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Exhibit 99.1

Genpact Reports Results for the Third Quarter of 2011

Third Quarter Revenues of $429.6 Million, Up 34%

Adjusted Income from Operations of $70.9 Million, Up 43%

Net Income of $48.0 Million, Up 20%

NEW YORK, November 3, 2011 — Genpact Limited (NYSE: G), a global leader in business process and technology management, today announced financial results for the third quarter ended September 30, 2011.

Key Financial Results – Third Quarter 2011

 

 

Revenues were $429.6 million, up 33.6% from $321.6 million in the third quarter of 2010. Revenues from Global Clients were up 53.6% and business process management revenues from Global Clients were up 22.9%.

 

 

Net income attributable to Genpact Limited shareholders was $48.0 million, up 19.7% from $40.1 million in the third quarter of 2010; net income margin for the third quarter of 2011 was 11.2%, compared to 12.5% in the third quarter of 2010.

 

 

Diluted earnings per common share were $0.21, up 18.7% from $0.18 in the third quarter of 2010.

 

 

Adjusted income from operations totaled $70.9 million, up 43.2% from $49.5 million in the third quarter of 2010.

 

 

Adjusted income from operations margin was 16.5%, up from 15.4% in the third quarter of 2010.

 

 

Adjusted diluted earnings per share were $0.26, up 25.9% from $0.20 in the third quarter of 2010.

N.V. ‘Tiger’ Tyagarajan, Genpact’s president and CEO said, “Genpact delivered another great quarter in Q3, with strong growth in revenues, adjusted operating income, earnings per share and cash flows. Overall revenues increased 34% and Global Clients business process management revenues increased 23% year-over-year. The integration of the Headstrong acquisition is going well and cross-sell continues to gain momentum, as we won an additional six deals this quarter to go along with the five from last quarter. Client demand for our products and services was strong in the third quarter and we won a total of 27 new logos. Overall we increased the number of clients representing between $1 – 5 million in annual revenues to 112, from 59 in Q3 of 2010, giving us a great runway for growth and demonstrating the value we bring to clients.”

Revenues from clients other than GE, which Genpact refers to as Global Clients, grew 53.6% over the third quarter of 2010. Business process management revenues from Global Clients grew by 22.9% over the third quarter of 2010 and were led by 42.6% growth in Smart Decision Services, which is comprised of Genpact’s reengineering, analytics, business consulting and enterprise risk consulting businesses. Revenues from Global Clients now represent approximately 71.3% of Genpact’s total revenues, with the remaining 28.7% of revenues coming from GE. GE revenues increased by 0.8% from the third quarter of 2010, adjusted for dispositions by GE.

As of the end of the third quarter of 2011, 60 client relationships, including existing relationships with nine Headstrong clients, each contributed revenues of $5 million or more in the last twelve months, up from 41 such relationships as of September 30, 2010. As of the end of the third quarter of 2011, eight client relationships, including existing relationships with two Headstrong clients, each contributed revenues of $25 million or more in the last twelve months, up from four such client relationships as of September 30, 2010.

Approximately 74.3% of Genpact’s revenues for the quarter came from business process management services, compared to 86.1% for the third quarter of 2010. Revenues from IT services including IT services revenues attributable to Headstrong represented approximately 25.7% of total revenues for the third quarter of 2011, up from 13.9% for the third quarter of 2010.

Genpact generated $95.1 million of cash from operations in the third quarter of 2011, up from $68.0 million of cash from operations in the third quarter of 2010, primarily due to increased cash earnings and better working capital management. Genpact had approximately $409.1 million in cash and cash equivalents as of September 30, 2011.


Year-to-Date Results

 

   

Revenues were $1,157.7 million, up 26.2% from $917.4 million for the nine months ended September 30, 2010.

 

   

Net income attributable to Genpact Limited shareholders was $123.2 million, up 28.1% from $96.2 million for the nine months ended September 30, 2010; net income margin was 10.6%, up from 10.5% for the nine months ended September 30, 2010.

 

   

Diluted earnings per common share were $0.54, up 27.2% from $0.43 for the nine months ended September 30, 2010.

 

   

Adjusted income from operations was $187.4 million, up 33.8% from $140.0 million for the nine months ended September 30, 2010.

 

   

Adjusted income from operations margin was 16.2%, up from 15.3% for the nine months ended September 30, 2010.

 

   

Adjusted diluted earnings per share were $0.66, up 28.5% from $0.51 for the nine months ended September 30, 2010.

The third quarter and year-to-date results reflected a reserve of $3.9 million, equivalent to approximately $0.01 per share in earnings for both periods, against a receivable from MF Global, a client which recently filed for bankruptcy protection.

As of September 30, 2011, Genpact had approximately 53,600 employees worldwide, an increase from approximately 43,300 as of September 30, 2010. Genpact’s employee attrition rate for the nine months ended September 30, 2011 was 30%, measured from day one of employment, compared to 28% for the same period in 2010. Annualized revenue per employee for the nine months ended September 30, 2011, was $34,300, up from $30,600 for the nine months ended September 30, 2010.

2011 Outlook

Tyagarajan continued, “Our pipeline remains strong and stable and we are well positioned to capitalize on the opportunities for growth. However, in an environment where our clients are facing ongoing macro-economic uncertainty and volatility, which may continue into 2012, it is especially important to be adaptable to the changing priorities these factors may pose. Since the Headstrong acquisition, we have consistently provided an outlook for the full year 2011 of 23-25% revenue growth and 16-16.5% adjusted income from operations margin. Our strong performance during the first nine months of the year reflects the diversity and resilience in our business model, and we now expect to finish the full year 2011 ahead of the high end of both of these ranges.”

Conference Call to Discuss Financial Results

Genpact management will host an hour-long conference call beginning at 7:00 a.m. EDT on November 4, 2011 to discuss the company’s performance for the third quarter of fiscal 2011. To participate, callers can dial 1-866-202-1971 from within the U.S. or +1 617-213-8842 from any other country. Thereafter, callers will be prompted to enter the participant code, 76931561.

For those who cannot participate in the call, a replay and podcast will be available on Genpact’s website, www.genpact.com, after the end of the call. A transcript of the call will also be made available on Genpact’s website.

About Genpact

Genpact Limited (NYSE: G), a global leader in business process and technology management services, has developed a science behind superior business processes. Genpact’s unique process thought leadership captured in its Smart Enterprise Processes (SEPSM) framework, combined with deep domain expertise in multiple industry verticals, delivers better business outcomes across the enterprise, rather than simply providing efficiency gains within a single function. Genpact’s Smart Decision Services deliver business insights to its clients through targeted analytics, reengineering expertise, and advanced risk management. Genpact makes technology more intelligent by embedding it with these process and data insights in addition to providing a wide range of technology services. Built on a legacy of serving GE for more than 14 years, Genpact enables


companies worldwide to make smarter decisions, helping them drive revenue growth, compete more successfully, mitigate risk effectively, and improve operating margins and working capital. Driven by a passion for process and operational excellence based on its Lean and Six Sigma DNA, the company’s 53,000+ professionals around the globe deliver world-class business process and technology management services everyday to its more than 600 clients – from a network of 51 delivery centers across 17 countries supporting more than 25 languages. For more information, visit www.genpact.com.

Safe Harbor

This press release contains certain statements concerning our future growth prospects and forward-looking statements, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those in such forward-looking statements. These risks and uncertainties include but are not limited to a slowdown in the economies and sectors in which our clients operate, a slowdown in the business process management and information technology services sectors, the risks and uncertainties arising from our past and future acquisitions, our ability to manage growth, factors which may impact our cost advantage, wage increases, our ability to attract and retain skilled professionals, risks and uncertainties regarding fluctuations in our earnings, general economic conditions affecting our industry as well as other risks detailed in our reports filed with the U.S. Securities and Exchange Commission, including Genpact’s Annual Report on Form 10-K. These filings are available at www.sec.gov. Genpact may from time to time make additional written and oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission and our reports to shareholders. Although Genpact believes that these forward-looking statements are based on reasonable assumptions, you are cautioned not to put undue reliance on these forward-looking statements, which reflect management’s current analysis of future events and should not be relied upon as representing management’s expectations or beliefs as of any date subsequent to the time they are made. Genpact does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of Genpact.

# # #

Contact

 

Investors      Shishir Verma
     +1 (646) 624-5912
     shishir.verma@genpact.com
Media      Gail Marold
     +1 (919) 345-3899
     gail.marold@genpact.com


GENPACT LIMITED AND ITS SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

(In thousands, except per share data)

 

     As of December 31,      As of September 30,  
     2010      2011  

Assets

     

Current assets

     

Cash and cash equivalents

   $ 404,034       $ 409,065   

Short term investments

     76,985         —     

Accounts receivable, net

     174,654         255,715   

Accounts receivable from related party, net

     131,271         139,947   

Deferred tax assets

     21,985         19,551   

Due from related party

     3         3,791   

Prepaid expenses and other current assets

     126,848         171,544   
  

 

 

    

 

 

 

Total current assets

   $ 935,780       $ 999,613   

Property, plant and equipment, net

     197,166         180,633   

Deferred tax assets

     35,099         74,227   

Investment in equity affiliates

     1,913         286   

Customer-related intangible assets, net

     33,296         88,793   

Marketing-related intangible assets, net

     —           20,952   

Other intangible assets, net

     51         3,114   

Goodwill

     570,153         954,185   

Other assets

     120,003         106,663   
  

 

 

    

 

 

 

Total assets

   $ 1,893,461       $ 2,428,466   
  

 

 

    

 

 

 


GENPACT LIMITED AND ITS SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

(In thousands, except per share data)

 

     As of December 31,     As of September 30,  
     2010     2011  

Liabilities and equity

    

Current liabilities

    

Short-term borrowings

   $ —        $ 252,000   

Current portion of long-term debt

     24,950        28,932   

Current portion of capital lease obligations

     702        1,168   

Current portion of capital lease obligations payable to related party

     1,188        887   

Accounts payable

     12,206        9,785   

Income taxes payable

     8,064        54,630   

Deferred tax liabilities

     489        862   

Due to related party

     4,030        1,451   

Accrued expenses and other current liabilities

     270,919        290,243   
  

 

 

   

 

 

 

Total current liabilities

   $ 322,548      $ 639,958   

Long-term debt, less current portion

     —          88,714   

Capital lease obligations, less current portion

     741        905   

Capital lease obligations payable to related party, less current portion

     1,748        983   

Deferred tax liabilities

     2,953        1,650   

Due to related party

     10,683        13,982   

Other liabilities

     73,546        126,235   
  

 

 

   

 

 

 

Total liabilities

   $ 412,219      $ 872,427   
  

 

 

   

 

 

 

Shareholders’ equity

    

Preferred shares, $0.01 par value, 250,000,000 authorized, none issued

     —          —     

Common shares, $0.01 par value, 500,000,000 authorized, 220,916,960 and 221,995,792 issued and outstanding as of December 31, 2010 and September 30, 2011, respectively

     2,208        2,218   

Additional paid-in capital

     1,105,610        1,133,926   

Retained earnings

     421,092        544,266   

Accumulated other comprehensive income (loss)

     (50,238     (127,566
  

 

 

   

 

 

 

Genpact Limited shareholders’ equity

     1,478,672        1,552,844   

Noncontrolling interest

     2,570        3,195   
  

 

 

   

 

 

 

Total equity

     1,481,242        1,556,039   

Commitments and contingencies

    
  

 

 

   

 

 

 

Total liabilities and equity

   $ 1,893,461      $ 2,428,466   
  

 

 

   

 

 

 


GENPACT LIMITED AND ITS SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)

 

     Three months ended September 30,     Nine months ended September 30,  
     2010     2011     2010     2011  

Net revenues

        

Net revenues from services - related party

   $ 122,759      $ 123,290      $ 354,011      $ 359,035   

Net revenues from services - others

     198,812        306,275        563,406        798,707   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net revenues

     321,571        429,565        917,417        1,157,742   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenue

        

Services

     204,833        268,312        572,619        736,830   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenue

     204,833        268,312        572,619        736,830   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

   $ 116,738      $ 161,253      $ 344,798      $ 420,912   

Operating expenses:

        

Selling, general and administrative expenses

     71,272        95,868        219,440        250,033   

Amortization of acquired intangible assets

     3,875        5,754        12,159        13,971   

Other operating (income) expense, net

     (839     2,883        (4,780     2,592   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

   $ 42,430      $ 56,748      $ 117,979      $ 154,316   

Foreign exchange (gains) losses, net

     (5,513     (9,736     73        (12,433

Other income (expense), net

     1,210        2,147        3,324        8,271   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before Equity-method investment activity, net and income tax expense

   $ 49,153      $ 68,631      $ 121,230      $ 175,020   

Equity-method investment activity, net

     104        21        709        289   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax expense

   $ 49,049      $ 68,610      $ 120,521      $ 174,731   

Income tax expense

     7,490        18,907        19,572        46,386   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

   $ 41,559      $ 49,703      $ 100,949      $ 128,345   

Net income attributable to noncontrolling interest

     1,428        1,657        4,797        5,171   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Genpact Limited shareholders

   $ 40,131      $ 48,046      $ 96,152      $ 123,174   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to Genpact Limited common shareholders

     40,131        48,046        96,152        123,174   

Earnings per common share attributable to Genpact Limited common shareholders

        

Basic

   $ 0.18      $ 0.22      $ 0.44      $ 0.56   

Diluted

   $ 0.18      $ 0.21      $ 0.43      $ 0.54   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares used in computing earnings per common share attributable to Genpact Limited common shareholders

        

Basic

     219,630,410        221,771,264        218,847,260        221,359,288   

Diluted

     224,831,250        226,772,299        224,583,494        226,153,992   


GENPACT LIMITED AND ITS SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

     Nine months ended September 30,  
     2010     2011  

Operating activities

    

Net income attributable to Genpact Limited shareholders

   $ 96,152      $ 123,174   

Net income attributable to noncontrolling interest

     4,797        5,171   
  

 

 

   

 

 

 

Net Income

   $ 100,949      $ 128,345   

Adjustments to reconcile net income to net cash provided by (used for) operating activities:

    

Depreciation and amortization

     43,128        44,552   

Amortization of debt issue costs

     310        1,264   

Amortization of acquired intangible assets

     12,400        14,094   

Provision (release) for doubtful receivables

     (1,373     5,944   

Gain on business acquisition

     (247     —     

Unrealized (gain) loss on revaluation of foreign currency asset/liability

     (393     (6,397

Equity-method investment activity, net

     709        289   

Stock-based compensation expense

     14,963        17,712   

Deferred income taxes

     (5,719     (3,722

Others, net

     152        5,320   

Change in operating assets and liabilities:

    

Increase in accounts receivable

     (40,657     (36,568

Increase in other assets

     (49,536     (48,564

Decrease in accounts payable

     (300     (2,152

(Decrease) increase in accrued expenses and other current liabilities

     (23,288     10,274   

Increase in income taxes payable

     24,043        42,886   

Increase in other liabilities

     2,823        3,807   
  

 

 

   

 

 

 

Net cash provided by operating activities

   $ 77,964      $ 177,084   
  

 

 

   

 

 

 

Investing activities

    

Purchase of property, plant and equipment

     (47,690     (22,263

Proceeds from sale of property, plant and equipment

     916        687   

Investment in affiliates

     (2,324     —     

Purchase of short term investments

     (85,971     (129,458

Proceeds from sale of short term investments

     175,584        206,443   

Short term deposits placed with related party

     (6,485     —     

Redemption of short term deposits with related party

     16,213        —     

Payment for business acquisitions, net of cash acquired

     (42,575     (561,767
  

 

 

   

 

 

 

Net cash provided by (used for) investing activities

   $ 7,668      $ (506,358

Financing activities

    

Repayment of capital lease obligations

     (3,486     (2,027

Proceeds from long-term debt

     —          120,000   

Repayment of long-term debt

     (32,500     (25,000

Short-term borrowings, net

     (165     252,000   

Proceeds from issuance of common shares under stock based compensation plans

     18,472        10,614   

Direct cost incurred in relation to Debt

     —          (9,115

Distribution to noncontrolling interest

     (4,700     (4,680
  

 

 

   

 

 

 

Net cash provided by (used for) financing activities

   $ (22,379   $ 341,792   

Effect of exchange rate changes

     8,882        (7,487

Net increase in cash and cash equivalents

     63,253        12,518   

Cash and cash equivalents at the beginning of the period

     288,734        404,034   
  

 

 

   

 

 

 

Cash and cash equivalents at the end of the period

   $ 360,869      $ 409,065   
  

 

 

   

 

 

 

Supplementary information

    

Cash paid during the period for interest

   $ 1,293      $ 4,036   

Cash paid during the period for income taxes

   $ 28,872      $ 42,212   

Property, plant and equipment acquired under capital lease obligation

   $ 1,066      $ 1,438   


Reconciliation of Adjusted Non-GAAP Financial Measures to GAAP Measures

To supplement the consolidated financial statements presented in accordance with GAAP, this press release includes the following measures defined by the Securities and Exchange Commission as non-GAAP financial measures: non-GAAP adjusted income from operations, adjusted net income attributable to shareholders of Genpact Limited, or adjusted net income, and adjusted diluted earnings per share attributable to shareholders of Genpact Limited, or adjusted diluted earnings per share. These non-GAAP measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures, the financial statements prepared in accordance with GAAP and the reconciliations of Genpact’s GAAP financial statements to such non-GAAP measures should be carefully evaluated.

For its internal management reporting and budgeting purposes, Genpact’s management uses financial statements that do not include stock-based compensation expense, amortization of acquired intangibles at formation in 2004, expenses associated with the Company’s March 2010 secondary offering and significant acquisition related expenses and amortization of acquired intangibles on such acquisitions, for financial and operational decision-making, to evaluate period-to-period comparisons or for making comparisons of Genpact’s operating results to that of its competitors. Moreover, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use when adopting ASC 718 “Compensation-Stock Compensation”, Genpact’s management believes that providing financial statements that do not include stock-based compensation allows investors to make additional comparisons between Genpact’s operating results to those of other companies. In addition, Genpact’s management believes that providing non-GAAP financial measures that exclude amortization of acquired intangibles, expenses of the secondary offering and significant acquisition related expenses and amortization of acquired intangibles on such acquisitions, allows investors to make additional comparisons between Genpact’s operating results to those of other companies. The Company also believes that it is unreasonably difficult to provide its financial outlook in accordance with GAAP for a number of reasons including, without limitation, the Company’s inability to predict its future stock-based compensation expense under ASC 718, the amortization of intangibles associated with further acquisitions, significant acquisition related expenses and expenses of the secondary offering, if any. Accordingly, Genpact believes that the presentation of non-GAAP adjusted income from operations and adjusted net income, when read in conjunction with the Company’s reported results, can provide useful supplemental information to investors and management regarding financial and business trends relating to its financial condition and results of operations.

A limitation of using non-GAAP adjusted income from operations and adjusted net income versus income from operations and net income attributable to shareholders of Genpact Limited calculated in accordance with GAAP is that non-GAAP adjusted income from operations and adjusted net income excludes costs, namely, stock-based compensation, that are recurring. Stock-based compensation has been and will continue to be a significant recurring expense in Genpact’s business for the foreseeable future. Management compensates for this limitation by providing specific information regarding the GAAP amounts excluded from non-GAAP adjusted income from operations and adjusted net income and evaluating such non-GAAP financial measures with financial measures calculated in accordance with GAAP.


The following tables show the reconciliation of these adjusted financial measures from GAAP for the three and nine months ended September 30, 2010 and 2011:

Reconciliation of Adjusted Income from Operations

(Unaudited)

(In thousands)

 

     Three months ended September 30,     Nine months ended September 30,  
     2010     2011     2010     2011  

Income from operations as per GAAP

   $ 42,430      $ 56,748      $ 117,979      $ 154,316   

Add: Amortization of acquired intangible assets resulting from Formation Accounting

     3,199        2,327        10,117        7,275   

Add: Amortization of acquired intangible assets relating to significant acquisitions

     —          2,867        —          4,916   

Add: Stock based compensation

     4,678        9,153        14,963        17,712   

Add: Significant acquisition related expenses

     —          —          —          5,619   

Add: Other income

     712        1,452        2,478        3,012   

Less: Equity-method investment activity, net (excluding non-cash gain on re measurement of equity holding in HPP)

     (104     (38     (709     (306

Less: Non controlling interest

     (1,428     (1,657     (4,797     (5,171
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted income from operations

   $ 49,487      $ 70,852      $ 140,031      $ 187,373   
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of Adjusted Net Income

(Unaudited)

(In thousands, except per share data)

 

     Three months ended September 30,     Nine months ended September 30,  
     2010     2011     2010     2011  

Net income as per GAAP

   $ 40,131      $ 48,046      $ 96,152      $ 123,174   

Add: Amortization of acquired intangible assets resulting from Formation Accounting

     3,199        2,327        10,117        7,275   

Add: Amortization of acquired intangible assets relating to significant acquisitions

     —          2,867        —          4,916   

Add: Stock based compensation

     4,678        9,153        14,963        17,712   

Add: Significant acquisition related expenses

     —          —          —          5,619   

Add: Secondary offering expenses

     —          —          591        —     

Less: Tax impact on amortization of acquired intangibles resulting from Formation Accounting

     (925     (540     (2,998     (1,838

Less: Tax impact on amortization of acquired intangibles resulting from significant acquisitions

     —          (975     —          (1,670

Less: Tax impact on stock based compensation

     (1,159     (2,583     (3,837     (5,057

Less: Tax impact on significant acquisition related expenses

     —          —          —          (1,394
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

   $ 45,924      $ 58,295      $ 114,988      $ 148,737   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted diluted earnings per share

   $ 0.20      $ 0.26      $ 0.51      $ 0.66