 24.1% we saw in the second quarter, and it showed strength across the board in our capabilities. A few highlights for Advanced Technology Solutions, which is now 29% of total company revenue: both revenue growth and revenue per headcount for advanced technology solutions ran well above 2x the total company. Non-FTE commercial agreements accounted for over 70% of revenues, and advertised revenue made up more than 70%, highlighting how long these agreements last. Demand specifically continues to rise for our proprietary agentic solutions, part of advanced technology solutions, which encompass our productized AI offerings developed using Genpact IP. As BK noted, we will deliver more than $1 billion in agency bookings by the close of this year — over 5x our 2025 bookings. Through our agentic solutions, fresh demand sources are being unlocked, substantially expanding different work and buying centers among new and existing clients. So far, new clients represent more than half of the cumulative awarded contract value for our agentic offerings. We keep witnessing growth in revenue as well as gross margin, since clients who already rely on us for mission-critical operations are opting to move toward agency operations with broader scope, greater volume, or both. That differentiation is evident in deal momentum throughout the company. During this quarter we closed 5 large deals, which brings us to 17 so far this year — exceeding all of 2025 — and we have a healthy pipeline of further large deals. So far this year, bookings, backlog and pipeline are all at record levels. Contract duration across both advanced technology solutions and core business services appears solid and is trending upward, as clients continue making long-term commitments. In addition, during this quarter, more than 55% of total revenue came from sources other than FTEs. Our deliberate strategy is to build a sizable recurring annual revenue stream that isn't tied to FTE counts. Turning to our segments, Consumer and Healthcare each grew 10.7% compared with the prior year. Financial Services posted a 7.4% gain, and high-tech and manufacturing were up 4.4%. Let's now move on to profitability for the quarter. Gross margin expanded roughly 160 basis points year over year. Our Q3 gross margin of 38% beat expectations, which reflected the revenue mix during the quarter. Our margin profile continues to demonstrate clear operating and pricing discipline. One key point: average headcount fell again quarter over quarter, and we continue to observe revenue growth separating from headcount. Going further down the P&L, SG&A expense represented 22.6% of revenue, roughly 2 points higher than a year ago, reflecting our ongoing strategic investments in future opportunities tied to agentic operations. Adjusted operating income reached $247 million, a 7.7% year-over-year increase, while adjusted operating income margin stood at 17.8%, as we keep self-funding our substantial strategic investments. GAAP net income was $152 million, and diluted EPS came in at $0.89. Adjusted diluted EPS climbed 10.3% to $1.07 per share and continues to outpace revenue growth. Turning to cash. We closed out the quarter holding about $500 million in cash and cash equivalents. This quarter's operating cash flow came in at $93 million, and it took a hit from our recent ERP implementation — shifting our processes onto a new system held up invoicing and collections. As of October, we're already tracking to get back to where we were on collections before the ERP rollout. Credit quality is still strong, and we anticipate these effects will settle down by early next year. During Q3 we returned $62 million to shareholders, which puts our capital return for the year to date at $246 million. We don't anticipate any significant shift in how we allocate capital. Moving on to the outlook — we're carrying out our strategy. Demand is robust, and our resources remain concentrated on agentic operations while we pursue long-term value and growth. This gives us real momentum and sets us up for further strength. For the full year 2026, we anticipate revenue growth of no less than 7% on an as-reported basis, reflecting our solid backlog, pipeline and execution capability. That figure includes close to 2 points of impact from the work we are transitioning away. Within Advanced Technology Solutions, we expect revenue growth of at least 25% for 2026. And we continue to expect old business services revenue to grow despite the effect of moving away from that work. Just to remind everyone, since we're collaborating closely with customers as they move off this work, scheduling is going to be a consideration in both 2026 and 2027. When we look at 2027, the dollar effect is presently anticipated to be somewhat bigger than what we see in 2026. Thanks to how we've performed so far this year, we're raising our gross margin guidance for the full year to 36.9%, which represents an increase of about 90 basis points compared with last year. That widening in margin continues to give us flexibility to put substantial money behind investments that fuel growth down the road. Adjusted operating income margin is expected to climb to 17.7%, and for the whole year we now anticipate adjusted diluted EPS growth of no less than 13%. Let's now move on to the fourth quarter. Looking at reported figures, we anticipate total revenue will rise roughly 7%, with more than 3 points of that reflecting work that is transitioning away. Within Advanced Technology Solutions, we foresee growth comparable to what we saw in Q3, while Core Business Services should decline modestly, a figure that also includes the effect of work moving away. We anticipate both gross margin and adjusted operating income margin will widen once more, and we look for Q4 adjusted diluted EPS to again post double-digit growth and outpace revenue. To wrap up, I want to offer a few brief remarks about 2027: robust and rising demand, steady execution, and sharp focus position us to achieve comparable total revenue growth in 2027, even while we deliberately reshape ourselves and move away from work that doesn't fit our agentic operations strategy. We'll keep concentrating on widening margins while making substantial investments for long-term growth, and we anticipate driving ongoing growth in adjusted diluted EPS. So let me end where BK began: Genpact is the agency operations company, and our vision, our focus and our results all support that claim. We help clients expand more quickly, run more efficiently and turn more of their work into cash. Each phase of how we carry out our plan makes us stronger in the marketplace. We're widening the market we can serve as well as our portion of what clients spend, producing durable, high-quality revenue that grows through distinctive value, and pushing margins to structurally higher levels. Combined, these things produce double-digit growth in adjusted diluted EPS while delivering enduring value to clients. I'm tremendously excited to come aboard at this crucial juncture and to help steer the effort to shape what comes next for Genpact. Having said that, I'll hand the call back to Kyle.

Thank you, Samita. Operator, we're ready to go ahead and take questions.

I appreciate the question. Let me start by covering a few of the segment dynamics. I hear all the moving pieces you mentioned, and it does sound like CBS actually accelerates once we give back those 3 points that went back to clients. If we look more broadly at the work that might be shifting between CBS and ATS, is there a way to size that? Clearly, with modernization of import, or clients, if we just look at the numbers in these segments, can you kind of say, okay, at x the migration, CBS would have been this rather than the low single digits we're seeing today.

Yes, Brian — I'll field that one. It's genuinely thrilling to see how our agentic operations strategy is coming together and how distinctly we're presenting ourselves to < > science — not merely operating end-to-end mission-critical processes at this point, but also changing them quickly and drawing on our combined flywheel of data system and operating models. As for your specific question, well, I'd offer two or three remarks. First, on the whole, we view this as momentum that's broad-based right across the board, spanning every sector we serve. Regarding your question about how much of the second item is shifting from core into Advanced Tech — at this point I'd characterize that as minimal. Our bookings do continue to accumulate, but as time passes they'll turn into those amortized recurring revenues, which will in turn become GAAP revenues. As of today, though, that amount is minimal, and on growth I'd add one final point: it's more broad-based, both in core, as you mentioned, and in advanced tech.

Okay, that helps. Sumita, welcome — glad to have you with us. I'd love to hear your perspective after these first several weeks on board at Genpact. Where do you expect to put most of your focus and energy early on? And maybe I'll ask a financial question too, just on free cash flow. Could you comment on how that performed, and on the understanding that some cash flow conversion was pulled forward a bit last year? Do you see an improving path from here?

Thanks, Brian. Yes, I'm incredibly excited to be here; it's great to join for the first earnings call. On your first question about where I expect to spend more time — there's a lot happening at Genpact. One reason I joined this company is the incredible energy I saw in the company and in the people I met with; and I'd say we are, hands down, working across our strategy, working towards making Genpact the agentic operations company. And I think that requires us to operate at multiple levels, both for our clients as well as making sure we have the capabilities to deliver the right outcomes for our clients; so I'm going to focus primarily, I'd say, on making sure our capital allocation and our investments are in the right place, making sure we're choosing the right metrics to describe our company, and making sure we have the right ability to continue to serve our clients. On your question on cash, specifically, Brian. So I think in my prepared remarks, I mentioned that we had some, I'd say, ERP implementation issues in the last few weeks and quarters. And what we feel good about is the fact that we're already back to our collection pace that we were at pre-implementation — pre the ERP implementation. We think of this as typical implementation friction, which is what we experienced. Not a credit quality challenge at all. And we think the ERP implementation actually positions Genpact really well for the future, as we continue to scale for growth. Our cash and cash equivalent balance at the end of the quarter was about $500 million, which we believe is a really healthy level.

For the big contracts signed during this year up to now, can you put a figure on how many came primarily through agentic work as opposed to perhaps fresh ones or simply standard renewals of work already underway?

I'll handle that one, Maggie. Any time we discuss one of these big contracts, the first thing to note is that every single one is net new. They may involve customers we already have, yet in terms of renewals—as you're aware—whether from booking, or if we sign a big renewal contract, that one isn't included; these are, without exception, net new big contracts. And I'd add that every one of the big contracts has a meaningful share arriving from an agentic operations angle; and that all hinges on which of the products we've already built or which sit on the road map. There are also standard big contracts, and there are likewise portions involving more bespoke agents that we'll build, which don't get counted in agentic booking. Even so, the majority of big contracts carry an agentic element consisting of proprietary IP solutions, whether in finance, supply chain, banking, or for KYC, and a number of them were certainly represented this quarter or the one before within the total 17 big contracts we've had.

All right. And so when you identify that agentic deal, could you walk us through how its ramp-up compares with a typical deal from your history — specifically regarding when you reach peak or steady-state profitability and revenue?

Yes. Early days is how I'd describe it, Maggie. We're extremely excited to be ramping quickly across all those bookings, which, as I said in my prepared remarks, will reach $1 billion by a margin by year-end. And every one of those is amortized vectoring revenue. That again sets us up for durable, considerably richer revenues down the road. Now, on implementation — to your specific question — we're in the early phases; many of these are implemented, yet we're in early phases of building the full implementation road map with existing as well as new clients. And we're learning, including by handholding clients through their technology road maps with their CTOs, how it fits into their technology architecture, and we are implementing it — but we're at early stages of that, and I think we'll say more as we go along.

So BK, thinking about the core business services compared with ATS, and as we go further into an agentic future — agentic operations — what's happened to the core business? Is there a point where it moves — it's stable the way it is now, but then there's a ramp or acceleration, revenue decelerates, or growth turns negative in some period? How should we think about that business, where ultimately everything has to shift over to the ATS side?

Yes. The way I'd put it, Surinder, is this — and as I've said before, customers don't come to us to purchase either Core or ATS. That split is just how we break out revenue for our investor community. They come to run and transform their operations; they come to find out how AI can deliver greater ROI on the investments they've already made; they come to us because of the new operating model we've built from an agentic operation standpoint, and because of how we bring all their legacy tech and legacy processes into a new age far more quickly; that's the reason they come to us. In that setting, Core is still included in a lot of the big contracts I referenced, and it stays a vital component. Consider this: suppose we sign a specific large contract today and begin running it tomorrow—obviously, the work they've been performing that we're doing at this moment hasn't yet become Advanced Tech. For some stretch of time, Core will be needed, and afterward we'll move that over to Advanced Tech. Yet at the core, we're creating a very sizable TAM for us to < >. That's the reason this strategy gets us so enthusiastic, and it's appearing in our results. The operating model is appearing in the financial model to a major degree, as you can observe. We've now posted gross margin improvement for 14 quarters straight, and those richer margins make that point unmistakably.

One more point, Surinder: as noted in our prepared remarks, Core Business Services should post full-year growth compared with last year. That business, in our view, still has exceptionally bright prospects ahead.

Understood. So I suppose the way to clarify that would be that with Core Business Services, you're dealing with a long tail. Meanwhile, you're layering ATS on top of it. So what I think I'm driving at is that this should, in theory, mean an overall growth rate for the firm that accelerates over — if we look across several periods of years. I'm not referring to guidance specifically, but rather as we think about the business model, because if that long tail remains there and you keep seeing strong demand on the ATS side? Yes.

What I'd say is, look, I think 2026 or even earlier years have made it clear how we're building strong momentum. And in a similar vein, we expect that to appear in 2027, even as we move away from some of the on-site parts; we're seeing that in our pipeline. We're seeing that in our bookings. We're seeing that in our backlog and in client conversations. And that strength has given us the ability to double down on agentic operations. And I think as we move through '26, '27, we're positioned to deliver even higher growth with tremendous opportunity in agentic operations. And we truly are setting the company up for long-term growth at an even faster pace and a better gross margin.

Understood. Then, to follow up on that, Sumita. Could you perhaps discuss gross margins for us? At this point it sounds like the benefit is mostly from revenue mix. Is that the correct way to describe what you're seeing right now? And then should we simply keep that trend going, net of any investments you stop making? Or might there be other efficiencies to consider as AI capabilities keep advancing from an internal delivery standpoint?