Genpact ((G)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Genpact’s earnings call for Q4 2024 painted a predominantly positive picture, with strong revenue growth, substantial new bookings, and successful AI initiatives taking center stage. The overall tone of the call was one of optimism, bolstered by operational efficiencies and innovative advancements. While there were some challenges noted in segment performance and visibility into non-annuitized business, these were overshadowed by the company’s robust performance and forward momentum.
Strong Revenue Growth
Q4 revenue for Genpact reached $1.25 billion, marking a 9% increase year over year. For the full year, revenue grew by 6.5%, surpassing initial guidance by 400 basis points. This robust growth underscores the company’s ability to effectively capture market opportunities and drive top-line performance.
Datatech AI Performance
Genpact’s Datatech AI segment reported a 12% increase in revenue year over year in Q4, continuing its growth trajectory for four consecutive quarters. This reflects the growing demand for AI-driven solutions and the company’s strength in this domain.
Operational Efficiency and Profitability
The company achieved a 10 basis point expansion in gross margin during Q4, with an adjusted operating income margin of 17.7%. For the full year, operating cash flow saw a significant increase of 25%, highlighting Genpact’s operational efficiency and focus on profitability.
Significant New Bookings
In 2024, Genpact secured $5.7 billion in new bookings, marking a 15% increase year over year. This impressive growth in new business indicates strong market demand and the company’s ability to attract sizable contracts.
Launch of AI Initiatives
Genpact introduced several AI initiatives, including Gen AI solutions, the AI Value Studio, and the GigaFactory, aimed at enhancing AI-driven transformation. These initiatives highlight the company’s commitment to leveraging cutting-edge technology to drive business outcomes.
Mixed Performance Across Segments
While the Consumer and Healthcare segments reported an 11% revenue increase, other areas such as High-Tech and Manufacturing, and Financial Services showed slower growth rates of 9% and 6% respectively in Q4. This mixed performance suggests varying levels of market dynamics and challenges across different sectors.
Challenges with Annuitized Business
Genpact highlighted challenges with its annuitized business model, where 25% of business revenue relies on converting pipeline opportunities into bookings each quarter. This presents challenges in visibility and predictability, necessitating strategic focus to manage these aspects effectively.
Forward-Looking Guidance
Looking ahead to 2025, Genpact provided a detailed guidance, projecting full-year revenue growth between 5.5% and 7.7%, with a midpoint of 6.5% on an as-reported basis. In constant currency terms, growth is expected to be around 7.2% at the midpoint. The company anticipates gross and adjusted operating income margins to expand over 2024 levels, with adjusted diluted EPS expected to grow by 9% at the midpoint. For Q1 2025, net revenue growth is forecasted between 6.2% and 7.2% on an as-reported basis.
In summary, Genpact’s Q4 2024 earnings call conveyed a strong sense of positive momentum, driven by significant revenue growth, strategic AI initiatives, and effective operational management. While certain segments face challenges, the company’s forward-looking guidance and commitment to innovation paint an encouraging picture for future growth and profitability.
