Genpact Limited

Good day, ladies and gentlemen. Welcome to the 2021 fourth quarter GENPAC limited earnings conference call. My name is Catherine 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 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 Genpak. Please proceed.

Thank you, Catherine, and good morning, everyone, and welcome to our earnings call to discuss results for the fourth quarter and full year ended December 31, 2021. We hope you had a chance to view our earnings release, which was posted to the IR section of our website, genpak.com. Speakers on today's call are Tiger T. Adarajan, our president and CEO, and Mike Wiener, 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. Mike will then walk you through our financial performance in greater detail and provide our outlook for 2022. Tiger will then come back with some closing comments, and then we'll take your questions. We expect our call to last roughly 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. These 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 the 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 fourth quarter and year-end 2021 earnings call. We are very pleased with our full year 2021 financial results with revenue, adjusted value to DPS, and cash flow ahead of our expectations. We continue to strategically invest for long-term growth while meaningfully expanding our adjusted operating income margin. For the fourth consecutive year, our analytics, digital, and consulting businesses, which make up Transformation Services, led our global client growth. As we look at 2022 and beyond, we see further expansion into multiple buying centers of our clients with cloud, SaaS, and data analytics-led solutions driving even greater value for them. For the fourth quarter 2021, we deliver total revenues of $1.1 billion, up 13% on a constant currency basis. Global client revenue of $979 million, up 16% on a constant currency basis. Adjusted operating income margin of 14.4% and adjusted diluted earnings per share of 54 cents. For the full year 2021, we deliver total revenue of $4 billion, up 7% on a constant currency basis. Global client revenue of $3.6 billion, up 11% on a constant currency basis, adjusted operating income margin of 16.5%, expanding 60 basis points year-over-year, and adjusted diluted earnings per share of $2.45, up 16% year-over-year. Our global client revenue was up 11% for the year. This performance was primarily driven by transformation services that grew 33%, including the impact from the Enquirer acquisitions up from 21% in 2020, and represents now 36% of total global client revenue, up from 30% in 2020. Intelligent operations grew 3% and represented 64% of total global client revenue. We saw double-digit growth across most of our verticals, including consumer goods and retail, tech sciences and healthcare, high tech, and manufacturing and services. As we mentioned last year, Banking and capital markets performance was impacted by the restructured relationship with a client that resized its asset management business at the end of 2020, the impact of which we expect to completely roll off by second quarter. As we expected, revenue from GE businesses declined 18% for the full year 2021. We continue to have a strong relationship with GE and believe it's announced separation into three independent companies will provide us with opportunities to win new work to support the spin-off. Throughout the year, we saw a continued acceleration of digital transformation across all industries. Companies are striving to innovate rapidly to serve their end customers in new ways given the shift to virtualization and increased expectations in user and customer experience. Our clients are leveraging disruptive technologies and predictive analytics to drive actionable insights that lead to superior outcomes in order to establish a competitive advantage in their markets. Our bookings accelerated in line with these trends, with total new bookings for 2021 of $3.7 billion, up a healthy 20% from 2020. Apart from an increase in inflows and pipeline, our win rate for 2021 was 52%, up from 47% in 2020. Sold-for deals continue to represent approximately half of our bookings. Global client bookings increased by 21% from 2020 levels and were up 12% versus our pre-pandemic 2019 levels. Large deal bookings also grew as we signed nine new engagements with total contract value greater than $50 million during the year across our industry verticals. All but one of these started with analytics, consulting, and digital engagements demonstrating that client relationships that start with transformation services often lead to significant subsequent growth. In 2021, we added 97 new client logos, up from 72 in 2020. Each of these new logos represent an initial average booking of approximately $3 million. We are excited about these new relationships as it allows us to grow with these clients into the future. Transformation services represented 45% of our total global client bookings, up from 36% in 2020. During 2021, approximately two-thirds of new accounts that started with a standalone transformation services engagement, either short-term or annuity-based, led to a follow-on booking, including intelligent operations deals, which are annuity-based in nature. Almost 50% of transformation services bookings are longer-term annuity engagements, providing us with very good visibility to future revenues. Our performance during 2021 was the result of our continued focus on our chosen set of industry verticals and services with large addressable markets, as well as our strength in data and analytics. We believe the sharp focus we have provides the depth in industry and process knowledge that is needed to drive deeper value for clients. While we continue to see growth in our original strategic focus area of finance and accounting, we are seeing very strong momentum across newer growth areas, such as sales and commercial, supply chain management, financial crimes and risks, and financial planning and analysis. The combined target addressable market in these areas is more than double that of finance and accounting alone, and they are much less penetrated. Across all these areas, we have built significant expertise through both organic and inorganic investments, and by tapping into growing partnership ecosystem. These grew more than 43% in quarter four and 36% for 2021. We have continued to have a very healthy and growing pipeline of new opportunities in these services. Our ability to organize and orchestrate data and develop cloud-based analytics solutions with industry and process depth differentiates us in the market. Analytics is the fastest growing component of our global client transformation services portfolio, growing 58% in 2021, up from 29% in 2020, and now makes up about half of total global client transformation services. We are helping clients use complex data sets to derive actionable insights that lead to meaningful business outcomes beyond just cost and productivity. For example, preventing fraud, improving pricing, reducing losses, improving sales targeting, and improving customer satisfaction and retention. Let me give a couple of examples of highly replicable work where we are driving meaningful value for our clients. For a life sciences company, we are redesigning its global supply chain operations as it moves to the cloud. Leveraging our deep domain expertise, we will validate the client's data and refine processes to enhance its demand and supply planning and forecast accuracy. and improve product fulfillment and trade compliance. For multiple insurance clients, we are using AI and machine learning to analyze pictures of vehicle damage or real-time auto claims estimates, coupled with an end-to-end cloud-based workflow solution on Microsoft Azure that automatically creates and routes new claims cases. This has dramatically reduced cycle time for claims, increasing customer satisfaction and retention, while also reducing fraud. For a large aerospace manufacturer, we are leveraging our deep process domain and digital expertise to transform their receivables process with high-radius order-to-cash SaaS platforms. This helps our clients reduce their DSOs and unlock cash faster to support strategic initiatives. Extending our reach into clients, marketing, and sales organizations, last quarter we acquired Voodoo Digital to augment our right-point experience team's capabilities in digital content. We are now providing clients with a full end-to-end solution that seamlessly integrates digital content, e-commerce, and marketing operations to generate better insights and drive growth. Our experience acquisitions have been successful in allowing us to enter new buying centers like sales and commercial and grow both our transformation services and intelligence operations engagement. Similarly, our acquisition of Enquero has supplemented our high organic growth in data and analytics, These acquisitions have also helped us bolster our talent in these areas. Let me talk about our competitive position in the global talent market. During 2021, we welcomed approximately 42,000 new team members, reflecting the strength of Genpak brand in a very competitive environment for talent. We continue to invest in the learning and development of our employees to provide them with the critical skills needed for the future to build their careers. For the second consecutive year, our global workforce completed over 10 million training hours leveraging a genome online on-demand learning platform. This led to approximately 10,000 of our employees being trained in cloud basics, about 25,000 trained and tested in Lean Six Sigma, and more than 52,000 becoming certified in data analytics. Additionally, through our talent match platform, 14,000 newly re-skilled employees were redeployed to new roles. The combination of reskilling and redeployment is a competitive advantage in this challenging talent market. Our attrition rate in the fourth quarter was 33%, remaining steady versus the third quarter. With our ability to reskill, redeploy, and hire at scale, we continue to successfully serve our clients and convert new opportunities. Turning to 2022, I believe we are well positioned to build on the momentum we saw in global client revenue last year, which saw a return to double-digit growth ahead of our initial expectations. Given strong market demand for our services, leading to the expansion of existing client relationships, as well as the addition of new client logos to our portfolio, we expect global client revenue growth to be between 9% and 12% on a constant currency basis. This includes a recovery in our banking and capital market verticals, where we are seeing great traction. I'd like to take a minute to comment on how rapidly the world has changed since we last spoke in early November. Inflationary pressures across all industries have increased in an unprecedented way, as confirmed by yesterday's U.S. economic data. We're absorbing higher expenses related to the current inflationary environment, including increased labor costs, while continuing investments in our growth. For example, we want a spate of new deals at the end of the year leading to advanced hiring in order to support those deals as they ramp up, including onshore and multiple geographies. Travel levels are on their way to normalize as our teams have begun to once again engage with clients in person on a regular basis. With our strength in bookings, including new client logos, and our ability to diligently manage our costs as revenue ramps through 2022, We expect our fully adjusted operating income margin to be between 16 and 16.5%. With that, let me turn the call over to Mike.