Genpact LTD
For the period ended Sep 30, 2024. Filed Nov 12, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 12, 2024
G$42.27+2.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-09.
0001398659-24-000088
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0001398659-24-000100
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 166 previous paragraphs and 167 current paragraphs.
93 unchanged; 67 reworded; 7 added; 5 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 15 previous and 15 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
*Not meaningful
Current report
Other operating (income) expense, net. Other operating income (net of expense) was $0.0 million in the third quarter of 2024, consistent with $0.1 million in the third quarter of 2023.
Current report
Net income. As a result of the foregoing factors, net income as a percentage of net revenues was 11.0% in the third quarter of 2024, up from 10.4% in the third quarterof 2023.
Current report
Nine months ended September 30, 2024 Compared to the Nine months ended September 30, 2023
Current report
Foreign exchange gains, net. We recorded a net foreign exchange gain of $4.4 million in the nine months ended September 30, 2024, up $0.7 million from $3.7 million in the nine months ended September 30, 2023. The gain primarily resulted from the depreciation of the Indian rupee against the U.S. dollar during the nine months ended September 30, 2023 and 2024.
Current report
Other income (expense), net. Our other income (net of expense) was $14.1 million in the nine months ended September 30, 2024 compared to $6.9 million in the nine months ended September 30, 2023. This change was primarily driven by(i) a gain on changes in the fair value of assets in our deferred compensation plan inthe nine months ended September 30, 2024 compared to a loss on changes in the fair value of assets in our deferred compensation plan inthe nine months ended September 30, 2023, and (ii)higher sublease income and related corporate transactions in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.
Current report
Net income. As a result of the foregoing factors, net income as a percentage of net revenues was 10.6% in the nine months ended September 30, 2024, up from 10.2% in the nine months ended September 30, 2023.
Removed paragraphs (5)
Previous report
Net income. As a result of the foregoing factors, net income as a percentage of total net revenues was 10.4% in the second quarter of 2024, down from 10.5% in the second quarterof 2023. Net income increased from $116.3 million in the second quarter of 2023 to $122.0 million in the second quarter of 2024, primarily due to higher income from operations, partially offset by higher income tax expense in the second quarter of 2024 compared to the second quarter of 2023.
Previous report
Six months ended June 30, 2024 Compared to the Six months ended June 30, 2023
Previous report
Foreign exchange gains (losses), net. We recorded a net foreign exchange gain of $3.3 million in the first half of 2024 compared to a net foreign exchange gain of $0.7 million in the first half of 2023. The gain in the first half of 2024 resulted primarily from gains on fair value hedges and the depreciation of the Indian rupee against the U.S. dollar during the first half of 2024. The gain in the first half of 2023 resulted primarily from gains on fair value hedges, partially offset by the appreciation of the Indian rupee against the U.S. dollar during that period.
Previous report
Other income (expense), net. Our other income (net of expense) was $9.0 million in the first half of 2024 compared to $7.5 million in the first half of 2023. This change was primarily driven by higher sublease income and related corporate transactions in the first half of 2024 compared to the first half of 2023.
Previous report
Net income. As a result of the foregoing factors, net income as a percentage of total net revenues was 10.4% in the first half of 2024, up from 10.1% in the first half of 2023. Net income increased by $16.6 million from $222.4 million in the first half of 2023 to $238.9 million in the first half of 2024, primarily due to higher income from operations, partially offset by higher income tax expense in the first half of 2024 compared to the first half of 2023.
Reworded paragraphs (67)
Previous wording
•geopolitical tensions, such as the ongoing conflicts between Russia and Ukraine and Israel and Hamas, including any escalation of either conflict, and future actions that may be taken by the United States and other countries in response;
Current wording
•geopolitical tensions, such as the ongoing conflicts between Russia and Ukraine and in the Middle East, including any escalation of such conflicts, and future actions that may be taken by the United States and other countries in response;
Previous wording
Our results of operations are affected by economic conditions, including macroeconomic conditions, the overall inflationary environment and levels of business confidence. In the second quarter of 2024, continued economic and geopolitical uncertainty in many markets around the world, including with respect to monetary policy and slowing global economic growth, impacted our business and may continue to impact our business in the future.
Current wording
Our results of operations are affected by economic conditions, including the overall inflationary environment and levels of business confidence. In the third quarter of 2024, continued economic and geopolitical uncertainty in many markets around the world, including with respect to monetary policy and slowing global economic growth, impacted our business and may continue to impact our business in the future.
Previous wording
We are a global professional services firm that makes business transformation real. We drive digital-led innovation and run digitally-enabled intelligent operations for our clients, guided by our experience running thousands of processes for hundreds of Fortune Global 500 clients. We have over 135,200 employees serving clients in key industry verticals from more than 35 countries. Our registered office is located at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda.
Current wording
We are a global professional services firm that makes business transformation real. We drive digital-led innovation and run digitally-enabled intelligent operations for our clients, guided by our experience running thousands of processes for hundreds of Fortune Global 500 clients. We have over 138,500 employees serving clients in key industry verticals from more than 35 countries. Our registered office is located at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda.
Previous wording
In the quarter ended June 30, 2024, we recorded net revenues of $1,176.2 million, of which $546.0 million, or 46.4%, was from Data-Tech-AI services, with the remaining $630.2 million, or 53.6%%, from Digital Operations services.
Current wording
In the quarter ended September 30, 2024, we recorded net revenues of $1,210.9 million, of which $569.4 million, or 47.0%, was from Data-Tech-AI services, with the remaining $641.5 million, or 53.0%, from Digital Operations services.
Previous wording
For a description of ourcritical accounting policies and estimates, see Note 2—“Summary of significant accounting policies” under Part I, Item 1—“Unaudited Consolidated Financial Statements” above, as well as Part II, Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” and Note 2—“Summary of significant accounting policies” under Part IV, Item 15—“Exhibits and Financial Statement Schedules” in our Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes to our critical accounting policies and estimates during the six months ended June 30, 2024 from those described in our Annual Report on Form 10-K for the year ended December 31, 2023.
Current wording
For a description of ourcritical accounting policies and estimates, see Note 2—“Summary of significant accounting policies” under Part I, Item 1—“Unaudited Consolidated Financial Statements” above, as well as Part II, Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” and Note 2—“Summary of significant accounting policies” under Part IV, Item 15—“Exhibits and Financial Statement Schedules” in our Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes to our critical accounting policies and estimates during the nine months ended September 30, 2024 from those described in our Annual Report on Form 10-K for the year ended December 31, 2023.
Previous wording
The following table sets forth certain data from our consolidated statements of income for the three and six months ended June 30, 2023 and 2024.
Current wording
The following table sets forth certain data from our consolidated statements of income for the three and nine months ended September 30, 2023 and 2024.
Previous wording
1 We disaggregate our revenue as revenue from either Digital Operations services or Data-Tech-AI services based on the nature of the services provided. During the first quarter of 2024, we realigned as Data-Tech-AI services certain services that had previously been designated as Digital Operations services based on the nature of work performed and the mode of delivery for these particular services, which have evolved over time. Accordingly, we have updated the classification of revenue derived from Digital Operations services and Data-Tech-AI services for the three and six months ended June 30, 2023 to present comparable information. For additional information, see Note 19—“Net revenues” under Part I, Item 1—“Unaudited Consolidated Financial Statements” above.
Current wording
1 We disaggregate our revenue as revenue from either Digital Operations services or Data-Tech-AI services based on the nature of the services provided. During the first quarter of 2024, we realigned as Data-Tech-AI services certain services that had previously been designated as Digital Operations services based on the nature of work performed and the mode of delivery for these particular services, which have evolved over time. Accordingly, we have updated the classification of revenue derived from Digital Operations services and Data-Tech-AI services for the three and nine months ended September 30, 2023 to present comparable information. For additional information, see Note 19—“Net revenues” under Part I, Item 1—“Unaudited Consolidated Financial Statements” above.
Previous wording
Net revenues. Our net revenues were $1,176.2 million in the second quarter of 2024, up $70.7 million, or 6.4%, from $1,105.5 million in the second quarter of 2023.
Current wording
Net revenues. Our net revenues were $1,210.9 million in the third quarter of 2024, up $75.2 million, or 6.6%, from $1,135.8 million in the third quarter of 2023.
Previous wording
Adjusted for foreign exchange, primarily the impact of changes in the values of the Japanese yen, Australian dollar, Chinese yuan, U.K pound sterling, Polish zloty and Indian rupee against the U.S. dollar, our net revenues grew 6.8% in the second quarter of 2024 compared to the second quarter of 2023 on a constant currency 2 basis. We provide information about our revenue growth on a constant currency 2 basis so that our revenue may be viewed without the impact of foreign currency exchange rate fluctuations, thereby facilitating period-to-period comparisons of our business performance. Total net revenues on a constant currency 2 basis are calculated by restating current-period activity using the prior fiscal period’s foreign currency exchange rates and adjusted for hedging gains/losses.
Current wording
Adjusted for foreign exchange, primarily the impact of changes in the values of the Argentine peso, Japanese yen and Indian rupee against the U.S. dollar, our net revenues grew 7.0% in the third quarter of 2024 compared to the third quarter of 2023 on a constant currency 2 basis. We provide information about our revenue growth on a constant currency 2 basis so that our revenue may be viewed without the impact of foreign currency exchange rate fluctuations, thereby facilitating period-to-period comparisons of our business performance. Net revenues on a constant currency 2 basis are calculated by restating current-period activity using the prior fiscal period’s foreign currency exchange rates and adjusted for hedging gains/losses.
Previous wording
Our average headcount increased by 11.4% to approximately 133,700 in the second quarter of 2024 from approximately 120,000 in the second quarter of 2023.
Current wording
Our average headcount increased by 9.1% to approximately 137,500 in the third quarter of 2024 from approximately 126,000 in the third quarter of 2023.
Previous wording
Net revenues from Data-Tech-AI services in the second quarter of 2024 were $546.0 million, up $21.1 million, or 4.0%, from $525.0 million in the second quarter of 2023. This increase was largely driven by an increase in revenue from our supply chain and risk management services in the second quarter of 2024 compared to the second quarter of 2023.
Current wording
Net revenues from Data-Tech-AI services in the third quarter of 2024 were $569.4 million, up $46.1 million, or 8.8%, from $523.4 million in the third quarter of 2023. This increase was largely driven by an increase in revenue from our AI and advanced tech services as well as data and analytics services in the third quarter of 2024 compared to the third quarter of 2023.
Previous wording
Net revenues from Digital Operations services in the second quarter of 2024 were $630.2 million, up $49.6 million, or 8.5%, from $580.6 million in the second quarter of 2023, primarily due to ramp-ups of services for new large deals signed in 2023.
Current wording
Net revenues from Digital Operations services in the third quarter of 2024 were $641.5 million, up $29.1 million, or 4.8%, from $612.4 million in the third quarter of 2023, primarily due to ramp-ups of services from recently signed large deals.
Previous wording
Net revenues from our Financial Services segment increased by 5.9% in the second quarter of 2024 compared to the second quarter of 2023, largely due to large deal ramp-ups, partially offset by a reduction in services provided to a client in the banking vertical in the second quarter of 2024 compared to the second quarter of 2023. Net revenues from our Consumer and Healthcare segment increased by 7.4% in the second quarter of 2024 compared to the second quarter of 2023, largely driven by ramp-ups of services from large deals signed in 2023 as well as recently signed deals. Net revenues from our High Tech and Manufacturing segment increased by 5.8% in the second quarter of 2024 compared to the second quarter of 2023, largely driven by ramp-ups of client deals signed in 2023, partially offset by the impact of a reduction in deal scope for a large client in 2023.
Current wording
Net revenues from our Financial Services segment increased by 5.8% in the third quarter of 2024 compared to the third quarter of 2023, largely due to an increase in AI and advanced tech services as well as data and analytics services. Net revenues from our Consumer and Healthcare segment increased by 8.2% in the third quarter of 2024 compared to the third quarter of 2023, largely driven by ramp-ups of services from recently signed large deals and an increase in data and analytics services. Net revenues from our High Tech and Manufacturing segment increased by 5.8% in the third quarter of 2024 compared to the third quarter of 2023, largely driven by ramp-ups of deals signed in 2023 as well as recently signed deals and an increase in AI and advanced tech services.
Previous wording
Cost of revenue. Cost of revenue was $759.8 million in the second quarter of 2024, up $44.3 million, or 6.2%, from $715.5 million in the second quarter of 2023. The increase in cost of revenue in the second quarter of 2024 compared to the second quarter of 2023 was primarily due to (i) an increase in our operational headcount to support revenue growth, (ii) wage inflation and (iii) higher infrastructure expenses. This increase was partially offset by (i) lower depreciation and amortization expense, (ii) lower stock-based compensation expense and (iii) improved operating leverage in the second quarter of 2024 compared to the second quarter of 2023.
Current wording
Cost of revenue. Cost of revenue was $779.5 million in the third quarter of 2024, up $46.5 million, or 6.4%, from $733.0 million in the third quarter of 2023. The increase in cost of revenue in the third quarter of 2024 compared to the third quarter of 2023 was primarily due to (i) an increase in our operational headcount to support revenue growth, (ii) wage inflation, (iii) increased spending on professional services and (iv) higher infrastructure expenses. This increase was partially offset by lower stock-based compensation expense in thethird quarter of 2024 compared to thethird quarter of 2023.
Previous wording
Gross margin. Our gross margin increased from 35.3% in the second quarter of 2023 to 35.4% in the second quarter of 2024. The increase in gross margin was primarily driven by improved operating leverage and lower stock-based compensation expense, partially offset by wage inflation in the second quarter of 2024 compared to the second quarter of 2023.
Current wording
Gross margin. Our gross margin increased from 35.5% in the third quarter of 2023 to 35.6% in the third quarter of 2024. The increase in gross margin was primarily driven by revenue growth and lower stock-based compensation expense, partially offset by an increase in our operational headcount and wage inflation, net of contractual cost-of-living-adjustments ("COLA"), in the third quarter of 2024 compared to the third quarter of 2023.
Previous wording
Selling, general and administrative (SG&A) expenses. SG&A expenses as a percentage of total net revenues decreased from 20.8% in the second quarter of 2023 to 20.4% in the second quarter of 2024. SG&A expenses were $239.6 million in the second quarter of 2024, up $10.2 million, or 4.5%, from $229.4 million in the second quarter of 2023. The increase in SG&A expenses was primarily due toan increase in our sales and marketing spend to support growth as well as higher professional servicesand travel related expensesin the second quarter of 2024 compared to the second quarter of 2023. This increase was partially offset bylower stock-based compensation expense and operating leverage in support functions in the second quarter of 2024 compared to the second quarter of 2023.
Current wording
Selling, general and administrative (SG&A) expenses. SG&A expenses as a percentage of net revenues decreased from 20.2% in the third quarter of 2023 to 20.1% in the third quarter of 2024. SG&A expenses were $243.3 million in the third quarter of 2024, up $13.6 million, or 5.9%, from $229.7 million in the third quarter of 2023. The increase in SG&A expenses was primarily due toan increase in our sales and marketing spend to support growth as well as higher travel related expenses and wage inflationin thethird quarter of 2024 compared to thethird quarter of 2023. This increase was partially offset bylower stock-based compensation expense and operating leverage in support functions in the third quarter of 2024 compared to the third quarter of 2023.
Previous wording
Amortization of acquired intangible assets. Amortization of acquired intangible assets was $6.6 million in the second quarter of 2024, down $1.7 million, or 20.6%, from $8.3 million in the second quarter of 2023. This decrease was primarily due to the completion of useful lives of intangible assets acquired in prior periods.
Current wording
Amortization of acquired intangible assets. Amortization of acquired intangible assets was $6.5 million in the third quarter of 2024, down $1.0 million, or 13.4%, from $7.5 million in the third quarter of 2023. This decrease was primarily due to the completion of useful lives of intangible assets acquired in prior periods.
Previous wording
Income from operations. As a result of the foregoing factors, income from operations as a percentage of total net revenues increased from 14.2% in the second quarter of 2023 to 14.5% in the second quarter of 2024. Income from operations increased by $12.9 million from $157.3 million in the second quarter of 2023 to $170.3 million in the second quarter of 2024, primarily due to higher revenue and a higher gross margin in the second quarter of 2024 than in the second quarter of 2023.
Current wording
Income from operations. As a result of the foregoing factors, income from operations as a percentage of net revenues increased from 14.6% in the third quarter of 2023 to 15.0% in the third quarter of 2024. Income from operations increased by $16.0 million from $165.7 million in the third quarter of 2023 to $181.7 million in the third quarter of 2024, primarily due to higher revenue and a higher gross margin, partially offset by higher SG&A expenses in the third quarter of 2024 compared to the third quarter of 2023.
Previous wording
Foreign exchange gains (losses), net. We recorded a net foreign exchange gain of $2.5 million in the second quarter of 2024 compared to a net foreign exchange gain of $1.8 million in the second quarter of 2023. The gain in the second quarter of 2024 resulted primarily from gains on fair value hedges and the depreciation of the Indian rupee against the U.S. dollar. The gain in the second quarter of 2023 resulted primarily from gains on fair value hedges, partially offset by the appreciation of the Indian rupee against the U.S. dollar.
Current wording
Foreign exchange gains, net. We recorded a net foreign exchange gain of $1.1 million in the third quarter of 2024 compared to a net foreign exchange gain of $3.0 million in the third quarter of 2023. The gain in the third quarter of 2023 and 2024 resulted primarily from the depreciation of the Indian rupee against the U.S. dollar.
Previous wording
Interest income(expense), net. Our interest expense (net of interest income) was $13.5 million in the second quarter of 2024, up $1.4 million from $12.1 million in the second quarter of 2023, primarily due to a $3.9 million increase in interest expense, largely offset by a $2.5 million increase in interest income. Our interest income increased from $3.5 million in the second quarter of 2023 to $6.0 million in the second quarter of 2024, primarily due to higher interest rates and higher cash balances in the second quarter of 2024 compared to the second quarter of 2023. The increase in interest expense was largely due to (i) incremental interest expense on the senior notes issued in June 2024, (ii) a higher average benchmark-based rate on our revolving credit facility and term loan, and (iii) lower gains on interest rate swaps entered into to hedge interest rate exposure on our term loan. This was partially offset by lower usage of our revolving credit facility and a lower term loan balance in the second quarter of 2024 compared to the second quarter of 2023. The weighted average rate of interest on our debt, including the net impact of interest rate swaps, increased from 3.3% in the second quarter of 2023 to 4.4% in the second quarter of 2024. See the section titled “Liquidity and Capital Resources—Financial Condition” for further discussion.
Current wording
Interest income(expense), net. Our interest expense (net of interest income) was $12.4 million in the third quarter of 2024, down $0.9 million from $13.3 million in the third quarter of 2023, primarily due to a $5.7 million increase in interest income, partially offset by a $4.9 million increase in interest expense. Our interest income increased from $4.6 million in the third quarter of 2023 to $10.3 million in the third quarter of 2024, primarily due to higher cash balances in the third quarter of 2024 compared to the third quarter of 2023. The increase in interest expense was largely due to an incremental interest expense on the senior notes issued in June 2024 and lower gains on interest rate swaps entered into to hedge interest rate exposure on our term loan. This increase in interest expense was partially offset by lower interest expense on our revolving credit facility and term loan due to lower volumes in the third quarter of 2024 compared to third quarter of 2023. The weighted average rate of interest on our debt, including the net impact of interest rate swaps, increased from 4.1% in the third quarter of 2023 to 4.6% in the third quarter of 2024. See the section titled “Liquidity and Capital Resources—Financial Condition” for further discussion.
Previous wording
Other income (expense), net. Our other income, net of expense, was $3.3 million in the second quarter of 2024, down from $3.4 million in the second quarter of 2023, primarily due to a lower gain on changes in the fair value of assets in our deferred compensation plan, largely offset by higher miscellaneous receipts in the second quarter of 2024 compared to the second quarter of 2023.
Current wording
Other income (expense), net. Our other income (net of expense) was $5.1 million in the third quarter of 2024, compared to other expense (net of income) of $0.5 million in the third quarter of 2023, primarily due to a gain on changes in the fair value of assets in our deferred compensation plan in the third quarter of 2024 compared to a corresponding loss in the third quarter of 2023.
Previous wording
Income tax expense. Our income tax expense was $40.4 million in the second quarter of 2024, up from $34.1 million in the second quarter of 2023, representing an effective tax rate (“ETR”) of 24.9% in the second quarter of 2024, up from 22.7% in the second quarter of 2023. The increase in our ETR was primarily driven by lower tax deductions related to stock-based compensation and other discrete items in the second quarter of 2024 compared to the second quarter of 2023.
Current wording
Income tax expense. Our income tax expense was $42.7 million in the third quarter of 2024, up from $37.3 million in the third quarter of 2023, representing an effective tax rate (“ETR”) of 24.3% in the third quarter of 2024, up from 24.1% in the third quarter of 2023. The increase in our ETR was primarily driven by lower discrete benefits in the third quarter of 2024 compared to the third quarter of 2023.
Previous wording
Adjusted income from operations. Adjusted income from operations (“AOI”) increased by $12.5 million from $186.0 million in the second quarter of 2023 to $198.4 million in the second quarter of 2024. Our AOI margin increased from 16.8% in the second quarter of 2023 to 16.9% in the second quarter of 2024, largely due to improved operational efficiencies in the second quarter of 2024 compared tothe second quarter of 2023.
Current wording
Adjusted income from operations. Adjusted income from operations (“AOI”) increased by $18.0 million, from $195.0 million in the third quarter of 2023 to $213.0 million in the third quarter of 2024. Our AOI margin increased from 17.2% in the third quarter of 2023 to 17.6% in the third quarter of 2024, largely due to improved operational efficiencies in thethird quarter of 2024 compared tothe third quarter of 2023.
Previous wording
AOI and AOI margin are non-GAAP measures and 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 financial measures used by other companies. We believe that presenting AOI together with our reported results can provide useful supplemental information to our investors and management regarding financial and business trends relating to our financial condition and results of operations. A limitation of using AOI versus net income calculated in accordance with GAAP is that AOI excludes certain recurring costs and certain other charges, namely stock-based compensation and amortization of acquired intangibles. We compensate for this limitation by providing specific information on the GAAP amounts excluded from AOI.
Current wording
AOI and AOI margin are non-GAAP measures and are not based on any comprehensive set of accounting rules or principles. They should not be considered as a substitute for, or superior to, financial measures calculated in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. We believe that presenting AOI alongside our reported results offers useful supplemental information to our investors and management regarding financial and business trends relating to our financial condition and results of operations. A limitation of using AOI versus net income calculated in accordance with GAAP is that AOI excludes certain recurring costs and certain other charges, namely stock-based compensation and amortization of acquired intangibles. We compensate for this limitation by providing specific information on the GAAP amounts excluded from AOI.
Previous wording
We calculate AOI as net income, excluding (i) stock-based compensation, (ii) amortization and impairment of acquired intangible assets, (iii) foreign exchange (gains)/losses, net, (iv) interest (income) expense, net, (v) restructuring (income) expense and (vi) income tax expense, as we believe that our results after taking into account these adjustments more accurately reflect our ongoing operations. To calculate AOI margin, we divided AOI (as calculated above) by total revenue. For additional information, see Note 18—“Segment reporting” under Part I, Item 1—“Unaudited Consolidated Financial Statements” above.
Current wording
We calculate AOI as net income, excluding (i) stock-based compensation expense, (ii) amortization and impairment of acquired intangible assets, (iii) foreign exchange (gains)/losses, net, (iv) interest (income) expense, net, and (v) income tax expense, as we believe that our results after considering these adjustments more accurately reflect our ongoing operations. To calculate AOI margin, we divided AOI (as calculated above) by net revenue. For additional information, see Note 18—“Segment reporting” under Part I, Item 1—“Unaudited Consolidated Financial Statements” above.
Previous wording
AOI of our Financial Services segment increased to $53.1 million in the second quarter of 2024 from $46.7 million in the second quarter of 2023, primarily due to higher revenues and operating efficiency in the second quarter of 2024 compared to the second quarter of 2023. AOI of our Consumer and Healthcare segment increased to $70.7 million in the second quarter of 2024 from $59.0 million in the second quarter of 2023, largely due to higher revenue from large deal ramp-ups and operating efficiencies in the second quarter of 2024 compared to the second quarter of 2023. AOI of our High Tech and Manufacturing segment increased to $74.6 million in the second quarter of 2024 from $69.6 million in the second quarter of 2023, primarily driven by higher revenue and the reduction in scope of a low margin priority account, partially offset by productivity commitments in the second quarter of 2024 compared to the second quarter of 2023.
Current wording
AOI of our Financial Services segment increased to $58.3 million in the third quarter of 2024 from $53.0 million in the third quarter of 2023, primarily due to higher revenues and operating efficiency in the third quarter of 2024 compared to the third quarter of 2023. AOI of our Consumer and Healthcare segment increased to $74.5 million in the third quarter of 2024 from $62.3 million in the third quarter of 2023, largely due to higher revenue from large deal ramp-ups and operating efficiencies in the third quarter of 2024 compared to the third quarter of 2023. AOI of our High Tech and Manufacturing segment decreased to $81.2 million in the third quarter of 2024 from $83.1 million in the third quarter of 2023, primarily driven by higher investment in delivery commitments, partially offset by higher revenue, in the third quarter of 2024 compared to the third quarter of 2023.
Previous wording
AOI for “Others” in the table above primarily represents the adjustment of over- or under-absorption of corporate overheads which is not allocated to any individual segment for management's internal reporting purposes. See Note 18—“Segment reporting” under Part I, Item 1— “Unaudited Consolidated Financial Statements” above.
Current wording
AOI for “Others” in the table above primarily represents the adjustment of allowances for credit losses and over- or under-absorption of corporate overheads which is not allocated to any individual segment for management's internal reporting purposes. See Note 18—“Segment reporting” under Part I, Item 1— “Unaudited Consolidated Financial Statements” above.
Previous wording
Net revenues. Our net revenues were $2,307.4 million in the first half of 2024, up $112.6 million, or 5.1%, from $2,194.8 million in the first half of 2023.
Current wording
Net revenues. Our net revenues were $3,518.4 million in the nine months ended September 30, 2024, up $187.8 million, or 5.6%, from $3,330.6 million in the nine months ended September 30, 2023.
Previous wording
Adjusted for foreign exchange, primarily the impact of changes in the values of the Japanese yen, Australian dollar, South African rand, Chinese yuan, U.K pound sterling, Polish zloty and Indian rupee against the U.S. dollar, our net revenues grew 5.6% in the first half of 2024 compared to the first half of 2023 on a constant currency 3 basis. We provide information about our revenue growth on a constant currency 3 basis so that our revenue may be viewed without the impact of foreign currency exchange rate fluctuations, thereby facilitating period-to-period comparisons of our business performance. Total net revenues on a constant currency 3 basis are calculated by restating current-period activity using the prior fiscal period’s foreign currency exchange rates and adjusted for hedging gains/losses.
Current wording
Adjusted for foreign exchange, primarily the impact of changes in the values of the Japanese yen, Chinese yuan, Australian dollar, Indian rupee and South African rand against the U.S. dollar, our net revenues grew 6.0% in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 on a constant currency 3 basis. We provide information about our revenue growth on a constant currency 3 basis so that our revenue may be viewed without the impact of foreign currency exchange rate fluctuations, thereby facilitating period-to-period comparisons of our business performance. Net revenues on a constant currency 3 basis are calculated by restating current-period activity using the prior fiscal period’s foreign currency exchange rates and adjusted for hedging gains/losses.
Previous wording
Our average headcount increased by 10.5% to approximately 132,100 in the first half of 2024 from approximately 119,500 in the first half of 2023.
Current wording
Our average headcount increased by 10.1% to approximately 133,900 in the nine months ended September 30, 2024 from approximately 121,600 in the nine months ended September 30, 2023.
Previous wording
Net revenues from Data-Tech-AI services in the first half of 2024 were $1,069.9 million, up $35.0 million, or 3.4%, from $1,034.9 million in the first half of 2023. This increase was largely driven by an increase in revenue from our data and analytics solutions embedded in our finance and accounting, supply chain and risk management services in the first half of 2024 compared to the first half of 2023.
Current wording
Net revenues from Data-Tech-AI services in thenine months ended September 30, 2024 were $1,639.3 million, up $81.0 million, or 5.2%, from $1,558.3 million in the nine months ended September 30, 2023. This increase was largely driven by ramp-ups of services from recently signed large deals and an increase in revenue from our data and analytics solutions embedded in our finance and accounting, supply chain and risk management services in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.
Previous wording
Net revenues from Digital Operations services in the first half of 2024 were $1,237.6 million, up $77.6 million, or 6.7%, from $1,159.9 million in the first half of 2023, primarily due to ramp-ups of services for new large deals signed in 2023.
Current wording
Net revenues from Digital Operations services in the nine months ended September 30, 2024 were $1,879.1 million, up $106.7 million, or 6.0%, from $1,772.4 million in the nine months ended September 30, 2023, primarily due to ramp-ups of services for large deals signed in 2023 as well as recently signed large deals.
Previous wording
Net revenues from our Financial Services segment increased by 4.3% in the first half of 2024 compared to the first half of 2023, primarily due to large deal ramp-ups, partially offset by a reduction in services provided to a client in the banking vertical. Net revenues from our Consumer and Healthcare segment increased by 6.0% in thefirst half of 2024 compared to thefirst half of 2023, primarily driven by ramp-ups of services from large deals signed in 2023 and recently signed deals as well as an increase in supply chain engagements. Net revenues from our High Tech and Manufacturing segment increased by 4.9% in thefirst half of 2024 compared to thefirst half of 2023, largely driven by ramp-ups of client deals signed in 2023, partially offset by the impact of a reduction in deal scope for a large client in 2023. Net revenues from "Business held for sale" in the table above represent revenues from a business we had previously classified as held for sale with effect from April 1, 2022 as part of a series of actions we took in 2022 to focus our business on emerging solutions where we see the greatest opportunities for growth and to deprioritize assets that no longer fit with our long-term strategy. The sale of the business we had previously classified as held for sale was completed in the first quarter of 2023. For additional information, see Note 7—“Assets and liabilities held for sale” and Note 18—“Segment reporting” under Part I, Item 1—“Unaudited Consolidated Financial Statements” above.
Current wording
Net revenues from our Financial Services segment increased by 4.8% in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to ramp-ups of services from large deals. Net revenues from our Consumer and Healthcare segment increased by 6.7% in thenine months ended September 30, 2024 compared to thenine months ended September 30, 2023, primarily driven by ramp-ups of services from large deals signed in 2023 and recently signed deals as well as an increase in supply chain engagements. Net revenues from our High Tech and Manufacturing segment increased by 5.2% in thenine months ended September 30, 2024 compared to thenine months ended September 30, 2023, largely driven by ramp-ups of deals signed in 2023 as well as recently signed new deals. Net revenues from "Business held for sale" in the table above represent revenues from a business we had previously classified as held for sale with effect from April 1, 2022 as part of a series of actions we took in 2022 to focus our business on emerging solutions where we see the greatest opportunities for growth and to deprioritize assets that no longer fit with our long-term strategy. The sale of the business we had previously classified as held for sale was completed in the first quarter of 2023. For additional information, see Note 7—“Assets and liabilities held for sale” and Note 18—“Segment reporting” under Part I, Item 1—“Unaudited Consolidated Financial Statements” above.
Previous wording
Cost of revenue. Cost ofrevenue was $1,494.6 million in the first half of 2024, up $60.0 million, or 4.2%, from $1,434.6 million in the first half of 2023. The increase in cost of revenue in the first half of 2024 compared to the first half of 2023 was primarily due to (i) an increase in our operational headcount to support revenue growth, (ii) wage inflation and (iii) higher infrastructure expenses in the first half of 2024 compared to the first half of 2023. This increase was partially offset by lower consulting expenses, lower stock-based compensation expense and lower depreciation and amortization expense in the first half of 2024 compared to the first half of 2023.
Current wording
Cost of revenue. Cost ofrevenue was $2,274.1 million in the nine months ended September 30, 2024, up $106.6 million, or 4.9%, from $2,167.5 million in the nine months ended September 30, 2023. The increase in cost of revenue in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily due to (i) an increase in our operational headcount to support revenue growth, (ii) wage inflation, (iii) higher infrastructure expenses, and (iv) increased spending on professional services in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. This increase was partially offset by lower travel related expenses, lower stock-based compensation expense and lower depreciation and amortization expense in thenine months ended September 30, 2024 compared to thenine months ended September 30, 2023.
Previous wording
Gross margin. Our gross margin increased from 34.6% in the first half of 2023 to 35.2% in the first half of 2024. The increase in gross margin was primarily due toimproved operating leverage, lower stock-based compensation expense and lower depreciation and amortization expense, partially offset by wage inflation inthe first half of 2024 compared to the first half of 2023.
Current wording
Gross margin. Our gross margin increased from 34.9% in the nine months ended September 30, 2023 to 35.4% in the nine months ended September 30, 2024. The increase in gross margin was primarily due toimproved operating leverage, lower stock-based compensation expense and lower depreciation and amortization expense, partially offset by wage inflation (net of contractual COLA) inthe nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.
Previous wording
Selling, general and administrative (SG&A) expenses. SG&A expenses as a percentage of total net revenues increased from 20.3% in thefirst half of 2023 to 20.6% in thefirst half of 2024. SG&A expenses were $474.7 million in thefirst half of 2024, up $28.8 million, or 6.5%, from $445.9 million in thefirst half of 2023. The increase in SG&A expenses was primarily due toan increase in our sales and marketing spend to support business growth, a higher allowance for credit losses and wage inflation in the first half of 2024 compared to the first half of 2023. This increase was partially offsetby lower stock-based compensation expense and operating leverage in support functions in thefirst half of 2024 compared to thefirst half of 2023.
Current wording
Selling, general and administrative (SG&A) expenses. SG&A expenses as a percentage of net revenues increased from 20.3% in thenine months ended September 30, 2023 to 20.4% in thenine months ended September 30, 2024. SG&A expenses were $718.0 million in thenine months ended September 30, 2024, up $42.3 million, or 6.3%, from $675.6 million in thenine months ended September 30, 2023. The increase in SG&A expenses was primarily due toan increase in our sales and marketing spend to support business growth, a higher allowance for credit losses, increased spending on professional services, higher travel related expenses and wage inflation in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. This increase was partially offsetby lower stock-based compensation expense and operating leverage in support functions in thenine months ended September 30, 2024 compared to thenine months ended September 30, 2023.
Previous wording
Amortization of acquired intangible assets. Amortization of acquired intangible assets was $13.5 million in the first half of 2024, down $3.0 million, or 18.3%, from $16.5 million in the first half of 2023. This decrease was primarily due to the completion of useful lives of intangible assets acquired in prior periods.
Current wording
Amortization of acquired intangible assets. Amortization of acquired intangible assets was $20.0 million in the nine months ended September 30, 2024, down $4.0 million, or 16.8%, from$24.0 million in the nine months ended September 30, 2023. This decrease was primarily due to the completion of useful lives of intangible assets acquired in prior periods.
Previous wording
Other operating (income) expense, net. Other operating income (net of expense) was $5.5 million in the first half of 2024 compared to $4.6 million in the first half of 2023. The change in other operating income (net of expense) was primarily due to the receipt of $1.5 million upon the redemption of a loan note associated with the sale of a business previously classified as held for sale and the waiver by a vendor of a liability in the first half of 2024. Additionally, a gain was recorded in the first half of 2023 upon the successful termination of a lease that was abandoned as part of the 2022 restructuring described above. For additional information, see Note 7—"Assets and liabilities held for sale" and Note 24—“Restructuring” under Part I, Item 1—“Unaudited Consolidated Financial Statements” above.
Current wording
Other operating (income) expense, net. Other operating income (net of expense) was $5.6 million in thenine months ended September 30, 2024 compared to $4.7 million in thenine months ended September 30, 2023. The change was primarily due to the receipt of $1.5 million upon the redemption of a loan note associated with the sale of a business previously classified as held for sale and the waiver by a vendor of a liability in thenine months ended September 30, 2024. Additionally, a gain of $4.9 million was recorded in the nine months ended September 30, 2023 upon the successful termination of a lease that was abandoned as part of the 2022 restructuring described above. For additional information, see Note 7—"Assets and liabilities held for sale" and Note 24—“Restructuring” under Part I, Item 1—“Unaudited Consolidated Financial Statements” above.
Previous wording
Income from operations. As a result of the foregoing factors, income from operations as a percentage of total net revenues increased from 13.8% in the first half of 2023 to 14.3% in the first half of 2024. Income from operations increased by $27.8 million from $302.4 million in the first half of 2023 to $330.2 million in the first half of 2024, primarily due to a higher gross margin in the first half of 2024 compared to the first half of 2023.
Current wording
Income from operations. As a result of the foregoing factors, income from operations as a percentage of net revenues increased from 14.1% in the nine months ended September 30, 2023 to 14.5% in the nine months ended September 30, 2024. Income from operations increased by $43.8 million from $468.1 million in the nine months ended September 30, 2023 to $511.9 million in the nine months ended September 30, 2024, primarily due to a higher gross margin in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.
Previous wording
Interest income (expense), net. Our interest expense (net of interest income) was $23.8 million in the first half of 2024, up $2.0 million from $21.8 million in the first half of 2023, primarily due to a $6.0 million increase in interest expense, largely offset by a $4.0 million increase in interest income. Our interest income increased from $8.4 million in the first half of 2023 to $12.4 million in the first half of 2024, due to higher interest rates and higher cash balances in the first half of 2024 compared to the first half of 2023. The increase in interest expense was largely due to (i) incremental interest expense on our senior notes issued in June 2024, (ii) a higher average benchmark-based rate on our revolving credit facility and term loan, and (iii) lower gains on interest rate swaps entered into to hedge interest rate exposure on our term loan. This was partially offset by lower usage of our revolving credit facility and a lower principal amount outstanding under our term loan in the first half of 2024 compared to the first half of 2023. The weighted average rate of interest on our debt, including the net impact of interest rate swaps, increased from 3.3% in the first half of 2023 to 4.3% in the first half of 2024. See the section titled “Liquidity and Capital Resources—Financial Condition” for further discussion.
Current wording
Interest income (expense), net. Our interest expense (net of interest income) was $36.2 million in thenine months ended September 30, 2024, up $1.1 million from $35.0 million in thenine months ended September 30, 2023, primarily due to a $10.9 million increase in interest expense, partially offset by a $9.7 million increase in interest income. Our interest income increased from $13.0 million in thenine months ended September 30, 2023 to $22.7 million in thenine months ended September 30, 2024, due to higher cash balances in thenine months ended September 30, 2024 compared to thenine months ended September 30, 2023. The increase in interest expense was largely due to (i) incremental interest expense on our senior notes issued in June 2024, (ii) a higher average benchmark-based rate on our revolving credit facility and term loan, and (iii) lower gains on interest rate swaps entered into to hedge interest rate exposure on our term loan. The increase in interest expense was partially offset by a lower amount outstanding under our revolving credit facility and term loan in thenine months ended September 30, 2024 compared to thenine months ended September 30, 2023. The weighted average rate of interest on our debt, including the net impact of interest rate swaps, increased from 3.5% in thenine months ended September 30, 2023 to 4.4% in thenine months ended September 30, 2024. See the section titled “Liquidity and Capital Resources—Financial Condition” for further discussion.
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Previous report — wording carried elsewhere
Other operating (income) expense, net. Other operating income (net of expense) was $0.1 million in the second quarter of 2024, compared to $5.0 million in the second quarter of 2023. The decrease was primarily due to a gain recorded in the second quarter of 2023 upon the successful termination of a lease that was abandoned as part of a 2022 restructuring.