Earnings Transcript for G - Q4 Fiscal Year 2024

Operator: Good day, ladies and gentlemen, and welcome to Genpact Limited's Fourth Quarter and Full Year 2024 Earnings Call. My name is Carmen, and I will be your conference moderator for today. At this time, all participants are in a listen-only mode. We will conduct a question and answer session towards the end of this conference call. As a reminder, this call is being recorded for replay purposes. The replay of the call will be archived and made available on the IR section of Genpact Limited's website. I would now like to turn the call over to Chris Davis, Head of Investor Relations at Genpact Limited. Please proceed.

Chris Davis: Thank you, Carmen. Good afternoon, everyone, and welcome to Genpact Limited's Q4 2024 earnings conference call. We hope you had a chance to read our earnings press release which was posted on the investor relations section of our website, genpact.com. Today, we have with us BK Kalra, President and CEO, and Mike Weiner, Chief Financial Officer. BK will start with a high-level overview of the quarter and year, and then Mike will cover our financial performance in greater detail before we take your questions. Please note that during this call, we will make forward-looking statements including statements about our business outlook, strategies, and long-term goals. These comments are based on our plans, predictions, and expectations as of today, which may change over time. Actual results could differ materially due to a number of important risks and uncertainties including the risk factors in our 10-K, and 10-Q filings with the SEC. Also during this call, we will discuss certain non-GAAP financial measures. We have reconciled those to the most directly comparable GAAP financial measures in our earnings press release. These non-GAAP measures are not intended to be a substitute for our GAAP results. And finally, this call in its entirety is being webcast from our investor relations website and an audio replay and transcript will be available on our website in a few hours. And with that, I'd like to turn it over to BK.

BK Kalra: Thank you, Krista. Hello, everyone. And thank you for joining us today. I'm pleased to report another strong quarter with better than expected performance. Revenue in Q4 reached $1.25 billion, up 9% year over year. Importantly, Datatech AI is beginning to show its potential, up 12% year over year, with accelerating revenue growth for the fourth quarter in a row. Digital operational growth also accelerated, up 6% year over year. Gross margin and adjusted operating income margin also exceeded expectations in Q4 as we continue to deliver operating efficiency, even while investing for growth. Taking a broader view, I am proud of what we accomplished in 2024. We built a strong foundation significantly strengthening our execution and innovation muscle. We closed fourteen large deals in line with last year, but with 10% higher booking in aggregate across this cohort. Revenue for the year grew 6.5%, approximately 400 basis points above the midpoint of our initial guidance range. Operating cash flow grew 25%, adjusted diluted EPS grew 10% year over year, faster than revenue, for the fourth year in a row. And we ended 2024 with new bookings of $5.7 billion, up 15% year over year after exceptionally strong performance in 2023. As we enter 2025, innovation is front and center at Genpact Limited. It's clear that businesses need to move beyond generic AI to domain-specific intelligence, tailored to their industry needs. To meet this need, we are excited to announce the general availability of our first agentic solution for accounts payable. This is the first in a series of agentic solutions that we will bring to market in our digital operations business. Powered by appropriate LLM, our solution leverages Gen AI and machine learning models to automate invoice extraction, driving superior value through this innovative approach. Paragentix solutions are built on the foundation of Genpact Limited's deep industry expertise with highly detailed domain-specific knowledge embedded in each of our agents to deliver value at scale. We are also accelerating in data tech and AI with the launch of our AI value studio and the Genpact Limited GigaFactory. The AI value studio helps businesses identify high-impact use cases and create custom roadmaps with seasoned Genpact Limited AI architects blending process, industry, and technology expertise. And the Genpact Limited Gigafactory is our first of its kind AI accelerator, designed to help enterprises rapidly scale AI solutions from pilot to full-scale production. It includes thousands of prebuilt AI and generated models that combine deep industry knowledge with cutting-edge data engineering tools, all leveraging our unique port delivery model with cross-functional teams that bring together domain-specific knowledge, data engineering, and integration expertise all in one team to accelerate time to value with responsible AI by design. Databricks is one of our first partners as we scale this Gigafactory. This faster pace of innovation is built on the strong foundation of the three plus one execution framework that we introduced in 2024, which is now firmly embedded in our DNA. It covers partnerships, Datatech AI, simplification, and the plus one in our three plus one framework, which is establishing Genpact Limited as our own best credential for AI-led transformation. To close out the year, I will walk you through the final key highlights on each. First, we made meaningful progress on partnerships in 2024, with partner-related revenues up 50% year over year, reaching high single digits as a percentage of revenue by year-end, with line of sight to generating significantly more in future periods. Growth was driven by investing in a world-class leadership team, driving awareness, improving our go-to-market, and scaling delivery capabilities with a number of hyperscalers and other large technology partners. We believe this represents a significant ongoing opportunity for Genpact Limited in 2025 and beyond. Looking ahead, we are also expanding our footprint in the startup ecosystem, with a particular focus on next-generation AI orchestration and other systems specifically designed to optimize business processes and workflows with AI. We expect these partnerships with emerging technology leaders will further accelerate our technology capability and go-to-market efforts in Datatech AI. Second, our focus on delivering comprehensive solutions in Data Tech AI in Q4 with revenue up 12% year over year. I'll give you a couple of examples that speak to the kind of work we are doing and the value it is driving for clients. We are forming a strategic relationship with Otis, the world's leading company for elevator escalator manufacturing, installation, and service to accelerate their transformation. As part of this, we would implement strong data architecture and new AI-powered technologies to make a number of core high-volume transactional and repeatable activities more efficient. With advanced automation, we would help standardize Otis's critical business processes, making it easier for customers to do business with them and allowing Otis to continue to focus on serving its customers with best-in-class service and innovative products that will propel them forward. We are also working with NTT DATA, our global technology leader, providing network solutions, cloud infrastructure, and data center services, to transform their technology solutions finance operations with the help of WWI. As part of this transformation, Genpact Limited is deploying multiple AI-forward solutions designed to improve many finance and accounting processes, including time to bill, credit rebill, leading to improved accuracy, shorter purchase order lead times, and better overall vendor and customer experience. We see ongoing evidence that Gen AI is significantly expanding the total addressable market. We now have more than 145 Gen AI solutions in production environments with clients, either deployed or going live, with Gen AI bookings accelerating to $100 million just in Q4. Coming back to the third element in our three plus one framework, which is simplification. We continue to streamline our operations to scale more efficiently. As an example, ongoing simplification to our cash collection process contributed to the significant increase in operating cash flows we delivered in 2024. And finally, on leading with Genpact Limited as our own best credential for AI-led transformation, we continue to make meaningful progress. I'll give you two examples. We introduced chat with data and that feature is live with HR, finance, sales, integrating advanced analytics machine learning, generating AI to increase forecast accuracy and leverage intelligence sourcing. We also adopted AI-powered network operations deploying AI across 120,000 endpoints in our network, implementing zero-touch provisioning, and significantly reducing tickets during the year. Now turning to our outlook. 2025 will be a year of accelerated innovation for Genpact Limited, and we feel good about our momentum as we enter the year. As a result, we are setting full-year revenue guidance at 6.5% at the midpoint of the range on an as-reported basis, which equates to approximately 7.2% at the midpoint in constant currency terms. We expect to deliver gross margin and AOI margins of 36% and 17.3% respectively, representing healthy expansion over 2024, with EPS growth of 9% at the midpoint. Consistent with our approach in 2024, our plan will be to reinvest any revenue upside we are able to generate over the course of the year back into the business to drive future revenue growth. Finally, as we lean into innovation in 2025, we are excited to share more details at our upcoming analyst day which will be held on June 26th, in New York City. Please save the date. A press release with additional details will be coming out soon. In closing, we are incredibly excited about the future as we accelerate the pace of innovation and change at Genpact Limited. Our commitment to scaling data, AI, and domain-driven agent tech solutions is positioning us as a clear leader in AI-driven transformation and driving superior value for our clients. I want to thank the entire Genpact Limited team for their incredible dedication and I am excited to see what we can deliver together in 2025. With that, let me turn the call over to Mike. Good afternoon, everyone, and thank you for joining us today.

Mike Weiner: I'll start with our fourth quarter results before moving on to full-year results and guidance. Results for the fourth quarter exceeded our expectations. We are particularly pleased with our strong revenue growth which was broad-based across all segments with particular strength in data tech and AI. Turning to our fourth quarter income statement. On an as-reported basis, net revenue reached $1.25 billion, a 9% year-over-year increase. Data, tech, and AI achieved revenue of $595 million, a 12% increase, fueled by strong demand for data and technology solutions. Data tech and AI contributed 48% of total quarterly revenue. Digital operations, which represented 52% of total revenue, grew 6% to $654 million supported by the successful ramp-ups of large-scale deals. Revenue from priority accounts grew approximately 9% year over year, representing 64% of fourth-quarter revenue. We delivered healthy growth in the fourth quarter across all three vertical segments. Consumer and healthcare revenue increased 11%, high-tech and manufacturing increased 9%, and financial services increased 6%. Outcome and consumption-based deals excluding fixed fee contracts accounted for 21% of fourth-quarter revenue. Our strategic shift to these deals positions us well to capture higher margin opportunities while delivering even greater value to our clients. Turning to profitability, we expanded gross margin by 10 basis points year over year in the fourth quarter to 35.7% due to operating leverage. SG&A expenses were 20% of revenue compared to 20.7% of revenue in the prior year, reflecting our continued investments in strategic growth areas as well as streamlined operations and enhanced productivity. Adjusted operating income was $221 million and adjusted operating income margin was 17.7%. Our effective tax rate for the fourth quarter was 22.3% compared to our prior year rate that was favorably impacted by a nonrecurring tax benefit from an intercompany transfer of intellectual property. Net income for the quarter was $142 million, diluted EPS was $0.79, and adjusted diluted EPS reached a record of $0.91, representing an 11.1% annual increase. Now turning to the full year. Annual bookings increased 15% to $5.7 billion reflecting healthy growth across all deal sizes. We won fourteen large deals in line with last year but with 10% higher bookings in aggregate across that cohort. We also added 101 new logos, ten more than the prior year with a written win rate of 50% with sole source deals accounting for 42% of total annual bookings. Our income for the full year is as follows on an as-reported basis. Net revenue grew 6.5% to $4.77 billion. Datatech and AI delivered revenue of $2.23 billion, increasing 6.9% and making up 47% of total revenue. Digital operations, which accounted for the remaining 53% of revenue, expanded by 6.1% year over year to $2.53 billion driven by large deal wins and client expansions. Across our industry segments, we achieved balanced growth during the year, with consumer and healthcare revenue up 8%, while high-tech and manufacturing and financial services grew 6% and 5% respectively. Annual revenue from outcome and consumption-based deals excluding fixed fee contracts, comprised 20% of total revenue for the year. While revenue from priority accounts grew approximately 6% year over year, contributing to 63% of total revenue. Gross margin for the year improved 40 basis points to 35.5% as we drove operational leverage. SG&A expense percentage of total revenue was 20.3% compared to 20.4% in the prior year, reflecting continued strategic investments net of our disciplined G&A cost management. Adjusted operating income grew 6.7% to $814 million. Margin increased 10 basis points from the prior year, to 17.1%, its highest annual level. Our effective tax rate for the year was 24.1% which brought in net income of $514 million. Adjusted diluted EPS was $3.28, a 10% increase, significantly outpacing revenue growth for the fourth consecutive year. We generated strong cash flow from operations, delivering $615 million, a 25% increase from the prior year. Turning to our balance sheet and capital allocation. We ended 2024 with a solid balance sheet highlighted by $648 million of cash and cash equivalents, up from $584 million in the year-ago period. Additionally, DSOs were 86 days, two days lower than 2023. We returned $112 million to shareholders in the fourth quarter through $85 million in share repurchases at an average share price of $45.41 and $27 million in dividends. For the full year, we returned $361 million made up of $253 million in share repurchases at an average price of $38.31 and $108 million in dividends. Let me pause now and review our guidance for 2025. Our approach remains consistent with last year and reflects our expectations that the macro environment will be similar to that in 2024. For the full year on an as-recorded basis, we expect to deliver net revenue in the range of $5.029 billion to $5.125 billion, growth of 5.5% to 7.7%, representing a 6.5% growth at the midpoint. At that midpoint, data and tech and AI and digital operations revenue growth is expected to be approximately 6.2% and 6.8% respectively. Given that estimated range, our adjusted diluted EPS is expected to be between $3.52 and $3.59, representing 9% growth year over year at the midpoint, again projected to grow faster than revenue. In constant currency terms, net revenue grew in the range of 6.2% to 8.2%, representing 7.2% at the midpoint, which translates into data tech and AI and digital operations revenue growth of approximately 6.4% and 7.9% respectively. Moving on. Full-year gross margin is expected to expand to 36%, an increase of 50 basis points year over year supported by operating leverage. Operating cash flow is expected to be approximately $590 million. On capital allocation, as in the past, we aim to return at least 50% of cash flow to investors through a combination of share repurchases and dividends, while maintaining flexibility for strategic investments. Accordingly, our Board of Directors approved an 11% increase in our regular quarterly dividend to $0.17 per quarter and $0.68 on an annual basis. In addition, our board also approved a $500 million increase to our existing share repurchase authorization. Looking at the first quarter now, on an as-reported basis, we expect to deliver net revenue between $1.202 billion and $1.213 billion, growing at 6.2% to 7.2%, representing 6.7% at the midpoint. This translates into Data Tech AI as well digital operations revenue of approximately 9.8% and 4.1% respectively. In constant currency terms, net revenue growth is in the range of 7.1% to 8.1%, representing 7.6% at the midpoint, which translates into Data Tech AI and digital operations revenue growth of approximately 10% and 5.4% respectively. We anticipate a gross margin of 35% and adjusted operating income of 16.5%. Lastly, we're projecting our adjusted diluted EPS of $0.79 to $0.80, an increase of approximately 9% at the midpoint compared to last year. With that, let me turn the call over to Krista.

Chris Davis: Thank you, Mike. Carmen, we're ready to take questions. Thank you.

Operator: Thank you so much. And as a reminder to our audience, to ask a question, simply press star one one on your telephone and wait for your name to be announced. To remove yourself, press star one one again. One moment for our first question. And it's from the line of Puneet Jain with JPMorgan. Please proceed.

Puneet Jain: Hey. Thanks for taking my question and great quarter. I wanted to ask on the guide, specifically as it relates to Data Tech AI and digital operations. It seems like from the guidance, Data Tech AI UX is expected to slow down beyond Q1. Part of it could be tough comps. But I'd like to ask if there is anything else going on and same question on digital operations, but like, the quote is expected to accelerate. So what drives that acceleration rest of the year beyond Q1 in taxes?

Mike Weiner: Yeah. So let me kick this off and hand over to you, BK. I want to put some additional comments, Deed. So, Puneet, as you know, approximately 75% of our business we call annuitized. That's business that we have that's converted to bookings that where it's converted to revenue that we've very good line of sight to and confidence in. The other 25% of revenue, we have to convert that pipeline to bookings into revenue in the immediate quarter. So obviously, as you go out later in the year, you have less visibility into it. So I'd say that when we came up with our guide for the full year on a quarterly basis, we gave you the first quarter already, it reflects a prudent approach that takes into account the annuitized book of the business as well as the non-annuitized book of the business which is disproportionately affected or results in data tech and AI. In addition to it, as you alluded to, it's a little bit tougher comps in the second half of the year. So we're committed to providing guidance on a quarterly basis and see how it goes from there.

Puneet Jain: Understood. Understood. And then on Gen AI, BK, you talked about, like, implementing some solutions. Some of them are live for clients. Are you seeing, like, an increase in size of some of those contracts as it relates to revenue you can generate from those engagements?

BK Kalra: So what we are seeing, Puneet, is that as we implement these Gen AI solutions, there are many follow-on conversations and contracts that we are getting, be it with our existing customers or new customers, because they are seeing the benefit and the value, you know, that we are able to drive. And that has been also the genesis of the Gigafactory that we recently launched, where it is helping clients to move from proof of concept or pilots to getting to large-scale production enterprise-wide, at a faster pace. So short answer, as we always say, you know, we see Gen AI as our total addressable market enhancer for us. And we continue to see that play out in our pipeline, in our conversations, and in our revenues.

Puneet Jain: Got it. Thank you.

Operator: Thank you. Our next question comes from the line of Maggie Nolan with William Blair. Please proceed.

Maggie Nolan: Hi. Thank you. On that topic of the Agentix Solutions, as we think about the guidance that you just gave, revenue guidance for 2025, what pace of hiring should we expect to be associated with that revenue guidance given the rollout of these types of solutions?

BK Kalra: Thanks, Maggie. I'll take that question. Look, I think, first, we are filled with the innovation posture that is taking hold in the market and a little bit of the first mover advantage that we are at the early stages beginning to harness. And long-term, medium to long-term, we will see a cadence of revenue higher than, you know, the typical hiring that has happened over the last same four or five years. In the short term, we are needing more of data technology skills that we are ramping to hire. So I don't think each quarter on quarter, you will see a massive shift, but there is a massive shift that is getting driven inside the company. Higher skilled as well as we are retraining and rearchitecting our current skill base through internal build programs, through genome programs, for the skills that are needed in the coming world. Yeah. And I would say the cost structure associated with all of that that we're doing is represented in the plan that we laid out.

Maggie Nolan: Got it. And then as we think about your business overall and how you might apply these new technologies going forward, what's kind of the balance between maybe more horizontal type solutions like this accounts payable solution or just accounts payable type work, horizontal work that you're doing versus domain-specific work that you're doing, and how do you view applicability of the emerging technology across those two buckets?

BK Kalra: So I think as we look at business, Maggie, it is a combination of horizontal and vertical domain-specific solutions. So the example that you're taking as an accounts payable, yeah, it is more horizontal or certain pieces from a supply chain standpoint are more horizontal. But similar posture, we are increasing in the insurance business, which is more around claims or underwriting or in our banking operation or, for example, trade promotion and CPG. So the posture is similar, and I think we are, you know, it is both into the industry verticals that we play in, as well as the intersection of the horizontals of finance or supply chain or procurement or others. Thank you.

Operator: Thank you. One moment for our next question. That comes from Sean Kennedy with Mizuho. Please proceed.

Sean Kennedy: Good evening, and thank you for taking my question. Congrats on the results. So I was wondering how Gen AI is expecting companies' trust and safety business, specifically content moderation in terms of potential and challenges. Know, for the business. And, also, could policy changes like the ones Meta recently made happen a sec on it? Thank you.

BK Kalra: So I'll take that, Sean. Thanks. So just as a reminder, content moderation or similar represents less than 10% of Genpact Limited's revenue. So it is not a significant portion of Genpact Limited's revenue, point number one. Point number two, the specifics that you are asking or many other such initiatives, you know, we stay in constant touch with our clients and we are only seeing increased intimacy with our clients. And the specific as in a fact check, you know, that those are the kind of work that we do not do. So we don't see that impact. But more importantly, we stay in very active touch with all of our clients. And we see a continued progression towards, you know, what our goals are and what our client's goals are, but we don't see any threat, you know, that you are if you are alluding to in.

Sean Kennedy: But is there an opportunity to use AI to kind of combat some of the kind of malicious content? Yeah. AI is kind of a threat in terms of content moderation. Like, is there opportunity there as well?

BK Kalra: So the short answer is yes. However, as you are dealing with large technology players, they obviously have their solution sets as well, Sean. Then they are actively engaging and, you know, we are an integral part of the solution, and we bring all those innovations to their doorstep as well. So it's a combination of factors where these large technology companies deploy their toolset or in certain cases, we deploy the toolset for them.

Sean Kennedy: Great. I appreciate the color. Congrats again on the quarter.

BK Kalra: Thank you.

Operator: Thank you. Our next question comes from the line of Brian Burke with TD Cowen. Please proceed.

Brian Burke: Hey, guys. Good afternoon. Thank you. BK, one year in the role now, as you look back on 2024, where would you say you've made the most progress and where now are you going to be most focused in 2025? I'm curious if it is about just merely scaling and executing upon the initiatives that have been installed over the past year or are there additional actions you're aiming to lean into?

BK Kalra: So thanks, Brian. Look, I think where I would say the most impact has been in the execution, agility, and the execution framework that I spoke of in 2024, be it the three plus one or other elements. And what I'm really thrilled about is how innovation is also taking hold. So it is not just scaling up what we did in 2024, that is table stakes, and you'll see some reflections of innovation already taking hold in terms of Gigafactory, in terms of AI value studio, in terms of services, agent tech solution. These are all new postures of Genpact Limited, and I think those are truly exciting as to how it is getting embraced, be it in our all of the global employee base, but more importantly also with our clients. So truly, innovation is where our focus is, and execution agility is the table stakes.

Mike Weiner: Right. If I may just add on, one thing BK has done and we've seen quarter after quarter and that's really going to be a big focus of ours in 2025 is speed. Right? So we absolutely understand how fast the outside world is moving. Right? And we are committed to keeping up, if not exceeding that speed in terms of our own execution and changes in the organization. I think that's a key focus for us in 2025.

Brian Burke: Okay. That's helpful. My follow-up is on bookings. So 15% growth here is solid off of already solid bookings the prior year. I see there's a there is some definitional change. It looks like it's duration, basically. Can you just clarify on that? And then can you give any sense on how ACV has trended here over the last year?

Mike Weiner: Yeah. So let me quickly take that. So, yeah, we do we have changed some of the definition of our bookings. So previously, we had capped our bookings in aggregate to five years. And again, didn't really make that much of a difference. But we have seen over the last couple of years, greater than five-year aggregated bookings. And to be in line with the industry, we've moved to an uncapped level of bookings. So, again, previously, if we did I'm making this up. A seven-year booking, we would reflect five of those seven years. Right? We're moving to more of an industry standard. Also, if you think about it, it really wasn't a material number for us. But again, over the last couple of years, we've seen the duration of those things expanding. ACV? Yes. So I think what you're alluding to in ACV is when you think about our deals, yeah, the mixture of our deals continues to change. Right? So if you think about when we had the low over, you know, 26% bookings, in the prior year, those deals tended to be on the larger side, longer tenure deals. Right? So you would reflect less ACV in the next year. Obviously, this year, it's a little bit more even-keeled in what represents that 15% number in terms of the duration of the deals. So it's not really comparable when you think about it from that perspective.

Brian Burke: Okay. Understood. Thank you.

Operator: Thank you. Our next question comes from the line of Surinder Thind with Jefferies. Please proceed.

Surinder Thind: Thank you. BK, I'd like to start with a big picture question around just the talent, the need for what I would call more technical talent at this point. How are you thinking about that in terms of it seems like as you accelerate innovation, you're looking for more software type skills. Is that a fair characterization that the build-out is more of those? And then, ultimately, how do you answer if someone was to say, well, you guys are IT services firms, whereas you're not a software development firm. And so is AI partly a software solution that maybe should be the expertise of those outside, or is it more of a domain-specific solution? Because there's a lot of money being thrown at software companies trying to build or better business processes.

BK Kalra: So let me take, possibly your second question first, Surinder, and then I'll tie it up with your first question, if that's okay. Look. We are a solutions firm that brings in not just services, but also software or other elements of accelerator together to solve business problems at scale for our clients. And what I would say is that fundamentally, many of these software the ERPs, more recently SaaS, all of those existed, you know, we know SaaS came in, you know, for the last almost eight, ten years. Yet at the keystroke level, there is a lot that needs to happen at scale. What we are doing is that intersection of domain, intersection of function, with the industry expertise, building solutions including software, that solves the problem at the keystroke level at scale. And what I would say is that, yeah, you can throw a lot of money at it, but you need to have a body of experience that is documented at scale over a period of time to understand the exceptions across industries, to truly build that knowledge and build into software. And to service that is how we are hiring point number your question number one. Talent around data technology, AI at scale. And one of the key value propositions for this talent is seeing in action the sandbox that doesn't exist, you know, generally available in software companies. And I think we are that last mile that enables a lot of these generic AI. Also, the foundation models or tools or SaaS and truly convert business value and creation of business value for our clients. And I think our progress on talent has been terrific. We continue to fuel that more, and it is, you know, we are seeing various channels to accelerate that technology talent journey. I'm really thrilled as to where we are at the end of 2024 and continue to make progress as we enter in 2025.

Surinder Thind: That's helpful. And then as a follow-up, related to that, how do you think about M&A at this point? Is that something that can be used to bring in additional capabilities, accelerate development, or does the innovation, because it is so domain-specific, have to be done much more organically?

BK Kalra: So our capital allocation methodology and principles stay the same. We constantly are evaluating similar M&A opportunities, and that's through a very disciplined financial approach and strategic thesis that where we cannot build organic capabilities at the speed that we need, we will, you know, deploy the M&A posture in there. And it is also integral to building the technology talent as well. But, again, this is a very, very disciplined approach. And if something materializes, obviously, you all will get to know. But it is an integral part of the strategy cost.

Surinder Thind: Thank you.

Operator: Thank you. And as a reminder, to ask a question, simply press star one one to get in the queue. We have a question from the line of Bradley Clark with BMO Capital Markets. Please proceed.

Bradley Clark: Hi. Thanks for taking my question, and nice results. I want to go back to generative AI. You've been consistent in expressing that this is a TAM expander for Genpact Limited. I want to understand in the project that you're working on and sort of guidance and conversation with customers in 2025. Is generative AI being funded for services products with net new dollars or is it in part coming at the expense of some more legacy work? Trying to understand if the spend in generative AI solutions that you'll be deploying is net new spend because I understand it could be net new to the market, but I'm trying to understand near where that spend is coming from. Thank you.

BK Kalra: Sure, Bradley. Look, I think what we observed in 2024 was that it was more a shift of the dollars than net new incremental dollars. And it could be a combination of factors as I speak to clients all the time. From, hey. Where they are, including experimenting because I do not know of a client. I do not know of a client. Who did not experiment into AI in 2024. Whether with us or with other, you know, partners. And, therefore, you know, what we saw in our book with our clients, you know, a lot of those successful journeys gave them confidence to continue to build in that momentum, but to your specific question, it was more a shift of the dollars. Now we will see how 2025 pans out. But at a broad macro level, what we saw was more a shift of the dollars than incremental dollars.

Bradley Clark: Appreciate the insight, and congrats again.

BK Kalra: Thank you.

Operator: Thank you. And this concludes the Q&A, and I will pass it back to management for closing comments.

BK Kalra: Thank you. And before we go, I just want to say thanks to all of our clients for choosing Genpact Limited. And to all of our shareholders, for their ongoing support. We are excited to keep innovating, and we look forward to talking to you again next quarter and hosting many of you at our Analyst Day in June. Thank you.

Operator: And with that, this concludes today's conference call. Thank you all for participating.