Genpact Limited

Good day, ladies and gentlemen, and welcome to the 2025 first quarter GenPAC Limited Earnings Conference Call. My name is Howard, 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 Krista Bessinger, head of investor relations at Genpact. Please proceed.

Thank you, Howard. Good afternoon, everyone, and welcome to Genpact's Q1 2025 earnings conference call. We hope you've had a chance to read our earnings press release posted on the investor relations section of our website, genpact.com. Today, we have with us BK Kalra, president and CEO of and Mike Wiener, Chief Financial Officer. BK will start with a high-level overview of the quarter, 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.

Thanks, Krista. Good afternoon, everyone, and thank you for joining us today. We entered 2025 with strong momentum, building on the execution, innovation, and discipline that defined our performance in 2024. We delivered 1.215 billion in total revenues in quarter one, up 8.3% year over year in constant currency, above the high end of our guidance range. Gross margin and adjusted operating income margin also exceeded expectations, driven by better than expected revenue performance. An adjusted EPS grew 16% year over year, reaching $0.84, $0.04 above the high end of our range. Our ability to exceed expectations in Q1, despite a softening macro environment, speaks to strength of our execution, and the highly annuitized nature of our business. We signed two large deals in Q1 with more than 80% of associated revenue accounted for as annuitized data tech AI revenue. This reflects the strength of our pivot to data, AI, and other advanced technologies. That said, a few additional very large deals with higher concentration in digital operations were pushed out in the latter part of March and April due to supply chain and tariff related uncertainty. As a result, we are taking a conservative approach, widening our guidance range and lowering the total revenue to reflect slower cycle times. It is important to note that these large deals continue to be very active. Many are sole sourced or are in final stages of contracting. We are being deliberate and meeting our clients where they are. Our pipeline is at an all-time high, and we believe our ability to drive productivity, optimize costs, and accelerate transformation for clients using AI and other advanced technologies is a key differentiator, as is our ability to help clients rethink how their global supply chains are configured and run. We are laser focused on execution and innovation while deepening client relationships. As we operate with consistency for clients, we gain greater market share and build a stronger business. That is exactly what we intend to do in this moment as well. And everything starts with disciplined execution. And at Genpak, our three plus one execution framework introduced in 2024 has strengthened our foundation. It covers partnerships, data tech AI, simplification, and the plus one in our three plus one framework, which is establishing Genpak as our own best credential for AI-led transformation. Let me quickly walk you through the key highlights on three plus one in the first quarter, starting with partnerships. Partner-related revenues is off to a very strong start in 2025, up 80% year over year, and more than 10% quarter over quarter, reaching 10% of total revenues in Q1. We believe partnerships represent a significant ongoing opportunity for Genpact, given that technology service and solution companies with mature partner operations typically generate 20 to 50% of revenues from partner channels. Second, on data tech AI, Our focus on delivering innovative solutions is driving results with revenue up 12% year-over-year on a constant currency basis in Q1. We now have more than 215 GenAI solutions in production environment with clients, either deployed or going live, up approximately 50% quarter-over-quarter, with GenAI revenues nearly doubling from quarter-four. We are also seeing early traction with our agentic solutions. We launched our first agentic solutions for accounts payable in February of this year, delivering strong productivity gains for clients with reduced manual effort and faster processing times. While we are sharing AI-driven productivity gains with clients with new commercial models, incremental revenue is coming from expanded scope, increased volumes, or both. resulting in net revenue growth for GenPact. We are seeing strong engagement with our AI Gigafactory as well. It is now live across manufacturing, retail, and financial services with additional vertical service offerings coming in Q2. Since launch in January, we have onboarded more than 30 existing clients looking to scale AI more broadly across their operations. Third, our simplification efforts continue to deliver results. As an example, we have meaningfully reduced time to bill the average number of days it takes to initiate client billing. This reflects tighter coordination between our sales and delivery teams and tangible progress in simplifying our internal processes. And finally, on client zero, we made meaningful progress in Q1. And let me talk about two fronts. AI-led efficiencies allowed us to reduce headcount in IT and HR, protecting margins and creating a leaner long-term cost structure. Second, Client Zero is becoming an increasingly effective sales tool. We are seeing significant interest from clients who want access to Scout, the family of AI agents we developed internally and deployed across our IT, HR, and finance organizations. Now turning to our guidance in more detail. Our outlook at the beginning of the year assumed a stable macro environment relative to the second half of 2024. The operating environment has changed significantly since then. As a result, we are taking a measured approach. There are three key components to our updated guidance. First, we are widening our range to reflect increased uncertainty in certain industries driven by changes in global trade. Second, in spite of our record large deal pipeline, we are reducing our digital operations and data tech AI outlook to reflect the few large deals that were pushed out in the latter part of March and April. Delays in large deals early in the year disproportionately affect digital operations, because in-year revenues is more dependent on signing early. On data tech AI, although the strong momentum has been built, and we have not observed any slowdown year-to-date, with strong demand and conversion rate continuing through the end of April, we are lowering numbers for data tech AI out of an abundant of cautions. As mentioned earlier, our pipeline for large deals is at record levels, up more than 80% year over year, reflecting healthy long-term demand and increased focus on cost takeout, which often happens during economic downturns. All of these deals are actively in play, and we are ensuring we are meeting our clients where they are, matching their pace in this uncertain environment. Finally, our gross and AOI margin guidance remains unchanged as we stay disciplined on cost management while continuing to invest in our top priorities to accelerate long-term growth, with EPS continuing to grow faster than revenue. In summary, we entered 2025 with strong momentum, delivering a first quarter that demonstrates the power of our business, anchored in execution, innovation, and trusted client relationships. While the operating environment has changed, we remain confident in our strategy. Our pipeline remains strong and we continue to execute with discipline, staying tightly aligned with our clients and helping them succeed in today's rapidly changing environment. Our focus on execution, innovation, and long-term value creation has never been clearer. We have demonstrated our ability to accelerate growth across revenues, margins, EPS, and cash flow, and we'll continue our momentum by gaining market share as operating environment improves. With that, I'll turn the call over to Mike.