Bradley Clark

Bradley Clark asked about the long-term durability of demand for Genpact's services, specifically how growth is sustained after the initial implementation of solutions like the AP agentic solution or other third-party agentic solutions.

Answer

CEO Balkrishan Kalra clarified that solutions like the AP agentic suite, Record to Report, and insurance solutions are just initial offerings, and each is designed to build recurring annual revenues for Genpact, fundamentally reshaping the business. He emphasized that clients, especially in mega deals, increasingly recognize the long-term benefits of agentic operations across various functions (finance, supply chain, mid-offices, claims, underwriting, banking). By integrating agents with human expertise within a responsible AI framework, Genpact enables clients to gain market share and focus on core competencies, establishing a meaningful and long-term business relationship.

Bradley Clark asked about the long-term durability of demand for Genpact's services, particularly after implementing solutions like the AP agentic solution or third-party agentic solutions, and how growth continues after initial implementation.

Answer

Balkrishan Kalra, CEO of Genpact, explained that initial solutions like AP agentic, Record to Report, or insurance are just the beginning, and each builds recurring annual revenues for Genpact, significantly shaping the business. He emphasized that clients, especially in mega deals, recognize the long-term benefits of agentic operations—integrating agents with human expertise within a responsible AI framework—across finance, supply chain, mid-offices, claims, underwriting, and banking. This approach enables clients to gain market share and focus on their core business, thereby building a meaningful, long-term business for Genpact.

Bradley Clark of BMO Capital Markets asked how the implied revenue deceleration in the second half of 2025 aligns with the company's midterm growth target of 7% for 2026, seeking what provides confidence in a re-acceleration.

Answer

CFO Mike Weiner reiterated the midterm target of at least 7% growth for 2026-2027, stating the pipeline remains healthy and that recent deal delays do not impact their long-term view. CEO Balkrishan Kalra added that their guidance philosophy remains prudent and they are confident in the medium-term targets laid out at Investor Day, highlighting Genpact's continued performance at the top end of its peer group.

Bradley Clark of BMO Capital Markets asked whether client spending on generative AI projects represents net new budget dollars or if it is being reallocated from legacy IT services spending.

Answer

CEO BK Kalra stated that based on observations in 2024, spending on AI was primarily a shift of existing client dollars rather than net new incremental funds. He explained that many clients were in an experimental phase, reallocating budgets to explore AI's potential, but noted that this dynamic could evolve as the market matures in 2025.

Bradley Clark asked what signs of a budget influx or improved business environment Genpact is watching for and inquired about the pricing environment, particularly in relation to a slight dip in sole-source deals.

Answer

CFO Michael Weiner responded that the company has not seen signs of 'budget flushes' and is not assuming any in its guidance. He described the pricing environment as 'relatively constant' and advised not to read into the quarterly fluctuation of sole-source deals, which he characterized as 'lumpy' by nature and influenced by deal size.

Bradley Clark inquired about the revenue drivers for the $485 million DMDC contract, asking what factors determine the final realized value and about the margin profile of this work compared to the rest of the Security Solutions business.

Answer

EVP & CFO Mark Bendza explained that the DMDC contract includes a recurring base service revenue stream of approximately $25 million, with the remainder being variable third-party hardware and software. For modeling purposes, Telos combines the DMDC and DHS programs, forecasting $60 million to $85 million annually. Bendza noted that on a blended basis, these programs are dilutive to cash gross margins, potentially lowering the company's overall cash gross margin by a couple hundred basis points in 2025 on a significantly higher revenue base.