Total Revenue of $1.13 billion, Up
4%1,2,3
Diluted EPS of $0.64, Up 12%; Adjusted Diluted
EPS4 of $0.73, Up
7%
NEW
YORK, May 9, 2024 /PRNewswire/ -- Genpact
Limited (NYSE: G), a global professional services and solutions
firm delivering outcomes that shape the future, today announced
financial results for the first quarter ended March 31, 2024.
"Results for the first quarter were above the high end of our
guidance range, driven by early signs of improving execution and
better than expected performance across both Data-Tech-AI and
Digital Operations," said Balkrishan "BK" Kalra, Genpact's
President & CEO. "In the first quarter, we established our
new '3+1 Execution Framework,' which is focused on building
stronger partnerships, delivering more comprehensive Data-Tech-AI
solutions, simplifying our sales and go-to-market structures, and
enhancing our own operational efficiency through AI-led
transformation. This work, while early, is delivering promising
results and will be a key ingredient in putting us on the path to
reach our full potential."
Key Financial Highlights – First Quarter 2024
- Total revenue was $1.13 billion,
up 4% year-over-year, both on an as reported and constant currency
basis.1,3
- Data-Tech-AI revenue was $524
million, up 3% year-over-year, both on an as reported and
constant currency basis,1,3 representing 46% of total
revenue.5
- Digital Operations revenue was $607
million, up 5% year-over-year (6% on a constant currency
basis),1 representing 54% of total
revenue.5
- Gross profit was $396 million, up
7% year-over-year, with a corresponding margin of 35.0%.
- Net income was $117 million, up
10% year-over-year, with a corresponding margin of 10.3%.
- Income from operations was $160
million, up 10% year-over-year, with a corresponding margin
of 14.1%.
- Adjusted income from operations was $182
million, up 2% year-over-year, with a corresponding margin
of 16.1%.6,7
- Diluted earnings per share was $0.64, up 12% year-over-year, and adjusted
diluted earnings per share4,6 was $0.73, up 7% year-over-year.
- Cash utilized in operations was $26
million, compared to $34
million utilized in operations in the first quarter of
2023.
- Genpact repurchased approximately 865,000 of its common shares
during the quarter for total consideration of approximately
$30 million at an average price per
share of $34.67.
__________________________________
|
1 Revenue growth on a constant
currency basis is a non-GAAP measure and is calculated by restating
current-period activity using the prior fiscal period's foreign
currency exchange rates adjusted for hedging gains/losses in such
period.
|
2 Both on an as reported and
constant currency basis.
|
3
Total revenue and Data-Tech-AI revenue for the first quarter 2023
includes $0.5 million associated with a business classified as held
for sale.
|
4 Adjusted diluted earnings
per share is a non-GAAP measure. A reconciliation of GAAP diluted
earnings per share to adjusted diluted earnings per share is
attached to this release.
|
5 Genpact updated the
classification of certain service revenues from Digital Operations
to Data-Tech-AI in the quarter ended March 31, 2024 to more
accurately reflect the nature of, and mode of delivery for, the
services provided, which have evolved over time. The tables set
forth after the "Outlook" section in this release provide the
amount of revenue derived from Digital Operations and Data-Tech-AI,
both as originally reported and as updated, for each quarter from
the first quarter of 2022 through the first quarter of 2024. The
outlook presented in this release for Digital Operations and
Data-Tech-AI revenue growth reflect this updated revenue
classification.
|
6 Income from operations and
diluted earnings per share for the first quarter of 2023 include a
$0.8 million loss incurred on the sale of the business previously
designated as held for sale as well as a $1.2 million operating
loss from the business previously designated as held for sale.
These items were excluded from adjusted income for operations and
adjusted diluted earnings per share for the first quarter of
2023.
|
7 Adjusted income from
operations and adjusted income from operations margin are non-GAAP
measures. Reconciliations of each of GAAP income from operations
and GAAP net income to adjusted income from operations and GAAP
income from operations margin and GAAP net income margin to
adjusted income from operations margin are attached to this
release.
|
Outlook
Genpact's updated outlook for the full year 2024 is as
follows:
- Total revenue in the range of $4.59
billion to $4.63 billion,
representing year-over-year growth of approximately 2.5% to 3.5% as
reported, or 2.7% to 3.7% on a constant currency basis,1
up from the prior guidance of approximately 2.0% to 3.0% as
reported.
- Digital Operations revenue growth of approximately 3.6%
year-over-year and Data-Tech-AI revenue growth of approximately
2.3% year-over-year at the midpoint of the range, as reported, up
from the previous midpoints of 3.1% and 1.7%, respectively, on an
updated classification basis.5
- Digital Operations revenue growth of approximately 4.0%
year-over-year and Data-Tech-AI revenue growth of approximately
2.4% year-over-year at the midpoint of the range, on a constant
currency basis,1 up from the previous midpoints of 3.2%
and 1.9%, respectively, on an updated classification
basis.5
- Gross margin of approximately 35.3%, up from the prior guidance
of approximately 35.0%.
- Adjusted income from operations margin8 of
approximately 17.0%.
- Adjusted diluted EPS9 in the range of $3.01 to $3.04, up
from the prior range of $3.00 to
$3.03.
Genpact's outlook for the second quarter of 2024 is as
follows:
- Total revenue in the range of $1.143
billion to $1.148 billion,
representing year-over-year growth of approximately 3.4% to 3.8% as
reported, or 3.6% to 4.0% on a constant currency basis.1
- Digital Operations revenue growth of approximately 5.4%
year-over-year and Data-Tech-AI revenue growth of approximately
1.6% year-over-year at the midpoint of the range, as reported.
- Digital Operations revenue growth of approximately 5.7%
year-over-year and Data-Tech-AI revenue growth of approximately
1.6% year-over-year at the midpoint of the range, on a constant
currency basis.1
- Gross margin of approximately 34.8%.
- Adjusted income from operations margin8 of
approximately 16.5%.
The outlook presented above reflects the updated classification
of Digital Operations and Data-Tech-AI
revenue.5
Digital Operations and Data-Tech-AI revenue
update5
The following tables provide Digital Operations and Data-Tech-AI
revenue breakdowns for each quarter from the first quarter of 2022
through the first quarter of 2024, as originally reported and on an
updated classification basis:
As Originally Reported:
|
Q1'22
|
Q2'22
|
Q3'22
|
Q4'22
|
Q1'23
|
Q2'23
|
Q3'23
|
Q4'23
|
Q1'24
|
Digital Operations
revenue
|
602
|
601
|
601
|
608
|
604
|
605
|
636
|
639
|
630
|
YoY %
|
5.0 %
|
3.3 %
|
2.4 %
|
3.3 %
|
0.4 %
|
0.7 %
|
5.8 %
|
5.1 %
|
4.2 %
|
QoQ %
|
2.2 %
|
(0.2) %
|
0.1 %
|
1.1 %
|
(0.6) %
|
0.1 %
|
5.2 %
|
0.4 %
|
(1.5) %
|
Data-Tech-AI
revenue
|
467
|
489
|
510
|
495
|
485
|
501
|
500
|
507
|
502
|
YoY %
|
25.1 %
|
20.2 %
|
18.9 %
|
2.3 %
|
4.0 %
|
2.5 %
|
(2.0) %
|
2.5 %
|
3.4 %
|
QoQ %
|
(3.5) %
|
4.7 %
|
4.3 %
|
(2.9) %
|
(1.9) %
|
3.2 %
|
(0.2) %
|
1.5 %
|
(1.1) %
|
________________________________
|
8 Adjusted income from
operations margin is a non-GAAP measure. A reconciliation of the
outlook for each of GAAP income from operations margin and GAAP net
income margin to adjusted income from operations margin is attached
to this release.
|
9 Adjusted diluted earnings
per share is a non-GAAP measure. A reconciliation of the outlook
for GAAP diluted earnings per share to adjusted diluted earnings
per share is attached to this release.
|
Updated Classification:
|
Q1'22
|
Q2'22
|
Q3'22
|
Q4'22
|
Q1'23
|
Q2'23
|
Q3'23
|
Q4'23
|
Q1'24
|
Digital Operations
revenue
|
581
|
580
|
578
|
583
|
579
|
581
|
612
|
615
|
607
|
YoY %
|
5.1 %
|
3.1 %
|
1.9 %
|
3.2 %
|
(0.3) %
|
0.2 %
|
6.0 %
|
5.5 %
|
4.8 %
|
QoQ %
|
2.9 %
|
(0.3) %
|
(0.4) %
|
1.0 %
|
(0.6) %
|
0.2 %
|
5.5 %
|
0.4 %
|
(1.2) %
|
Data-Tech-AI
revenue
|
487
|
509
|
533
|
519
|
510
|
525
|
523
|
531
|
524
|
YoY %
|
24.0 %
|
19.6 %
|
18.9 %
|
2.4 %
|
4.7 %
|
3.0 %
|
(1.9) %
|
2.3 %
|
2.7 %
|
QoQ %
|
(3.9) %
|
4.6 %
|
4.7 %
|
(2.6) %
|
(1.8) %
|
2.9 %
|
(0.3) %
|
1.5 %
|
(1.4) %
|
Conference Call to Discuss Financial Results
Genpact's management will host an hour-long conference call
beginning at 5:00 p.m. ET on
May 9, 2024 to discuss the company's
performance for the first quarter ended March 31, 2024. Those who wish to participate can
register here to receive a dial-in number and unique PIN to access
the call seamlessly. It is recommended callers join 10 minutes
prior to the start of the event (although you may register and dial
in at any time during the call). A live webcast of the call
will also be made available on the Genpact Investor Relations
website at https://www.genpact.com/investors. For those who cannot
join the call live, a replay will be archived on the Genpact
website after the end of the call. A transcript of the call will
also be made available on the website.
About Genpact
Genpact (NYSE: G) is a global professional services and
solutions firm delivering the outcomes that shape the future. Our
125,000+ people across 30+ countries are driven by our innate
curiosity, entrepreneurial agility, and desire to create lasting
value for clients. Powered by our purpose – the relentless pursuit
of a world that works better for people – we serve and transform
leading enterprises, including the Fortune Global 500, with our
deep business and industry knowledge, digital operations services,
and expertise in data, technology, and AI.
Safe Harbor
This press release contains certain statements concerning our
future growth prospects, including our outlook for 2024, financial
results and other forward-looking statements, as defined in the
safe harbor provisions of the U.S. Private Securities Litigation
Reform Act of 1995. These 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.
These risks, uncertainties, and other factors include but are not
limited to macroeconomic uncertainty and general economic
conditions, any deterioration in the global economic environment
and its impact on our clients, our ability to manage our CEO
transition and retain senior management, technological innovation,
including AI technology and future uses of generative AI and large
language models, and our ability to invest in new technologies and
adapt to industry developments at sufficient speed and scale, our
ability to develop and successfully execute our business
strategies, our ability to effectively price our services and
maintain pricing and employee utilization rates, general
inflationary pressures and our ability to share increased costs
with our clients, wage increases in locations in which we have
operations, our ability to attract and retain skilled
professionals, our ability to protect our and our clients' data
from security incidents or cyberattacks, the economic and other
impacts of geopolitical conflicts and any related sanctions and
other measures that have been or may be implemented or imposed in
response thereto, as well as any potential expansion or escalation
of existing conflicts or economic disruption beyond their current
scope, a slowdown in the economies and sectors in which our clients
operate, a slowdown in the sectors in which we operate, the risks
and uncertainties arising from our past and future acquisitions or
divestitures, our ability to convert bookings to revenues, our
ability to manage growth, factors which may impact our cost
advantage, changes in tax rates and tax legislation and other laws
and regulations, our ability to effectively execute our tax
planning strategies, risks and uncertainties regarding fluctuations
in our earnings, foreign currency fluctuations, political, economic
or business conditions in countries in which we operate, as well as
other risks detailed in our reports filed with the U.S. Securities
and Exchange Commission, including Genpact's Annual Report on Form
10-K and Quarterly Reports on Form 10-Q. These filings are
available at www.sec.gov. Genpact may from time to time make
additional written and oral forward-looking statements, including
statements contained in our filings with the Securities and
Exchange Commission and our reports to shareholders. Although
Genpact believes that these forward-looking statements are based on
reasonable assumptions, you are cautioned not to put undue reliance
on these forward-looking statements, which reflect management's
current analysis of future events and should not be relied upon as
representing management's expectations or beliefs as of any date
subsequent to the time they are made. Genpact undertakes no
obligation to update any forward-looking statements that may be
made from time to time by or on behalf of Genpact.
Contacts
Investors
|
|
Tiffany
Horvath
|
|
|
+1 (614)
625-6485
|
|
|
tiffany.horvath@genpact.com
|
|
|
Media
|
|
Siya
Belliappa
+1 (718)
561-9843
siya.belliappa@genpact.com
|
GENPACT LIMITED AND
ITS SUBSIDIARIES
Consolidated Balance Sheets (Unaudited) (In
thousands, except per share data and share count)
|
|
|
|
As of December 31, 2023
|
|
As of March 31, 2024
|
Assets
|
|
|
|
|
Current assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
583,670
|
|
$
478,398
|
Accounts receivable,
net of allowance for credit losses of $18,278
and $21,294 as of December 31, 2023 and March 31, 2024,
respectively
|
|
1,116,273
|
|
1,147,233
|
Prepaid expenses and
other current assets
|
|
191,566
|
|
204,811
|
Total current assets
|
|
$
1,891,509
|
|
$
1,830,442
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
189,803
|
|
193,805
|
Operating lease
right-of-use assets
|
|
186,167
|
|
199,118
|
Deferred tax
assets
|
|
298,921
|
|
281,945
|
Intangible assets,
net
|
|
53,028
|
|
46,305
|
Goodwill
|
|
1,683,782
|
|
1,679,720
|
Contract cost
assets
|
|
202,543
|
|
204,918
|
Other assets, net of
allowance for credit losses of $4,096 and $7,174 as of
December 31, 2023 and March 31, 2024, respectively
|
|
299,960
|
|
304,389
|
Total assets
|
|
$
4,805,713
|
|
$
4,740,642
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
Current liabilities
|
|
|
|
|
Short-term
borrowings
|
|
$
10,000
|
|
$
50,000
|
Current portion of
long-term debt
|
|
432,242
|
|
425,768
|
Accounts
payable
|
|
27,739
|
|
28,032
|
Income taxes
payable
|
|
38,458
|
|
39,373
|
Accrued expenses and
other current liabilities
|
|
759,180
|
|
595,350
|
Operating leases
liability
|
|
50,313
|
|
46,879
|
Total current liabilities
|
|
$
1,317,932
|
|
$
1,185,402
|
|
|
|
|
|
Long-term debt, less
current portion
|
|
824,720
|
|
818,327
|
Operating leases
liability
|
|
168,015
|
|
180,724
|
Deferred tax
liabilities
|
|
11,706
|
|
11,589
|
Other
liabilities
|
|
234,948
|
|
246,230
|
Total liabilities
|
|
$
2,557,321
|
|
$
2,442,272
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
Preferred shares, $0.01
par value, 250,000,000 authorized, none issued
|
|
—
|
|
—
|
Common shares, $0.01
par value, 500,000,000 authorized, 179,494,132
and 179,979,368 issued and outstanding as of December 31, 2023
and
March 31, 2024, respectively
|
|
1,789
|
|
1,794
|
Additional paid-in
capital
|
|
1,883,944
|
|
1,879,099
|
Retained
earnings
|
|
1,085,209
|
|
1,144,671
|
Accumulated other
comprehensive income (loss)
|
|
(722,550)
|
|
(727,194)
|
Total equity
|
|
$
2,248,392
|
|
$
2,298,370
|
|
|
|
|
|
Total liabilities and equity
|
|
$
4,805,713
|
|
$
4,740,642
|
GENPACT LIMITED AND
ITS SUBSIDIARIES
Consolidated Statements of
Income (Unaudited) (In thousands, except per
share data and share count)
|
|
|
|
Three months ended March 31,
|
|
|
2023
|
|
2024
|
Net revenues
|
|
$
1,089,319
|
|
$
1,131,237
|
Cost of
revenue
|
|
719,078
|
|
734,759
|
Gross profit
|
|
$
370,241
|
|
$
396,478
|
Operating expenses:
|
|
|
|
|
Selling, general and
administrative expenses
|
|
216,485
|
|
235,031
|
Amortization of
acquired intangible assets
|
|
8,255
|
|
6,927
|
Other operating
(income) expense, net
|
|
389
|
|
(5,466)
|
Income from operations
|
|
$
145,112
|
|
$
159,986
|
Foreign exchange gains
(losses), net
|
|
(1,040)
|
|
837
|
Interest income
(expense), net
|
|
(9,627)
|
|
(10,242)
|
Other income (expense),
net
|
|
4,030
|
|
5,787
|
Income before income tax
expense
|
|
$
138,475
|
|
$
156,368
|
Income tax
expense
|
|
32,374
|
|
39,421
|
Net income
|
|
$
106,101
|
|
$
116,947
|
Earnings per common
share
|
|
|
|
|
Basic
|
|
$
0.58
|
|
$
0.65
|
Diluted
|
|
$
0.57
|
|
$
0.64
|
Weighted average number
of common shares used in computing earnings per
common share
|
|
|
|
|
Basic
|
|
183,795,404
|
|
180,416,537
|
Diluted
|
|
187,586,277
|
|
181,937,555
|
GENPACT LIMITED AND
ITS SUBSIDIARIES
Consolidated Statements of Cash
Flows (Unaudited) (In thousands)
|
|
|
|
Three Months ended March 31,
|
|
|
2023
|
|
2024
|
Operating activities
|
|
|
|
|
Net income
|
|
$
106,101
|
|
$
116,947
|
Adjustments to reconcile net income to net cash used
for operating activities:
|
|
|
|
|
Depreciation and
amortization
|
|
18,757
|
|
17,280
|
Amortization of debt
issuance costs
|
|
487
|
|
488
|
Amortization of
acquired intangible assets
|
|
8,255
|
|
6,927
|
Loss on the sale of the
business classified as held for sale
|
|
802
|
|
—
|
Allowance for credit
losses
|
|
3,324
|
|
10,897
|
Unrealized gain on
revaluation of foreign currency assets/liabilities
|
|
(2,994)
|
|
(6,700)
|
Stock-based
compensation expense
|
|
19,704
|
|
9,181
|
Deferred tax
expense
|
|
1,710
|
|
11,510
|
Others, net
|
|
454
|
|
167
|
Change in operating assets and
liabilities:
|
|
|
|
|
Increase in accounts
receivable
|
|
(17,794)
|
|
(40,148)
|
Increase in prepaid
expenses, other current assets, contract cost assets, operating
lease right-of-use
assets and other assets
|
|
(11,424)
|
|
(22,495)
|
Increase (decrease) in
accounts payable
|
|
(13,261)
|
|
285
|
Decrease in accrued
expenses, other current liabilities, operating lease liabilities
and other liabilities
|
|
(167,217)
|
|
(131,129)
|
Increase in income
taxes payable
|
|
19,032
|
|
1,229
|
Net cash used for operating
activities
|
|
$
(34,064)
|
|
$
(25,561)
|
Investing activities
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
(12,578)
|
|
(24,005)
|
Payment for internally
generated intangible assets (including intangibles under
development)
|
|
(828)
|
|
(667)
|
Proceeds from sale of
property, plant and equipment
|
|
9
|
|
—
|
Payment for business
acquisitions, net of cash acquired
|
|
(682)
|
|
—
|
Payment for divestiture
of the business
|
|
(19,510)
|
|
—
|
Net cash used for investing
activities
|
|
$
(33,589)
|
|
$
(24,672)
|
Financing activities
|
|
|
|
|
Repayment of finance
lease obligations
|
|
(3,705)
|
|
(3,433)
|
Repayment of long-term
debt
|
|
(6,625)
|
|
(13,250)
|
Proceeds from
short-term borrowings
|
|
75,000
|
|
50,000
|
Repayment of short-term
borrowings
|
|
(46,000)
|
|
(10,000)
|
Proceeds from issuance
of common shares under stock-based compensation plans
|
|
15,924
|
|
6,797
|
Payment for net
settlement of stock-based awards
|
|
(18,172)
|
|
(20,820)
|
Payment of earn-out
consideration
|
|
(2,399)
|
|
—
|
Dividend
paid
|
|
(25,255)
|
|
(27,492)
|
Payment for stock
repurchased and retired (including expenses related to stock
repurchase)
|
|
(30,013)
|
|
(30,002)
|
Net cash used for financing
activities
|
|
$
(41,245)
|
|
$
(48,200)
|
Net decrease in cash
and cash equivalents
|
|
(108,898)
|
|
(98,433)
|
Effect of exchange rate
changes
|
|
14,414
|
|
(6,839)
|
Cash and cash
equivalents at the beginning of the period
|
|
646,765
|
|
583,670
|
Cash and cash equivalents at the end of the
period
|
|
$
552,281
|
|
$
478,398
|
Supplementary information
|
|
|
|
|
Cash paid during the
period for interest
|
|
$
6,112
|
|
$
11,393
|
Cash paid during the
period for income taxes, net of refund
|
|
$
23,001
|
|
$
20,108
|
Non-GAAP Financial Measures
To supplement the consolidated financial
statements presented in accordance with GAAP, this press release
includes the following non-GAAP financial measures:
- Adjusted income from operations;
- Adjusted income from operations margin;
- Adjusted diluted earnings per share; and
- Revenue growth on a constant currency basis.
These non-GAAP financial measures are not
based on any comprehensive set of accounting rules or principles
and should not be considered a substitute for, or superior to,
financial measures calculated in accordance with GAAP, and may be
different from non-GAAP financial measures used by other companies.
Accordingly, these non-GAAP financial measures, the financial
statements prepared in accordance with GAAP and the reconciliations
of Genpact's GAAP financial statements to such non-GAAP financial
measures should be carefully evaluated.
Given Genpact's acquisitions of varying scale
and size, and the difficulty in predicting expenses relating to
acquisitions and the amortization of acquired intangibles thereof,
since July 2012 Genpact's management
has used financial statements that exclude all acquisition-related
expenses and amortization of acquired intangibles for its internal
management reporting, budgeting and decision-making purposes,
including comparing Genpact's operating results to those of its
competitors. For the same reasons, since April 2016, Genpact's management has excluded the
impairment of acquired intangible assets from the financial
statements it uses for internal management purposes.
Acquisition-related expenses are excluded in the period in which an
acquisition is consummated. Genpact's management also uses
financial statements that exclude stock-based compensation expense.
Because of varying available valuation methodologies, subjective
assumptions and the variety of award types that companies can use
when adopting ASC 718 "Compensation-Stock Compensation," Genpact's
management believes that providing non-GAAP financial measures that
exclude such expenses allows investors to make additional
comparisons between Genpact's operating results and those of other
companies.
During the second quarter of 2022, Genpact
approved a plan to divest a business that was no longer deemed
strategic. Given the specialized nature of this business, we
anticipated completing a transaction within twelve months after the
end of the second quarter of 2022, and therefore, we classified the
revenues and expenses related to this business as held for sale
with effect from April 1, 2022.
During the first quarter of 2023, the Company consummated this
transaction and recorded a loss on the sale of the business.
Genpact's management believes that excluding such loss on the sale
of the business and the revenues and expenses associated with the
business previously designated as held for sale in calculating its
non-GAAP financial measures provides useful information to both
management and investors regarding the Company's financial
performance and underlying business trends. Additionally, in its
calculations of non-GAAP financial measures, Genpact's management
has adjusted foreign exchange gains and losses, interest income and
expense and income tax expenses from GAAP net income, and other
income and expenses, and certain gains from GAAP income from
operations, because management believes that the Company's results
after taking into account these adjustments more accurately reflect
the Company's ongoing operations. In its calculations of adjusted
diluted earnings per share, Genpact's management adds back
stock-based compensation expense, amortization and impairment of
acquired intangible assets, acquisition-related expenses and the
related tax impact of such adjustments from GAAP diluted earnings
per share. For the purpose of calculating adjusted diluted earnings
per share, the combined current and deferred tax effect is
determined by multiplying each pre-tax adjustment by the applicable
statutory income tax rate.
Genpact's management provides information
about revenues on a constant currency basis so that the revenues
may be viewed without the impact of foreign currency exchange rate
fluctuations compared to prior fiscal periods, thereby facilitating
period-to-period comparisons of the Company's true business
performance. Revenue growth on a constant currency basis is
calculated by restating current-period activity using the prior
fiscal period's foreign currency exchange rates adjusted for
hedging gains/losses in such period.
Accordingly, Genpact believes that the
presentation of adjusted income from operations, adjusted income
from operations margin, adjusted diluted earnings per share and
revenue growth on a constant currency basis, when read in
conjunction with the Company's reported results, can provide useful
supplemental information to investors and management regarding
financial and business trends relating to its financial condition
and results of operations.
A limitation of using adjusted income from
operations and adjusted income from operations margin versus income
from operations, income from operations margin, net income and net
income margin calculated in accordance with GAAP is that these
non-GAAP financial measures exclude certain recurring costs and
certain other charges, namely stock-based compensation expense and
amortization and impairment of acquired intangible assets.
Management compensates for this limitation by providing specific
information on the GAAP amounts excluded from adjusted income from
operations and adjusted income from operations margin.
The following tables show the reconciliation of
these non-GAAP financial measures to the most directly comparable
GAAP measures for the three months ended March 31, 2023 and 2024:
Reconciliation of
Net Income/Margin to Adjusted Income from
Operations/Margin (In thousands)
|
|
|
|
Three months ended March 31,
|
|
|
2023
|
|
2024
|
Net income
|
|
$
106,101
|
|
$
116,947
|
Foreign exchange
(gains) losses, net
|
|
1,040
|
|
(837)
|
Interest (income)
expense, net
|
|
9,627
|
|
10,242
|
Income tax
expense
|
|
32,374
|
|
39,421
|
Stock-based
compensation expense
|
|
19,704
|
|
9,181
|
Amortization and
impairment of acquired intangible assets
|
|
8,143
|
|
6,925
|
Operating loss from
the business classified as held for sale
|
|
1,201
|
|
—
|
Loss on the sale of
the business classified as held for sale
|
|
802
|
|
—
|
Adjusted income from operations
|
|
$
178,992
|
|
$
181,879
|
Net income
margin
|
|
9.7 %
|
|
10.3 %
|
Adjusted income from operations
margin
|
|
16.4 %
|
|
16.1 %
|
Reconciliation of
Income from Operations/Margin to Adjusted Income from
Operations/Margin (In thousands)
|
|
|
|
Three months ended March
31,
|
|
|
2023
|
|
2024
|
Income from
operations
|
|
$
145,112
|
|
$
159,986
|
Stock-based
compensation expense
|
|
19,704
|
|
9,181
|
Amortization and
impairment of acquired intangible assets
|
|
8,143
|
|
6,925
|
Other income
(expense), net
|
|
4,030
|
|
5,787
|
Operating loss from
the business classified as held for sale
|
|
1,201
|
|
—
|
Loss on the sale of
the business classified as held for sale
|
|
802
|
|
—
|
Adjusted income from operations
|
|
$
178,992
|
|
$
181,879
|
Income from operations
margin
|
|
13.3 %
|
|
14.1 %
|
Adjusted income from operations
margin
|
|
16.4 %
|
|
16.1 %
|
Reconciliation of
Diluted EPS to Adjusted Diluted EPS10 (Per share
data)
|
|
|
|
Three months ended March 31,
|
|
|
2023
|
|
2024
|
Diluted EPS
|
|
$
0.57
|
|
$
0.64
|
Stock-based
compensation expense
|
|
0.11
|
|
0.05
|
Amortization and
impairment of acquired intangible assets
|
|
0.04
|
|
0.04
|
Operating loss from
the business classified as held for sale
|
|
0.01
|
|
—
|
Loss on the sale of
the business classified as held for sale
|
|
0.00
|
|
—
|
Tax impact on
stock-based compensation expense
|
|
(0.04)
|
|
0.01
|
Tax impact on
amortization and impairment of acquired intangible
assets
|
|
(0.01)
|
|
(0.01)
|
Tax impact on
operating loss from the business classified as held for
sale
|
|
(0.00)
|
|
—
|
Tax impact on loss on
the sale of the business classified as held for sale
|
|
(0.00)
|
|
—
|
Adjusted diluted EPS
|
|
$
0.68
|
|
$
0.73
|
________________________________
|
10 Due to rounding, the
numbers presented in this table may not add up precisely to the
totals provided.
|
The following tables show the reconciliation of forward-looking
non-GAAP financial measures to the most directly comparable GAAP
measures for the year ending December 31,
2024:
Reconciliation of
Outlook for Net Income Margin to Adjusted Income from Operations
Margin11
|
|
|
|
Year ending December 31, 2024
|
Net income margin
|
|
10.1 %
|
Estimated interest
(income) expense, net
|
|
1.3 %
|
Estimated income tax
expense
|
|
3.3 %
|
Estimated stock-based
compensation expense
|
|
1.8 %
|
Estimated amortization
and impairment of acquired intangible assets
|
|
0.6 %
|
Adjusted income from operations
margin
|
|
17.0 %
|
Reconciliation of
Outlook for Income from Operations Margin to Adjusted Income
from Operations Margin11
|
|
|
|
Year ending December 31, 2024
|
Income from operations margin
|
|
14.4 %
|
Estimated stock-based
compensation expense
|
|
1.8 %
|
Estimated amortization
and impairment of acquired intangible assets
|
|
0.6 %
|
Estimated other income
(expense), net
|
|
0.2 %
|
Adjusted income from operations
margin
|
|
17.0 %
|
Reconciliation of
Outlook for Diluted EPS to Adjusted Diluted EPS11 (Per share
data)
|
|
|
|
Year ending December 31, 2024
|
|
|
Lower
|
|
Upper
|
Diluted EPS
|
|
$
2.56
|
|
$
2.59
|
Estimated stock-based
compensation expense
|
|
0.44
|
|
0.44
|
Estimated amortization
and impairment of acquired intangible assets
|
|
0.14
|
|
0.14
|
Estimated tax impact
on stock-based compensation expense
|
|
(0.10)
|
|
(0.10)
|
Estimated tax impact
on amortization and impairment of acquired intangible
assets
|
|
(0.04)
|
|
(0.04)
|
Adjusted diluted EPS
|
|
$
3.01
|
|
$
3.04
|
________________________________
|
11 Due to rounding, the
numbers presented in this table may not add up precisely to the
totals provided.
|
The following tables show the reconciliation of
forward-looking non-GAAP financial measures to the most directly
comparable GAAP measures for the quarter ending June 30, 2024:
Reconciliation of
Outlook for Net Income Margin to Adjusted Income
from Operations Margin12
|
|
|
|
Quarter ending June 30, 2024
|
Net income margin
|
|
9.6 %
|
Estimated interest
(income) expense, net
|
|
1.4 %
|
Estimated income tax
expense
|
|
3.0 %
|
Estimated stock-based
compensation expense
|
|
1.9 %
|
Estimated amortization
and impairment of acquired intangible assets
|
|
0.6 %
|
Adjusted income from operations
margin
|
|
16.5 %
|
Reconciliation of
Outlook for Income from Operations Margin to Adjusted Income
from Operations Margin12
|
|
|
|
Quarter ending June 30, 2024
|
Income from operations margin
|
|
13.8 %
|
Estimated stock-based
compensation expense
|
|
1.9 %
|
Estimated amortization
and impairment of acquired intangible assets
|
|
0.6 %
|
Estimated other income
(expense), net
|
|
0.2 %
|
Adjusted income from operations
margin
|
|
16.5 %
|
__________________________________
|
12 Due to rounding, the
numbers presented in this table may not add up precisely to the
totals provided.
|
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SOURCE Genpact