Genpact Limited FY2025 Q2 Financial Report: Revenue Up 7.0%

Executive Summary

In the second quarter of fiscal year 2025, Genpact Limited demonstrated solid revenue growth, increasing by approximately 7.0% compared to the same period last year, driven by expanding client engagements and service offerings. Net income remained robust at $132.7 million, reflecting stable profitability despite increased operating expenses. The company’s cash position remains strong at $663.3 million, supporting ongoing investments and shareholder returns. Overall, Genpact’s performance indicates resilience and positive momentum in its core operations amid a competitive market environment.

Management Discussion and Analysis

Genpact’s Q2 FY2025 results highlight a consistent revenue trajectory, with revenue reaching $1.254 billion, up from $1.176 billion in the prior year, representing a 7.0% increase. Gross profit improved to $450.1 million, with gross margin slightly decreasing to 35.9% from 35.4%, primarily due to increased costs of revenue. Operating expenses, notably selling, general, and administrative expenses, increased to $266.4 million, reflecting strategic investments in technology and talent. Net income from continuing operations was $132.7 million, with earnings per share (EPS) at $0.76, slightly higher than $0.68 in the previous year, indicating improved profitability per share. The company’s liquidity remains healthy, with total current assets of $2.135 billion and total liabilities of $2.721 billion, resulting in a strong net debt position of approximately $868 million.

Income Statement Analysis

Revenue and Gross Profit

Revenue increased by 7.0% YoY from $1.177 billion to $1.254 billion, driven by growth in key service segments. Gross profit rose to $450.1 million, with gross margin marginally improving to 35.9% from 35.4%, indicating efficient cost management despite inflationary pressures.

Operating and Net Income

Operating income grew to $179.4 million from $170.3 million, a 5.4% increase, with operating margin slightly decreasing due to higher operating expenses. Net income from continuing operations was $132.7 million, up from $122 million, reflecting a 8.8% rise. EPS increased to $0.76 from $0.68, a 11.8% improvement, supported by share repurchases and operational efficiency.

Balance Sheet Analysis

Assets and Liquidity

As of June 30, 2025, total assets stood at $5.308 billion, with cash and cash equivalents at $663.3 million, representing a decrease of 27.4% from $914.2 million in the prior year, primarily due to investments in growth initiatives. Accounts receivable increased by 12.5% to $1.309 billion, reflecting higher sales volume. Total current assets totaled $2.135 billion, while total liabilities were $2.721 billion, resulting in a total stockholders’ equity of approximately $2.587 billion. The company’s net debt position is approximately $869 million, indicating manageable leverage levels.

Liabilities and Equity

Total liabilities increased by 0.2% YoY, mainly driven by long-term debt of $833.4 million. Shareholders’ equity increased by 0.4%, supported by retained earnings of $1.347 billion and additional paid-in capital. The debt-to-equity ratio remains within a healthy range, reflecting prudent leverage management.

Cash Flow Analysis

Operating Activities

Operating cash flow was robust at $177.4 million, driven by net income and favorable working capital changes. Cash paid for taxes and interest totaled approximately $54.3 million, supporting ongoing operational needs.

Investing Activities

Investments in property, plant, and equipment amounted to $24.6 million, primarily for technology upgrades. Acquisitions net of $80.6 million reflect strategic expansion efforts. Overall, investing activities resulted in a net cash outflow of $105.2 million.

Financing Activities

Net cash inflow from financing activities was $18.9 million, mainly from short-term debt issuance of $85 million offset by share repurchases of $30 million and dividend payments of $29.6 million. The company maintains a balanced approach to capital management.

Ratios & DuPont Analysis

Genpact’s net margin of 10.6% reflects solid profitability. ROA at 2.5% indicates effective asset utilization, while ROE of 20.4% demonstrates strong shareholder returns. The asset turnover ratio suggests efficient revenue generation relative to assets, and the equity multiplier indicates moderate leverage.

Risk Factors

Potential risks include regulatory changes impacting outsourcing and BPO services, increased competition from global players, macroeconomic uncertainties affecting client spending, operational risks related to technology infrastructure, and currency fluctuations impacting international revenues. Additionally, macroeconomic headwinds could influence client demand and profitability.

Notes & Additional Commentary

There are no significant one-time items or unusual expenses reported in this quarter. The slight decrease in gross margin is attributable to increased costs, but overall profitability remains stable. Share repurchases and dividend payments reflect confidence in long-term growth prospects and commitment to shareholder value.

Investment Implications

Genpact’s consistent revenue growth, strong cash flow, and manageable leverage position it well for continued expansion. Short-term opportunities include leveraging digital transformation trends and expanding high-margin service lines. Long-term risks involve macroeconomic volatility and competitive pressures. The company’s balanced approach to capital allocation and operational efficiency supports a cautiously optimistic outlook for investors seeking stability and growth in the BPO sector.