Genpact Ltd (G) Reports Modest Revenue Growth and Strong Earnings Per Share in Q3 2023
Total revenue increased by 2% year-over-year to $1.14 billion in Q3 2023.
Diluted EPS rose by 25% to $0.64, while adjusted diluted EPS saw a 1% increase to $0.76.
Genpact revises full-year outlook, expecting total revenue of approximately $4.45 billion.
Leadership transition announced with "Tiger" Tyagarajan to retire and Balkrishan "BK" Kalra named as successor.
On November 8, 2023, Genpact Ltd (NYSE:G), a global professional services firm, reported its financial results for the third quarter ended September 30, 2023. The company experienced a 2% increase in total revenue, reaching $1.14 billion, with Digital Operations services revenue growing by 6% to $636 million. However, Data-Tech-AI services revenue declined by 2% to $500 million. Despite the mixed performance in revenue streams, Genpact achieved a significant 25% increase in diluted earnings per share (EPS) to $0.64 and a modest 1% rise in adjusted diluted EPS to $0.76.
Financial Performance Overview
Genpact's net income for the quarter was $118 million, marking a 23% improvement from the previous year, and income from operations increased by 27% to $166 million. The adjusted income from operations was $195 million, up by 3% year-over-year, with a margin of 17.2%. The company's cash flow from operations decreased to $162 million compared to $226 million in the third quarter of 2022.
Revised Full-Year 2023 Outlook
Looking ahead, Genpact has adjusted its full-year 2023 revenue forecast to approximately $4.45 billion, a 2% year-over-year increase, or 2.5% on a constant currency basis. This is a downward revision from the previous outlook of $4.59 billion to $4.64 billion. The company now anticipates an adjusted income from operations margin of approximately 17.0%, slightly up from the prior expectation of 16.8%. Adjusted diluted EPS is projected to be $2.89, compared to the prior range of $2.91 to $2.94.
CEO Succession and Conference Call
Alongside the earnings report, Genpact announced a CEO succession plan. "Tiger" Tyagarajan will retire, and Balkrishan "BK" Kalra will take over as President and CEO effective February 9, 2024. The company will hold a conference call to discuss the quarterly results and provide further details on the leadership transition.
Balance Sheet and Cash Flow Highlights
As of September 30, 2023, Genpact reported cash and cash equivalents of $541 million, a decrease from $646 million at the end of 2022. The company's total assets slightly increased to $4.59 billion. The balance sheet also reflects a total equity of $2.01 billion, up from $1.83 billion at the end of the previous year.
The company's cash flow statements reveal a net cash provided by operating activities of $298.9 million for the nine months ended September 30, 2023, compared to $214 million in the same period last year. However, cash used for investing activities increased to $60 million, and cash used for financing activities was $338.3 million, indicating significant repayments and stock repurchases.
Conclusion
Genpact's third-quarter results show resilience in its Digital Operations services, even as it faces challenges in its Data-Tech-AI segment. The company's ability to maintain profitability and revise its full-year outlook reflects a cautious yet optimistic approach to navigating the current economic landscape. The announced CEO transition marks a new chapter for Genpact, with a focus on continuity and strategic growth.
For detailed financial tables and further information on Genpact's third-quarter performance, please visit Genpact Investor Relations.
Explore the complete 8-K earnings release (here) from Genpact Ltd for further details.
This article first appeared on GuruFocus.
