Good day, ladies and gentlemen. Welcome to the 2025 Second Quarter Genpact Limited Earnings Conference Call. My name is Lisa, and I will be your conference moderator for today. As a reminder, this call is being recorded for replay purposes. The replay of the call will be archived and made available on the IR section of Genpact's website. I would now like to turn the call over to Krista Bessinger, Head of Investor Relations at Genpact. Please proceed.

Thank you, Lisa. Good afternoon, everyone, and welcome to Genpact's Q2 2025 Earnings Conference Call. We hope you've had a chance to read our earnings press release, which was posted on the Investor Relations section of our website. Today, we have with us BK Kalra, President and CEO; and Mike Weiner, Chief Financial Officer. BK will start with a high-level overview of the quarter, and then Mike will cover our financial performance in greater detail before we take your questions. Please note that during this call, we will make forward-looking statements, including statements about our business outlook, strategies and long-term goals. These comments are based on our plans, predictions and expectations as of today, which may change over time. Actual results could differ materially due to a number of important risks and uncertainties. Also during this call, we will discuss certain non-GAAP financial measures. We have reconciled those to the most directly comparable GAAP financial measures in our earnings press release. These non-GAAP measures are not intended to be a substitute for our GAAP results. And finally, this call in its entirety is being webcast from our Investor Relations website, and a replay and transcript will be available on our website in a few hours. And with that, I'd like to turn it over to BK.

Thank you, Krista. Hello, everyone, and thank you for joining us today. Q2 was another strong quarter for Genpact with revenue reaching $1.25 billion, up 7% year-over-year, reflecting broad-based outperformance across the business. Gross and adjusted operating income margins were also strong, up 50 and 40 basis points year-over-year, respectively, as we continue to deliver margin expansion while also making significant investments for long-term growth. Importantly, adjusted EPS continues to grow faster than revenue, up 11% year-over-year, including reaching $0.88 above the high end of our guidance range. At our Investor Day in June, we introduced GenpactNext, our strategy designed to establish Genpact as a global leader in Advanced Technology Solutions, building on the strength of our Core Business Services, to accelerate revenue growth and expand margins. The GenpactNext growth model has three key elements, which we call the 3Cs. They are, number one, our capabilities; number two, our clients; and three, our catalysts. We are seeing strong early momentum across each. Let me walk you through the key highlights. First, on capabilities. We have two sets of distinct but interconnected offerings, Advanced Technology Solutions and Core Business Services. These offerings amplify each of them. Why? Because, as you have heard me say before, there is no artificial intelligence without process intelligence. We are capitalizing on this opportunity by integrating advanced technologies into what Genpact has always been known for, exceptional process, industry domain and last-mile expertise. This quarter, Advanced Technology Solutions revenue, which includes data and AI, digital technologies, advisory and agentic solutions, continues to accelerate, up 17% year-over-year, driven by strength in data and AI, as we help clients rapidly deploy AI systems into production. Our data and AI pipeline has tripled over the last year, and we are innovating rapidly. The AI Gigafactory is now live across all Genpact verticals with more than 45 clients onboarded year-to-date and more than 100 experienced data and AI leaders joining us to help our clients rapidly scale AI. We now have more than 270 gen AI solutions in production environments with clients, either deployed or going live, up more than threefold year-over-year. Our agentic solutions are also gaining traction. All four modules of our agentic AP suite are now generally available, and we are delivering measurable results with more accurate data capture, greater touchless processing, and significant productivity benefits for clients and for Genpact. The AP suite is just one example of how our Advanced Technology Solutions are creating more value for clients and generating high-value revenue for Genpact. Our Advanced Technology Solutions delivered more than twice the revenue per headcount compared to the company average and are growing at more than twice the rate of Genpact's overall revenue. Approximately 70% of Advanced Technology Solutions revenue is annuitized, and approximately 70% comes from non-FTE commercial terms, making it high quality, sticky, and strategically aligned with our future direction. While we are sharing AI-driven productivity gains with clients, incremental revenue is coming from expanded scope, increased volumes, and entirely new logos, driving net revenue growth. Second, on clients. We are very proud of our enterprise and mid-market clients, many of whom shared firsthand at Investor Day how our Advanced Technology Solutions are driving meaningful value. Today, I want to share two additional stories with you that demonstrate how we are leveraging Advanced Technology Solutions across both the enterprise and mid-market to build intelligent, agile operations for our clients. The first is a leading global health care solutions company, serving patients and providers for more than 125 years. As a strategic partner, Genpact has modernized the company's new product introduction and installed base functions to excel in the rapidly changing environment. We are now integrating gen AI and agentic AI into the company's product lifecycle and reducing time spent on routine engineering work through gen AI-based documentation and leveraging agentic AI frameworks to proactively track and manage compliance across our rapidly evolving regulatory landscape. Our AI-powered solutions and industry domain expertise are enabling a more agile and innovative approach to launching new products and managing them in the aftermarket, resulting in faster time to market, enhanced compliance, and sustained product quality around the world. The second example is a large property and casualty insurance broker in North America. We are partnering with this firm to modernize its operations using AI and other advanced technologies. Our partnership will transform their policy lifecycle operation, leveraging intelligent automation, agentic processes, and scalable operating models to drive greater efficiency, scalability, and enhanced experience for their retail partners and carriers. This work speaks to the strength of our leadership in the insurance sector and our focus on empowering high-growth mid-market clients with scalable, repeatable AI solutions. Finally, on catalysts, we are further accelerating growth through investments in partnerships and AI-focused talent. Partnerships represent a significant growth opportunity for Genpact. Partner-related revenues grew more than 70% year-over-year in Q2, representing 10% of total revenue. We have achieved top-tier partnership status with AWS, Salesforce, and ServiceNow. Our joint solution portfolio is also expanding, further differentiating Genpact and accelerating pipeline growth. Today, we offer joint solutions for financial clients with AWS Bedrock, Order Management with Salesforce, Sourcing and Procurement with ServiceNow, just to name a few. To further advance our capabilities, we are also collaborating with start-ups like Instabase for intelligent document processing, Zenoti for responsible AI adoption, and so on. We continue to make significant investments in AI talent, accelerating our pivot to Advanced Technology Solutions with a focus on AI builders, experts who build AI solutions, and AI practitioners, domain experts who use AI in the flow of work for client processes. Now turning to guidance. With better-than-expected results in Q2, we are raising our full year outlook for revenue, adjusted operating income margin, and EPS. Our expected revenue range is now 4% to 6% on an as-reported basis, up from 2% to 5% previously. We expect adjusted operating income margin of 17.4%, up from 17.3% previously, and we are raising our outlook for adjusted diluted EPS by $0.08 to $3.54 at the midpoint of the range. In closing, we are incredibly excited about the future as we reshape Genpact to be an AI-first company. Momentum is building as we leverage Advanced Technology Solutions to strengthen our last-mile advantage and position Genpact as a clear partner of choice for AI-driven transformation. With that, let me turn the call over to Mike.

Good afternoon, everyone, and thank you for joining us. Results for the second quarter exceeded our expectations with broad-based strength across our businesses. Total revenue grew to $1.254 billion, up 7% from the prior year, driven by organic growth. Data-Tech-AI represented 48% of total revenue or $599 million and grew at 10% from the prior year, driven by continued strength in data and AI. Digital operations revenue of $655 million was up 4% year-over-year, driven by strong execution in deal ramps. Digital operations accounted for 52% of total revenue. At Investor Day, we introduced two additional revenue metrics to track our progress against our GenpactNext strategy, Advanced Technology Solutions and Core Business Services. Advanced Technology Solutions revenue of $293 million was up 17% year-over-year, reflecting strength in data and AI. Core Business Services revenue of approximately $962 million was up 4%, primarily driven by digital operations. This quarter, Advanced Technology Solutions represented 23% of total revenue. We closed four large deals in the second quarter, including one that was pushed out from the first quarter. All the remaining large deals that were pushed out remain active. As a reminder, large deals are $50 million or greater in total contract value. We also continue to expand our footprint, both in enterprise and mid-market clients. Our pipeline remains strong and balanced across various deal sizes with both Advanced Technology Solutions pipeline up nearly 1.5x year-over-year. Revenue grew across all segments, led by High Tech and Manufacturing at 13%, followed by Financial Services at 6%, and Consumer and Healthcare at 1%. Non-FTE revenue, which now includes outcome, consumption, and fixed fee deals, accounted for 46% of second quarter revenue, in line with the period a year ago. Turning to profitability. We expanded gross margin by 50 basis points year-over-year, reaching 35.9%, driven by operating leverage. SG&A expenses were 21.2% of revenue. Adjusted operating income was $217 million, and adjusted operating income margin expanded 40 basis points to 17.3%. Our effective tax rate for the second quarter was 24.9%, in line with the prior year. Net income for the quarter was $133 million, and diluted EPS was $0.75. Adjusted diluted EPS was $0.88, up 11.4% year-over-year. Operating cash flow was $177 million, down from $209 million in the prior year. Additionally, DSOs were 91 days. We ended the second quarter with $663 million in cash and cash equivalents, down from $914 million a year ago. We've returned $60 million to shareholders in the second quarter through $30 million in share repurchases and $30 million in dividends. Turning to guidance. With our strong second-quarter performance, we are increasing our guidance range. For the full year, on an as-reported basis, we now expect to deliver net revenue in the range of $4.958 billion to $5.053 billion or 4% to 6% growth. At the midpoint 5%, Data-Tech-AI and digital operations revenue is expected to be approximately 7.4% to 2.9%, respectively. Given that estimated range, our adjusted diluted EPS is now expected to be between $3.51 and $3.58, representing 8.1% growth year-over-year at the midpoint. To provide additional details on reaching our 5% midpoint of our full year revenue guide, we need to deliver $238 million of growth for the full year, of which roughly 70% has been delivered in the first half. That leaves 30% or $76 million to be delivered in the second half. Moving on. Our expectations for full year gross margin remain at 36%, a 50 basis point increase year-over-year. Expectations for adjusted operating income margin are now 17.4%, a 30 basis point increase from the prior year. Operating cash flow is expected to be approximately $610 million. On capital allocation, we continue to return at least 50% of cash flow to investors through a combination of share repurchases and dividends while maintaining flexibility for strategic investments. As a reminder, the XponentL acquisition, which closed in June, is now included in our guidance and is not expected to have a material impact on 2025 results. Turning to the third quarter. On an as-reported basis, we expect to deliver net revenue between $1.258 billion and $1.27 billion or 3.9% to 4.9% growth, representing 4.4% at the midpoint. This translates into Data-Tech-AI and Digital Operations revenue of approximately 6.7% and 2.3%, respectively. We are now anticipating a margin of 36% and adjusted operating income margin of 17.5%. We expect diluted EPS of $0.89 to $0.90 for the third quarter. More details on constant currency growth rates can be found in our earnings press release and fact sheet posted to our Investor Relations website. In closing, we're excited about the future. We remain committed to growing adjusted diluted EPS faster than revenue, expanding margins while self-funding investments for growth and maintaining a strong track record of returning cash to shareholders. With that said, I'll turn the call over to Krista now.

Great. Thank you, Mike. Operator, we're ready to go ahead and take questions. Thank you.

The first question that I have today is coming from the line of Bryan Bergin of TD Cowen.

I guess the first one I have is just as it relates to pace and conversion of new bookings. You had noted a deal was signed ahead of the Investor Day. Just any further traction you've seen there as far as pipeline conversion goes and whether any prior tariff-related delays are showing?

Maybe I'll start. Mike, feel free to add. Thanks, Bryan. Look, overall, inflow and conversion and pipeline continue to be in a very healthy state. We're really pleased with the execution and innovation and investments that we are doing to fuel innovation. Specifically on the deals that we spoke about in Q1, as Mike said in his prepared remarks, we already closed one of them, and we closed many of the large deals in the second quarter. Both the large deals and the overall pipeline continue to be in a pretty healthy state. Mike?

The only thing I'd like to add is that we closed one of those deals in the first quarter, as BK talked about, and we had three other large deals in a different cohort that weren't delayed that closed in the second quarter. We're still in active dialogue with those deals, and we expect them to come to fruition within the year.

Okay. Good. Second question on gen AI, just anything the latest you can share about that net impact of gen AI from traditional contracting on your base business? And have you got any incremental details on the range of outcomes that you may have across engagements?

Yes. I think as you may have noticed during our Investor Day, we shared a detailed illustration of how a lot of this gen AI and agentic implementations are shaping our franchise. It pretty much stays in the similar range, and it was the demonstration of how AI is a clear tailwind. We continue to see that progress reasonably well. If I look at the pipeline, whether it's from a data and AI standpoint or gen AI standpoint, the pipeline continues to be at a very healthy stage, and we're thrilled with how we are shaping the curve of the business, especially with our investments in this innovation.

Yes, if I can just tap onto that. When we think about it, we laid out, we gave an illustrative example that BK alluded to earlier that we had in our Investor Day. The way to think about it is that we are sharing the AI productivity gains with our clients, which is expected. But we are seeing incremental revenue coming from various sources, including expanded scope, increased volumes or both, as well as new logos, that on top of our ability to enhance our margins makes it very accretive for Genpact, both top and bottom line.

And the next question is coming from the line of Surinder Thind of Jefferies.

BK, can you maybe just talk about a bit more about the Advanced Technology Solutions, the pipeline there, maybe how quickly that converts and just kind of the length of the projects that we have a better understanding of that segment reporting, given it's one of the new pieces of data that you're providing?

Yes. Thanks, Surinder. Look, overall, it's our revenue desegregation, just specifically on Advanced Technology Solutions. As I mentioned, the pipeline is actually growing at a much healthier pace overall across various components of Advanced Technology Solutions. Conversion is tad faster. It is greater than twice our revenue by headcount and is growing certainly north of twice the overall company average. On your specific question on the length of the contract, approximately 70% of all of Advanced Technology Solutions is annuitized and also non-FTE.

Got it. That's helpful. And then just kind of following up when I think about the growth rates from a segment perspective, it looks like you had nice growth across each of the verticals. Any additional color that you can provide there? Obviously, it seems like we've seen a pickup in professional services. Just any color on how we should think about the demand environment there at the segment?

Look, overall, again, very pleased with the execution and total growth being 7% year-over-year on pretty decent comps. High Tech and Manufacturing has grown 13%, as Mike mentioned in his prepared remarks. Our Financial Services 6%, and yes, Consumer Healthcare was 1%, with some concentration on macro-sensitive customers specifically. If I look at the pipeline across cohorts, both deal cohorts, vertical cohorts, and geographic cohorts continue to be in a pretty strong and healthy stage, and I am really pleased with the strong execution that the team is demonstrating along with our clients.

Yes, Surinder, I would like to add to that. We delivered 7% growth for the quarter. We're beginning to see the benefits of the strategic investments we've made that we've self-funded in the business, which is really reflecting in our revenue disaggregation, particularly where we are quite pleased with the 17% in Advanced Technology Solutions.

And the next question will be coming from the line of Jacob Haggarty of Baird.

Congrats on a good quarter. I just had a quick question on sequential trends. So at the midpoint of your Q3 guide, it implies below sequential trends, which would then mean that Q4 would have to be sort of above what's normal for you to hit the top end of your guide. Is that something that's possible if you hit the midpoint? Or are you guys going to have to lower the top end there? What are your thoughts on that?

Yes. It's Mike. So again, we feel really good about our guide in terms of the range. Again, the way I'd like you to think about it is, so at 5%, which is the midpoint of it, right? First of all, we haven't changed our approach on how we guide. I think it really changes on a sequential basis. So again, using just simple math, at 5% growth at the midpoint, right? We need to deliver about $238 million for the year, as I talked about. Seventy percent of that has already been delivered in the first half. So if you then can extrapolate that, the other 30% is about $76 million. Again, we feel good about being able to achieve that in the midpoint of the range. We'll ultimately see about execution and client involvement that could potentially push us above that number.

And we continue to be prudent about how we guide and how we deliver.

I appreciate the insights on Advanced Tech Solutions and Core Business Services. Looking back at 2024, Advanced Tech Solutions began to accelerate in Q3, while Core Business Services has been slowing down. Do you expect this trend to persist? I understand that we will face tougher comparisons in the latter half for Advanced Tech Solutions. How do you perceive the relationship between the growth rates of these two sectors?

Yes. So I'll kick this off, BK, and then maybe we'll hand it over to you for some additional high-level comments about it. If we hark back to our Investor Day, we highlighted at least 7% growth for the midterm, which is '26 and '27. We continue to build momentum in our business. The pipeline remains very healthy, and conversion rates that BK alluded to. We'll provide some bookings information at the end of the year. The impact of potentially this cohort of delayed large deals has really no effect on our view this year or next year. We continue to execute extremely well in the existing deals that we have as well as the pipeline.

Yes. I would like to add two comments. We continue to stay prudent about our guide and don't want numbers to run ahead of us. We remain confident of our medium-term targets that we laid out at Investor Day. If you look at the last few quarters, we've continued to perform at the top end of our services sector.

I have another question that will be coming from the line of Maggie Nolan of William Blair.

I wanted to see your thoughts on as we continue to see how these trends that AI develop, whether or not you're seeing a bit of a convergence between what would have traditionally been considered IT services and what has traditionally been considered BPO just given that AI is more comprehensive. There seems to be an appetite for larger, more comprehensive deal sizes that touch data and process in all of these different areas. Is that something that resonates with you as you think about a multiyear vision for the company? And how is Genpact responding to that?

Thanks, Maggie. Look, I think I will first speak to our strategy. Our strategy is known as last-mile experts, whether that is from process, domain, contextual data, operational data, and operations at scale while applying investments in technology in this differentiation that has been core to us. Clients do not think about BPO or IT. They are looking for who is providing them value, who is underwriting the value. I think that is where the industry domain is informing operations at large scale, knowing the last mile, and that has begun to shine more.

Yes. That's helpful. And then also on a multiyear timeline. Obviously, you've talked about this a little bit in the past, but can you elaborate on the ability to drive revenue and kind of decouple that to some degree from headcount? And then what type of investments are most important for the headcount that does remain as you perhaps invest a little bit less in headcount to drive the same amount of revenue?

Sure. So maybe a two-part answer. First, all this transformation is not happening overnight. It is a multiyear transition and transformation. We're wanting to take all these solutions to our clients. We've got to meet them where they are in their journey and set up the data pipeline, infrastructure, etc. We're in that early phase. We do believe that our medium-term targets of at least 7% will hold. As we think from a workforce standpoint, we mentioned that there will only be two cohorts of people in Genpact, AI builders or AI practitioners. We've set up some near-term targets too, and I'm really pleased to see how our talent is adopting these new technologies and techniques at scale.

And there are no more questions in the queue. I would like to turn the call back over to management for any closing remarks. Please proceed.

Thank you, Lisa. I want to thank you all for joining us today and my heartfelt thanks to our incredible employees for all of their hard work. We are very excited about the future of Genpact. As we look ahead, we will continue to leverage Advanced Technology Solutions to strengthen our last-mile advantage and position Genpact as a partner of choice for AI-driven transformation. I also want to take this opportunity to thank all of our clients for choosing Genpact and all the shareholders for their ongoing support. We look forward to speaking with you again next quarter. Thank you.

Thank you for joining today's conference call. This does conclude today's meeting. You may all disconnect.