Good day, ladies and gentlemen, and welcome to the 2025 First Quarter Genpact 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 Genpact’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; and Mike Weiner, 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 for 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 1, 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. And 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…

Good afternoon, everyone, and thank you for joining us today. We’re pleased to report a strong first quarter with the results ahead of our expectations. At the same time, as BK mentioned, we’re seeing some delayed decision-making in select end markets, particularly those impacted by shifting global trade dynamics. As a result, we’re taking a conservative approach and updating our full year guidance, which I’ll walk you through shortly. Turning to the quarter, we delivered 16% adjusted EPS growth, well ahead of the 7% net revenue growth of $1.215 billion. This marks the 6th consecutive quarter with adjusted EPS increasing at a faster base in revenue. On a constant currency basis, net revenue grew 8%. Our pipeline was up from the fourth quarter and reached a new high with a healthy mix across deal sizes. We achieved win rates of 40% in the quarter with sole source deals accounting for approximately 54% of total bookings, up from 35% in the prior year. We added 18 new logos and won two large new deals in the quarter. As a reminder, large deals are $50 million or greater in total contract value. Data-Tech-AI services represented 48% of total revenue and/or $582 million, driven by demand for our tech services and data modernization. This was an 11% increase in the prior year and 12% constant currency, exceeding the high-end of our guide. Digital Operations revenue of $633 million was up 4% year-over-year, 5% on a constant currency basis. This performance was in line with our expectations. Digital Operations accounted for 52% of total revenue. Revenue from priority accounts grew approximately 6% over the prior year and represented 62% of the total. Growth was balanced across our segments led by High Tech and Manufacturing at 11% followed by Financial Services at 7% and Consumer…

Great. Thank you, Mike. Howard, I think we’re ready to go ahead and queue for questions.

Thank you. [Operator Instructions] Our first question or comment comes from the line of Bryan Bergin from TD Cowen. Mr. Bergin, your line is now open.

Hi, guys. Thanks for taking the question here. So, let’s start on growth and the revised outlook, particularly just in Digital Ops, the magnitude of the change in a short period of time is just a surprise. So can you just help us with the moving pieces here, dig in a little bit as it relates to those deals that I’ve gotten pushed out, how many we’re talking about? And then, as we think about it, as you go through the year, they’ve been delayed. But, are you relying on them to be signed at any point soon to account for the implied second half sequential pickup? Or have you basically just removed those out fully and you’re guiding to a little bit of growth on the existing base of business?

Hey, Bryan, it’s Mike. So, let me start that off, may BK could chime-in in a moment or so. So you’re correct in your assertion that Digital Operations, the vast majority of the reduction, if not all the reduction, is really driven by the delay in these large deals. Just a reminder, large deals are greater than $50 million. And these deals have been pushed out. We’re well in excess of that. So they had a meaningful impact, particularly in the business for the second half of the year, right? Our range does not incorporate that those deals will happen in a reasonable period of time. Again, a deal that is signed in late in the fourth quarter or in the fourth quarter will just not have the material revenue impact that it would have had based on our assumptions in the first quarter of the year, right? So, I think, from that perspective, we feel very good about the outlook and where we are. We hope to get those deals consummated as soon as possible. Again, none of them have been canceled. They’ve just simply been delayed. And, I think, what’s kind of interesting about it, when you double click on what those deals are, who they are, right, it’s interesting. They’re all within manufacturing, consumer goods, high tech hardware, right, and even look at a deeper level of it. And you look at the services underneath those, quite a few of them had to do with supply chain related work that we do, right, which really ties into the macro, which is what we’re seeing a greater level of uncertainty really related to tariff related industries, which, unfortunately, is impacting us disproportionately this quarter. I know BK would like to add on to that.

Two more points. Thanks, Bryan. And all of these deals that Mike referred, there are a few in number, Bryan, continue to be in a very active dialogue, a number of them are actually sole source conversations. But given our clients are also dealing with a multitude of issues, it is taking longer than we expected. And that is what is reflected in the guide. And, I think, I’ll also point out that, actually, the couple of large deals that we signed in the first quarter that we just reported had a higher proportion of Data-Tech-AI, which talks to the strength of the solutions that we have developed. But just from a granularity of guidance goes more to support Data-Tech-AI. And I think we do want to center more on the total revenue and because our go-to-market motions are solving client problems at scale on DO, Digital Ops, Data-Tech-AI is more characterization of the skills that we bring to bear. But, we feel really good in the range to deliver total revenues, including Data-Tech-AI and DO.

Okay. And just to be clear that the follow-up on that. The deals that you’re currently waiting on, do you see any situation where they could be canceled or they follow-up along and they’re obviously proposing some efficiency measures where you don’t see the risk of those ultimately getting canceled.

I’ll tell you we don’t see any of this call, because the dialogue is actually more number of conversations are happening. We had expected them to sign obviously by this time and number of our team members are in front of both of these large companies as well. So they know that these programs large deals are very meaningful for them. So I don’t see them any chance of getting canceled actually our pipeline overall for large deals is 80% higher YoY, and this metric hasn’t happened over a period of time. So we feel really good about the demand overall.

This is basically a timing related issue for us.

Okay. And, sorry, if I could just touch on margin here So, as we look you affirm the outlook for the gross margin and the op margin, it does imply the second half gross margin steps up pretty notably. Can you just help us gain comfort there on what drives that step up?

Yeah. So it’s a little counterintuitive when you think about it from that perspective. Yeah, we see – first of all, we outperformed in the first quarter both on gross margin and an AOI perspective versus our expectations, which is going to carry forward for the remaining part of the year, right? We continue to execute exceptionally well in our +1 operations. And then, the interesting thing is in absence of these large deals coming in, large deals typically come in early on. These are multi-year, 5 to 7 year deals. They come in at a below average gross margin. So, the absence of some of those deals or the delay in those deals from when we anticipated them will continue to support that gross margin that we’re forecasting.

Okay. Makes sense. Thank you.

Thank you. Our next question or comment comes from the line of Maggie Nolan from William Blair. Your line is open.

Hi. Thank you. I wanted to follow-up on the large deals that were delayed. Are they showing any signs of pricing pressure given the changing environment?

No. Yeah. Okay. Go ahead, Mike.

Yeah. I’m sorry. We both said it. Absolutely not. Really, it has nothing to do with the composition of the deal, the scoping of the deal by any stretch like that, or the comparative pressure associated with it. It’s literally a timing effect on we anticipated these deals closing in the early part of the year, right? We still are looking forward to them closing towards the latter part of the year, but unfortunately because of the revenue cadence pattern of it, it’s disproportionately impacting our business growth rates for the year, and notably that’s in Digital Operations.

Yeah. Exactly right. And also, Maggie, we don’t need to close these deals to land in our guidance range. We are obviously becoming more conservative relative to the macro environment that we find ourselves since the beginning of this quarter. But, we are not seeing any pricing pressure, and our solutions are actually taking hold more strongly.

Okay. Thank you. And then you mentioned that it was largely in like manufacturing end markets. Is there a particular concentration of end markets in the two segments that you split out, the DTAI versus Digital Ops, both manufacturing and then any others, as we think about what might be impacted by the changing environment?

I won’t say there is concentration, Maggie. Actually, we gain from a very diversified set of industries that we work with, but then we need to deal with some of these variations that come in. And, yes, we have strong client base in manufacturing, in CPG, in retail, and all of these end markets are a little bit in times of more uncertainty than other end markets.

Thank you.

Thank you. Our next question or comment comes from the line of Jacob Haggarty from RW Baird. Mr. Haggarty, your line is open.

Hey, guys. Thanks for taking my question. I just wanted to touch on what kind of deals are like being affected here, the deals that are getting pushed off. So, you guys mentioned that these are longer term in nature. Just kind of curious if these are more cost takeout deals and they’re still getting delayed or are these more discretionary, more transformational? Thanks.

So, a lot of these deals, Jacob, are in supply chains. So, for a large consumer goods company, there’s a big program that we’ve been running and now this is a large transaction in supply chain. This is much bigger than $50 million. And these are – I won’t say that they are just cost takeout. Obviously, any of these solutions have a significant productivity that comes in over a period of time, over a 5, 7-year period. But they always improve the outcomes too. So there’s always an efficiency and effectiveness level that gets deployed with all the solutions of, be it agentic or Gen AI or any of the other solutions. But it is a number of these deals are in these end markets that we refer to. And most of the deals that actually came in contention are in those markets and those deals continue to be in very active dialogue. It is just taking a little bit longer than our expectations to close.

Yeah, one thing to just quickly add on. As BK talked about, these are very large fields are in excess of the $50 million, which is our definition of large deals. And, yes, they are over a long period of time. These deals are contracted for 5 to 7 years, wouldn’t be an unusual component of it. And just an additional point of clarity on that, people don’t come in and buy Digital Operations or Data-Tech-AI from us. These are solutions and in many of these large deals, if not all of them, it is a component of both, right? So I just want them to make that bifurcation clear.

Thanks, guys.

Thank you. [Operator Instructions] Our next question or comment comes from the line of Sean Kennedy from Mizuho. Mr. Kennedy, your line is open.

Hi, everyone, thanks for taking my question. Nice to hear that there were no deal cancellations and that Data-Tech-AI has remained strong year-to-date. So for Data-Tech-AI, can you provide more detail on the outlook for your different customer end markets?

So, yeah, I mean, the way we don’t really think about it from that perspective, right? We think about it when we talk about our Data-Tech-AI revenue disaggregation, we really split it between the deals that are greater than 12 months and less than 12 months, right? So, the larger deals that are greater than 12 months are really associated with these multi-year transformational deals, right, which performed exceptionally well, particularly in the first quarter, as BK alluded to. The two large deals that we closed had a larger proponent of Data-Tech-AI on there. We are sitting on a record pipeline, which we’re working aggressively on closing them down. And so, we’ve just taken a very conservative prudent approach on our forecasting on the shorter cycle retail type deals that we do that are sometimes more susceptible to discretionary buying behavior of our clients. And that’s really what’s reflected in our guide.

Okay. Great. Thank you.

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

Hey, thanks for taking my question. I wanted to follow-up on like all these questions on large deals, especially around 2Q guidance. Like the only issue is around large deals that are in pipelines. Like that shouldn’t have much impact on second quarter growth. So, are you also seeing like headwinds or some weakness in your existing customers or that beliefs that have already ramped up that will impact in second quarter?

No, I think we feel really good about our second quarter, right, in terms of where those numbers are irrelevant of those large deals as BK alluded to from that perspective. Again, what we’ve talked about, not just for large deals, but for also different size deals across both the revenue categorizations of the own Data-Tech-AI, are just much more prudent conservative view, right, and a greater level of uncertainty. And that’s really what’s reflected in our outlook. Now, that said, we are sitting here into the quarter. So, we feel really good about that, right? So, the way that I talked about it in my prepared remarks is to kind of think about our business and think about our 3.5% growth that we’re forecasting for the year. 3.5% growth, so arguably about $166 million for us. We took down 50% of that growth in the first quarter alone. We’re anticipating taking down $45 million, which is about 27% of that in the second quarter, which we feel really good about. So, if you think about it from that perspective, the second half of the year really has us projected to grow about $35 million or about 22%. So, it does give you some sense of how we’re thinking about the year and how we’re approaching, our pretty conservative guide really driven by a lot of the uncertainty out there.

Got it. And then second like, as you like compete for some of these large deals like, what do you bake in for AI-driven productivity savings? I’m assuming like these deals are multi-year, 3 years, 5 years. Like what do you typically promise your customers as AI-driven benefits that you can generate over the term of the deal?

So, overall, especially in these large deals, Puneet, there is a holistic solution that walks in. Traditionally, obviously, we will bake in many solutions like lean and then predictive analytics came in, including machine learning and then Generative AI came in and now agentic AI has come in. It’s always a holistic solution that we bring in that drives, we’ve been driving productivity for over a decade and sharing that productivity with clients. This time is no different, yes, tools are far more visible, tools are different and tools are better. And, therefore, in a 5- to 7-year large deal, the productivities are anywhere from 30% to 40% to 45% and spread over 5 to 7 years. And that’s how and it stays in a very competitive zone in our markets. And a number of these are sole source deals as well, but we are always comparing to the best in the industry.

Got it. Thank you.

Thank you. [Operator Instructions] I’m showing no additional questions in the queue at this time. I’d like to turn the conference back over to management for any closing remarks.

Thank you, Howard. Before we wrap, I want to thank our entire team and clients. I am proud of what we have accomplished together, and I am confident in what we will continue to build one quarter at a time. We look forward to sharing more about our strategy, priorities, and long-term outlook at our Investor Day in June. Thank you.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.