Genpact Q2 2026 Earnings Call Transcript

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Provided by Quartr
August 6, 2026

Key Takeaways

  • Positive Sentiment: Q2 revenue rose 7.1% to $1.343 billion, while adjusted diluted EPS increased 13.6% to $1.00, outpacing revenue growth. Gross margin expanded for the 13th consecutive quarter to 36.5%.
  • Positive Sentiment: Advanced Technology Solutions revenue grew 24.1% year over year to $363 million, reaching 27% of total revenue. Genpact raised its full-year ATS growth outlook to at least 25% and expects more than $1 billion in 2026 Agentic bookings.
  • Positive Sentiment: Demand indicators strengthened, with record quarterly bookings, 12 large deals signed in the first half—double last year’s pace—and growing backlog and pipeline. More than half of cumulative Agentic contract value has come from new clients, suggesting expansion into additional markets.
  • Negative Sentiment: Genpact is exiting small portions of lower-value content management and commoditized contact-center work that do not fit its Agentic Operations strategy. The transition is expected to reduce 2026 revenue growth by nearly two percentage points, with the impact concentrated in the second half and potentially larger in 2027.
  • Positive Sentiment: Despite the strategic transition, management maintained its outlook for at least 7% 2026 revenue growth, raised adjusted diluted EPS growth expectations to at least 12%, and projected continued expansion in gross and adjusted operating margins.
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Earnings Conference Call
Genpact Q2 2026
00:00 / 00:00

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Operator

Good day, ladies and gentlemen, welcome to the 2026 second quarter Genpact Limited earnings conference call. My name is Carmen, and I will be your conference moderator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference call. 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 Kyle Vikström, Head of Investor Relations at Genpact. Please proceed.

Kyle Vikström
Kyle Vikström
Head of Investor Relations at Genpact

Good afternoon, everyone, welcome to Genpact's Q2 2026 earnings conference call. We hope you've had a chance to read our earnings press release posted on the investor relations section of our website, genpact.com. Today, we have with us BK Kalra, President and CEO, and Mike Weiner, Chief Financial Officer. BK will start with an overview of our results. 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, including the risk factors in our 10-K and 10-Q filings with the SEC.

Kyle Vikström
Kyle Vikström
Head of Investor Relations at Genpact

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. Supplemental investor information can also be found in our earnings press release, fact sheet, and investor presentation posted to our investor relations website. Finally, this call in its entirety is being webcast from our website. An audio replay and transcript will be available shortly after the call. With that, I'd like to turn it over to BK.

BK Kalra
BK Kalra
President and CEO at Genpact

Thank you, Kyle. Hello, everyone, thank you for joining us today. Q2 was another strong quarter for Genpact. We delivered $1.343 billion in total revenue, up 7.1% year-over-year. Advanced Technology Solutions revenue grew 24.1% year-over-year, demonstrating that our flywheel is firing on all cylinders. We expanded gross margin for yet another quarter, providing continued leverage for significant investments to drive future growth. Adjusted diluted EPS again grew double digits, faster than revenue, up 13.6% year-over-year. Non-FTE revenue surpassed 50% of total revenue for the first time. Last quarter, I spoke about something rare: a moment when a structural shift in the market, a differentiated capability set, and the right strategic positioning all converge at the same time. I want to build on that today. First, at the macro level, demand continues to remain very strong even as AI is redrawing markets.

BK Kalra
BK Kalra
President and CEO at Genpact

Enterprises want autonomous workflows that do the work, not just support it. Every function now has a mandate to leverage AI with clear ROI. This is opening new buying centers with new sets of requirements and complexities. At the same time, one universal truth has not changed. There is no artificial intelligence without process intelligence. Yes, frontier models are getting better by the week, but they are also beginning to converge on interchangeability, with switching costs getting lower. Models do not know how a global enterprise actually runs. The exceptions, the controls, the handoffs, and the actual flow of work. The last mile. This is where the outcome is actually won or lost. This is where the actual differentiation sits. Among enterprise clients, we continue to observe that readiness is low, even if aspiration remains very high.

BK Kalra
BK Kalra
President and CEO at Genpact

The foundational work, the data harmonization work, the process intelligence work still has to happen first to get ROI from investments in AI. That is why AI has not scaled for most companies, it is precisely why clients are looking to Genpact and our differentiated IP solutions. I said earlier, when such a rare structural shift is presented and a company can sharpen its differentiation and has the courage and discipline to act, the resulting advantage compounds in ways that are difficult to replicate. This is our moment. We are intentionally disrupting ourselves to be the leader in Agentic Operations. Genpact is not the company you knew. We are entering a new category with expanding TAM, building a higher quality, more durable, and structurally more valuable business.

BK Kalra
BK Kalra
President and CEO at Genpact

At Investor Day last June, when we first outlined our ambition for the year, we expected to deliver revenue growth of 7% with Advanced Technology Solutions growing mid-teens. Since then, our conviction in the opportunity ahead has only strengthened. The momentum we are seeing makes it clear that the shape of our business is changing for the better, the strategic pivot is taking hold much faster. As a result, we are leaning in and embracing this moment to further accelerate durable long-term growth, we are allocating our capital against this opportunity. Most importantly, we are doubling down in areas where we see the greatest long-term opportunity and the strongest returns. We are known for running mission-critical client operations at scale. We are moving from running business operations to running Agentic Operations. Therefore, we are codifying this process intelligence into a stronger mode and allocating even more capital here.

BK Kalra
BK Kalra
President and CEO at Genpact

We are investing behind the flywheel that is already accelerating with an even greater focus on Advanced Technology Solutions, where we believe growth is durable, margins are attractive, client demand continues to build with expanding TAM. This momentum also gives us the opportunity to review components in Core Business Services that are not aligned with our Agentic Operations strategy. We apply the test across our book of business with three simple questions. One: does combining our process intelligence with frontier models create durable value and an advantage that clients cannot easily replicate? Two: does it provide a compelling ROI for both the client and Genpact? Three: is it aligned with expanding TAM? Where the answers are yes, we are agentifying at speed.

BK Kalra
BK Kalra
President and CEO at Genpact

This is vast majority of our book across finance, supply chain, insurance, banking, and many other mission-critical workloads, this has expanding new TAM, which we have begun to capture already. Where the answers are no across the board, we are working with clients to transition work back and redeploying investments. These are very small parts of our business, like certain areas of content management and commoditized parts of contact centers. This clarity is at the heart of becoming the Agentic Operations company. Even with this intentional disruption, we still have line of sight to deliver at least 7% year-over-year revenue growth in 2026. On a full year basis, we expect the transition away from this work not aligned with our Agentic Operations strategy will have nearly two points of impact to total revenue growth. Despite this, Core Business Services revenue is still expected to grow for 2026.

BK Kalra
BK Kalra
President and CEO at Genpact

At the same time, we now expect Advanced Technology Solutions revenue to accelerate, growing at least 25% for 2026. This acceleration underscores the rapid pace of adoption and how our investments are paying off. While timing will be a factor for both 2026 and 2027, for 2027, we currently expect the dollar impact to be slightly larger, though offset by continued momentum in areas aligned with our strategy. Our deliberate focus and prioritization continue to show up in top and bottom line growth and in our demand signals. Demand for our deep domain and industry expertise is healthy and growing, as evidenced by our booking, backlog, and pipeline all increasing across both core and advanced tech. This quarter marked our largest ever quarterly bookings. We signed another six large deals with a large pipeline of other transformational deals, setting us up for a healthy close to the year.

BK Kalra
BK Kalra
President and CEO at Genpact

Our revenue retention continues to be strong. The mix of our business continues to move towards higher value Advanced Tech offerings as we make meaningful progress against the 2x/2x, 70/70 metric frame. Advanced Technology Solutions deliver more than 2x the revenue per headcount and more than 2x the revenue growth of the total company, with more than 70% annualized revenue and more than 70% for non-FTE commercial models. As we fundamentally change how we contract and deliver, we are creating a robust, durable base to build on that is no longer tied to headcount. This includes more multi-year recurring annual revenue streams and margin leverage from agentic and AI driving more meaningful scale. Over the past few years, we have systematically expanded our advanced technology capabilities in areas of our core strength. This has effectively created a powerful flywheel that is fueling Agentic Operations.

BK Kalra
BK Kalra
President and CEO at Genpact

The flywheel starts with our core: expert operators, decades of client trust, clear domains, last-mile knowledge. In essence, process intelligence you cannot buy off a shelf. The flywheel turns with the expanded capabilities in data and AI and through our partner ecosystem that power the Advanced Technology Solutions of today. That enriches process intelligence further, which earns trust to deliver the Agentic mandate. The mandate expands our scope, which deepens our intelligence. Deeper intelligence makes the next solution better. This flywheel compounds building Agentic Operations at scale, making our success hard to replicate. We are actively moving from human-processed and human-validated to machine-processed and human-validated, all wrapped in responsible AI. Driving compounding advantages from autonomous agents with the context, governance, and oversight that only last-mile experts like Genpact can provide.

BK Kalra
BK Kalra
President and CEO at Genpact

All of this is further accelerating Advanced Technology Solutions, that's playing out with the significant momentum we are seeing. Advanced Technology Solutions revenue grew another 24% in quarter two, now accounting for 27% of total revenue. This quarter, Advanced Technology Solutions represented nearly 40% of our bookings, our pipeline increased meaningfully across all capabilities quarter-over-quarter, highlighting the significant demand our flywheel is driving. We are not adding a fast line to the past. We are changing what the whole business is and moving to a new category. This is where it all comes together. Clients do not come to us to buy Core or Advanced Tech. They come to us with a vision for the future and a reality of where they are today. We are enabling the journey to Agentic-led autonomy that enterprises can trust. We call it Agentic Operations.

BK Kalra
BK Kalra
President and CEO at Genpact

Domain experts and AI agents working side by side through reimagined processes to execute transactions. Model agnostic, built for enterprise governance and clear auditability. Learning that compounds, delivered through multiyear, annuitized, recurring revenues. The traction and demand are real. In Agentic solutions, we are on track to book over $1 billion in total contract value just in 2026. This is not a trivial number, it is not Agentic washing. This represents just our productized AI offerings built with Genpact IP to run mission-critical business processes at enterprise scale, it is delivered with multiyear annuitized recurring revenues through a commercial model that is not tied to headcount. Looking at Agentic booking to date, more than half has come from new clients, proving the additional TAM we are capturing at speed.

BK Kalra
BK Kalra
President and CEO at Genpact

From the clients who rotate, we have seen more than 3% net revenue growth and more than 300 basis points of gross margin expansion. More clients, bigger wallets, a larger market, richer margins all at once. We are quickly building a robust roadmap that aligns where our clients are going with what we can uniquely deliver. We recently announced Genpact Transaction Monitoring Analyst, the first module of our new Genpact Banking Analyst Suite to help banks complete routine investigations faster and more consistently with full auditability and human oversight built in. We also recently launched the Genpact Deductions Recovery solution, our Agentic offering designed to help consumer goods companies recover millions in lost revenue by automating the identification, validation, and resolution of disputed deductions with faster cycle times and enhanced compliance.

BK Kalra
BK Kalra
President and CEO at Genpact

Adding to our existing Agentic portfolio, which includes accounts payable, record to report, source-to-pay, and insurance, these are just two additional examples of how we are actively delivering the outcomes clients need to reshape their operations. As clients see the compounding effects of our flywheel and expanding Agentic Operations, they are choosing Genpact over legacy and new competitors to work across even more workflows and the additional parts of their transformation. As a case in point, we recently embarked on a journey with Lumen, a global networking and technology company, to agentify their accounts payable operation. Mondelēz International, one of the world's largest snacking companies, expanded our relationship to build an enterprise-wide agentic operating model across their source-to-pay processes, spanning procurement through accounts payable. These are just a couple of examples. Partners also continue to be an important part of our strategy.

BK Kalra
BK Kalra
President and CEO at Genpact

In quarter two, our partner-related revenue growth accelerated as we continue to deepen relationship with partners core to our clients' infrastructures. This quarter, we achieved the Databricks Brickbuilder specialization for manufacturing, transportation, and energy. ISG recognized Genpact as a leader in the ServiceNow Ecosystem partners for 2026, and as a rising star in their Databricks ecosystem report for AI/ML and managed data optimization. Earlier this week, NelsonHall identified Genpact as a leader in all six of their F&A transformation need market segments for 2026, including agentic AI, procure-to-pay, record-to-report, order-to-cash, CFO advisory, and finance transformation overall. These are just a few recent examples that highlight how focus in our strategic areas is having a clear impact. In closing, this quarter is a significant proof point for Genpact as we shape what comes next as a leader in Agentic Operations.

BK Kalra
BK Kalra
President and CEO at Genpact

We are changing our business in ways that matter, building a new Genpact in a fundamentally different category, doubling down on our most strategic priorities to accelerate the flywheel for Agentic Operations, building high-quality, durable revenue that compounds and is harder to replicate, driving structurally richer margins, and ultimately opening daylight between Genpact and the market around us. With that, let me turn the call over to Mike.

Mike Weiner
Mike Weiner
CFO at Genpact

Good afternoon, everyone, and thank you for joining us today. We delivered a strong second quarter, highlighting how our focus and investments are strengthening our position in Agentic Operations. Total revenue grew 7.1% year-over-year to $1.343 billion as momentum in Advanced Technology Solutions continues to build. Advanced Technology Solutions revenue, which includes data and AI, digital technologies, advisory, and agentic, reached $363 million, growing again over 24% year-over-year with broad-based strength across our flywheel. Demand for our Advanced Technology Solutions is scaling quickly, and our strategic investments are delivering results. Our advanced technology capabilities are compounding with agentic and AI-led innovation showing up across a growing set of offerings. We are focused on exponentially expanding our total addressable market, delivering more value for clients across end-to-end workflows, and driving higher value, more durable revenue for Genpact.

Mike Weiner
Mike Weiner
CFO at Genpact

As BK mentioned, we're doubling down on our most strategic priorities to accelerate the flywheel for Agentic Operations, and we can start seeing the payoff. In the second quarter, our agentic bookings grew significantly quarter-over-quarter. For 2026, we are tracking to deliver over $1 billion in agentic TCV, five times more than 2025. As BK noted, our agentic business continues to capture a broader TAM and wallet share with meaningful traction across both new and existing clients. To date, more than 50% of our cumulative awarded contract value is coming from new clients. For existing accounts that are rotating from traditional to agentic delivery, both net revenue growth and gross margin expansion continue to be above what we reported at Investor Day in June of last year as we continue to drive higher volumes, increased scope, or both within our existing clients.

Mike Weiner
Mike Weiner
CFO at Genpact

This momentum is compounding into what we believe is a more durable revenue base with higher gross margins that continue to improve with scale. Core Business Services revenue, which includes digital operations, decision support services, and technology services, grew 1.9% to $980 million in the second quarter. We continue to see strong demand for our deep domain and industry experience built from decades of client trust as we help clients navigate through the different stages of their transformational journeys. Our sales team continued to execute well with strong demand for our core and advanced technology capabilities across new and existing clients. Net revenue retention remains accretive, and we continue to feel good about our pricing as we deliver incremental value for our client base. In 2Q, our large deal momentum also continued. We signed six large deals compared to three in the same period last year.

Mike Weiner
Mike Weiner
CFO at Genpact

This brings us to 12 large deals year to date, double of what we did in the same period last year. As a reminder, large deals are $50 million or greater in total contract value. Our bookings performance in the quarter was also the largest ever, with nearly 40% coming from Advanced Technology Solutions, and we continue to have a strong pipeline of additional large deals. With the record backlog and pipeline, we're in a very strong position for the second half of the year. This quarter, non-FTE revenues surpassed 50% of total revenue, reflecting our disciplined focus on shifting to fixed-fee, consumption, and outcome-based models. We are building a meaningful recurring annual revenue base that is decoupled from FTEs. At a segment level, consumer and healthcare grew 9.5%, followed by high-tech and manufacturing growth of 7.6% and financial services growth of 3.3%.

Mike Weiner
Mike Weiner
CFO at Genpact

Turning to profitability, gross margin expanded for the 13th consecutive quarter to 36.5%, up approximately 60 basis points year-over-year. Our margin profile reflects our continued operating and pricing discipline, as well as revenue contribution from our high-value advanced technology solutions. Notably, we are also seeing revenue growth decoupled from headcount as we embed these solutions in our own operations and delivery. Moving down to the P&L. SG&A expense as a percentage of revenue was 21.9%. Adjusted operating income was $234 million, up 7.5% year-over-year, faster than our revenue growth. Adjusted operating income margin was 17.4% as we continue to self-fund our strategic investments. Our effective tax rate in the second quarter was 23.7%. Net income was $146 million, and diluted EPS was $0.86. Adjusted diluted EPS increased 13.6% to $1 per share, growing significantly faster than revenue for yet another quarter.

Mike Weiner
Mike Weiner
CFO at Genpact

Shifting to cash, we generated $72 million of cash from operations, ending the second quarter with $517 million in cash and cash equivalents. This was impacted by timing of collections as well as prepayments made in 2025. Credit quality remains high. In the quarter, we returned $82 million to shareholders, $50 million in share repurchases, and $32 million in dividends. Turning to the outlook. As BK noted, the momentum we're seeing in advanced technology solutions is significant. As a result, we're doubling down behind the flywheel that is already accelerating, focusing resources on where we can drive durable value and demand over the long term. With a strong backlog, pipeline, and demand for our differentiated capabilities, we have line of sight to deliver at least 7% revenue growth on an as-reported basis in 2026.

Mike Weiner
Mike Weiner
CFO at Genpact

Even with nearly two points of impact from our transition away from work not aligned with our Agentic Operations strategy. Given the exceptional demand, we now expect Advanced Technology Solutions revenue growth to accelerate in the second half of the year, increasing at least 25% for the full year. In Core Business Services, we still expect 2026 to grow, even after roughly two points of impact from the transition noted earlier. From a timing perspective, the impact of the transition will be concentrated in the second half numbers. On margins, we continue to expect full-year gross margin to expand to 50 basis points to 36.5%, with adjusted operating income margin expected to increase approximately 25 basis points to 17.7%, reflecting our continued commitment to self-fund investments for growth. We now expect adjusted diluted EPS to grow at least 12%.

Mike Weiner
Mike Weiner
CFO at Genpact

Turning to the third quarter on an as-reported basis, we expect to deliver total revenue between $1.369 billion and $1.382 billion, or 6.5% growth at the midpoint. We expect Advanced Technology Solutions revenue growth to accelerate to at least 25% year-over-year. We expect Core Business Services to be flat to slightly down, even after about three points of impact from the transition away from work not aligned with our Agentic Operations strategy. We expect gross margin to expand to 36.6% and adjusted operating income margin to increase to 17.8%. Finally, we expect adjusted diluted EPS of $1.04 to 1.05 for the third quarter. In closing, as BK made it clear, a new Genpact is taking shape. To capture this enormous opportunity, we are reshaping how businesses operate, leveraging our unique strengths rooted in domain and industry expertise, with significant advancements in our Advanced Technology Solutions.

Mike Weiner
Mike Weiner
CFO at Genpact

We are focused on differentiating our position in the market, expanding our TAM dramatically, accelerating high-quality revenue growth, and consistently expanding margins. All of which will allow us to continue to deliver double-digit growth in adjusted diluted EPS and long-term client value. With that said, let me turn the call back over to Kyle.

Kyle Vikström
Kyle Vikström
Head of Investor Relations at Genpact

Thank you, Mike. Operator, we are ready to go ahead and take questions.

Operator

As a reminder, to ask a question, press star one one on your telephone and wait for your name to be announced. To withdraw your question, simply press star one one again. Our first question is from Bryan Bergin with TD Cowen.

Bryan Bergin
Bryan Bergin
Analyst at TD Cowen

Hey, good afternoon. Thank you. On the strategic prioritization that you're taking here, maybe the segment dynamics, just based on this conscious disruption of the business with the two-point CBS headwind this year and what sounds like a similar headwind next year, what does the target growth model look on the other side of these changes? If I adjust for the 2% that's second half-weighted, it seems like you're still somewhat in the CBS target model. I want to confirm whether you do have a different view of the target model versus the investor day, the 4%-5% CBS and the 15%+ ATS. If it is different, maybe speak to the sustainability of the very strong ATS growth.

BK Kalra
BK Kalra
President and CEO at Genpact

I'll take that, Bryan. Thanks. Overall, we feel exceptionally good about how we are ramping the business, not just in advanced tech, but also Core Business Services. This is how the flywheel is delivering, which starts from core and data and AI advisory partner solutions and landing in Agentic Operations, which we are building and delivering on a new category. If I see the demand signals, demand signals are obviously exceptionally high in advanced tech, continue to be very strong in core. Our backlog is really building up very strongly. We mentioned highest ever quarterly booking just previous quarter. Pipeline continues to be strong. Fundamentally, we are shaping the business to become a far higher growth and more durable, richer business as we cycle through 2026, 2027. Mike?

Mike Weiner
Mike Weiner
CFO at Genpact

The only thing I'd add to that, first of all, let's level it up the discussion a little bit. Our clients don't really come to us to buy Core Business Services or ATS related. These are just revenue classifications of the services and the products that we offer, right? They come to us to solve problems and run critical operations. We're working aggressively to agentify those operations, as BK just spoke about. When you think about it, we still continue to feel very good about the guide we put forth for this year and our long-term guide, which we articulated at our Investor Day, arguably, I guess that was in June of last year.

Bryan Bergin
Bryan Bergin
Analyst at TD Cowen

Okay, understood. My follow-up, maybe on bookings and backlog visibility. You highlighted here record bookings, backlog growth, and obviously strong pipeline still. Just at this juncture, how much visibility is that base providing you into 2027 growth?

Mike Weiner
Mike Weiner
CFO at Genpact

I'm not going to really talk about 2027 specifically. Let me just build up on how we're thinking about our guide this year, and you can extrapolate that into next year. I think that'll be somewhat helpful, right? As you correctly repeated, we had record bookings and backlog from just a tremendous first half of this year, right? If you think about it, and because this will help perpetuate us into next year as well, we had 12 large deals in the first half. That's double what we had in the first half of last year, right? Add onto that an incredibly strong pipeline, which we're working hard to execute on, right? We're seeing continued strength and demand across both core and ATS.

Mike Weiner
Mike Weiner
CFO at Genpact

With regard to the work that we're transitioning back to our clients, correct, that will manifest itself over the next four to six quarters, with two points being affected full year this year, right? I would also just continue to think through how the business continues to roll out and execute. Again, we feel very good about where we are. We have good line of sight to driving these results for this year and then through into next year.

Bryan Bergin
Bryan Bergin
Analyst at TD Cowen

Yeah, very good. Thank you.

BK Kalra
BK Kalra
President and CEO at Genpact

Yeah. I think if I was to add, there is a strong momentum building up in Advanced Tech. Advanced Tech is also annuitized business. Therefore, the flywheel from Core to Advanced Tech, which lands into Agentic Operations, is creating a pretty strong momentum and durable, richer revenues.

Operator

One moment for our next question. Comes from Maggie Nolan with William Blair. Please proceed.

Maggie Nolan
Maggie Nolan
Analyst at William Blair

Hi. Thank you. Another one maybe on the non-strategic work. Can you help us understand where those fall in terms of margins versus other offerings within your portfolio, and then maybe how that would show up this year versus next year? Then is this process sort of complete for now?

BK Kalra
BK Kalra
President and CEO at Genpact

Yeah. Maybe I'll take it, and Mike, feel free to add. First, what you can see, Maggie, consistently with the 13th quarter of a gross margin expansion, I think that trajectory is not changing, that momentum is not changing. I think we are shaping the business, as I mentioned, with more durable and more richer revenues, and therefore margin profile, we are expecting be it gross margin or AOI continue with the trajectory that we are talking about. I think just more specifically, this is again, a very small portion of our business that didn't stood the test of the three tests that we talked about. How do we create a durable value that can be easily replicated, or does it provide a strong ROI, both for Genpact and obviously for our clients? Is it aligned with large, fast-growing market and expanding TAM?

BK Kalra
BK Kalra
President and CEO at Genpact

These are, again, a very small portion of our business, as I mentioned, small portions of content management or some of the commoditized contact center play, which is what we are walking away from.

Maggie Nolan
Maggie Nolan
Analyst at William Blair

Understood. As we get comfortable with sort of the new Genpact with new pricing models and I'm wondering if you can help us better understand on the agentic workflows, what happens to pricing and margins as token prices increase, and how that impacts your ability to drive margin expansion.

BK Kalra
BK Kalra
President and CEO at Genpact

Yeah. Maybe I'll quickly take that again. Agentic solutions, one, we are leveraging the scale, and these are not bespoke agents that we build. I think that's a very important distinction versus what you see elsewhere. Because there's a component of a compounding learning within the solution set and the scale from an economic perspective as well. These are annuitized recurring revenues with minimum volume commit. There is a floor on the revenue we earn, and then upside as client expands use cases or add agentic workflows. Obviously, very high retention, multi-year, and far more stickier relationship. Again, from a margin standpoint, structurally, we expect to gain from both sides of the equation. Technology costs decline over time as compute advances. We own the stack, so efficiency gains flow to us.

BK Kalra
BK Kalra
President and CEO at Genpact

Labor costs decrease as agents handle more of the workflow. Humans are brought only for high judgment situation and not for volume processing. As far as token economics is concerned, it is also how we are building the architecture that allows dynamic switching, model flexibility without any client disruption. I think there is a strong, I would say, token FinOps that we have. We procure well. There isn't over or under provisioning or what have you. Feel really good about as to where we are taking the company.

Maggie Nolan
Maggie Nolan
Analyst at William Blair

Very thorough. Thank you, BK.

BK Kalra
BK Kalra
President and CEO at Genpact

Thanks, Maggie.

Operator

Our next question is from Surinder Thind with Jefferies. Please proceed.

Surinder Thind
Surinder Thind
Analyst at Jefferies

Thank you. BK, when we think about the Advanced Technology Solutions segment and the acceleration that we've seen there in the work or the revenue growth, can you maybe talk about, when I think about the agentic solutions that are available, how much of that is being driven by just more products that you have and more services that tie into that business line item versus what I would call just accelerating demand for an existing product set of services? I'm just trying to understand that as you build and create more agentic solutions, should we expect to see Advanced Technology Solutions continue to maybe accelerate in growth rate? Or how do we characterize or understand or put context around what the current growth rate is and maybe the sustainability of it?

BK Kalra
BK Kalra
President and CEO at Genpact

Yeah. Short answer, yes, you should expect it to accelerate. I think it is the flywheel effect that we are talking about. The flywheel builds actually from the strength of our core, the deep process intelligence, domain expertise, decades of operational excellence. That brings in process, data, enterprise technology all of that together in a room, then we own the driving change management at the client end as well. It also opens up new workloads for us. We are moving from just running client operations to getting to own the entire part of transformation for them, be it the foundational work or the data modernization, enterprise architecture, as I mentioned. Therefore, building these scale agentic solutions that'll create the exponential effect as we go along. Yes, you should expect that this acceleration will continue, and it is firing across all the components.

Mike Weiner
Mike Weiner
CFO at Genpact

If I can just add one thing to that, BK. When you talked about Advanced Technology Solutions revenue in the quarter grew 24%, right? That's about $360-ish million. Very little of that is agentic related revenue, right? We talk a lot about the bookings. That's going to just support the growth, particularly on a go-forward basis. We're very pleased with the agentic bookings, and we laid out we're looking forward to that getting to about $1 billion this year.

Surinder Thind
Surinder Thind
Analyst at Jefferies

That's helpful. Then, BK, over the last couple of years, the partnerships, partnership sourcing revenues have been an important part of the strategy. Can you maybe provide a bit more color there maybe in terms of There was some commentary in the prepared comments. When you think about the bookings that you're realizing now, how much of that is coming through your partners, and maybe how does that compare over the past year and how we should think about it on a go-forward basis?

BK Kalra
BK Kalra
President and CEO at Genpact

Look, partners are an integral part of the flywheel. I constantly believe that you could be anybody, but all solutions don't exist in just any four walls, even if you are a coolest model company. Therefore, the tech and partner ecosystem is integral to how you bring value to clients. We have invested heavily here, and I think I'll say we are in the early stages of the journey, and there's a significant opportunity ahead. If I give you a very quick example, in a recent case for a supply chain where we partnered with ServiceNow, this is for a leading energy equipment manufacturer, and they wanted to transition heavily customized legacy platform into a new domain-specific platform that is supported by ServiceNow. They chose Genpact to drive that transformation, where we built the data model standardization, governance, workflows, almost 100 fragmented workflows got integrated.

BK Kalra
BK Kalra
President and CEO at Genpact

A lot of customizations that we resolved and then built a future-ready platform. Now, all of this was combination of our supply chain domain expertise and a strong relationship with ServiceNow. All of this is showing up in our results and actually hopefully in their results too.

Surinder Thind
Surinder Thind
Analyst at Jefferies

Thank you.

Operator

Our next question is from Sean Kennedy with Mizuho. Please proceed.

Sean Kennedy
Sean Kennedy
Analyst at Mizuho

Hi, everyone. Congrats on the results and thanks for taking my questions. I wanted to ask if you're seeing any incremental pressure from customer insourcing trends or crowding out due to AI token infrastructure spend as some of your peers are experiencing. Thank you.

BK Kalra
BK Kalra
President and CEO at Genpact

Thanks, Sean. I think overall, all of this is rooted into the strategy as to what we are driving and how we are wanting to shape the future of this company. If I think about where our clients prioritizing their engineering resources, it is more of the harder problems that is hard to their company strategy. As an example, for a pharmaceutical company, it is sitting in a how do they develop a new molecule or a food or a beverage company, it is kind of what is the next best drink or the next best brand that they can bring to the market. For running mission-critical operations, finance, HR, supply chain, procurement, which is core to Genpact, that's where we are taking the company. That's where we are bringing in all of these agentic solutions that our clients are taking in a significant way.

Sean Kennedy
Sean Kennedy
Analyst at Mizuho

That's great to hear. For those agentic bookings, are you seeing particular success with any specific type of customer?

BK Kalra
BK Kalra
President and CEO at Genpact

I would say it is actually across the board, including new, and we are capturing the new TAM, as we mentioned that we expect greater than $1 billion of booking just in agentic and with no agentic washing, sold as annualized recurring revenues. Greater than 50% of it is from newer clients. We are rotating our existing clients, and that's based on the domain and industry-specific expertise that we have that we are bringing our new and existing clients and capturing the TAM. Core gives us this right to win, and that is the reason we have built the strategy that we talked about. It is therefore building a very long runway in clear chosen areas of our domain industry expertise. The client trust is building further.

Sean Kennedy
Sean Kennedy
Analyst at Mizuho

Great. Thanks so much.

BK Kalra
BK Kalra
President and CEO at Genpact

Thanks.

Operator

One moment for our next question. It comes from Puneet Jain with JPMorgan. Please proceed.

Puneet Jain
Puneet Jain
Analyst at JPMorgan

Hey, thanks for taking my question. I also wanted to follow up on this non-strategic portfolio. Do these contracts typically stem from standalone client relationships, or are these the processes you service as part of larger clients? Where do you think the work that's transitioning away will go? Will it go to any of your competitors or clients are taking them in-house?

BK Kalra
BK Kalra
President and CEO at Genpact

I would say it is, yes, more one-off contracts that we have had, but I'll first step back and just ground you, Puneet, and thanks for asking that. Look, the investments that we've been making for last couple of years, that has created this incredible opportunity to participate across more parts of clients end-to-end operations and transformation journeys. At the center of this flywheel that we are building, is applying advanced tech to code that drives this Agentic Operations long term. We are doubling down there and continuing to partner with clients more broadly, more deeply. Having said that, there are certain parts of where it is more one-off, I'll call it a little bit undifferentiated tail, which is not connected to the transformational work we do. Commercial is only tied to maybe per hour basis. We are not wanting that.

BK Kalra
BK Kalra
President and CEO at Genpact

I think it's very small portion of our book. Therefore, shaping the business to become far more durable, far higher quality, structurally higher margins for long term.

Puneet Jain
Puneet Jain
Analyst at JPMorgan

Got it. Can you share more details on the timelines of this transition? Like when did you engage with clients to kickstart this process? When will this two points of advance, when will that kick in? Has that already kicked in 2Q and continuing in second half? Or will that happen sometime in 3Q or 4Q?

BK Kalra
BK Kalra
President and CEO at Genpact

Sure, Puneet. Maybe I'll take the first part, Mike.

Mike Weiner
Mike Weiner
CFO at Genpact

Sure

BK Kalra
BK Kalra
President and CEO at Genpact

You can take the timing portion of it. I think, one, you should know that we are a pretty active and intense company, constantly are talking to the clients. As we build these strategies, they are not built in vacuum. They are built by validating a lot of these questions with the clients, too. It's a constant dialogue that we are having with the clients. Just from a timing standpoint, Mike.

Mike Weiner
Mike Weiner
CFO at Genpact

Yeah. The way I would think about it is from a perspective standpoint, right? We'll be transitioning that work over the next four to six quarters. I think we've quantified the impact, from a points perspective of two points for the full year impact for 2026.

Puneet Jain
Puneet Jain
Analyst at JPMorgan

Okay. Thank you.

Operator

Our next question comes from David Koning with Baird. Please proceed.

David Koning
David Koning
Analyst at Baird

Yeah. Hey, guys. Great job. One thing that I noticed in the supplemental materials, employees were down maybe a couple percent sequentially, I think a few percent year-over-year. It's really impressive. You're growing revenue 7%, employees down three. You're getting, I guess, 10% efficiency growth. We haven't seen anything like that in years. Just wondering, maybe the dynamics of that, I assume that's driving margins, et cetera. I saw attrition also ticked up to the highest level in a handful of years. If any of that's forced attrition or voluntary, but just maybe that whole dynamic.

BK Kalra
BK Kalra
President and CEO at Genpact

Thanks, David. Look, I think we are taking a very disciplined approach to headcount. I won't say that we are at any inflection point. I'll just say we are getting started. We are making significant investments in advanced tech, and we'll continue to do that. I'm really proud how the team is driving change and reskilling our workforce at scale. As we said, June last year, the longer term, we do expect revenue and headcount growth to decouple. I would say we are still in the early stages of that, becoming a leaner, highly productive talent base that is powered by solution, not some linear hiring. Early signs of leverage, but pleased that we are making that progress.

Mike Weiner
Mike Weiner
CFO at Genpact

Just one other thing to add on to it. If you heard in BK's prepared remarks, when we think of our ATS revenue, right? You think about it, and it's growing, as we just said this quarter, 24%. That revenue cohort, revenue per headcount is double, right? As that continues to leverage up, that's going to continue to support that decoupling when we get to whatever that inflection point might look like.

David Koning
David Koning
Analyst at Baird

That's helpful. Just as a follow-up, what prohibits or what type of work would never leave CBS? Like maybe examples or even what percent of the pie, like you run about $4 billion or so run rate, but a billion of it could never, ever be moved because of a reason or maybe just talk through that, too.

BK Kalra
BK Kalra
President and CEO at Genpact

I think maybe how I'll respond to that, David, is that whenever we are onboarding, we talked about now we have onboarded a dozen large deals that we will be onboarding as we go along. Clients need foundational work to begin with. While some of it might be leaving and kind of where clients want to go, a lot of foundational work first starts in the bottom of the flywheel, if you will, and a lot of foundational work that we need to do, be it the data work or the process foundational work that we need to do. Therefore, core is also a bucket that constantly fills. Is also an element.

BK Kalra
BK Kalra
President and CEO at Genpact

We are building solutions where we want to take the clients more quickly to advanced tech, but it also depends upon what is the starting point of a client. A lot of time, the starting point for a client needs some of that foundational work, which is core.

Mike Weiner
Mike Weiner
CFO at Genpact

Yeah. If I can just add on one thing, BK, if you don't mind.

BK Kalra
BK Kalra
President and CEO at Genpact

Absolutely.

Mike Weiner
Mike Weiner
CFO at Genpact

If you think about when, again, if we think about it from a higher level strategic perspective, we're developing, we're becoming an agentic operating company, right? We're just not sitting still, right? We're developing products agentified to continue to transition that work into more meaningful business models for us and for our customers. That will continue to evolve in not just quarters and years, and that's really the hypothesis on everything that we're doing here on how we're pivoting this company. Again, early days, but signs are quite positive.

David Koning
David Koning
Analyst at Baird

Great. Good job. Thank you, guys.

BK Kalra
BK Kalra
President and CEO at Genpact

Thank you.

Operator

Thank you. Our next question comes from Nate Swenson with Deutsche Bank. Please proceed.

Nate Swenson
Nate Swenson
Analyst at Deutsche Bank

Hey, thanks for the question. BK, I wanted to talk about the 70/70 framework you mentioned in your prepared remarks. ATS, more than 70% annuitized revenues and more than 70% non-FTE commercial models. I guess I'm interested in maybe the 30/30 portion of that book. Those projects that aren't annuitized or are still using FTE models, could you maybe give some more color on why clients may be anchoring towards those legacy structures? Is it inertia? Are they pushing back on pricing, something else? Then maybe going forward, can you talk about if 70/70 becomes 80/80 or 90/90, I guess why or why not?

BK Kalra
BK Kalra
President and CEO at Genpact

Yeah. Directionally, Nate, we are headed to far bigger than 2x/2x, far bigger than 70/70. You should know that. It is already greater than that. Sometimes, and we say annuitized, sometimes there are projects which are eight months, nine months, four months, right? They need to advise project on data strategy. It starts with a four-month project and the client is then thinking about, hey, what it is. There is a portion of that Book also, and because that enables further annuity. Directionally, are we wanting this 2x/2x, 70/70 to look much better than numerics? The answer is yes.

Nate Swenson
Nate Swenson
Analyst at Deutsche Bank

Got it. That's helpful. Mike, in response to a couple of the other questions, you talked about the revenue headwinds associated from the shift lasting four to six quarters. I guess just thinking about that in light of the three-point headwind for 3Q and two points for 2026. Is that three-point per quarter headwind kind of the right level to think about for the entirety of that four to six quarters? Or are there factors that push that higher or lower in the early stages of this shift? The related question, just on the offsets from faster ATS growth, are there any dynamics we need to consider on ATS bookings and the timing of those that may impact the offsets? I'm thinking about things like ATS durations, how long the projects take to ramp.

Nate Swenson
Nate Swenson
Analyst at Deutsche Bank

Maybe they could be shorter or longer, faster or slower. Just trying to think about the moving pieces on the offsets as we think about overall growth for the company.

Mike Weiner
Mike Weiner
CFO at Genpact

I'll work my way backwards on that. ATS, we raised our guide to 25% for this year, right? We'll continue to build off of that, right? We'll continue that and obviously the pipeline, the bookings and all the momentum, particularly on Agentic as that starts earning into revenue, we'll continue to accelerate that growth on a go-forward basis. Going back to the last question we just got, we also talked about the durability and the quality of that revenue. That's one thing. With regard to ostensibly how do I think of the four to six quarters? We've given you the numbers by definition for the remainder part of this year. We'll ultimately see how it pans out on a prospective basis in 2027 on how the calendarizes its way out.

Mike Weiner
Mike Weiner
CFO at Genpact

What I would continue just to elevate the discussion, really think about our guidance in totality and to also think about where our views were from when we gave our longer term views from our Investor Day back in June of 2025 of at least 7% growth.

Nate Swenson
Nate Swenson
Analyst at Deutsche Bank

Thanks, Mike.

Operator

Thank you. Our last question comes from Bryan Keane with Citigroup. Please proceed.

Bryan Keane
Bryan Keane
Analyst at Citigroup

Hey, guys. Thanks for fitting me in here. BK, just looking at that chart showing the ATS growth rates, your expectations going from mid-teens to high teens, at least 20, now we're going to 25 or at least 25. What surprised you there that the solution is resonating so much? What's the reason why we're seeing the growth rates accelerate like that versus your original expectations?

BK Kalra
BK Kalra
President and CEO at Genpact

I think what is a positive surprise, Bryan, I would say, is how it is resonating with both existing but more importantly, new clients. How we've been able to capture the new TAM in number of instances, we picked it up from a few of our peers because we now have this agentic solution which is more machine processed than human validated, wrapped in responsible AI. I think the traction that it is taking hold not only with our existing clients but more importantly with new clients is clearly helping.

BK Kalra
BK Kalra
President and CEO at Genpact

I think how the flywheel is shaping is another. We've been making these investments and I think we'll continue to, but the shape of the flywheel and how the flywheel investments in data and AI investments in last year we did the transaction of XponentL Data that has gone exceptionally well, investments in partners that I spoke about. I think combination of all of those things, everything is coming together and that's why we are taking a little bit more bolder step ahead to move in the direction we need to go in any case.

Bryan Keane
Bryan Keane
Analyst at Citigroup

Just to follow on to that, is there a way to think about win rates versus peers in the ATS book of business? Is it much higher than Genpact historically? Just trying to figure out are you just taking share from some of the legacy providers for the ATS business?

BK Kalra
BK Kalra
President and CEO at Genpact

I think our moat which is shaping further, is process intelligence with rich context. Most of our. That has come from running mission-critical operations where we are bringing operations, data, technology, architecture, people, our people, our clients' people, all of that together in a room, and that is showing up as a differentiator. That is showing up as a big differentiator. This is what our clients are telling us. A little bit, one of the proof points is six large deals in the first half of last year, 12 large deals first half of this year. Continued progress on gross margin is telling us the direction we are taking the company to.

Bryan Keane
Bryan Keane
Analyst at Citigroup

Great. Thanks for taking the questions.

Operator

Thank you.

BK Kalra
BK Kalra
President and CEO at Genpact

Thank you.

Operator

This will conclude our Q&A session, and I will pass it back to management for final comments.

BK Kalra
BK Kalra
President and CEO at Genpact

Thank you all for joining today, and I want to extend my sincere gratitude to our employees around the world whose discipline and innovation keeps our flywheel turning. Most importantly, to our clients who are trusting Genpact as their partner on the journey on this agentic-led transformation. Yes, to our shareholders for their continued confidence. This is our moment, and we have so much more to come. Thank you.

Operator

This concludes our conference. Thank you for participating, and you may now disconnect.

Executives
    • Kyle Vikström
      Kyle Vikström
      Head of Investor Relations
    • BK Kalra
      BK Kalra
      President and CEO
    • Mike Weiner
      Mike Weiner
      CFO
Analysts
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