Genpact LTD
For the period ended Mar 31, 2025. Filed May 12, 2025.
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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.
Mar 31, 2025 · Filed May 12, 2025
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 2024-09-30; filed 2024-11-12.
0001398659-24-000100
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-12.
0001398659-25-000059
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 167 previous paragraphs and 140 current paragraphs.
73 unchanged; 60 reworded; 7 added; 24 removed; 10 previous and 0 current paragraphs rearranged.
Tables are not compared: 15 previous and 11 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
•evolving global trade dynamics, including recently imposed tariffs, trade restrictions and other measures introduced by major economies, any of which may disrupt global supply chains, increase operating costs for our clients and delay their business decisions;
Current report
•unionization of a significant number of our employees.
Current report
Macroeconomic and geopolitical environment
Current report
Recently announced broad-based tariffs by the U.S., and threatened or imposed retaliatory measures by other countries, have contributed to increased macroeconomic uncertainty in global markets, which may impact our revenue growth. Extended periods of slower sales cycles could have a material adverse affect on our business, financial position and results of operations.
Current report
Revenues by nature of services provided were as follows:
Current report
*Not Meaningful
Current report
As of December 31, 2024 and March 31, 2025, our outstanding term loan, net of debt amortization expense of $0.9 million and $0.8 million, respectively, was $476.1 million and $469.5 million, respectively.
Removed paragraphs (24)
Previous report
•our ability to maintain relationships with former General Electric Company businesses;
Previous report
•further unionization of any of our employees.
Previous report
Macroeconomic environment
Previous report
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 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.
Previous report
Nine months ended September 30, 2024 Compared to the Nine months ended September 30, 2023
Previous report
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 report
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 report
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 report
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 report
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 report
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 report
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 report
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 report
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 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.
Previous report
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.
Previous 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.
Previous report
Income tax expense. Our income tax expense was $122.5 million in thenine months ended September 30, 2024, up from $103.8 million in thenine months ended September 30, 2023, representing an ETR of 24.8% in thenine months ended September 30, 2024, up from 23.4% in thenine months ended September 30, 2023. The increase in our ETR was primarily driven by lower tax deductions related to stock-based compensation in thenine months ended September 30, 2024 compared to thenine months ended September 30, 2023.
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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.
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Adjusted income from operations. Adjusted income from operations (“AOI”) increased by $33.3 million from $559.9 million in thenine months ended September 30, 2023 to $593.3 million in thenine months ended September 30, 2024. Our AOI margin increased to 16.9% in the nine months ended September 30, 2024 from 16.8% in the nine months ended September 30, 2023, largely due to higher operating leverage, partially offset by higher sales and marketing expenses.
Previous report
During the second quarter of 2022, management approved a plan to divest a business (the "Business") that was part of our Consumer and Healthcare segment. The divestiture was completed in the first quarter of 2023. As a result, we classified the assets and liabilities of the Business as held for sale and recorded net revenues of $0.5 million and a loss of $1.2 million in thenine months ended September 30, 2023. The sale of the Business was completed in the first quarter of 2023. Accordingly, there was no revenue or operating loss in thenine months ended September 30, 2024 from the Business. We also recorded a loss of $0.8 million in thenine months ended September 30, 2023 on the sale of the Business. 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 report
AOI of our Financial Services segment increased to $158.4 million in thenine months ended September 30, 2024 from $145.3 million in thenine months ended September 30, 2023, largely driven by higher revenues and operating efficiency in thenine months ended September 30, 2024 compared to thenine months ended September 30, 2023. AOI of our Consumer and Healthcare segment increased to $212.0 million in thenine months ended September 30, 2024 from $177.6 million in thenine months ended September 30, 2023, largely driven by higher revenue from large deal ramp-ups and improved efficiencies. AOI of our High Tech and Manufacturing segment increased to $224.8 million in thenine months ended September 30, 2024 from $217.0 million in thenine months ended September 30, 2023, largely driven by higher revenue, partially offset by higher investment in delivery commitments.
Previous report
The outstanding balance of the term loan under the 2018 Credit Agreement as of the date of the 2022 Credit Agreement was $527.0 million. The term loan and the revolving credit facility under the 2022 Credit Agreement have a term of five years and expire on December 13, 2027. The 2022 Credit Agreement did not result in a substantial modification of $290.9 million of the outstanding term loan under the 2018 Credit Agreement. As a result of the 2022 Credit Agreement, we extinguished $236.1 million of funding arrangements for the outstanding term loan under the 2018 Credit Agreement and obtained funding from new lenders of $239.1 million, resulting in outstanding principal of $530.0 million of the term loan under the 2022 Credit Agreement. In connection with the 2022 Credit Agreement, we expensed $0.1 million, representing partial acceleration of the amortization of the existing unamortized debt issuance costs and an additional fee paid to our lenders related to the term loan under the 2022 Credit Agreement. The overall borrowing capacity under the revolving credit facility under the 2022 Credit Agreement is $650.0 million, an increase from $500.0 million under the 2018 Credit Agreement. The remaining unamortized costs and an additional third-party fee paid in connection with the 2022 Credit Agreement will be amortized over the term of the facility, which will expire on December 13, 2027.
Reworded paragraphs (60)
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•expected spending by existing and prospective clients on the types of services we provide;
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•expected spending by existing and prospective clients on our services and solutions;
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•our ability to compete in the rapidly evolving technological environment and successfully implement and generate revenue from new services, including AI-enabled services;
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•our ability to compete in the rapidly evolving technological environment and successfully implement and generate revenue from new services;
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•deterioration in the global economic environment and its impact on our clients, including the bankruptcy of our clients;
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•deterioration in the global economic environment and its impact on our clients;
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•our ability to hire and retain enough qualified employees to support our operations;
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•our ability to hire and retain enough qualified employees to support our business, especially our advanced technology solutions;
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•our ability to manage the transition of our new Chief Executive Officer and to retain senior management;
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•our ability to retain senior management;
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•our dependence on revenues derived from clients in the United States and Europe and clients that operate in certain industries, such as the financial services and high tech industries;
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•our dependence on revenues derived from clients in North America and Europe and clients that operate in certain industries;
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•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;
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•geopolitical tensions, including the Russia-Ukraine war, the Middle East conflicts and any escalation in the India-Pakistan conflict, and actions that may be taken by the U.S. and other countries in response;
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•our ability to successfully consummate or integrate strategic acquisitions or execute divestitures;
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•our ability to successfully consummate or integrate strategic acquisitions;
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•financing terms, including the Secured Overnight Financing Rate ("SOFR") and changes to our credit ratings;
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•financing terms, including changes in the Secured Overnight Financing Rate ("SOFR") and changes to our credit ratings;
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•restrictions on visas for our employees traveling to North America and Europe;
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•restrictions on visas for our employees, in particular for employees traveling to the United States, the United Kingdom and the European Union, and restrictions on immigration more generally, as well as the potentially increased costs of visas and the wages we are required to pay employees on visas;
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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.
Current wording
Our results of operations are affected by economic and geopolitical conditions, including the overall inflationary environment and levels of business confidence. Since the beginning of 2025, economic uncertainty has increased in several markets globally, driven by shifting trade policy and the prospect of slowing global growth, which has impacted our business and may continue to impact our business in the future.
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The ongoing conflict between Russia and Ukraine and actions taken by the United States and other countries in response, including the imposition of sanctions, as well as the ongoing conflict in the Middle East, have contributed to and may continue to exacerbate supply chain disruption and inflation, regional instability and geopolitical tensions. While we do not have operations in Russia or Ukraine, it is difficult to anticipate the future impacts of the Russia-Ukraine conflict on our business or our clients’ businesses. We have limited operations in Israel and continue to closely monitor the situation in the Middle East. To date, we do not believe the conflicts in Ukraine or the Middle East, or the economic or political impacts of these conflicts, have had a material impact on our business, financial position or operations, but we plan to continue to monitor both conflicts.
Current wording
Geopolitical tensions have also intensified globally. The ongoing conflict between Russia and Ukraine, instability in the Middle East and recent escalations in the conflict between India and Pakistan are contributing to global market volatility and regional instability. While we do not have operations in Russia or Ukraine and have limited operations in Israel, we have significant delivery operations in India. We are actively monitoring the evolving situation between India and Pakistan and have implemented contingency plans to help ensure continuity of operations and employee safety. To date, none of these conflicts have had a material impact on our business, financial position or operations, but it is difficult to anticipate the future impacts of these conflicts on our business or our clients’ businesses.
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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.
Current wording
We are a global advanced technology services and solutions company. Powered by our mix of deep industry expertise, operational excellence, and advanced technology, we help companies reimagine finance and risk, supply chain and other core industry operations. We have over 145,000 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.
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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.
Current wording
In the quarter ended March 31, 2025, we recorded net revenues of $1,214.9 million, of which $581.9 million, or 47.9%, was from Data-Tech-AI services, with the remaining $633.0 million, or 52.1%, from Digital Operations services.
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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.
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, 2024. There have been no material changes to our critical accounting policies and estimates during the three months ended March 31, 2025 from those described in our Annual Report on Form 10-K for the year ended December 31, 2024.
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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.
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The following table sets forth certain data from our consolidated statements of income for the three months ended March 31, 2024 and 2025.
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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.
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Net revenues. Our net revenues were $1,214.9 million in the first quarter of 2025, up $83.7 million, or 7.4%, from $1,131.2 million in the first quarter of 2024.
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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.
Current wording
Adjusted for foreign exchange, primarily the impact of changes in the values of the euro, Australian dollar, Japanese yen and Indian rupee against the U.S. dollar, our net revenues grew 8.3% in the first quarter of 2025 compared to the first quarter of 2024 on a constant currency 1 basis. We provide information about our revenue growth on a constant currency 1 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 1 basis are calculated by restating current-period activity using the prior fiscal period’s foreign currency exchange rates and adjusted for hedging gains/losses.
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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.
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Our average headcount increased by 9.5% to approximately 142,900 in the first quarter of 2025 from approximately 130,500 in the first quarter of 2024.
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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.
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Net revenues from Data-Tech-AI services in the first quarter of 2025 were $581.9 million, up $58.1 million, or 11.1%, from $523.8 million in the first quarter of 2024. This increase was largely driven by demand for our technology services and data capabilities services in the first quarter of 2025 compared to the first quarter of 2024.
Previous 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.
Current wording
Net revenues from Digital Operations services in the first quarter of 2025 were $633.0 million, up $25.6 million, or 4.2%, from $607.4 million in the first quarter of 2024, primarily due to ramp-ups of services from recently signed deals.
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Revenues by segment were as follows:
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Revenues by reportable segment were as follows:
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2 Revenue growth on a constant currency basis is a non-GAAP measure and is calculated by restating current-period activity using the prior fiscal period’s foreign currency exchange rates adjusted for hedging gains/losses in such period.
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1 Revenue growth on a constant currency basis is a non-GAAP measure and is calculated by restating current-period activity using the prior fiscal period’s foreign currency exchange rates adjusted for hedging gains/losses in such period.
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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.
Current wording
Net revenues from our Financial Services segment increased by 6.8% in the first quarter of 2025 compared to the first quarter of 2024, largely due to an increase in technology services as well as ramp-ups of services from recently signed deals. Net revenues from our Consumer and Healthcare segment increased by 4.2% in the first quarter of 2025 compared to the first quarter of 2024, largely driven by an increase in finance and accounting services. Net revenues from our High Tech and Manufacturing segment increased by 10.9% in the first quarter of 2025 compared to the first quarter of 2024, largely driven by ramp-ups of services from recently signed deals and an increase in trust and safety and supply chain services.
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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.
Current wording
Cost of revenue. Cost of revenue was $785.9 million in the first quarter of 2025, up $51.2 million, or 7.0%, from $734.8 million in the first quarter of 2024. The increase in cost of revenue in the first quarter of 2025 compared to the first quarter of 2024 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 stock-based compensation expense in thefirst quarter of 2025 compared to thefirst quarter of 2024.
Previous 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.
Current wording
Gross margin. Our gross margin increased from 35.0% in the first quarter of 2024 to 35.3% in the first quarter of 2025. The increase in gross margin was primarily due to improved operating leverage in the first quarter of 2025 compared to the first quarter of 2024.
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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.
Current wording
Selling, general and administrative (SG&A) expenses. SG&A expenses as a percentage of net revenues decreased from 20.8% in the first quarter of 2024 to 19.8% in the first quarter of 2025. SG&A expenses were $241.1 million in the first quarter of 2025, up $6.1 million, or 2.6%, from $235.0 million in the first quarter of 2024. The increase was primarily driven by higher stock-based compensation expense, increased strategic investments in partnerships, alliances, and other sales and marketing capabilities as well as wage inflationin thefirst quarter of 2025 compared to thefirst quarter of 2024. This increase was partially offset by improved operating leverage and a lower allowance for credit losses in the first quarter of 2025 compared to the first quarter of 2024.
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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.
Current wording
Amortization of acquired intangible assets. Amortization of acquired intangible assets was $4.3 million in the first quarter of 2025, down $2.6 million, or 37.6%, from $6.9 million in the first quarter of 2024. This decrease was primarily due to the completion of useful lives of intangible assets acquired in prior periods.
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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.
Current wording
Other operating (income) expense, net. Other operating income (net of expense) was $0.1 million in the first quarter of 2025, compared to $5.5 million in the first quarter of 2024. The decline in other operating income (net of expense) was primarily due to a gain 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, both in the first quarter of 2024, with no corresponding income recorded in the first quarter of 2025.
Previous 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.
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 first quarter of 2024 to 15.1% in the first quarter of 2025. Income from operations increased by $23.7 million from $160.0 million in the first quarter of 2024 to $183.7 million in the first quarter of 2025, primarily due to higher gross margin, partially offset by higher SG&A expenses in the first quarter of 2025 compared to the first quarter of 2024.
Previous 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.
Current wording
Foreign exchange gains, net. We recorded a net foreign exchange gain of $1.3 million in the first quarter of 2025 compared to a net foreign exchange gain of $0.8 million in the first quarter of 2024. The gain in the first quarter of 2025 resulted primarily from gains on fair value hedges, partially offset by losses on remeasurement resulting from the appreciation of the Indian rupee against the U.S. dollar. The gain in the first quarter of 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 $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.
Current wording
Interest income (expense), net. Our interest expense (net of interest income) was $11.4 million in the first quarter of 2025, up $1.2 million from $10.2 million in the first quarter of 2024. The increase in interest expense was largely due to incremental interest expense on our senior notes issued in June 2024 and was partially offset by (i) the absence of any interest expense in the first quarter of 2025 on our senior notes issued in 2019, which were repaid in December 2024, and (ii) lower interest expense on our revolving credit facility and term loan due to lower SOFR and lower volume in the first quarter of 2025 compared to the first quarter of 2024. The weighted average rate of interest on our debt, including the net impact of interest rate swaps, increased from 4.2% in the first quarter of 2024 to 4.7% in the first quarter of 2025. 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 $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.
Current wording
Other income (expense), net. Our other income (net of expense) was $1.7 million in the first quarter of 2025, compared to $5.8 million in the first quarter of 2024, primarily due to a lower gain on changes in the fair value of assets in our deferred compensation plan in the first quarter of 2025 compared to the first quarter of 2024.
Previous 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.
Current wording
Income tax expense. Our income tax expense was $44.4 million in the first quarter of 2025, up from $39.4 million in the first quarter of 2024, representing an effective tax rate (“ETR”) of 25.3% in the first quarter of 2025, up from 25.2% in the first quarter of 2024. The change in our ETR was primarily driven by the mix of our pre-tax income and the impact of discrete items in the first quarter of 2025 compared to the first quarter of 2024.
Previous wording
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 wording
Net income. As a result of the foregoing factors, net income as a percentage of net revenues was 10.8% in the first quarter of 2025, up from 10.3% in the first quarterof 2024.
Previous 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.
Current wording
Adjusted income from operations. Adju sted income from operations (“AOI”) increased by $27.9 million, from $181.9 million in the first quarter of 2024 to $209.7 million in the first quarter of 2025. Our AOI margin increased from 16.1% in the first quarter of 2024 to 17.3% in the first quarter of 2025, largely driven by higher gross margin and improved SG&A leverage in thefirst quarter of 2025 compared tothe first quarter of 2024.
Previous 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.
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, 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 17—“Segment reporting” under Part I, Item 1—“Unaudited Consolidated Financial Statements” above.
Previous 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.
Current wording
AOI of our Financial Services segment increased to $58.2 million in the first quarter of 2025 from $47.0 million in the first quarter of 2024, primarily driven by higher revenues and operating efficiency in the first quarter of 2025 compared to the first quarter of 2024. AOI of our Consumer and Healthcare segment increased to $70.3 million in the first quarter of 2025 from $66.8 million in the first quarter of 2024, largely due to higher revenue from large deal ramp-ups and an improvement in the revenue mix, with higher margins in the first quarter of 2025 compared to the first quarter of 2024. AOI of our High Tech and Manufacturing segment increased to $80.1 million in the first quarter of 2025 from $69.0 million in the first quarter of 2024, primarily driven by higher revenues and operating efficiencies in the first quarter of 2025 compared to the first quarter of 2024.
Previous 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.
Current wording
AOI for “Unallocated corporate expenses” in the table above primarily represents the adjustment of allowances for credit losses and over- or under-absorption of corporate overheads, which are not allocated to any individual segment for management's internal reporting purposes. See Note 17—“Segment reporting” under Part I, Item 1— “Unaudited Consolidated Financial Statements” above.
Previous wording
On February 8, 2024, our board of directors approved an 11% increase in our quarterly cash dividend from $0.1375 per common share to $0.1525 per common share, representing a planned annual dividend of $0.61 per common share for 2024, up from $0.55 per common share in 2023. On March 26, 2024, June 26, 2024 and September 25, 2024, we paid a dividend of $0.1525 per share, amounting to $27.5 million, $27.3 million and $26.9 million in the aggregate, to shareholders of record as of March 11, 2024, June 10, 2024 and September 11, 2024, respectively.
Current wording
On February 8, 2024, our board of directors approved an 11% increase in our quarterly cash dividend from $0.1375 per common share to $0.1525 per common share, representing an annual dividend of $0.61 per common share for 2024, up from $0.55 per common share in 2023. On March 26, 2024, we paid a dividend of $0.1525 per share, amounting to $27.5 million in the aggregate, to shareholders of record as of March 11, 2024.
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Previous report — wording carried elsewhere
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 report — wording carried elsewhere
3 Revenue growth on a constant currency basis is a non-GAAP measure and is calculated by restating current-period activity using the prior fiscal period’s foreign currency exchange rates adjusted for hedging gains/losses in such period.
Previous report — wording carried elsewhere
Revenues by segment were as follows:
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
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 report — wording carried elsewhere
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) restructuring (income) expense, (v) the loss on the sale of the business classified as held for sale, (vi) interest (income) expense, net, (vii) the operating loss from the business classified as held for sale, and (viii) 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 net revenue, excluding revenue from the business previously classified as held for sale. For additional information, see Note 18—“Segment reporting” under Part I, Item 1—“Unaudited Consolidated Financial Statements” above.
Previous report — wording carried elsewhere
The following table shows the reconciliation of AOI to net income, the most directly comparable GAAP measure, for the nine months ended September 30,2023 and 2024:
Previous report — wording carried elsewhere
The following table sets forth our AOI by segment for the nine months ended September 30,2023 and 2024:
Previous report — wording carried elsewhere
AOI for “Others” in the table above primarily represents the adjustment of allowances for credit losses and over- or under-absorption of corporate overheads, none of which is allocated to any individual segment for management's internal reporting purposes. AOI for "business classified as held for sale" in the table above primarily represents the loss attributable to a business previously classified as held for sale. 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 report — wording carried elsewhere
In June 2024, Genpact Luxembourg and Genpact USA co-issued $400 million aggregate principal amount of 6.000% senior notes (the "2024 Senior Notes"). The 2024 Senior Notes are fully guaranteed by the Company. The total debt issuance cost of $4.4 million incurred in connection with the 2024 Senior Notes offering is being amortized over the life of the 2024 Senior Notes as additional interest expense. As of September 30, 2024, the amount outstanding under the 2024 Senior Notes, net of debt amortization expense of $4.1 million, was $395.9 million, which is payable on June 4, 2029.