2023 Total Revenue of $4.48 billion, Up 2% (3% constant
currency)1,2
2023 Digital Operations
Services Revenue of $2.48 billion, Up
3% (4% constant currency)1
2023
Data-Tech-AI Services Revenue of $1.99
billion, Up 2%1,2,3
2023 Diluted
EPS of $3.41, Up 81%; Adjusted
Diluted EPS4,5 of $2.98,
Up 9%
Increases Quarterly Dividend by
11%
NEW
YORK, Feb. 8, 2024 /PRNewswire/ -- Genpact
Limited (NYSE: G), a global professional services firm focused on
delivering outcomes that transform businesses, today announced
financial results for the fourth quarter and full year ended
December 31, 2023.
"We delivered total annual revenue of $4.5 billion in 2023, up 2% year-over-year. While
the macroeconomic environment remains challenging, we have
identified and begun to implement several key initiatives to
improve execution. Looking ahead, 2024 will be a year of
strengthening our foundation for future growth," said BK
Kalra, President and CEO, Genpact. "As Genpact's new CEO, my
top priority is to sharpen our focus and drive increased
speed and accountability throughout the organization to reach our
full potential."
Key Financial Highlights – Full Year 2023
- Total revenue was $4.48 billion,
up 2% year-over-year (3% on a constant currency
basis).1,2
- Revenue from Data-Tech-AI services was $1.99 billion, up 2% year-over-year, both on an
as reported and constant currency basis,1,2 representing
45% of total revenue.
- Revenue from Digital Operations services was $2.48 billion, up 3% year-over-year (4% on a
constant currency basis),1 representing 55% of total
revenue.
- Net income was $631 million, up
79% year-over-year, including a non-recurring tax benefit of
$170 million related to an
intercompany transfer of intellectual property, with a
corresponding margin of 14.1%.
- Income from operations was $631
million, up 26% year-over-year, with a corresponding margin
of 14.1%.
- Adjusted income from operations was $763
million, up 6% year-over-year, with a corresponding margin
of 17.0%.5,6
- Diluted earnings per share was $3.41, up 81% year-over-year, including a
non-recurring tax benefit of $170
million related to an intercompany transfer of intellectual
property. Adjusted diluted earnings per share4,5 was
$2.98, up 9% year-over-year.
- New bookings were approximately $4.9
billion, up 26% year-over-year.7
- Cash generated from operations was $491
million, up 11% year-over-year.
- Genpact repurchased approximately 6 million of its common
shares during the year for total consideration of approximately
$225 million at an average price per
share of $37.48.
|
|
|
|
|
|
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 Total
revenue and revenue from Data-Tech-AI services for the full year
2023 and full year 2022 include $0.5 million and $12 million of
revenue, respectively, associated with a business classified as
held for sale.
|
3 Both on an
as reported and constant currency basis.
|
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. During the quarter ended
December 31, 2023, we completed an intercompany transfer of certain
intellectual property rights from non-US to US wholly-owned
subsidiaries, which resulted in a non-recurring tax benefit of $170
million. Net income and diluted earnings per share for the quarter
and full year ended December 31, 2023 included this benefit. This
benefit is excluded from adjusted diluted earnings per share for
the quarter and year ended December 31, 2023.
|
5 Income
from operations and diluted earnings per share for the full year
2022 included a $39 million restructuring charge related to lease
impairment charges and employee severance charges, as well as a $33
million impairment charge and a $25 million loss on the sale of a
business previously classified as held for sale. These items were
excluded from adjusted income from operations and adjusted diluted
earnings per share for the full year 2022.
|
6 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. Adjusted income from operations margin for the full year
2022 and full year 2023 was derived by adjusting total revenue to
exclude $12 million and $0.5 million of revenue, respectively,
associated with a business previously classified as held for
sale.
|
7 New
bookings, an operating measure, represents the total contract value
of new contracts and certain renewals, extensions and changes to
existing contracts. Regular renewals of contracts with no
change in scope are not counted as new bookings.
|
Key Financial Highlights – Fourth Quarter 2023
- Total revenue was $1.15 billion,
up 4% year-over-year, both on an as reported and constant currency
basis.1,2
- Revenue from Data-Tech-AI services was $507 million, up 3% year-over-year (2% on a
constant currency basis),1,2 representing 44% of total
revenue.
- Revenue from Digital Operations services was $639 million, up 5% year-over-year (4% on a
constant currency basis),1 representing 56% of total
revenue.
- Net income was $291 million, up
225% year-over-year, including a non-recurring tax benefit of
$170 million related to an
intercompany transfer of intellectual property, with a
corresponding margin of 25.4%.
- Income from operations was $163
million, up 27% year-over-year, with a corresponding margin
of 14.2%.
- Adjusted income from operations was $203
million, up 9% year-over-year, with a corresponding margin
of 17.7%.8,9
- Diluted earnings per share was $1.59, up 231% year-over-year, including a
non-recurring tax benefit of $170
million related to an intercompany transfer of intellectual
property. Adjusted diluted earnings per share4 was
$0.82, up 17% year-over-year.
- Cash generated from operations was $192
million, compared to $230
million in the fourth quarter of 2022.
- Genpact repurchased approximately 2.2 million of its common
shares during the quarter for total consideration of approximately
$75 million at an average price per
share of $34.27.
Capital Allocation
- Genpact's Board of Directors declared a quarterly cash dividend
for the first quarter of 2024 of $0.1525 per common share, an 11% increase,
payable on March 26, 2024 to
shareholders of record as of the close of business on March 11, 2024. The newly approved quarterly
dividend represents a planned annual dividend of $0.61 per common share, increased from
$0.55 per common share in
2023.
Outlook
Genpact's outlook for the full year 2024 is as follows:
- Total revenue in the range of $4.57
billion to $4.61 billion,
representing year-over-year growth of approximately 2% to 3% as
reported, or 2.1% to 3.1% on a constant currency basis.1
- Digital Operations services revenue growth of approximately 3%
year-over-year and Data-Tech-AI services revenue growth of
approximately 1.9% year-over-year at the midpoint of the range, as
reported.
- Digital Operations services revenue growth of approximately
3.1% year-over-year and Data-Tech-AI services revenue growth of
approximately 2.1% year-over-year at the midpoint of the range, on
a constant currency basis.1
- Gross margin of approximately 35%.
- Adjusted income from operations margin10 of
approximately 17%.
- Adjusted diluted EPS11 in the range of $3.00 to $3.03.
|
|
|
|
|
|
8 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.
|
9 Adjusted
income from operations margin for the fourth quarter of 2022 was
derived by adjusting total revenue to exclude $3 million of revenue
associated with a business classified as held for sale.
|
10 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.
|
11 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.
|
Genpact's outlook for the first quarter of 2024 is as
follows:
- Total revenue in the range of $1.108
billion to $1.114 billion,
representing year-over-year growth of approximately 1.75% to 2.25%
as reported, or 1.95% to 2.45% on a constant currency
basis.1
- Digital Operations services revenue growth of approximately
2.8% year-over-year and Data-Tech-AI services revenue growth of
approximately 1.0% year-over-year at the midpoint of the range, as
reported.
- Digital Operations services revenue growth of approximately
3.0% year-over-year and Data-Tech-AI services revenue growth of
approximately 1.3% year-over-year at the midpoint of the range, on
a constant currency basis.1
- Gross margin of approximately 34.5%.
- Adjusted income from operations margin10 of
approximately 16%.
Our outlook for the first quarter and full year
2024 reflects foreign currency exchange rates as of February 7, 2024.
Conference Call to Discuss Financial
Results
Genpact's management will host an hour-long conference call
beginning at 5:00 p.m. ET on
February 8, 2024 to discuss the
company's performance for the fourth quarter and full year ended
December 31, 2023. 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 firm delivering the outcomes that transform our clients'
businesses and shape their future. We're guided by our real-world
experience redesigning and running thousands of processes for
hundreds of global companies. Our clients – including many in the
Global Fortune 500 – partner with us for our unique ability to
combine deep industry and functional expertise, leading talent, and
proven methodologies to drive collaborative innovation that turns
insights into action and delivers outcomes at scale. We create
lasting competitive advantages for our clients and their customers,
running digitally enabled operations and applying our Data-Tech-AI
services to design, build, and transform their businesses. And we
do it all with purpose. From New
York to New Delhi and more
than 30 countries in between, our 125,000+ team is passionate in
its relentless pursuit of a world that works better for people.
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 general economic conditions,
any deterioration in the global economic environment and its impact
on our clients, 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
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 business process
outsourcing or information technology services sectors, our ability
to develop and successfully execute our business strategies, 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, 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
|
|
Roger Sachs,
CFA
|
|
|
+1 (203)
808-6725
|
|
|
roger.sachs@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, 2022
|
|
As of December 31, 2023
|
Assets
|
|
|
|
|
Current assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
646,765
|
|
$
583,670
|
Accounts receivable,
net of allowance for credit losses of $20,442
and $18,278 as of December 31, 2022 and 2023,
respectively
|
|
994,755
|
|
1,116,273
|
Prepaid expenses and
other current assets
|
|
137,972
|
|
191,566
|
Total current assets
|
|
$
1,779,492
|
|
$
1,891,509
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
180,758
|
|
189,803
|
Operating lease
right-of-use assets
|
|
198,366
|
|
186,167
|
Deferred tax
assets
|
|
135,483
|
|
298,921
|
Intangible assets,
net
|
|
89,715
|
|
53,028
|
Goodwill
|
|
1,684,196
|
|
1,683,782
|
Contract cost
assets
|
|
216,670
|
|
202,543
|
Other assets, net of
allowance for credit losses of $3,198 and $4,096 as
of December 31, 2022 and December 31, 2023, respectively
|
|
304,134
|
|
299,960
|
Total assets
|
|
$
4,588,814
|
|
$
4,805,713
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
Current liabilities
|
|
|
|
|
Short-term
borrowings
|
|
$
151,000
|
|
$
10,000
|
Current portion of
long-term debt
|
|
26,136
|
|
432,242
|
Accounts
payable
|
|
35,809
|
|
27,739
|
Income taxes
payable
|
|
45,306
|
|
38,458
|
Accrued expenses and
other current liabilities
|
|
791,007
|
|
759,180
|
Operating leases
liability
|
|
54,063
|
|
50,313
|
Total current liabilities
|
|
$
1,103,321
|
|
$
1,317,932
|
|
|
|
|
|
Long-term debt, less
current portion
|
|
1,249,153
|
|
824,720
|
Operating leases
liability
|
|
190,398
|
|
168,015
|
Deferred tax
liabilities
|
|
4,176
|
|
11,706
|
Other
liabilities
|
|
215,608
|
|
234,948
|
Total liabilities
|
|
$
2,762,656
|
|
$
2,557,321
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
Preferred shares, $0.01
par value, 250,000,000 authorized, none issued
|
|
—
|
|
—
|
Common shares, $0.01
par value, 500,000,000 authorized, 182,924,416
and 179,494,132 issued and outstanding as of December 31, 2022
and
2023, respectively
|
|
1,823
|
|
1,789
|
Additional paid-in
capital
|
|
1,777,453
|
|
1,883,944
|
Retained
earnings
|
|
780,007
|
|
1,085,209
|
Accumulated other
comprehensive income (loss)
|
|
(733,125)
|
|
(722,550)
|
Total equity
|
|
$
1,826,158
|
|
$
2,248,392
|
|
|
|
|
|
Total liabilities and equity
|
|
$
4,588,814
|
|
$
4,805,713
|
GENPACT LIMITED AND
ITS SUBSIDIARIES
|
|
Consolidated
Statements of Income
|
(Unaudited)
|
(In thousands,
except per share data and share count)
|
|
|
|
Three months ended December 31,
|
|
|
2021
|
|
2022
|
|
2023
|
Net revenues
|
|
$
1,072,277
|
|
$
1,102,545
|
|
$
1,146,253
|
Cost of
revenue
|
|
702,656
|
|
717,337
|
|
738,699
|
Gross profit
|
|
$
369,621
|
|
$
385,208
|
|
$
407,554
|
Operating expenses:
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
244,858
|
|
236,557
|
|
237,419
|
Amortization of
acquired intangible assets
|
|
13,824
|
|
9,862
|
|
7,454
|
Other operating
(income) expense, net
|
|
(986)
|
|
11,038
|
|
(51)
|
Income from operations
|
|
$
111,925
|
|
$
127,751
|
|
$
162,732
|
Foreign exchange gains
(losses), net
|
|
1,140
|
|
6,080
|
|
576
|
Interest income
(expense), net
|
|
(13,236)
|
|
(15,513)
|
|
(12,915)
|
Other income (expense),
net
|
|
3,929
|
|
4,799
|
|
8,081
|
Income before income tax
expense
|
|
$
103,758
|
|
$
123,117
|
|
$
158,474
|
Income tax
expense/(benefit)
|
|
30,673
|
|
33,405
|
|
(132,835)
|
Net income
|
|
$
73,085
|
|
$
89,712
|
|
$
291,309
|
Earnings per common
share
|
|
|
|
|
|
|
Basic
|
|
$
0.39
|
|
$
0.49
|
|
$
1.61
|
Diluted
|
|
$
0.38
|
|
$
0.48
|
|
$
1.59
|
Weighted average number
of common shares used in computing
earnings per common share
|
|
|
|
|
|
|
Basic
|
|
187,373,174
|
|
183,371,581
|
|
180,956,638
|
Diluted
|
|
193,191,605
|
|
187,525,698
|
|
183,354,187
|
GENPACT LIMITED AND
ITS SUBSIDIARIES
|
|
Consolidated
Statements of Income
|
(Unaudited)
|
(In thousands,
except per share data and share count)
|
|
|
|
Year ended December 31,
|
|
|
2021
|
|
2022
|
|
2023
|
Net revenues
|
|
$
4,022,211
|
|
$
4,371,172
|
|
$
4,476,888
|
Cost of
revenue
|
|
2,590,252
|
|
2,834,774
|
|
2,906,223
|
Gross profit
|
|
$
1,431,959
|
|
$
1,536,398
|
|
$
1,570,665
|
Operating expenses:
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
865,715
|
|
938,385
|
|
913,061
|
Amortization of
acquired intangible assets
|
|
58,448
|
|
42,667
|
|
31,463
|
Other operating
(income) expense, net
|
|
(1,203)
|
|
53,195
|
|
(4,716)
|
Income from operations
|
|
$
508,999
|
|
$
502,151
|
|
$
630,857
|
Foreign exchange gains
(losses), net
|
|
12,669
|
|
15,392
|
|
4,274
|
Interest income
(expense), net
|
|
(51,434)
|
|
(52,204)
|
|
(47,935)
|
Other income (expense),
net
|
|
12,895
|
|
(103)
|
|
15,028
|
Income before income tax
expense
|
|
$
483,129
|
|
$
465,236
|
|
$
602,224
|
Income tax
expense/(benefit)
|
|
113,681
|
|
111,832
|
|
(29,031)
|
Net income
|
|
$
369,448
|
|
$
353,404
|
|
$
631,255
|
Earnings per common
share
|
|
|
|
|
|
|
Basic
|
|
$
1.97
|
|
$
1.92
|
|
$
3.46
|
Diluted
|
|
$
1.91
|
|
$
1.88
|
|
$
3.41
|
Weighted average number
of common shares used in computing
earnings per common share
|
|
|
|
|
|
|
Basic
|
|
187,802,219
|
|
184,184,930
|
|
182,345,548
|
Diluted
|
|
192,961,841
|
|
188,087,240
|
|
185,141,843
|
GENPACT LIMITED AND
ITS SUBSIDIARIES
|
|
Consolidated
Statements of Cash Flows
|
(Unaudited)
|
(In
thousands)
|
|
|
|
Year ended December 31,
|
|
|
2021
|
|
2022
|
|
2023
|
Operating activities
|
|
|
|
|
|
|
Net income
|
|
$
369,448
|
|
$
353,404
|
|
$
631,255
|
Adjustments to reconcile net income to net cash
provided by operating activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
109,124
|
|
86,849
|
|
72,530
|
Amortization of debt
issuance costs (including loss on extinguishment of
debt)
|
|
2,678
|
|
2,376
|
|
1,967
|
Amortization of
acquired intangible assets
|
|
58,448
|
|
42,667
|
|
31,463
|
Write-down of
intangible assets and property, plant and equipment
|
|
915
|
|
1,377
|
|
—
|
Impairment charge on
assets classified as held for sale
|
|
—
|
|
32,575
|
|
—
|
Loss on sale of
business classified as held for sale
|
|
—
|
|
—
|
|
802
|
Write-down of operating
lease right-of-use assets and other assets
|
|
—
|
|
20,307
|
|
—
|
Allowance for credit
losses
|
|
1,487
|
|
1,583
|
|
3,979
|
Unrealized loss/(gain)
on revaluation of foreign currency asset/liability
|
|
(8,304)
|
|
525
|
|
(1,061)
|
Stock-based
compensation expense
|
|
81,968
|
|
77,373
|
|
88,576
|
Deferred tax
benefit
|
|
(9,263)
|
|
(29,151)
|
|
(157,932)
|
Others, net
|
|
623
|
|
863
|
|
1,477
|
Change in operating assets and
liabilities:
|
|
|
|
|
|
|
(Increase) in accounts
receivable
|
|
(11,803)
|
|
(112,341)
|
|
(130,791)
|
(Increase) decrease in
prepaid expenses, other current assets, contract cost assets,
operating lease right-of-use
assets and other assets
|
|
83,432
|
|
3,822
|
|
(39,075)
|
Increase (decrease) in
accounts payable
|
|
11,740
|
|
14,185
|
|
(8,215)
|
Increase (decrease) in
accrued expenses, other current liabilities, operating lease
liabilities and other liability
|
|
(2,057)
|
|
(54,329)
|
|
1,862
|
Increase (decrease) in
income taxes payable
|
|
5,845
|
|
1,585
|
|
(6,025)
|
Net cash provided by operating
activities
|
|
$
694,281
|
|
$
443,670
|
|
$
490,812
|
Investing activities
|
|
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
(53,341)
|
|
(50,614)
|
|
(55,421)
|
Payment for internally
generated intangible assets (including intangibles under
development)
|
|
(3,907)
|
|
(3,775)
|
|
(3,356)
|
Proceeds from sale of
property, plant and equipment and intangible assets
|
|
6,384
|
|
60
|
|
25
|
Payment for business
acquisitions, net of cash acquired
|
|
(72,025)
|
|
(33)
|
|
(682)
|
Proceeds from /
(payment) for divestiture of business
|
|
—
|
|
17,769
|
|
(19,510)
|
Proceeds from sale of
investment
|
|
142
|
|
—
|
|
—
|
Net cash used for investing
activities
|
|
$
(122,747)
|
|
$
(36,593)
|
|
$
(78,944)
|
Financing activities
|
|
|
|
|
|
|
Repayment of finance
lease obligations
|
|
(13,926)
|
|
(12,810)
|
|
(12,165)
|
Payment of debt
issuance costs
|
|
(3,029)
|
|
(3,045)
|
|
—
|
Proceeds from long-term
debt
|
|
350,000
|
|
239,130
|
|
—
|
Repayment of long-term
debt
|
|
(34,002)
|
|
(620,130)
|
|
(19,875)
|
Proceeds from
short-term borrowings
|
|
—
|
|
261,000
|
|
148,000
|
Repayment of short-term
borrowings
|
|
(250,000)
|
|
(110,000)
|
|
(289,000)
|
Proceeds from issuance
of common shares under stock-based compensation plans
|
|
35,051
|
|
27,751
|
|
39,485
|
Payment for net
settlement of stock-based awards
|
|
(35,717)
|
|
(44,942)
|
|
(21,529)
|
Payment of earn-out
consideration
|
|
(2,556)
|
|
(2,437)
|
|
(2,399)
|
Dividend
paid
|
|
(80,479)
|
|
(91,837)
|
|
(100,014)
|
Payment for stock
repurchased and retired (including expenses related to stock
repurchase)
|
|
(298,219)
|
|
(214,082)
|
|
(225,499)
|
Others
|
|
(6)
|
|
—
|
|
—
|
Net cash used for financing
activities
|
|
$
(332,883)
|
|
$
(571,402)
|
|
$
(482,996)
|
Effect of exchange rate
changes
|
|
(19,633)
|
|
(88,368)
|
|
8,033
|
Net increase (decrease)
in cash and cash equivalents
|
|
238,651
|
|
(164,325)
|
|
(71,128)
|
Cash and cash
equivalents at the beginning of the period
|
|
680,440
|
|
899,458
|
|
646,765
|
Cash and cash equivalents at the end of the
period
|
|
$
899,458
|
|
$
646,765
|
|
$
583,670
|
Supplementary information
|
|
|
|
|
|
|
Cash paid during the
period for interest (including interest rate swaps)
|
|
$
46,348
|
|
$
51,147
|
|
$
47,989
|
Cash paid during the
period for income taxes, net of refunds
|
|
$
31,761
|
|
$
145,979
|
|
$
156,733
|
Property, plant and
equipment acquired under finance lease obligations
|
|
$
286
|
|
$
7,078
|
|
$
2,459
|
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 (a) initiated restructuring measures and, as a result,
recorded a charge related to i) right-of-use lease assets and other
assets related to certain abandoned leased office properties and
ii) employee severance costs resulting from a focused reduction in
Genpact's workforce and (b) 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. During the second
quarter of 2023, the Company terminated a lease for office property
which was fully impaired as part of a restructuring in the second
quarter of 2022, as discussed above, and recorded a gain on such
lease termination as restructuring income in the second quarter of
2023. During the fourth quarter of 2023, Genpact completed an
intercompany transfer of certain intellectual property rights from
non-US to US wholly-owned subsidiaries, which resulted in a
non-recurring tax benefit of $170
million. Genpact's management believes that excluding these
restructuring charges, the loss on the sale of the business
previously classified as held for sale, the revenues and expenses
associated with such business, the gain on the lease termination
and the non-recurring tax benefit on the transfer of intellectual
property rights 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, and acquisition-related expenses along with the
related tax impact of other adjustments and excludes the
non-recurring tax benefit on the transfer of intellectual property
rights 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 and years
ended December 31, 2022 and
2023:
Reconciliation of
Net Income/Margin to Adjusted Income from
Operations/Margin
|
(In
thousands)
|
|
|
|
Three months ended
December 31,
|
|
Year ended December 31,
|
|
|
2022
|
|
2023
|
|
2022
|
|
2023
|
Net income
|
|
$
89,712
|
|
$ 291,309
|
|
$ 353,404
|
|
$ 631,255
|
Foreign exchange
(gains) losses, net
|
|
(6,080)
|
|
(576)
|
|
(15,392)
|
|
(4,274)
|
Interest (income)
expense, net
|
|
15,513
|
|
12,915
|
|
52,204
|
|
47,935
|
Income tax
expense
|
|
33,405
|
|
(132,835)
|
|
111,832
|
|
(29,031)
|
Stock-based
compensation expense
|
|
22,479
|
|
24,726
|
|
77,373
|
|
88,576
|
Amortization and
impairment of acquired intangible assets
|
|
9,857
|
|
7,453
|
|
42,566
|
|
31,348
|
Restructuring (income)
expense
|
|
—
|
|
—
|
|
38,815
|
|
(4,874)
|
Operating loss from
the business classified as held for sale
|
|
10,551
|
|
—
|
|
24,842
|
|
1,201
|
Impairment charge on
assets classified as held for sale
|
|
11,149
|
|
—
|
|
32,575
|
|
—
|
Loss on the sale of
business classified as held for sale
|
|
—
|
|
—
|
|
—
|
|
802
|
Adjusted income from operations
|
|
$
186,586
|
|
$
202,992
|
|
$ 718,219
|
|
$
762,938
|
Net income
margin
|
|
8.1 %
|
|
25.4 %
|
|
8.1 %
|
|
14.1 %
|
Adjusted income from operations
margin
|
|
17.0 %
|
|
17.7 %
|
|
16.5 %
|
|
17.0 %
|
Reconciliation of
Income from Operations/Margin to Adjusted Income from
Operations/Margin
|
(In
thousands)
|
|
|
|
Three months ended
December 31,
|
|
Year ended December 31,
|
|
|
2022
|
|
2023
|
|
2022
|
|
2023
|
Income from
operations
|
|
$
127,751
|
|
$ 162,732
|
|
$
502,151
|
|
$ 630,857
|
Stock-based
compensation expense
|
|
22,479
|
|
24,726
|
|
77,373
|
|
88,576
|
Amortization and
impairment of acquired intangible assets
|
|
9,857
|
|
7,453
|
|
42,566
|
|
31,348
|
Other income
(expense), net
|
|
4,799
|
|
8,081
|
|
(103)
|
|
15,028
|
Restructuring (income)
expense
|
|
—
|
|
—
|
|
38,815
|
|
(4,874)
|
Operating loss from
the business classified as held for sale
|
|
10,551
|
|
—
|
|
24,842
|
|
1,201
|
Impairment charge on
assets classified as held for sale
|
|
11,149
|
|
—
|
|
32,575
|
|
—
|
Loss on the sale of
business classified as held for sale
|
|
—
|
|
—
|
|
—
|
|
802
|
Adjusted income from operations
|
|
$
186,586
|
|
$
202,992
|
|
$
718,219
|
|
$
762,938
|
Income from operations
margin
|
|
11.6 %
|
|
14.2 %
|
|
11.5 %
|
|
14.1 %
|
Adjusted income from operations
margin
|
|
17.0 %
|
|
17.7 %
|
|
16.5 %
|
|
17.0 %
|
Reconciliation of
Diluted EPS to Adjusted Diluted EPS12
|
(Per share
data)
|
|
|
|
Three months ended
December 31,
|
|
Year ended December 31,
|
|
|
2022
|
|
2023
|
|
2022
|
|
2023
|
Diluted EPS
|
|
$
0.48
|
|
$
1.59
|
|
$
1.88
|
|
$
3.41
|
Stock-based
compensation expense
|
|
0.12
|
|
0.13
|
|
0.41
|
|
0.48
|
Amortization and
impairment of acquired intangible assets
|
|
0.05
|
|
0.04
|
|
0.23
|
|
0.17
|
Restructuring (income)
expense
|
|
—
|
|
—
|
|
0.21
|
|
(0.03)
|
Operating loss from
the business classified as held for sale
|
|
0.06
|
|
—
|
|
0.13
|
|
0.01
|
Impairment charge on
assets classified as held for sale
|
|
0.06
|
|
—
|
|
0.17
|
|
—
|
Loss on the sale of
business classified as held for sale
|
|
—
|
|
—
|
|
—
|
|
0.00
|
Tax impact on
stock-based compensation expense
|
|
(0.04)
|
|
(0.01)
|
|
(0.12)
|
|
(0.10)
|
Tax impact on
amortization and impairment of acquired intangible
assets
|
|
(0.01)
|
|
(0.01)
|
|
(0.06)
|
|
(0.04)
|
Tax impact on
restructuring (income) expense
|
|
—
|
|
—
|
|
(0.05)
|
|
0.01
|
Tax impact on
operating loss from the business classified as held for
sale
|
|
(0.01)
|
|
—
|
|
(0.03)
|
|
(0.00)
|
Tax impact on
impairment charge on assets classified as held for sale
|
|
(0.01)
|
|
—
|
|
(0.03)
|
|
(0.00)
|
Tax benefit on
intercompany transfer of intellectual property rights
|
|
—
|
|
(0.93)
|
|
—
|
|
(0.92)
|
Adjusted diluted EPS
|
|
$
0.70
|
|
$
0.82
|
|
$
2.74
|
|
$
2.98
|
|
|
|
|
|
|
12 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
Margin13
|
|
|
|
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
Margin13
|
|
|
|
Year ending December 31, 2024
|
Income from operations margin
|
|
14.6 %
|
Estimated stock-based
compensation expense
|
|
1.8 %
|
Estimated amortization
and impairment of acquired intangible assets
|
|
0.6 %
|
Estimated other income
(expense), net
|
|
0.1 %
|
Adjusted income from operations
margin
|
|
17.0 %
|
Reconciliation of
Outlook for Diluted EPS to Adjusted Diluted
EPS13
|
(Per share
data)
|
|
|
|
Year ending December 31, 2024
|
|
|
Lower
|
|
Upper
|
Diluted EPS
|
|
$
2.55
|
|
$
2.58
|
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
|
|
$
3.00
|
|
$
3.03
|
|
|
|
|
|
|
13 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 March 31, 2024:
Reconciliation of
Outlook for Net Income Margin to Adjusted Income from Operations
Margin14
|
|
|
|
Quarter ending March 31, 2024
|
Net income margin
|
|
10.0 %
|
Estimated interest
(income) expense, net
|
|
1.2 %
|
Estimated income tax
expense
|
|
2.9 %
|
Estimated stock-based
compensation expense
|
|
1.2 %
|
Estimated amortization
and impairment of acquired intangible assets
|
|
0.6 %
|
Adjusted income from operations
margin
|
|
16.0 %
|
Reconciliation of
Outlook for Income from Operations Margin to Adjusted Income
from
|
Operations
Margin14
|
|
|
|
Quarter ending March 31, 2024
|
Income from operations margin
|
|
14.1 %
|
Estimated stock-based
compensation expense
|
|
1.2 %
|
Estimated amortization
and impairment of acquired intangible assets
|
|
0.6 %
|
Estimated other income
(expense), net
|
|
0.0 %
|
Adjusted income from operations
margin
|
|
16.0 %
|
|
|
|
|
|
|
14 Due
to rounding, the numbers presented in this table may not add up
precisely to the totals provided.
|
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SOURCE Genpact