Sean Kennedy

Sean Kennedy asked about the incremental margin profile from current and future data partnerships, whether new customers still require an S&P subscription, and if the company is exploring different revenue models like consumption in the GenAI era.

Answer

Martina Cheung, President and CEO, clarified that all current partnerships require customers to have an existing S&P Global license, with new customer acquisition through these channels being a future goal. She noted that while additional monetization models may be considered, it's premature, as the strategies of LLM and hyperscale partners are still evolving. Eric Aboaf, CFO and EVP, emphasized that permissioning, licensing, and paywalls serve as defensive mechanisms and usage monitors, driving value and positive financial results as usage increases.

Sean Kennedy asked about the incremental margin profile from current and future data partnerships, whether new customers still require an S&P Global subscription, and if different revenue models (e.g., consumption) are being explored for the GenAI era.

Answer

Martina Cheung, President and CEO, confirmed that currently, all partnerships require customers to have an S&P Global license, partly due to partner capabilities, and this is seen as a path to new customer acquisition. While additional monetization models may be considered in the future, it's "a little far away" and depends on the partners' journeys. Eric Aboaf, CFO and EVP, reiterated that permissioning, licensing, and paywalls are natural defensive mechanisms and usage monitors, leading to a virtuous cycle of value and positive financial benefits.

Sean Kennedy inquired how a sustained period of lower oil and energy prices might impact the growth of the Commodity Insights division and how that might differ from the last downturn in 2020.

Answer

CEO Martina Cheung explained that the business's revenue is not directly correlated with commodity prices, as they charge a subscription or license fee for their price assessments. She stated that an impact would only be felt in an extreme scenario causing widespread provider shutdowns. The company's current guidance already contemplates oil prices in the low $70s.

Sean Kennedy followed up on Moody's Analytics, asking if sales cycles had changed since last quarter's mention of lengthening, and about the general demand environment for banking solutions.

Answer

Rob Fauber, President and Chief Executive Officer of Moody's Corporation, stated that sales cycles haven't significantly changed from last quarter, noting that lengthening cycles are often accompanied by an expansion in the size and complexity of solutions. He described the demand environment for banking solutions as 'pretty good,' with strong engagement and wins from major banking customers, driven by a focus on growth.

Sean Kennedy asked about any changes in Moody's Analytics sales cycles, specifically if they are still lengthening, and the general demand environment for banking solutions.

Answer

Rob Fauber, President and Chief Executive Officer, stated that the demand environment for banking is "pretty good," with strong engagement and growth from major banking customers. He noted that sales cycles haven't changed much from the previous quarter, still showing some lengthening but also an expansion in the size and complexity of solutions, which he views as a comfortable tandem movement.

Sean Kennedy of Mizuho Financial Group asked if heightened tariffs and macro uncertainty are acting as a catalyst for KYC solution penetration in the corporate market, and inquired about the total opportunity and go-to-market strategy.

Answer

CEO Robert Fauber responded that uncertainty could potentially be a catalyst, as it drives customers to seek more data and tools for managing risk. He highlighted the launch of a new corporate platform, MAKS side, which serves use cases like supplier risk in addition to KYC. He noted strong early traction with over 150 quoted opportunities in the pipeline, particularly in logistics, healthcare, and TMT.

Sean Kennedy asked about the reasons for the deceleration in North America and how the region's pipeline conversion has trended since May. He also requested more detail on the sequential growth drivers in Latin America on a country-by-country basis.

Answer

CFO Juan Urthiague attributed the North American decline to a specific professional services client but noted optimism due to a strong pipeline and recent wins, with large deals starting to close again. For Latin America, he highlighted Argentina as the top performer, with stabilization and recovery beginning in Brazil, Peru, and Mexico.

Sean Kennedy asked about the demand environment for the professional services vertical and whether the pullback in Latin America was broad-based or concentrated in specific sectors.

Answer

CFO Juan Urthiague stated that the outlook for the professional services vertical is stable, with better performance expected in BFSI, travel, and healthcare. He specified that the weakness in Latin America is concentrated by country, particularly in Brazil and Mexico, while Argentina is performing well. He noted that strength in BFSI in the U.S. and Europe is offsetting the weakness in that vertical within Mexico.

Sean Kennedy asked about the drivers of underperformance in the top 2-5 customer cohort and whether there was a bifurcation in growth between larger and smaller customers.

Answer

CFO Juan Urthiague explained that the weakness in the top 2-5 client cohort is directly linked to their concentration in the professional services sector, which has faced industry-wide headwinds. He countered the idea of a broader large-client slowdown by pointing to strong 17% growth in the 11-20 client cohort and growth in the number of accounts across all major revenue thresholds. COO Patricia Pomies added that the company is reinforcing its '100-squared' strategy to focus top talent on the most strategic accounts to drive further growth.

Sean Kennedy asked about the drivers behind the strong growth from Disney and the sustainability of those trends into 2025.

Answer

CTO Diego Tartara explained the growth is driven by two main areas. In media, they have a strong pipeline from projects consolidating platforms like Disney+, Hulu, and ESPN. In parks and experiences, the strategic focus is shifting towards improving the guest experience, an area where Globant is strong, positioning them well for future work.

Sean Kennedy from Mizuho inquired about the mix of new versus existing clients for AgenTeq solutions and how client conversations have evolved since the tariff-related caution mentioned in early April.

Answer

CEO Balkrishan Kalra noted that solutions like AgenTeq are seeing strong adoption from both existing clients and new logos. He added that client conversations are now centered on leveraging data and AI for ROI, with Genpact's process intelligence as a key differentiator. CFO Mike Weiner commented that while the macro is muted, the 'paralysis' from early in the year has eased, which is reflected in their cautious guide.

Sean Kennedy asked for more detail on the outlook for Data-Tech-AI services, specifically across different customer end markets, given its continued strength.

Answer

CFO Mike Weiner clarified that Genpact primarily views its Data-Tech-AI business by deal duration rather than by end market. He noted that large, multiyear transformational deals performed very well in Q1. The company's conservative adjustment to the DTA forecast reflects caution around shorter-cycle, more discretionary deals that could be susceptible to changes in client buying behavior in the current environment.

Sean Kennedy from Mizuho Financial Group asked how GenAI is impacting Genpact's trust and safety business, specifically content moderation, and whether policy changes at major clients like Meta could affect it. He also asked if AI could be an opportunity to combat malicious content.

Answer

CEO BK Kalra clarified that content moderation represents less than 10% of Genpact's revenue and that the company maintains close client relationships, seeing no immediate threat from policy changes. He noted that while there is an opportunity to use AI to combat harmful content, it's a collaborative effort, as large technology clients also deploy their own proprietary solutions.