Genpact Limited

Pax Limited's fourth quarter and full year 2024 earnings call. My name is Carmen 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 GEMPAC's website. I would now like to turn the call over to Krista Bessinger, Head of Investor Relations at GenPAC. Please proceed.

Thank you, Carmen. Good afternoon, everyone, and welcome to GenPAC's Q4 2024 Earnings Conference Call. We hope you had a chance to read our earnings press release, which was posted on the investor relations section of our website, genpac.com. Today, we have with us BK Kalra, President and CEO, and Mike Wiener, Chief Financial Officer. BK will start with a high-level overview of the quarter and year, and then Mike will cover our financial performance in greater detail before we take your questions. Please note that during this call, we will make forward-looking statements, including statements about our business outlook, strategies, and long-term goals. These comments are based on our plans, predictions and expectations as of today, which may change over time. Actual results could differ materially due to a number of important risks and uncertainties, including the risk factors in our 10-K and 10-Q filings with the SEC. Also during this call, we will discuss certain non-GAAP financial measures. We have reconciled those to the most directly comparable GAAP financial measures in our earnings press release. These non-GAAP measures are not intended to be a substitute for our GAAP results. And finally, this call in its entirety is being webcast from our investor relations website. And an audio replay and transcript will be available on our website in a few hours. And with that, I'd like to turn it over to BK.

Thank you, Krista. Hello everyone, and thank you for joining us today. I'm pleased to report another strong quarter with better than expected performance. Revenue in Q4 reached 1.25 billion, up 9% year over year. Importantly, data tech AI is beginning to show its potential, up 12% year over year, with accelerating revenue growth for the fourth quarter in a row. Digital operations growth also accelerated up 6% year over year. Gross margin and adjusted operating income margin also exceeded expectations in Q4 as we continue to deliver operating efficiency even while investing for growth. Taking a broader view, I am proud of what we accomplished in 2024. We built a strong foundation, significantly strengthening our execution and innovation muscle. We closed 14 large deals in line with last year, but with 10% higher booking in aggregate across this cohort. Revenue for the year grew 6.5%, approximately 400 basis points above the midpoint of our initial guidance range. Operating cash flow grew 25% year over year. Adjusted diluted EPS grew 10% year over year, faster than revenue for the fourth year in a row. And we ended 2024 with new bookings of 5.7 billion, up 15% year over year, after exceptionally strong performance in 2023. As we enter 2025, Innovation is front and center at Genpak. It's clear that businesses need to move beyond generic AI to domain-specific intelligence tailored to their industry needs. To meet this need, we are excited to announce the general availability of our first agentic solution for accounts payable. This is the first in a series of agentic solutions that we will bring to market in our digital operations business. Powered by a proprietary LLM, our solution leverages GenAI and machine learning models to automate invoice extraction, driving superior value through this innovative approach. Our agentic solutions are built on foundation of Genpact's deep industry expertise with highly detailed domain-specific knowledge embedded in each of our agents to deliver value at scale. We are also accelerating in data, tech, and AI with the launch of our AI Value Studio and the Genpak Gigafactory. The AI Value Studio helps businesses identify high-impact use cases and create custom roadmaps with seasoned Genpak AI architects blending process, industry, and technology expertise. And the Genpak Gigafactory is a first-of-its-kind AI accelerator designed to help enterprises rapidly scale AI solutions from pilot to full-scale production. It includes thousands of pre-built AI and generative models that combine deep industry knowledge with cutting-edge data engineering tools. all leveraging a unique port delivery model with cross-functional teams that bring together domain-specific knowledge, data engineering, and integration expertise all in one team to accelerate time to value with responsible AI by design. Databricks is one of our first partners as we scale this Gigafactory. This faster pace of innovation is built on the strong foundation of 3 plus 1 execution framework that we introduced in 2024, which is now firmly embedded in our DNA. It covers partnerships, data tech AI, simplification, and the plus 1 in our 3 plus 1 framework, which is establishing GenPact as our own best credential for AI-led transformation. To close out the year, I will walk you through the final key highlights on each. First, we made meaningful progress on partnerships in 2024, with partner-related revenues up 50% year over year, reaching high single digits as a percentage of revenue by year end, with line of sight to generating significantly more in future periods. Growth was driven by investing in world-class leadership team, driving awareness, improving our go-to-market and scaling delivery capabilities with a number of hyperscalers and other large technology partners. We believe this represents a significant ongoing opportunity for Genpak in 2025 and beyond. Looking ahead, we are also expanding our footprint in the startup ecosystem with a particular focus on next generation AI orchestration and other systems specifically designed to optimize business processes and workflows with AI. We expect these partnerships with emerging technology leaders will further accelerate our technology capability and go-to-market efforts in Data Tech AI. Second, our focus on delivering comprehensive solutions through accelerating growth in Data Tech AI in Q4 with revenue up 12% year over year. I'll give you a couple examples that speak to the kind of work we are doing and the value it is driving for clients. We are forming a strategic relationship with Otis, the world's leading company for elevator and escalator manufacturing, installation and service to accelerate their transformation. As part of this, we would implement strong data architecture and new AI-powered technologies to make a number of core high-volume transactional and repeatable activities more efficient. With advanced automation, we would help standardize Otis' critical business processes, making it easier for customers to do business with them, and allowing Otis to continue to focus on serving its customers with best-in-class service and innovative products that will propel them forward. We are also working with NTT Data, a global technology leader, providing network solutions, cloud infrastructure, and data center services to transform their technology solutions finance operations with the help of generative AI. As part of this transformation, Genpact is deploying multiple AI-powered solutions designed to improve many finance and accounting processes, including time to bill, credit-free bill, leading to improved accuracy, shorter purchase order lead times, and better overall vendor and customer experience. We see ongoing evidence that GenAI is significantly expanding our total addressable market. We now have more than 145 GenAI solutions in production environment with clients, either deployed or going live, with GenAI bookings accelerating to 100 million just in Q4. Coming back to the third element in our 3 plus 1 framework, which is simplification, we continue to streamline our operations to scale more efficiently. As an example, ongoing simplification to our cash collection process contributed to the significant increase in operating cash flows we delivered in 2024. And finally, on leading with Genpact as our own best credential for AI-led transformation, we continue to make meaningful progress. I'll give you two examples. We introduced Chat with Data, and that feature is live with HR, finance, sales, integrating advanced analytics, machine learning, generative AI to increase forecast accuracy and leverage intelligence sourcing. We also adopted AI-powered network operations, deploying AI across 120,000 endpoints in our network, implementing zero-touch provisioning, and significantly reducing tickets during the year. Now turning to our outlook. 2025 will be a year of accelerated innovation for Genpak, and we feel good about our momentum as we enter the year. As a result, we are setting full year revenue guidance at 6.5% at the midpoint of the range on as reported basis, which equates to approximately 7.2% at the midpoint in constant currency terms. We expect to deliver gross margin and AOI margins of 36% and 17.3% respectively, representing healthy expansion over 2024 with EPS growth of 9% at the midpoint. Consistent with our approach in 2024, our plan will be to reinvest any revenue upside we are able to generate over the course of the year back into the business to drive future revenue growth. Finally, as we lean into the innovation in 2025, we are excited to share more details at our upcoming analyst day which will be held on June 26th in New York City. Please save the date. Our press release with additional details will be coming out soon. In closing, we are incredibly excited about the future as we accelerate the pace of innovation and change at Genpak. Our commitment to scaling data, AI, and domain-driven agentic solutions is positioning us as a clear leader in AI-driven transformation and driving superior value for our clients. I want to thank the entire Genpak team for their incredible dedication, and I am excited to see what we can deliver together in 2025. With that, let me turn the call over to Mike.