Genpact Limited (NYSE: G), a global leader in business process and technology management, today announced financial results for the second quarter ended June 30, 2011.
Key Financial Results – Second Quarter 2011
Revenues were $397.6 million, up 29.3% from $307.6 million in the second quarter of 2010. Revenues from Global Clients were up 44.1% and business process management revenues from Global Clients were up 23.7%.
Net income attributable to Genpact Limited shareholders was $39.0 million, up 40.1% from $27.8 million in the second quarter of 2010; net income margin for the second quarter of 2011 was 9.8%, up from 9.1% in the second quarter of 2010.
Diluted earnings per common share were $0.17, up 39.3% from $0.12 in the second quarter of 2010.
Adjusted income from operations totaled $65.3 million, up 40.1% from $46.6 million in the second quarter of 2010.
Adjusted income from operations margin was 16.4%, up from 15.1% in the second quarter of 2010.
Adjusted diluted earnings per share were $0.22, up 41.9% from $0.15 in the second quarter of 2010.
N.V. ‘Tiger’ Tyagarajan, Genpact's president and CEO said, “Genpact delivered a great second quarter, with strong growth in revenues, adjusted operating income, earnings per share and cash flows. Genpact stand-alone revenues, excluding Headstrong revenues, grew 15% over the prior year quarter. Integration of the Headstrong acquisition, which closed on May 3rd, is going well. Headstrong was neutral to adjusted operating income margin in the quarter. This quarter we increased the number of clients contributing $1 to $5 million in annual revenues to 103 (including 25 from Headstrong), from 52 in the prior-year quarter, giving us a great runway for future growth.”
Revenues from clients other than GE, which Genpact refers to as Global Client revenues, grew 44.1% over the second quarter of 2010, including two months of Headstrong revenues. Business process management revenues from Global Clients grew 23.7% over the second quarter of 2010, led by 54.0% growth in Smart Decision Services, which is comprised of Genpact’s reengineering, analytics, business consulting and enterprise risk consulting businesses. Revenues from Global Clients now represent approximately 69.2% of Genpact's total revenues, with the remaining 30.8% of revenues coming from GE. GE revenues increased by $5.8 million, or 4.9%, from the second quarter of 2010, adjusted for dispositions by GE.
As of the end of the second quarter of 2011, 56 client relationships, including existing relationships with 10 Headstrong clients, each contributed revenues of $5 million or more in the last twelve months, up from 40 such relationships as of June 30, 2010. As of the end of the second quarter of 2011, eight client relationships, including existing relationships with two Headstrong clients, each contributed revenues of $25 million or more in the last twelve months, up from four such client relationships as of June 30, 2010.
Approximately 78.1% of Genpact's revenues for the quarter came from business process management services, compared to 85.9% for the second quarter of 2010. Revenues from IT services were approximately 21.9% of total revenues for the second quarter of 2011, up from 14.1% for the second quarter of 2010, including IT services revenues attributable to Headstrong.
Genpact generated $60.9 million of cash from operations in the second quarter of 2011, up from $30.0 million of cash from operations in the second quarter of 2010. Cash flow from operations increased by more than $30 million in the second quarter of 2011 compared to the second quarter of 2010, primarily due to increased cash earnings, better working capital management and certain cash tax refunds received in the quarter. Genpact had approximately $336.4 million in cash and cash equivalents as of June 30, 2011.
Year-to-Date Results
* Revenues were $728.2 million, up 22.2% from $595.8 million for the six months ended June 30, 2010.
* Net income attributable to Genpact Limited shareholders was $75.1 million, up 34.1% from $56.0 million for the six months ended June 30, 2010; net income margin was 10.3%, up from 9.4% for the six months ended June 30, 2010.
* Diluted earnings per common share were $0.33, up 33.3% from $0.25 for the six months ended June 30, 2010.
* Adjusted income from operations was $116.5 million, up 28.7% from $90.5 million for the six months ended June 30, 2010.
* Adjusted income from operations margin was 16.0%, up from 15.2% for the six months ended June 30, 2010.
* Adjusted diluted earnings per share were $0.40, up 30.2% from $0.31 for the six months ended June 30, 2010.
As of June 30, 2011, Genpact had approximately 51,300 employees worldwide, an increase from approximately 42,500 as of June 30, 2010. Genpact's employee attrition rate for the six months ended June 30, 2011 was 29%, measured from day one of employment, an increase from 26% for the same period in 2010. Annualized revenue per employee for the six months ended June 30, 2011, was $34,500, up from $30,300 for the six months ended June 30, 2010.
2011 Outlook
Tyagarajan continued, "We continue to expect full year revenue growth of 23-25% and our adjusted income from operations margin to be in the range of 16% to 16.5%. Given our strong performance during the first half of the year and the diversity of our business, despite ongoing concerns in the global economy we now expect to be at the higher end of both ranges.”
Conference Call to Discuss Financial Results
Genpact management will host an hour-long conference call beginning at 8:00 a.m. EDT on August 3, 2011 to discuss the company's performance for the second quarter of fiscal 2011. To participate, callers can dial 1-866-713-8563 from within the U.S. or +1 617-597-5311 from any other country. Thereafter, callers will be prompted to enter the participant code, 41722945.
For those who cannot participate in the call, a replay and podcast will be available on Genpact's website, http://www.genpact.com/, after the end of the call. A transcript of the call will also be made available on Genpact's website.
About Genpact
Genpact is a global leader in business process and technology management, offering a broad portfolio of enterprise and industry-specific services. The company manages over 4,500 processes and projects for more than 600 clients worldwide. Putting process in the forefront, Genpact couples its deep process knowledge and insights with focused IT capabilities, targeted analytics, business consulting, domain consulting and pragmatic reengineering to deliver comprehensive solutions for clients. Lean and Six Sigma are an integral part of Genpact's culture and Genpact views the management of business processes as a science. Genpact has developed Smart Enterprise Processes (SEPSM), a groundbreaking, rigorously scientific methodology for managing business processes, which focuses on optimizing process effectiveness in addition to efficiency to deliver superior business outcomes. Services are seamlessly delivered from a global network of centers to meet a client's business objectives, cultural and language needs and cost reduction goals. Learn more at http://www.genpact.com/.
