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Genpact (G) Q4 Earnings and Revenues Surpass Estimates

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Genpact Limited G delivered impressive fourth-quarter 2019 results, with earnings and revenues beating the Zacks Consensus Estimate.

Adjusted earnings per share of 57 cents outpaced the consensus mark by 1.8% and increased 9.6% year over year. The increase was driven by higher operating profit of 7 cents and positive impact of a penny related to higher foreign exchange balance sheet remeasurement gains, partially offset by higher effective tax rate of 2 cents and increased share count of a penny.

Revenues amounted to $941 million, which beat the consensus estimate by 3.2% and improved 12.7% year over year on a reported basis as well as constant-currency basis. The top line was driven by large deals and growth in transformation services.

The stock has gained 30.3% over the past year, significantly outperforming the 18.2% growth of the industry it belongs to.

Quarter Details

Total BPO revenues (85% of total revenues) increased 14% year over year to $801 million. Total IT revenues (15% of total revenues) came in at $140 million, up 3% year over year.

Global Clients (86% of total revenues) revenues climbed 7% year over year on a reported basis and 8% at cc to $811 million. Global Client BPO revenues of $711 million improved 9% year over year on a reported basis and 10% on a constant-currency basis. Global Client IT revenues grew 4% year over year to $100 million.

General Electric (GE) revenues of $129 million increased 61% year over year. It contributed 14% to total revenues. GE BPO revenues improved 81% year over year to $90 million. GE IT revenues of $40 million increased 29%.

Adjusted income from operations totaled $159 million, up 12% year over year. Adjusted operating income margin was 16.9%, flat with the year-ago quarter figure.

Balance Sheet

Genpact exited the fourth quarter with cash and cash equivalents of $467.1 million compared with $368 million at the end of the previous quarter. Long-term debt (less current portion) totaled $1.3 billion compared with $950.9 million at the end of the third quarter.

Genpact returned around $65 million to shareholders through dividend payout and $30 million through share repurchase in 2019.

2020 Guidance

Adjusted EPS is projected between $2.24 and $2.28. The Zacks Consensus Estimate is pegged at $2.28.

The company expects revenues in the range of $3.89-$3.95 billion, the midpoint ($3.92 billion) of which is above the current Zacks Consensus Estimate of $3.91 billion.

Global Client revenues are expected to register 12-14% growth on a reported as well as constant-currency basis.

Adjusted operating income margin is continued to be anticipated around 16%.

Zacks Rank & Stocks to Consider

Genpact currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Zacks Business Services sector are awaiting fourth-quarter 2019 earnings of key players like Delphi , Waste Management WM and Republic Services RSG, each scheduled to release results on Feb 13.

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