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G Q3 Earnings Beat Estimates on ATS Growth, Margins Expand
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Key Takeaways
Genpact's Q3 adjusted EPS rose 10.3% y/y to $1.07, beating estimates, while revenues grew 7.3% to $1.39B.
ATS revenues rose 30.3% y/y to $405.1M, while gross margin expanded 160 basis points to 38%.
Genpact raised its 2026 adjusted EPS outlook to $4.14 and gross margin forecast to 36.9%.
Genpact Limited (G - Free Report) reported better-than-expected third-quarter 2026 results. Adjusted earnings of $1.07 per share increased 10.3% year over year and beat the Zacks Consensus Estimate of $1.05 by 1.9%. Net revenues rose 7.3% to $1.39 billion, surpassing the consensus mark of $1.38 billion by 0.7%.
Performance was driven by Advanced Technology Solutions (ATS) revenues, which jumped 30.3% year over year. Gross margin expanded 160 basis points to 38%, marking the 14th consecutive quarter of year-over-year improvement. Non-FTE revenues exceeded 55% of total revenues, reflecting a shift toward non-headcount-based commercial models.
Over the past year, G's shares lost 7.6% compared with the industry's 16.7% decline. The Zacks S&P 500 composite gained 14.2% during the same period.
Image Source: Zacks Investment Research
G's Advanced Technology Solutions Accelerate
ATS revenues climbed to $405.1 million from $311 million a year ago, accounting for 29.2% of total revenues compared with 24.1% in the prior-year quarter. Growth accelerated from 24.1% in the second quarter, reflecting increasing momentum in Genpact's advanced technology portfolio.
The business spans Data & artificial intelligence (AI), Digital Technologies, Advisory and Agentic Solutions. Management continues to expect ATS revenues to grow at least 25% in 2026. The company is investing in AI-led offerings built on its process intelligence capabilities to capture demand for enterprise automation and higher-value services.
Genpact's Core Business Remains Stable
Core Business Services revenues were $980.3 million, essentially unchanged from $980.3 million in the year-ago quarter. The business represented 70.8% of total revenues, down from 75.9% a year earlier as ATS expanded its contribution.
The flat performance included a nearly 3-percentage-point impact from Genpact's deliberate transition away from work that does not align with its Agentic Operations strategy. Management continues to expect Core Business Services revenues to grow for the full year, despite an anticipated roughly 2-percentage-point impact from this portfolio shift.
Across industry verticals, Financial Services revenues increased 7.4% to $368 million. Consumer & Healthcare revenues advanced 10.7% to $476 million, while High Tech & Manufacturing revenues grew 4.4% to $542 million.
G Expands Gross Margin Amid Higher Expenses
Gross profit increased 12.1% year over year to $526.7 million. The improvement reflects Genpact's shift toward higher-value offerings and commercial arrangements that are less dependent on employee headcount.
Adjusted income from operations rose 7.7% to $246.5 million. The corresponding margin expanded 10 basis points to 17.8%. Reported income from operations increased 10.1% to $211 million, while operating margin improved to 15.2% from 14.8%.
Selling, general and administrative expenses increased to $312.5 million from $262.1 million in the prior-year quarter. Net income rose 4% to $151.7 million, while the net income margin declined to 10.9% from 11.3%.
Genpact's Agentic Solutions Gain Momentum
Genpact expects Agentic Solutions total contract value to exceed $1 billion by the end of 2026, more than five times the 2025 level. These offerings automate mission-critical business processes using AI-driven solutions developed with Genpact's intellectual property.
More than half of cumulative agentic contract value has come from new clients. The company also reported revenue growth exceeding 3% and gross margin expansion of more than 300 basis points among clients transitioning to its agentic offerings.
All Agentic Solutions contracts use non-FTE commercial arrangements, including fixed-fee, consumption-based and outcome-based models. Management highlighted record bookings, backlog and pipeline as the company expands its presence in enterprise operations.
G's Cash Flow Reflects Working Capital Pressures
Cash generated from operations was $93 million during the quarter. For the first nine months, operating cash flow totaled $142 million compared with $526.2 million in the corresponding prior-year period.
The year-to-date cash flow statement showed a $405.8 million increase in accounts receivable, representing a significant working capital outflow. Genpact ended September with $499.1 million in cash and cash equivalents compared with $853.8 million at the end of 2025.
During the quarter, the company repurchased approximately 870,000 shares for $31 million and distributed roughly $31 million in dividends. Year-to-date capital returned to shareholders totaled about $246 million.
Genpact Raises 2026 Earnings & Margin Outlook
For 2026, Genpact continues to expect reported revenue growth of at least 7%, including a nearly 2-percentage-point impact from its transition away from lower-priority work. On a constant-currency basis, revenues are projected to increase 6.8%.
Management raised its gross margin outlook to approximately 36.9% from 36.5%, representing an anticipated 90-basis-point year-over-year improvement. The adjusted operating margin forecast remains about 17.7%, up 25 basis points from 2025.
Genpact also increased its adjusted diluted earnings growth guidance to at least 13% from at least 12%. Its updated outlook reconciliation indicates adjusted earnings of $4.14 per share compared with the previous projection of $4.09. The Zacks Consensus Estimate for earnings is pegged at $4.11 per share for 2026.
ADP (ADP - Free Report) reported impressive first-quarter fiscal 2027 results. ADP’s adjusted earnings of $2.83 per share outpaced the consensus mark by 1.8% and rose 14% from the year-ago quarter. ADP’s total revenues of $5.49 billion surpassed the consensus mark by 0.4% and increased 6% year over year.
Broadridge Financial Solutions, Inc. (BR - Free Report) posted better-than-expected first-quarter fiscal 2027 results. BR’s adjusted earnings of $1.56 per share beat the Zacks Consensus Estimate by 13.9% and increased 3% year over year. Total revenues of $1.67 exceeded the consensus estimate by 1.5% and rose 5% from the year-ago quarter.
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G Q3 Earnings Beat Estimates on ATS Growth, Margins Expand
Key Takeaways
Genpact Limited (G - Free Report) reported better-than-expected third-quarter 2026 results. Adjusted earnings of $1.07 per share increased 10.3% year over year and beat the Zacks Consensus Estimate of $1.05 by 1.9%. Net revenues rose 7.3% to $1.39 billion, surpassing the consensus mark of $1.38 billion by 0.7%.
Genpact Limited Price, Consensus and EPS Surprise
Genpact Limited price-consensus-eps-surprise-chart | Genpact Limited Quote
Performance was driven by Advanced Technology Solutions (ATS) revenues, which jumped 30.3% year over year. Gross margin expanded 160 basis points to 38%, marking the 14th consecutive quarter of year-over-year improvement. Non-FTE revenues exceeded 55% of total revenues, reflecting a shift toward non-headcount-based commercial models.
Over the past year, G's shares lost 7.6% compared with the industry's 16.7% decline. The Zacks S&P 500 composite gained 14.2% during the same period.
Image Source: Zacks Investment Research
G's Advanced Technology Solutions Accelerate
ATS revenues climbed to $405.1 million from $311 million a year ago, accounting for 29.2% of total revenues compared with 24.1% in the prior-year quarter. Growth accelerated from 24.1% in the second quarter, reflecting increasing momentum in Genpact's advanced technology portfolio.
The business spans Data & artificial intelligence (AI), Digital Technologies, Advisory and Agentic Solutions. Management continues to expect ATS revenues to grow at least 25% in 2026. The company is investing in AI-led offerings built on its process intelligence capabilities to capture demand for enterprise automation and higher-value services.
Genpact's Core Business Remains Stable
Core Business Services revenues were $980.3 million, essentially unchanged from $980.3 million in the year-ago quarter. The business represented 70.8% of total revenues, down from 75.9% a year earlier as ATS expanded its contribution.
The flat performance included a nearly 3-percentage-point impact from Genpact's deliberate transition away from work that does not align with its Agentic Operations strategy. Management continues to expect Core Business Services revenues to grow for the full year, despite an anticipated roughly 2-percentage-point impact from this portfolio shift.
Across industry verticals, Financial Services revenues increased 7.4% to $368 million. Consumer & Healthcare revenues advanced 10.7% to $476 million, while High Tech & Manufacturing revenues grew 4.4% to $542 million.
G Expands Gross Margin Amid Higher Expenses
Gross profit increased 12.1% year over year to $526.7 million. The improvement reflects Genpact's shift toward higher-value offerings and commercial arrangements that are less dependent on employee headcount.
Adjusted income from operations rose 7.7% to $246.5 million. The corresponding margin expanded 10 basis points to 17.8%. Reported income from operations increased 10.1% to $211 million, while operating margin improved to 15.2% from 14.8%.
Selling, general and administrative expenses increased to $312.5 million from $262.1 million in the prior-year quarter. Net income rose 4% to $151.7 million, while the net income margin declined to 10.9% from 11.3%.
Genpact's Agentic Solutions Gain Momentum
Genpact expects Agentic Solutions total contract value to exceed $1 billion by the end of 2026, more than five times the 2025 level. These offerings automate mission-critical business processes using AI-driven solutions developed with Genpact's intellectual property.
More than half of cumulative agentic contract value has come from new clients. The company also reported revenue growth exceeding 3% and gross margin expansion of more than 300 basis points among clients transitioning to its agentic offerings.
All Agentic Solutions contracts use non-FTE commercial arrangements, including fixed-fee, consumption-based and outcome-based models. Management highlighted record bookings, backlog and pipeline as the company expands its presence in enterprise operations.
G's Cash Flow Reflects Working Capital Pressures
Cash generated from operations was $93 million during the quarter. For the first nine months, operating cash flow totaled $142 million compared with $526.2 million in the corresponding prior-year period.
The year-to-date cash flow statement showed a $405.8 million increase in accounts receivable, representing a significant working capital outflow. Genpact ended September with $499.1 million in cash and cash equivalents compared with $853.8 million at the end of 2025.
During the quarter, the company repurchased approximately 870,000 shares for $31 million and distributed roughly $31 million in dividends. Year-to-date capital returned to shareholders totaled about $246 million.
Genpact Raises 2026 Earnings & Margin Outlook
For 2026, Genpact continues to expect reported revenue growth of at least 7%, including a nearly 2-percentage-point impact from its transition away from lower-priority work. On a constant-currency basis, revenues are projected to increase 6.8%.
Management raised its gross margin outlook to approximately 36.9% from 36.5%, representing an anticipated 90-basis-point year-over-year improvement. The adjusted operating margin forecast remains about 17.7%, up 25 basis points from 2025.
Genpact also increased its adjusted diluted earnings growth guidance to at least 13% from at least 12%. Its updated outlook reconciliation indicates adjusted earnings of $4.14 per share compared with the previous projection of $4.09. The Zacks Consensus Estimate for earnings is pegged at $4.11 per share for 2026.
Genpact currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Earnings Snapshots
ADP (ADP - Free Report) reported impressive first-quarter fiscal 2027 results. ADP’s adjusted earnings of $2.83 per share outpaced the consensus mark by 1.8% and rose 14% from the year-ago quarter. ADP’s total revenues of $5.49 billion surpassed the consensus mark by 0.4% and increased 6% year over year.
Broadridge Financial Solutions, Inc. (BR - Free Report) posted better-than-expected first-quarter fiscal 2027 results. BR’s adjusted earnings of $1.56 per share beat the Zacks Consensus Estimate by 13.9% and increased 3% year over year. Total revenues of $1.67 exceeded the consensus estimate by 1.5% and rose 5% from the year-ago quarter.