Genpact’s Q1 2025 Earnings Call: Strong Growth Amid Challenges

Genpact ((G)) has held its Q1 earnings call. Read on for the main highlights of the call.

Genpact’s Q1 2025 earnings call showcased a robust financial performance, with notable growth in revenue and earnings per share (EPS). The sentiment was largely positive, driven by the strength in Data-Tech-AI and partner-related revenues. However, the company acknowledged challenges due to delays in large deals, particularly in the manufacturing and consumer goods sectors, which led to a conservative revision of their full-year guidance. Despite these hurdles, Genpact’s strong pipeline and ongoing client engagement suggest a promising long-term outlook.

Record Revenue and EPS Growth

Genpact reported a record $1.215 billion in total revenues for the first quarter, marking an 8.3% year-over-year increase in constant currency, which exceeded the high-end of their guidance. The company’s adjusted EPS also saw a significant rise, growing 16% year-over-year to $0.84, underscoring the company’s strong financial health.

Strong Performance in Data-Tech-AI

The Data-Tech-AI segment was a standout performer, with revenue increasing by 12% year-over-year in constant currency. Genpact has over 215 Gen AI solutions in production, with revenues from this segment nearly doubling from the previous quarter, highlighting the company’s strategic focus on technology-driven growth.

Improved Operating Metrics

Genpact’s operating metrics showed improvement, with gross margin expanding by 30 basis points to 35.3%, and adjusted operating income margin increasing by 120 basis points to 17.3%. These metrics reflect the company’s efficient operational management and cost control.

Partner-Related Revenue Surge

The company experienced a surge in partner-related revenue, which increased by 80% year-over-year and more than 10% quarter-over-quarter, now representing 10% of total revenues. This growth underscores the successful collaboration with partners and the expansion of Genpact’s market reach.

Strong Pipeline and Client Engagement

Genpact’s pipeline reached an all-time high, with large deals up more than 80% year-over-year. This indicates strong long-term demand and robust client engagement, which are critical for sustained growth.

Delays in Large Deals

Several large deals, particularly in the Digital Operations segment, faced delays due to supply chain and tariff-related uncertainties. These delays are expected to impact the timing of future revenues, posing a challenge to the company’s growth trajectory.

Conservative Guidance Revision

Amid increased uncertainty, Genpact revised its full-year guidance conservatively, lowering expectations for Digital Operations and Data-Tech-AI. Despite strong early-year momentum, the company opted for a cautious approach due to the delayed deals and macroeconomic challenges.

Challenges in Manufacturing and Consumer Goods Segments

The delays in large deals were notably concentrated in the manufacturing, consumer goods, and high-tech hardware sectors. These sectors are particularly sensitive to global trade dynamics, which have contributed to the uncertainty and delays.

Forward-Looking Guidance

Genpact’s forward-looking guidance reflects a cautious stance, with a widened guidance range and lowered total revenue projections due to the delays in closing large deals. However, the company maintained its gross and adjusted operating income margin guidance, emphasizing disciplined cost management and continued investments for growth. The strong pipeline and increased demand for Data-Tech-AI solutions signal a positive long-term outlook.

In summary, Genpact’s Q1 2025 earnings call highlighted a strong financial performance with record revenue and EPS growth, driven by the Data-Tech-AI segment and partner-related revenues. Despite challenges from delayed deals and macroeconomic uncertainties, the company’s robust pipeline and strategic focus on technology-driven solutions suggest a promising future. The overall sentiment was positive, with a cautious yet optimistic outlook for the coming quarters.