Good day, ladies and gentlemen, and welcome to the Fourth Quarter and Full Year 2018 Genpact Limited Earnings Conference Call. My name is Sarah and I will be your conference moderator for today. At this time, all participants are in a listen-only mode. We will conduct the question-and-answer session towards the end of this conference. We expect the call to conclude in about an hour. As a reminder, this call is being recorded for replay purposes. The replay of this call will be archived and made available on the IR section of Genpact's website. I would now like to turn the call over to Roger Sachs, Head of Investor Relations at Genpact. Please go ahead sir.

Thank you, Sarah, and good afternoon everybody and welcome to Genpact's fourth quarter earnings call to discuss our results for the fourth quarter and full year ended December 31, 2018. We hope you had a chance to review our earnings release, which was posted to the IR section of our website, genpact.com. With me in New York today are Tiger Tyagarajan, our President and Chief Executive Officer; and Ed Fitzpatrick, our Chief Financial Officer. Our agenda today will be as follows. Tiger will provide a high-level overview of our results and update you on our strategic initiatives. Ed will then discuss our financial performance in greater detail and provide our outlook for 2019. Tiger will then come back for some closing comments and then we will take your questions. And as Sarah just mentioned, we expect the call to last about one hour. Some of the matters we will discuss in today's call are forward-looking. These forward-looking statements 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. We believe these non-GAAP measures provide additional information to enhance the understanding of the way management views of the operating performance of our business. You can find a 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 2018 fourth quarter and year-end earnings call. We had a great end to 2018. I'm really pleased with our fourth quarter and full year results as we stayed focused and executed well on our strategy, driving strong financial performance. It is clear that we have crossed the tipping point in terms of our reputation as a preferred digital transformation partner in our chosen industry verticals and service lines. We believe we have set the stage for long-term sustainable growth and profitability in an expanding addressable market. Here are our full year 2018 results on a constant currency basis. Total revenue increased 9%. Global Client revenue increased 10.5%. And Global Client BPO revenue increased 12%. We also delivered adjusted operating income margin of 15.8% and adjusted EPS of $1.80, up 11%. Global Client revenue grew during the fourth quarter as we ramped up our relationship with truly iconic companies such as Walmart. Not only did this help us deliver another year of very consistent Global Client BPO revenue growth of 12%, but Global Client IT revenue also grew in low-single-digits during 2018 for the first time in four years. Transformation Services also had a great quarter as growth increased with digital analytics and consulting picking up momentum both as standalone client engagements and as part of being significantly embedded in large deals. Our execution of our well-defined strategy is working. And as we have always said digital and analytics is expanding our addressable market not only in our core BPO services, but also in new attractive areas such as supply chain, financial crimes, and other industry-specific vertical higher value-added services. This is leading to strong growth in Transformation Services as well as triggering new growth in…

Thank you Tiger and good afternoon everyone. Today I'll review our fourth quarter and full year 2018 results as well as provide our financial outlook for 2019. Let me begin with a review of our fourth quarter results. We generated total revenue of $835 million, an increase of 14% year-over-year or 15% on a constant currency basis. During the quarter, overall business process outsourcing revenues which represent 84% of our total revenues increased 14% year-over-year. Total IT services revenue increased 12%. Revenues from Global Clients which represent 90% of our total revenue increased 13% year-over-year or 14% on a constant currency basis to $755 million. Performance during the quarter was primarily driven by our Hi-Tech, consumer goods and retail and manufacturing verticals. Additionally the earlier than expected fulfillment of work related to the ramp of large new deals, drove revenues toward the high-end of our expected range. Within Global Clients, BPO revenues grew 13% year-over-year or 14% on a constant currency basis largely driven by Transformation Services that grew approximately 20% during the fourth quarter and represented approximately 25% of total Global Client revenue. Global Client IT services revenue was up 11% year-over-year, driven by work associated with the ramp of recent large deals, as well as project work around systems and technology enhancements related to client-specific developments in the life science and healthcare industries. Revenue from GE was $80 million up 24% year-over-year and included approximately $8 million of work related to the recent new large contract win. Adjusted income from operations for the quarter grew 24% to $142 million and operating margins increased to 130 basis points to 17% in comparison to the prior year. This performance was driven by top line growth, improved gross profit related to the expected improvement and utilization around Transformation Services and operating…

Thank you, Ed. 2018 turned out to be a great year for us along so many fronts and positions us very nicely for sustained and consistent growth in 2019 and beyond. As I reflect back on our journey of embracing change and disrupting ourselves to meet the changing needs of our clients, we had a view about the way the marketplace would evolve, and to-date, it is largely playing out as we had expected. One, corporate leadership teams who resisted change are now increasingly looking to leverage new advanced technologies to reinvent their business models or risk being disrupted. Two, companies are increasingly looking for transformation partners who not only understand digital technologies and analytics, but can also demonstrate deep industry acumen, domain knowledge of client-specific industry and processes, and the various inter-linkages risks and leverage points in their businesses. Three, there is a heightened focus on outcomes from clients. These go beyond costs to growth customer delight working capital and regulatory compliance. And finally, firms and teams that are focused on collaboration and they have a culture of agile co-innovation with their customers and other ecosystem partners have a competitive advantage in the market. We are tapping into the tremendous opportunity that these trends have created. We also believe that increased automation and digitization will expand the pie for our business. As we invest and offer AI and automation-based solutions, the value proposition that we bring to our client significantly increases. As expected, we are seeing the benefits from first-time clients that have never outsourced before. We believe partners that can help transform the underlying technology as well as reengineer and reimagine their business processes should emerge as winners. I believe this positions us to be a strategic long-term partner for clients in our focused industries that will lead to continued consistent long-term profitable growth. Our 2018 results and our 2019 outlook are in line with do medium term financial outlook that we have been sharing with you over the past several years. Before signing off, I want to welcome Professor Ajay Agrawal from the University of Toronto, who we recently announced as a new member of our Board of Directors. Professor Agrawal is a renowned academic and has tremendous experience incubating startups that leverage AI and machine learning to solve many real-world business and societal problems. His keen insights will help us continue to drive transformation at scale for our clients. With that, let me turn the call back over to Roger.

Thank you, Tiger. We would now like to open our call for your questions. Sarah, can I ask you to please give the instructions.

[Operator Instructions] Our first question comes from Ashwin Shirvaikar with Citi. Your line is now open.

Thank you and good quarter, guys.

Thank you, Ashwin.

So, Tiger, you started off with using the words tipping point. Obviously, good sales momentum, could you talk about -- is there need here for a salesforce investment given the demand? Or are you all set with regards to handling that demand at the top of the funnel?

Actually, Ashwin, I would say we continue to progress our sales force investment and we've been doing that now for five plus years as you know. That investment continues to function by driving deeper into the industries of our choice and more and more into the strategic accounts that we are building deeper and broader relationships with. The size of our scale now is also allowing us to leverage. And that's what you see play out a little bit in fourth quarter. And as we have planned for a 2019, we're getting a little bit of that leverage. In terms of absolute sales number as well as quality, we are very pleased with the team we have and we continue to refine the way they work. So I think that investment just continues and we're getting better at leveraging that much better.

Great. And as you talked about sort of driving ITO growth, what's driving that demand? Is it sustainable? And would you consider a some kind of partnership with IT companies to further take advantage of that?

So, Ashwin our strategy in IT as we've been saying for many years now has been to define specific areas in IT that are connected to areas of our domain expertise both in verticals and our service lines. And we've been on a journey to actually hone our IT business into those spaces. And as we went through that journey we went through a period where we were below – we were declining. We think as we finish the year we are confident that as we get into 2019 we will be driving low single-digit growth, which is not the same level as the company's growth. But one of the reasons that its happening as compared to not growing earlier is because we are now sharply connecting each of those whether it is commercial leasing platforms, it's sourcing platforms, it's technology implementations connected to finance, technology implementations that are connected to supply chains it's the Kinaxis partnership it's the Workday partnership. So I think these are sharply defined and that's allowing us to grow IT business that is connected to our verticals and connected to our services.

Got it. Thank you.

Thanks, Ashwin.

Thank you. Our next question comes from the line of Joseph Foresi with Cantor. Your line is now.

Hi. My first question is just sort of around your narrative for 2019. The pipeline I think is doing fairly well or perhaps better-than-expected. And the conversion seems fairly good. You've got GE as a tailwind. Maybe you could just talk a little bit about, if you had to give us one theme on the top line for 2019 and some of the – are these investments that are paying off that are making their way into revenues at this point? Or is this a secular tailwind? I'm just trying to parcel through what's driving both the pipeline and the top line.

I would say Joe it's a combination of both. And normally typically it does tend to be a combination of both because obviously it is a competitive market. So, there is a clear set of trends that I referred to in my prepared remarks around companies that are trying to capture disruption in the market in order to change their business models or responding to competitive-driven pressure and disruption happening as a result of new technology or new business models that they are facing. And that is making them search for the right partner to work with both for allowing the use of new technologies in their operations as well as having people like us run those operations with those technologies embedded inside, which is what we call intelligent operations. That's allowing larger deals to be sole-sourced, as I said in my prepared remarks that our sole source percentage is up. And that's allowing us to then not only run those operations with those digital technologies embedded, but also help some of their own operations to run with some of those technologies. And we are well positioned now to do that because of the investments we've been making over the last four or five years, going back to the sales investment then the investments in digital and analytics as we did that pivot and investments in consulting that then became the overall Transformation Services. So I think it's a combination of all of that. And the tipping point I referred to was more around reputation. In our business when a client takes a decision, they talk to five other clients. We obviously as we continued this journey and as we have clients who were delighted by some of the work we do, they refer us and they talk to other clients, and that -- we are beginning to see that happen in some of the digital transformation space.

Got it. And then my second question is around margins. You gave a lot of color in your prepared remarks. I think Ed did a good job of giving a lot of color. But you've got some headwinds GE is coming on Walmart. And my question was maybe you can help us better understand sort of the sequence of margin expansion what delevers are there. And then just along those same lines I think you're getting sort of like a $35 million tax benefit in 2018. It sounded like that was going to continue in the first two quarters of 2019. Should we be thinking about that for the whole year and how should we think about that as well? Thanks.

Okay. So I'll take the last one first Joe. In the export subsidy, if you recall, we had two years of benefit in 2018. We're expecting effect will be only to get only one year of benefit next year full year. Right now, we know we have approvals to the first quarter of 2019. We're expecting that that will get renewed, so we're accruing just one full year, so nine more months of that benefit continuing for the year such that it's only one year benefit. So that's about $20 million roughly I think is what we've assumed Joe in the numbers. So that would be a reduction of about $15 million from what we saw $15 million or $16 million from 2018. And on the impact of the large deals, as you know in the beginning of these deals, we start out with lower operating and gross margins that we ramp up throughout the period. There's no exception here. For the full year, the large deals that we just signed on, the impact AOI is about 20 basis points, maybe 20 or 30 basis points. Joe, we're offsetting that with the leverage that we're driving for the rest of the firm such that we can maintain that increase of 20 basis points to 16% as we go because we have the size, scope and scale to drive that. It will improve over time. The way it works is as we take over these large onshore deals, we'll take them on. And then as we automate over time, the gross profits -- sorry the automation of that work will improve the gross profits over time. But that takes time. So each year, we will expect the gross profits to improve and the AOI to improve, such that the lower AOI that you're seeing in the beginning will actually become higher by the end of the contract such that the full AOI over the full term is in line with company average operating margins. And gross profits will improve as well over that time frame. Let me know if that answers your question, if you have a follow-up.

No. Just on the $20 million. Is that two or three quarters? Are you averaging it kind of per quarter or you…

Yes. It's about five per quarter in each quarter, Joe.

Got it. Perfect. Thanks.

Yes.

Thank you. Our next question comes from the line of Tien-Tsin Huang of JPMorgan. Your line is now open.

Hi, thanks. Congrats on the results and the momentum. I wanted to ask on the larger deals, ask them together. Just number one, the risk profile of the deals, I caught the margin commentary. But just excluding deals how would you characterize the risk profile here versus the other stuff you've done? And secondarily from a pipeline standpoint is there resources -- do you have the resources and the capacity to win more? Do you need to replenish the pipeline? Is it still there? Just trying to understand your appetite to do more as you focus on ramping up these deals, if that make sense? Thanks.

Tien-Tsin, thank you. Let me answer the first one. The risk profile of these deals is actually not that different from the typical deals we've done over the history particularly the last few years. They are also interestingly spread out across our different verticals. That helps because of different teams that then work on them. And they are also spread out geographically. I mean if you just look at the GE relationship that we signed and executed in December and that's executed. Now we are delivering. That was spread across -- I mean actually four continents I believe. And therefore, I would say, it's the kind of risk profile that we know how to manage. We've had a history of managing execution very well. So I'm actually very confident of the experience of the team the experience of now our digital team, the Cora team, the analytics team and actually bringing all that to bear on these deals. The pipeline, as we've gone through 2018; clearly, we've had a very strong set of inflows. The pipeline reached a peak. We got a set of bookings done. Our pipeline still is good. We are very pleased with the pipeline. The characteristics of the pipeline are still very similar. They still have similar characteristics in terms of distribution across verticals, distribution across geographies and distribution across in terms of size of deals. And they have as I described for the 2018 bookings significant digital and analytics components and Transformation Services components embedded inside them. So overall that secular change that we are finding that is driving that pipeline continues and our participation that continues and we hope to continue to have the same way win rates.

Just to add to that, in terms of large deals on the risk I mean the full focus of 2019 is execution, right? We've got these large deals, large deals just -- by their nature are inherently more complex and the elements of digitization as you heard me talk about, automating a lot of these processes and collaborating with our clients is going to be first and foremost. It's a year of full execution.

Thank you.

Thank you. Our next question comes from the line of Puneet Jain with JPMorgan. Your line is now open.

I think we should move on now.

No, problem. Our next question comes from the line of Maggie Nolan with William Blair. Your line is now open.

Hi. So you've talked a little bit about the improved utilization and somewhat sustainable going into the next year here. If I recall that was a bit problematic in the first quarter of last year. So, is it fair to assume that we're going to see less of a decline in margins in first quarter this year? Or how are you expecting that to play out?

Yeah. So the improvement that we're seeing in Transformation Services and particularly consulting utilization will be better year-over-year. We've made that -- we've progressed significantly in the second half as you heard me talk about and we expect that improvement to continue. So effectively as you look at the full year, we said gross profits will be effectively flat year-over-year, but Transformation Services, the consulting utilization will be better to the tune of about 100 basis points offset by the impact of these large deals on gross profits of about 100 basis points. So first quarter will likely be largely aligned with last year maybe slightly below. But we will ramp just like we did last year throughout the year each quarter. AOI levels should be relatively consistent with what we did last year each quarter and have similar progression. So there's kind of two things happening going in different directions, keeping gross profits relatively stable for the year.

Okay, great. Thanks, Ed. And then roughly how big is the consumer goods segment currently? And do you feel like there's been a change in the sentiment or a pickup in the technology spend in this industry? Or is there an underlying trend here that could have an impact on Genpact?

Maggie, hi. I think there is clearly an underlying trend in the consumer goods retail industry globally. And it's been going on for, I would say probably four to five years. And these are trends that we all read about, ranging from the online versus physical to sustainability being so important for consumers, consumer taste changing, the impact of private label versus brands, shareholder activism. And you put all that together, the consumer goods retail industry is undergoing significant disruption across the globe. And part of what's playing out for us is in that highly disruptive environment, a number of large global enterprises in that industry want to drive change to be ahead of that disruption that's happening. We think that it's still in early innings of playing out. It's a very big industry. It's very global. It straddles every economy in the world. And it's here to stay. So whether it is personal care products, groceries, apparel to beverages, alcoholic beverages that whole spectrum, you take all of that it's a very massive industry. And we are very well-positioned in that industry. We have been very well-positioned for many years now. We have iconic relationships there. Those relationships are highly referenceable. And we have some very unique solutions built around supply chain, trade promotions, order management, analytics that basically impacts customers' top line, margin, pricing, customer satisfaction. So we are very, very pleased with the way we are positioned in that industry. And it's a pretty significant and important industry for us.

Okay. Thanks, Tiger. Congrats on the quarter.

Thank you, Maggie.

Thanks, Maggie.

Thank you. Our next question comes from the line of Edward Caso with Wells Fargo. Your line is now open.

Hi, great. It sounds like some of the profile of your deals are changing from absorbing clients' personnel, and then gradually shifting them offshore to absorbing personnel and then gradually automating their jobs away. Am I hearing that correctly?

So, Joe, hi. I wouldn’t…

It's Ed Caso. Sorry.

Ed, Sorry. Ed, I wouldn't say it's shifting from one to the other. I would say very clearly digitization and automation is real and we are doing it in our operations and we are doing it in new deals we win. And therefore, it's now very clearly part of every deal mix. So therefore in earlier days, when we would talk about absorbing, that absorption would then lead to some element of work then globalizing. Now, it is -- yes, of course, that should happen, but even more importantly automation happens. And that is an important part of the mix. The other comment I would have is, some of the work that we are now taking on and services we're getting into are much higher value-added services, have much higher criticality for the business and for the customer and therefore very high likelihood that some of that will remain onshore in a very sustained way and will have much more automation inside it. Does that make sense?

Yes. That's great. So the other -- let me just ask the Brexit question as my other one. What are you seeing? I mean, we're just hearing that no one knows what's going to happen, so there's not a lot of anything going on at the moment. Is that the correct read? Or are you seeing any kind of planning?

Ed, you answered the question. The reality is, it's very tough to know what's going to happen. I think the best we can do, which is the way we approach a number of these situations where things could go in different directions, is to be incredibly flexible and agile to move in different directions. So as an example, the fact that we have pretty significant centers of gravity of operations in Continental Europe, between our deep strength in Romania, our now deep strength in Hungary, in Poland, positions us really well to be able to leverage continental delivery for clients who actually have, for whatever reason whenever the scenario plays out, require continental delivery in the continent of Europe, outside of the U.K. We also have significant presence in the U.K. for a number of our verticals. And that allows us, therefore, to serve clients inside the U.K. with U.K. staff in the U.K. that is local. So I think our ability to deal with that flexibility in an agile way is actually something that we think is important, not just in the context of Brexit but in the context of a lot of other changes that the world continues to see. But specifically on Brexit, unfortunately your answer is our best answer, which is no one knows exactly where it's going to land and how it's going to land.

Great. Thank you.

Thanks, Ed.

Thank you. Our next question comes from the line of Stefan Styk with BMO Capital Markets. Your line is now open.

Hi. This is Stefan Styk on for Keith Bachman. Thank you for taking my question. I was wondering if you could discuss your view on the durability of short cycle work in a potential macro slow down. Also based on your conversations, how would you estimate the impact to Transformation Services? Thanks.

Yes. Let me take that Stefan and thanks for the question. I'll start by saying that about 22% of our revenue in 2018 was Transformation Services. And that's a combination of consulting digital and analytics. Some maternal proportion of that is actually Transformation Services that is embedded, as I described, in a number of our large deals. So by very nature of being embedded in those deals, they are multi-year. And they are a series of projects as part of that multi-year contract. So while it's a series of projects and has a start and stop, the reality is it is actually in some way it's actually embedded in those large annuity contracts. We also are clear that given the growth that we continue to see and the expansion of the pie that we are seeing in our BPO business with transformation services embedded inside that our ratio which is today 22% of transformation services and 78% of annuity managed services that ratio is going to change, but it's not going to change dramatically. It's going to be a very slow progression over many, many years. And therefore, we continue -- we will continue to have a business that has a very material significant component, which is managed services and new long-term annuity contracts. The last point I would make on your question is the nature of Transformation Services is not a one-time strategic consulting engagement. These are consulting engagements that have operational depth, that have an element of change management that needs to be driven over actually many years, that have digital implementations that needs to get industrialized across an ecosystem of our clients. So it's a little different from strategy consulting. And therefore, it is less short-term than otherwise you would expect. And the last point is, therefore, it's less susceptible to macro trends that actually get consulting businesses to be cut off. Having said that, obviously, it's not the same as long-term annuity contracts.

Great. Thank you. That's very helpful. And my second question around your cash flow in 2019. 2018 you guys had higher CapEx because of the GE deal. So what gives you confidence in 2019 that you won't face the similar potential requisite investments for your other new deals?

Well, I'd say if we have large deals, a low large deal like that, I'd be happy to spend it. The CapEx on that is first order of priority to support organic growth, right? So as long as we're getting greater than our cost of capital, I'll do those deals all day. So we like the deal that we did in 2018. If more will come along, we'll do that and we'll adjust our capital allocation as appropriate, right? So I think those things maybe just deal with that as they come up and like the opportunities they present us.

Okay, great. Thank you.

Thanks, Stefan.

Thank you. Our next question comes from the line of Frank Atkins with SunTrust. Your line is now open.

Thank you for taking my questions. Wanted to see if I could get a quick update on Cora, just in terms of sizing, or any metrics around that? If you could talk a little bit about the interaction with AI and Cora with RPA and what that does as a combined pair?

Yes, Frank, thanks. As I said in my prepared remarks, Cora is now pretty integral to a number of our Transformation Services engagements as well as Transformation Services embedded in our deals. More than about -- about half, not more than, about half of our clients have some instances and products and solutions on Cora that are implemented and they are using. And the sum total of users, registered users, is about 2 million. It's up from about 1 million a year plus back. And it's a range of solutions. And all of those solutions are based on the orchestration layer that we call Cora. Now the way Cora is put together is, it combines 12 different technologies that are brought together. And not all technologies are needed for all solutions. One of them is RPA, another one of them would be computer vision AI. Another one of them could be computational linguistics AI and so on. There are 12 different technologies. So to your specific question, we have many instances where we have RPA combined with computational linguistics that allows, for example, in a commercial small business lending world for us to be able to implement a specific Cora solution that we call Cora LiveSpread which actually takes documents, reads the documents, takes decisions on the documents based on cash flow and P&L that the machine and AI understands. And then populates using RPA different systems that it needs to populate in the customer's technology landscape. So that's a combination of computational linguistics, which is AI and RPA. The RPA provider we would use, the partner we would use could be any one of the three partners we described. The AI solutions that we would use in this case is our own AI solution that we acquired with RAGE. And in every solution, we bring some of this technology together and then orchestrate them. That's the nature of the digital world today.

Okay, that's very helpful. And for my follow-up, I wanted to ask a little bit about the global delivery model at this point. Could you give us any color by geo headcount attrition and kind of where you stand in terms of the skilling of the talent base?

I'll answer the last part first Frank. Skilling of the talent base is important relevant across the globe. Whether it is our scale delivery centers in India, in China, in Philippines, in Bucharest, and Budapest, and in Poland, in Jacksonville, in Richardson in a number of our locations in the U.S. and Latin America. It's relevant everywhere in our operating teams. It's relevant for our consulting teams who are with our clients in the marketplace in Europe, in the U.K., in the U.S., in Canada, and Australia, and Japan; and for our sales teams. So, from a skilling perspective, there is no -- we should do in once place versus another place. The type of skilling that you would do would be different. The specific skills would be customized for the specific needs of specific groups depending on the vertical, the service line, et cetera, and the geography. The distribution of the work force, it's very well-distributed across a range of the geographies that I just described. Obviously, given the nature of our business moving up the value chain to higher value-added services, getting closer to the clients, getting closer to some of the work that needs to be done onshore. Some of the onshore work in the U.S. have gone up faster than offshore work. Some of the onshore work, for example, in Japan has gone up and Australia has gone up. Having said that, given the size and scale of our global delivery locations in India, Philippines, China, Eastern Europe, et cetera. Even though the percentage growth might be lower there in terms of size and scale, it's still large there and continues to be large and continues to grow. So, that distribution is actually one of the differentiated propositions that our clients really like.

And I think on the attrition I think largely in line with where we 25% to 30% -- 26% in the quarter.

And the attrition is not significantly and materially different than in the past by geography. We see a very consistent pattern. It depends more on the type of work that people do.

Okay, great. Thank you very much.

Thanks, Frank.

Thank you. Our next question comes from the line of Bryan Bergin with Cowen and Company. Your line is now open.

Hi, guys, thank you. I wanted to ask one more thing. Can you comment on the level of investment you expect to spend around sales and marketing and R&D for 2019? I'm curious if you're at a point where you can get some leverage off of that absolute level of spend there. And you think about those categories, particularly capabilities that are seeing a disproportionate level of investment in your 2019 plan.

Yeah. So on SG&A in general, we are going to leverage it. That's one of the reasons we're going to be driving operating margins up from 15% to 16%. So SG&A will be the driver of that growth and we will see some leverage in selling as well this year as the Tiger talked about. Some of these large deals in particular give us the scale to be able to leverage that. We feel like we have really good coverage globally we'll be able to leverage that in selling.

And Bryan if you see our 2018 performance, leverage already has been delivered in 2018. And all that I think Ed is saying and we are saying is that that leverage will continue in 2019. And that's the plan that we've laid out. It assumes a continuation of sales leverage, R&D leverage and G&A leverage. All three.

Okay. And then as far as the sales cycle is on the large transformational deals today versus a year ago, it certainly sounds like the demand has ramped to. Is this also translating to conversion, to signings at a faster pace?

Interestingly we've seen -- yes. The answer is, yes. One would have assumed that larger, more complex deals would take longer. Some of them do. There is no question that there are deals that have taken a long time because they are complex. But on the average, they seem to have gone faster than one would have expected larger deals to take in the past. And that again reflects the nature of what's happening in the world and what's happening to disruption and what's happening to clients wanting to grab the opportunity to actually change their own business models.

Okay, thank you.

Thanks, Bryan.

Thanks, Bryan.

Thank you. This concludes our question-and-answer session for today. I would now like to turn the call back to Roger Sachs for any further remarks.

Okay. Thanks, everybody, for joining us on our call today and we look forward to speaking with you again next quarter.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone have a great day.