Genpact Reports Results for the Second Quarter of 2017

Posted by: at 8/08/2017 10:47:00 pm

Revenues of $671 Million, Up 6
Genpact Reports Results for the Second Quarter of 2017
% (~7% on a constant currency basis)[1]
Global Client BPO Revenues of $511 Million, Up 13% (~15% on a constant currency basis)[2]
Diluted EPS of $0.36, Up 16%; Adjusted Diluted EPS[3] of $0.43, Up 19%
NEW YORK, August 8, 2017 — Genpact Limited (NYSE: G), a global professional services firm focused on delivering digital transformation for clients, has announced financial results for the second quarter ended June 30, 2017.
“We delivered strong results for the second quarter with our strategy and execution working very well. Our top line was driven by 15% constant currency growth in Global Client BPO revenue.  Our transformation services, comprised of consulting, digital and analytics, continued to be the fastest growing area of our business, growing at more than 20% in the quarter,” said N.V. ‘Tiger’ Tyagarajan, Genpact’s president and CEO. “I am excited with the launch of Genpact CoraTM, which we believe is the first unified platform that fully integrates automation, analytics, and AI engines embedded with deep domain and process expertise.  With our highly differentiated end-to-end solutions, we are extremely well positioned to drive profitable growth and shareholder value.”
Key Financial Results – Second Quarter 2017
  • Total revenue was $670.7 million, up 6% year over year (up ~7% on a constant currency basis). 
  • Income from operations was $80.0 million, up 0.1% year over year, with a corresponding margin of 11.9%.  Adjusted income from operations was $110.5 million, up 17.3% year over year, with a corresponding margin of 16.5%.[4]
  • Diluted earnings per share were $0.36, up 16% year over year, and adjusted diluted earnings per share were $0.43, up 19% year over year. Diluted earnings per share includes a $0.01 foreign currency gain resulting from balance sheet re-measurement.
Revenue Details – Second Quarter 2017[5]
  • Revenue from Global Clients was $608 million, up 14% year over year (up ~15% on a constant currency basis), representing approximately 91% of total revenues. If all 2016 GE revenue reclassifications had occurred on January 1, 2016, revenue from Global Clients would have increased 11% year over year (13% on a constant currency basis).
  • Revenue from GE was $63 million, down 34% year over year, representing approximately 9% of total revenues. If all 2016 GE revenue reclassifications had occurred on January 1, 2016, revenue from GE would have decreased 26% year over year.
  • Total BPO revenue was $556 million, up 9% year over year, representing approximately 83% of total revenues. 
  • Global Client BPO revenue was $511 million, up 16% year over year (up ~18% on a constant currency basis). If all 2016 GE revenue reclassifications had occurred on January 1, 2016, BPO revenue from Global Clients would have increased 13% year-over-year (or 15% on a constant currency basis).
  • GE BPO revenue was $45 million, down 36% year over year. If all 2016 GE revenue reclassifications had occurred on January 1, 2016, GE BPO revenue would have decreased 25% year over year.
  • Total IT revenue was $114 million, down 5% year over year, representing approximately 17% of total revenues.
  • Global Client IT revenue was $97 million, up 2% year over year.
  • GE IT revenue was $18 million, down 29% year over year.
Cash Flow from Operations
  • Cash generated from operations was $115.3 million for the six months ended June 30, 2017, compared to $85.9 million for the six months ended June 30, 2016.
2017 Outlook
  • Total revenue for the full year 2017 is now expected to be $2.66 to $2.71 billion (including an assumed adverse foreign exchange impact of $24 million, all of which is reflected in Global Client revenue).  This now represents growth of 3% to 5%, or 4% to 6% on a constant currency basis.
  • Global Client revenue growth is now expected to improve to 7% to 9%, or 8% to 10% on a constant currency basis.
  • Adjusted income from operations margin[6] is expected to be approximately 15.7%.
  • Adjusted diluted EPS[7] is expected to be $1.53 to $1.57.
Conference Call to Discuss Financial Results
Genpact’s management will host an hour-long conference call beginning at 4:30 p.m. ET on August 2, 2017 to discuss the company’s performance for the second quarter of 2017. To participate, callers can dial +1 (877) 654-0173 from within the U.S. or +1 (281) 973-6289 from any other country. Thereafter, callers will be prompted to enter the conference ID, 44449442.
A live webcast of the call will also be made available on the Genpact Investor Relations website at http://investors.genpact.com. For those who cannot participate in the call, a replay will be available 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 firm focused on delivering digital transformation for our clients, putting digital and data to work to create competitive advantage. We do this by integrating lean principles, design thinking, analytics and digital technologies with our domain and industry expertise to deliver disruptive business outcomes – an approach we call Lean DigitalSM. We deliver value to our clients in two ways – through digital-led, domain-enabled solutions that drive innovation, and through intelligent operations enabled by digital that design, transform and run clients’ operations. Our approach is continually refined in one of the world’s largest digital process sandboxes, where we test and improve thousands of processes. For two decades, first as a General Electric division and since 2005 as an independent company, we have been passionately serving our clients. We generate impact for clients from the Fortune Global 500 and beyond, and employ over 77,000 people in more than 20 countries, with key offices in New York City, Palo Alto, London, and Delhi. For additional information, visit www.genpact.com
Safe Harbor
This press release contains certain statements concerning our future growth prospects and 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 a slowdown in the economies and sectors in which our clients operate, a slowdown in the business process outsourcing and information technology services sectors, the risks and uncertainties arising from our past and future acquisitions, our ability to convert bookings to revenues, our ability to manage growth, factors which may impact our cost advantage, wage increases, changes in  tax rates and tax legislation, our ability to attract and retain skilled professionals, risks and uncertainties regarding fluctuations in our earnings, foreign currency fluctuations, general economic conditions affecting our industry 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. 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.

GENPACT LIMITED AND ITS SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
(In thousands, except per share data and share count)


As of December 31,

As of June 30,


2016

2017
Assets







Current assets







Cash and cash equivalents
$
422,623

$
441,064
Accounts receivable, net

615,265


637,613
Prepaid expenses and other current assets

189,149


246,277
Total current assets
$
1,227,037

$
1,324,954
Property, plant and equipment, net

193,218


208,658
Deferred tax assets

70,143


67,568
Investment in equity affiliates

4,800

809
Intangible assets, net

78,946


127,068
Goodwill

1,069,408


1,260,511
Other assets

242,328


249,866
Total assets
$
2,885,880

$
3,239,434
Liabilities and equity







Current liabilities







Short-term borrowings
$
160,000

$
205,000
Current portion of long-term debt

39,181


39,213
Accounts payable

9,768


18,317
Income taxes payable

24,159


51,226
Accrued expenses and other current liabilities

498,247


452,364
Total current liabilities
$
731,355

$
766,120
Long-term debt, less current portion

698,152


1,026,047
Deferred tax liabilities

2,415


6,621
Other liabilities

162,790


177,546
Total liabilities
$
1,594,712

...


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