Genpact Limited

Good day, ladies and gentlemen. Welcome to the 2021 Second Quarter GENPAC Limited Earnings Conference Call. My name is Buena, and I will 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 Genpact. Please go ahead.

Thank you, Buena, and good afternoon, everybody, and welcome to Genpact's second quarter call to discuss our results for the period ended June 30th, 2021. We hope you had a chance to review our earnings release, which was posted to the IR section of our website, genpact.com. Speakers on today's call are Tiger Kiyagarajan, our President and CEO, It's Patrick, our outgoing chief financial officer, and Mike Weiner, who is joining us as our new chief financial officer, succeeding Ed, who will be transitioning to another leadership role within GenPact. Today's agenda will be as follows. Target 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. Target will then come back for some closing comments, and then we will take your questions. We expect our call will 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, we 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 a reconciliation of these measures to GAP 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 second quarter 2021 earnings call. Our second quarter performance saw global client revenue returned to double-digit growth earlier than we anticipated. Driven by accelerated momentum and transformation services, particularly in analytics, and the strength of our intelligent operations business, we exceeded our expectations on the top line, bottom line, and cash flow. Our strategic investments in services such as supply chain, sales and commercial, and financial crimes and risk are proving to be extremely relevant for our clients opening many new opportunities to create value in areas beyond just cost and productivity. In the second quarter of 2021, we delivered total revenue of $988 million, up 7% on a constant currency basis, global client revenue of $893 million, up 11% on a constant currency basis, adjusted operating income margin of 17.9%, expanding 170 basis points year over year, and adjusted diluted earnings per share of 66 cents, up 27% year over year. Before reviewing the quarter in more detail, I want to welcome Mike Weiner, who has joined Genpak as our new CFO, effective August 10th, succeeding Ed Fitzpatrick, who will be staying on in a market-facing client advisory role. Mike comes to us with strong public company CFO experience and brings an extensive background in the finance function working in many large global corporations we expect mike will make a significant contribution to the continued success of the company as we execute on our strategic growth agenda we're very excited to have him on board mike is with us on the call today and we'll make a few comments later on during the second wave of covet 19 in india a few months back we were able to adapt and maintain our delivery of services to clients resulting in no material impact to our business. This was only possible because of the unwavering support of our clients, together with our geographically distributed operations across India, extensive global delivery footprint, and ability to quickly redeploy talent across areas of our business. I'm happy to report that new cases among our India-based team have significantly declined and we are aggressively driving a vaccination campaign in partnership with local hospitals with vaccination clinics set up at many of our operating centers. To date, more than 60% of our India workforce has at least one dose of the vaccine. As we move into the second half of the year, the overall demand environment remains healthy as companies pursue digital transformations. The pipeline continues to include an increasing mix of new logos. Global client revenue returned to double-digit growth in the quarter. This impressive performance was seen across most of our chosen industry verticals, including consumer goods and retail, life sciences and healthcare, high tech, and manufacturing and services. As we had expected, banking and capital markets was impacted by the restructured relationship with one of our clients that resized its asset management business. However, we saw an expansion of our banking and capital markets pipeline supported by opportunities in financial crimes and risk services. Transformation Services accounted for 35% of our global client revenue in the quarter and grew at 30% plus, including the contribution from the Inquiro acquisition. A good portion of our Transformation Service engagements continue to be annuity-based. Transformation Services continues to be powered by our analytics business that have grown at an increasing rate in each of the past three years. The combination of robust demand and our strategic investment has led to analytics becoming the largest component of our transformation service business while we continue to also grow nicely across consulting and digital. Let me share some examples of our transformation service engagement and the value they are driving for our clients. for a global CPG company changing their operating model and redesigning the user experience for its sales teams to significantly free up their capacity to drive higher growth and customer satisfaction. For an insurance company using our AI-based cloud workflow solution, Cora, to orchestrate underwriting processes across the client's shared Microsoft Azure environment, leading to significantly faster underwriting times with better premium pricing, lower risk, and higher profitability. For our high-end consumer electronics company, leveraging our industry expertise and data, AI, and machine learning-based analytics to improve demand and supply forecast accuracy. Integrating these forecasts with the planning and production processes resulted in a 20% improvement in order fulfillment, a 40% reduction in planning time, and a 15% lower inventory. for a global bank, bringing our data specialists and subject matter experts together to significantly improve their data governance, leading to better timeliness and accuracy of their regulatory reporting. We have consistently seen that starting a new client relationship with Transformation Services leads to subsequent growth. Over the past 18 months, 60% of new accounts that started with a standalone Transformation Services engagement led to a follow-on booking including longer term annuity deals. Additionally, many of these engagements provide the opportunity to leverage new and more profitable commercial models beyond traditional FTE pricing. The share of our total revenue with alternate commercial models has been consistently increasing. Thematically, there are three competitive differentiators that are helping us win. First, our ability to orchestrate data and analytics in the cloud as it's becoming core to every client's transformation journey. Second, our deep expertise linking services, such as financial accounting to supply chain, or financial crimes and risks to banking operations, or supply chain to sales and commercial operations. And finally, our focus on driving value for clients beyond just cost and productivity, such as increased growth, lower receivables and inventory, or lower losses and fraud. each case linking client outcomes to commercial constructs. Our portfolio of services, investments in data and process models, and digital expertise are proving to be incredibly relevant for clients in this business environment. Four specific areas that we are seeing strong momentum include sales and commercial, supply chain management, financial crimes and risk, and financial planning and analysis. Let me expand on each of these. Firstly, in our sales and commercial service line, bringing together cloud-based data and analytics and operations insights to drive revenue growth for our clients. For example, helping our high-tech clients' sales teams focus on best opportunities to pursue with small and medium businesses. Second, in supply chain services, given the disruption in the semiconductor industry, helping improve demand and supply planning by leveraging data and analytics for many integrated device manufacturing companies, foundries, and tier one chip manufacturers. Third, as digital commerce becomes pervasive and industry agnostic, we see an increased need for clients to address fraud and financial crimes. Our teams of industry experts and data scientists are developing and implementing as a service solutions on the cloud in the areas of fraud and anti-money laundering, know your customer and transaction monitoring. And finally, FP&A is an area ripe for disruption, and we are seeing significant opportunities to leverage our deep industry expertise, strengthen financial accounting, and use of data and analytics in the cloud to provide agile forecasting and decision-making capabilities for our clients cutting across customer, supply chain, marketing, and finance data. All these areas highlight that anything that drives growth for our clients represents high growth opportunities for us. For example, we recently announced a new strategic relationship with Coca-Cola Beverages Africa to help them drive competitive growth. Leveraging our deep process and domain depth in CPG and beverages, we are establishing a multifunction, digitally enabled shared services organization to centralize and automate finance, procurement, data management, as well as other functions creating intelligent operations that improve customer service and allow them to concentrate on their growth initiatives. We've always believed our people are our biggest competitive advantage. Therefore, attracting, building, and retaining talent continues to be a top priority for us. In the quarter, we increased our net global employee base by more than 5,000 people. Over the years, we have earned a reputation as an organization known for building great careers. Our investments in the learning and development of our employees allow our talent to build critical new skills needed for the future. We leverage our scalable online learning platform, Genome, to reskill our workforce. Genome, in combination with our redeployment platform, Talent Match, has been an enormous success And during the quarter, we redeployed 4,000 team members into new roles, providing them with new career opportunities. As we discussed last quarter, we have a unique certification program in data and analytics that enables our employees to generate critical insights from our vast operating data sets, ultimately allowing us to build unique data models in specific domain areas that bring tremendous client value. 60% of our global workforce is currently enrolled in this program with about 10,000 fully trained and tested by the end of second quarter. Our strong second quarter results prove that the powerful combination of deep domain and process expertise coupled with our strategic investments in digital analytics and experience provides us with a competitive differentiation. We believe transformation services engagements drive better long-term partnerships with clients with better CXO connects creating paths to different buying centers. This has led to more than half of our bookings to continue being driven by sole source deals. With our expanding addressable market, we are bringing more transformation services and intelligent operation solutions to our clients, setting the stage to continue our long-term journey of delivering annual double-digit to low-teens global client growth and deliberate adjusted operating margin expansion. Based on our year-to-date performance, We are now raising our 2021 full year top line adjusted operating income margin and adjusted value to DPS outlook. With that, let me turn the call over to Ed for a detailed review of our second quarter results.