Genpact Reports Results for 2011 Full Year and Fourth Quarter

NEW YORK, Feb. 6, 2012 /PRNewswire/ -- Genpact Limited (NYSE: G), a global leader in business process and technology management, today announced financial results for the fourth quarter and full-year ended December 31, 2011.

Key Financial Results – Full-Year 2011

• Revenues were $1.60 billion, up 27.1% from $1.26 billion in 2010.
• Net income attributable to Genpact Limited shareholders was $184.3 million, up 29.6% from $142.2 million in 2010; net income margin for 2011 was 11.5%, up from 11.3% in 2010.
• The effective tax rate was 27.7%, up from 19.4% in 2010.
• Diluted earnings per common share were $0.81, up from $0.63 per share in 2010.
• Adjusted income from operations increased 29.8% to $264.5 million, up from $203.7 million in 2010.
• Adjusted income from operations margin was 16.5%, up from 16.2% in 2010.
• Adjusted diluted earnings per share were $0.98, up from $0.74 in 2010.

Key Financial Results – Fourth Quarter 2011

• Revenues were $442.7 million, up 29.6% from $341.5 million in the fourth quarter of 2010.
• Net income attributable to Genpact Limited shareholders was $61.1 million, up 32.8% from $46.0 million in the fourth quarter of 2010; net income margin for the fourth quarter of 2011 was 13.8%, up from 13.5% in the fourth quarter of 2010.
• Diluted earnings per common share were $0.27, up from $0.20 per share in the fourth quarter of 2010.
• Adjusted income from operations totaled $77.1 million, up from $63.7 million in the fourth quarter of 2010.
• Adjusted income from operations margin was 17.4%, compared to 18.7% in the fourth quarter of 2010.
• Adjusted diluted earnings per share were $0.32, up from $0.23 in the fourth quarter of 2010.

N.V. 'Tiger' Tyagarajan, Genpact's President and CEO said, "We had a great 2011 and finished the year with a very strong fourth quarter. Genpact delivered growth in revenues, adjusted operating income and margin, as well as EPS for the year. We also generated record cash flows. In 2011, we took a number of actions that have more sharply defined who we are and how we add value to our clients. For example, we expanded and refocused our front-end teams by key industry verticals to better serve clients' needs, we now have half of our leadership team closer to clients which reflects our global footprint, we accelerated investment in new products and services, and we added substantial domain expertise through acquisitions. Genpact won a record 107 new logos during the year and expanded relationships with existing clients across all size-of-engagement categories. The number of clients in the category from $1 million to $5 million of annual revenues grew the fastest, to 121 from 64 at the end of 2010. This combination of new logo wins, expansion of existing client relationships, and strengthened domain capabilities gives us a tremendous runway for future growth."

Revenues from Global Clients grew 42.7% for the full year 2011 and 46.9% in the fourth quarter. Business process management revenues from Global Clients grew by 23.4% for the full year, and 20.5% in the fourth quarter and were led by growth in Smart Decision Services of 52.4% for the full year and 54.8% for the fourth quarter. Revenues from Global Clients represented approximately 69.8% of Genpact's total revenues in 2011, with the remaining 30.2% of revenues coming from GE. GE revenues increased 1.6% for the full year 2011 and were relatively unchanged in the fourth quarter.

As of the end of 2011, 56 client relationships each contributed revenues of $5 million or more in the last twelve months, up from 44 such relationships as of December 31, 2010. As of the end of 2011, nine client relationships each contributed revenues of $25 million or more in the last twelve months, up from three such client relationships as of December 31, 2010.

Approximately 78.2% of Genpact's revenues for the full year 2011 and 75.4% for the fourth quarter came from business process management services, compared to 86.1% for 2010 and 86.9% for the fourth quarter of 2010. Revenues from IT services represented approximately 21.8% of total revenues for full year 2011 and 24.6% for the fourth quarter, up from 13.9% for 2010 and 13.1% for the fourth quarter of 2010.

Genpact generated $266.6 million of cash from operations in 2011 and $89.5 million in the fourth quarter of 2011, up from $163.1 million of cash from operations in 2010 and $85.1 million in the fourth quarter of 2010, primarily due to increased cash earnings and to some non-recurring items. Genpact had approximately $408.0 million in cash and cash equivalents as of December 31, 2011.

As of December 31, 2011, Genpact had approximately 55,400 employees worldwide, an increase from approximately 43,900 at the end of 2010. The attrition rate for the entire year, measured from day one, was 30%, down from 31% in 2010. Revenue per employee in 2011 was $34,100, up from $31,100 in 2010.

2012 Outlook

Tyagarajan continued, "Our relationships with existing clients are strong and expanding, our pipeline is healthy and client decision cycle times appear to be stable. With our widely diversified portfolio of services across key industries and geographies, we are well positioned to adapt to evolving client needs in a sharply differentiated way. In an environment where our clients are facing ongoing macro-economic uncertainty and volatility, we expect annual revenues for 2012 between $1.84 billion and $1.88 billion. As we have discussed previously, we will continue to invest for growth and expect adjusted income from operations margin in 2012 of 16% to 16.5%."

Conference Call to Discuss Financial Results

Genpact management will host an hour-long conference call beginning at 8:00 a.m. EST on February 7, 2011 to discuss the company's performance for the periods ended December 31, 2011. To participate, callers can dial +1 (866)271-0675 from within the U.S. or +1 (617)213-8892 from any other country. Thereafter, callers will be prompted to enter the participant code, 95682579.

For those who cannot participate in the call, a replay and podcast will be available on Genpact's website, 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 Limited (NYSE: G), a global leader in business process and technology management services, has developed a science behind superior business processes. Genpact's unique process thought leadership captured in its Smart Enterprise Processes (SEP(SM)) framework, combined with deep domain expertise in multiple industry verticals, delivers better business outcomes across the enterprise, rather than simply providing efficiency gains within a single function. Genpact's Smart Decision Services deliver business insights to its clients through targeted analytics, reengineering expertise, and advanced risk management.  Genpact makes technology more intelligent by embedding it with these process and data insights in addition to providing a wide range of technology services.  Built on a legacy of serving GE for more than 14 years, Genpact enables companies worldwide to make smarter decisions, helping them drive revenue growth, compete more successfully, mitigate risk effectively, and improve operating margins and working capital. Driven by a passion for process and operational excellence based on its Lean and Six Sigma DNA, the company's 55,000+ professionals around the globe deliver world-class business process and technology management services everyday to its more than 600 clients – from a network of 57 delivery centers across 16 countries supporting more than 25 languages.  For more information, visit www.genpact.com.  

Safe Harbor

This press release contains certain statements concerning our future growth prospects and forward-looking statements, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those in such forward-looking statements. These risks and uncertainties include but are not limited to a slowdown in the economies and sectors in which our clients operate, a slowdown in the business process management and information technology services sectors, the risks and uncertainties arising from our past and future acquisitions, our ability to manage growth, factors which may impact our cost advantage, wage increases, our ability to attract and retain skilled professionals, risks and uncertainties regarding fluctuations in our earnings, general economic conditions affecting our industry as well as other risks detailed in our reports filed with the U.S. Securities and Exchange Commission, including Genpact's Annual Report on Form 10-K. These filings are available at www.sec.gov. Genpact may from time to time make additional written and oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission and our reports to shareholders. Although Genpact believes that these forward-looking statements are based on reasonable assumptions, you are cautioned not to put undue reliance on these forward-looking statements, which reflect management's current analysis of future events and should not be relied upon as representing management's expectations or beliefs as of any date subsequent to the time they are made. Genpact does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of Genpact.

Reconciliation of Adjusted Non-GAAP Financial Measures to GAAP Measures

To supplement the consolidated financial statements presented in accordance with GAAP, this press release includes the following measures defined by the Securities and Exchange Commission as non-GAAP financial measures: non-GAAP adjusted income from operations, adjusted net income attributable to shareholders of Genpact Limited, or adjusted net income, and adjusted diluted earnings per share attributable to shareholders of Genpact Limited, or adjusted diluted earnings per share. These non-GAAP measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures, the financial statements prepared in accordance with GAAP and the reconciliations of Genpact's GAAP financial statements to such non-GAAP measures should be carefully evaluated.

For its internal management reporting and budgeting purposes, Genpact's management uses financial statements that do not include stock-based compensation expense, amortization of acquired intangibles at formation in 2004, expenses associated with the Company's March 2010 secondary offering and significant acquisition related expenses and amortization of acquired intangibles on such acquisitions, for financial and operational decision-making, to evaluate period-to-period comparisons or for making comparisons of Genpact's operating results to that of its competitors. Moreover, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use when adopting ASC 718 "Compensation-Stock Compensation", Genpact's management believes that providing financial statements that do not include stock-based compensation allows investors to make additional comparisons between Genpact's operating results to those of other companies. In addition, Genpact's management believes that providing non-GAAP financial measures that exclude amortization of acquired intangibles, expenses of the secondary offering and significant acquisition related expenses and amortization of acquired intangibles on such acquisitions, allows investors to make additional comparisons between Genpact's operating results to those of other companies. The Company also believes that it is unreasonably difficult to provide its financial outlook in accordance with GAAP for a number of reasons including, without limitation, the Company's inability to predict its future stock-based compensation expense under ASC 718, the amortization of intangibles associated with further acquisitions, significant acquisition related expenses and expenses of the secondary offering, if any. Accordingly, Genpact believes that the presentation of non-GAAP adjusted income from operations and adjusted net income, when read in conjunction with the Company's reported results, can provide useful supplemental information to investors and management regarding financial and business trends relating to its financial condition and results of operations.

A limitation of using non-GAAP adjusted income from operations and adjusted net income versus income from operations and net income attributable to shareholders of Genpact Limited calculated in accordance with GAAP is that non-GAAP adjusted income from operations and adjusted net income excludes costs, namely, stock-based compensation, that are recurring. Stock-based compensation has been and will continue to be a significant recurring expense in Genpact's business for the foreseeable future. Management compensates for this limitation by providing specific information regarding the GAAP amounts excluded from non-GAAP adjusted income from operations and adjusted net income and evaluating such non-GAAP financial measures with financial measures calculated in accordance with GAAP.

The following tables show the reconciliation of these adjusted financial measures from GAAP for the three months and year ended December 31, 2010 and 2011:

SOURCE Genpact Limited