Genpact Limited

Good day, ladies and gentlemen. Welcome to the 2021 First Quarter GENPAC Limited Earnings Conference Call. My name is RJ, and I'll be your conference moderator for today. At this time, all participants are in a listen-only mode. We will conduct a question and answer session towards the end of this conference call. As a reminder, this call is being recorded for replay purposes. The replay of the call will be archived and made available on the IR section of GenPAC's website. I would now like to turn the call over to Roger Sachs, Head of Investor Relations at GenPAC.

Please proceed. Thank you, RJ, and good afternoon, everybody, and welcome to GenPAC's call to discuss our results for the first quarter ended March 31, 2021. We hope you've had a chance to review our earnings release, which was posted to the IR section of our website, genpak.com. Speakers on today's call are Tiger Tiyadarajan, our president and CEO, and Ed Fitzpatrick, our chief financial officer. Today's agenda will be as follows. Tiger will provide an overview of our results and an update on our strategic initiatives. Ed will then walk you through our financial performance for the quarter, as well as provide some thoughts on our outlook for 2021. Sharia will then come back for some closing comments, and then we will take your questions. We expect our call to last about an hour. Some of the matters we will discuss in today's call are forward-looking and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those in such forward-looking statements. Such risks and uncertainties are set forth in our press release. In addition, during our call today, it will refer to certain non-GAAP financial measures, that we believe provide additional information to enhance the understanding of the way management views the operating performance of our business. You can find the reconciliation of these measures to GAAP in today's earnings release posted to the IR section of our website. And with that, let me turn the call over to Tiger.

Thank you, Roger. Good afternoon, everyone, and thank you for joining us today for our first quarter 2021 earnings call. We had a strong start to the year, with first quarter revenue, adjusted operating income margin, adjusted diluted EPS, and cash flow, all exceeding our expectations. I'm pleased with the continued momentum we are seeing across our business. The growing need of enterprises to leverage digital technologies and cloud-based analytics is creating a high demand for our solutions. We are increasingly engaging with clients on large-scale holistic transformations to reimagine their business models and redesign their operations. These operations straddle multiple functions and buying centers, opening new parts of our expanding addressable market. Quickly covering our first quarter 2021 results, we delivered total revenue of $946 million, up 1% on a constant currency basis, global client revenue of $853 million, up 5% on a constant currency basis, Adjusted operating income margin of 17.2%, expanding 250 basis points year-over-year, and adjusted diluted earnings per share of 59 cents, up 11% year-over-year. Before I get into the details, I want to provide an update on the COVID-19 situation in India, where we have significant operations. As we've said from the start of the pandemic, all our decisions are centered on two key pillars. First, the health. safety and well-being of our global employees, and second, maintaining continuity of services for our clients. While we had a very small in-office presence across the two regions, the majority of those employees are now back to working from home. I'm extremely proud of the passion and dedication of our teams to support their colleagues in the face of this crisis. They continue to work tirelessly to deliver to our clients while simultaneously doing everything they can to support our impacted colleagues and their families. We also appreciate the outpouring of support we have received from our clients as we partner together to overcome this difficult time. We have set up drive-through testing for employees and their families, as well as an employee hotline to help with questions and provide access to medical attention and resources. We have increased insurance coverage and financial aid for our most impacted associate population. We have made provisions to enable employees to get vaccines when they become available at our cost. Across the globe, we have 24 by 7 counseling hotlines offering mental health support for our teams, access to a meditation wellness app, and an online community with resources for parents. Now turning back to our performance during the first quarter, client demand remained very healthy, carrying forward the momentum we saw in Q4 of last year. Our pipeline reached another all-time high, driven by new inflows, including several large, complex transformational deals that integrate multiple services, such as finance and accounting to supply chain, or sales and commercial operations. We are happy with our overall win rates that highlight our differentiation and competitive deals. Sole source deals continue to account for more than half our inflows, pipeline, and bookings during the quarter. Our strong global client performance was broad-based across almost all of our chosen verticals, including double-digit growth in consumer goods and retail, life sciences and healthcare, and high tech. The exception was banking and capital markets, which was impacted by the restructuring of the relationship with one of our banking capital market clients that we discussed last quarter. I'm particularly pleased with our global client top-line performance given our strong first quarter results of 2020. the last period prior to the challenges related to COVID-19. Given this strong start to the year, we believe we are well positioned to deliver on a full year outlook. As expected, GE declined 24% as a result of productivity delivered and a reduction in IT project spend in this uncertain macro environment. The reduction also includes the impact of GE divestitures that are now part of our global client portfolio. Transformation Services, which includes consulting, analytics, and digital, grew by approximately 20%, including the contribution from our recent acquisition of Enquero, and now represents more than 30% of total global client revenue. Transformation Services continues to drive new deal wins with consulting, digital, and analytics being systematically embedded into more than 70% of our pipelines. We are seeing a growing opportunity to serve the fast-changing needs of our clients with innovative solutions that leverage cloud architecture and data analytics. Here are a couple of examples. For a food company, we are using our AI and machine learning solution to generate more accurate and real-time demand forecasts, leveraging traditional and non-traditional data sources stored in the cloud after reimagining the entire planning process. For a global banking client, we are designing, building, and deploying a digital cloud-native commercial loan solution on AWS, leveraging our deep understanding of the commercial lending and syndication business and processes. The bank's objective is to disrupt this market with dramatically faster decision and funding times, along with a superior customer experience that ultimately should drive market share gains for them. Many of our transformation services engagements lead to much larger intelligent operations deals as clients drive change to gain a competitive advantage in their changing markets. Over the last four years, approximately 25% of our global client accounts that started initially with small transformation services engagements with a relationship of less than a million dollars have now expanded to larger relationships of more than $5 million, with some, of course, becoming even larger. Many of our engagements have alternate commercial models that are not just input or people cost-based. We exited the quarter with more than 40% of our total revenue coming from newer constructs, such as outcome-based pricing and fixed price models, up from 30% in 2017. The highlight of the quarter was the growth of analytics in our transmission services portfolio. First quarter global client analytics revenue grew more than 30% and we expect that momentum to continue through the year. Given its significant growth over the past several years, analytics has become the biggest component of our transmission services business. For the last couple of years, we've increased our focus and solutions with the use of data and analytics to drive insights and action in many services, like supply chain, sales and commercial, and financial crimes and risks. The growing appetite of clients across industries to leverage data and predictive insights on a thin digital layer in the cloud to solve problems and drive outcomes is fueling demand. Bolstered by our recent acquisition of Inquero, something digital, and RightPoint, we are now designing and implementing new cloud-based data and analytics solutions to accelerate clients' transformation journey. Some examples are, for a global media and entertainment business, we are creating a cloud enterprise platform that combines siloed in-house data with third-party consumer data to run analytics at scale in order to gain insights about consumer preferences, generate behavior recommendations, and improve the buying experience, all to drive new revenue streams and growth across all of its channels. For a major insurance carrier, we are using AI and machine learning to process claims and litigation expense data to predict exposure to large new claims in order to significantly reduce payouts and mitigate future underwriting risks. As I said in our earnings call last quarter, we are in a growing market that remains highly underpenetrated with digital transformation driving companies across all industries to redefine themselves, unlocking new opportunities. Our strategic investments over the years enable us to lead clients through their journeys, thus expanding our pipeline and leading to new bookings. This expansion of total addressable market is led largely by two types of clients. First, existing clients looking to accelerate transformation journeys, leading to larger engagements with us that incorporate services and buying centers beyond the CFO and the CIO, such as the COO, the chief risk officer, and the chief supply chain officer. And second, new clients that are now open to partnerships for the first time to change and transform themselves, in response to the new global environment. Two interesting metrics that demonstrate this trend are global clients with annual revenue of $50 million or greater increased to 11, up from 10 during the same period last year. And our revenue from this client group grew at more than double global client growth. Secondly, clients with annual revenues of $5 million and more increased to 132, up from 128. This included many first-time buyers to the type of services we provide. We are seeing permanent changes to the way businesses adapt to the new normal operating environment. They no longer exclusively rely on traditional KPIs and frameworks to drive performance, such as sales levels, process optimization, and efficiency from automation, or work in rigid, industrially aligned business models. Boards and C-suites have shifted priorities and are investing to design industry-disrupting operating models based on metrics like customer empathy and delight. We believe these factors provide a longer runway of sustainable low double-digit to low team growth for global clients. Our strong first quarter results reflect our resilient business model, focused strategies, and top-tier execution, all playing out in the market. We continue to build on our strengths and become even more relevant to clients by solving problems caused by disruption to industrial value chains. We believe our agility enables us to quickly bring new innovative transformation solutions, leveraging digital and analytics to the market. This has strengthened our position as a trusted advisor, separating us from our competition and fueling our continued growth, even in challenging environments. With that, Let me turn the call over to Ed for a detailed review of our second quarter results.