In This Article:
It has been about a month since the last earnings report for Genpact (G). Shares have added about 0.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Genpact due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Genpact Beats on Q1 Earnings and Revenue Estimate
Genpact delivered impressive first-quarter 2019 results, with earnings and revenues beating the Zacks Consensus Estimate.
Adjusted earnings per share of 43 cents outpaced the consensus mark by 2 cents and increased 10% year over year. The bottom line was driven by a positive impact of 10 cents from higher operating profits, partially offset by a foreign exchange balance sheet remeasurement loss of a penny, tax impact of 2 cents, and higher net interest expense of a penny.
Revenues amounted to $809 million, which beat the consensus estimate by $46 million and improved 17% year over year on a reported basis and 19% on a constant-currency (cc) basis. The top line was driven by strong growth in the company’s High Tech, consumer goods and retail and industrial manufacturing verticals.
Revenues in Detail
Total BPO revenues (84% of total revenues) increased 19% year over year to $681 million. Total IT revenues (16% of total revenues) came in at $128 million, up 11% year over year. Global Clients (87% of total revenue) revenues climbed 11% year over year on a reported basis and 12% at cc to $700 million. Global Client BPO revenues of $605 million improved 12% year over year on a reported basis and 14% at cc. Global Client IT revenues grew 5% year over year to $95 million. General Electric (GE) revenues of $109 million increased 88% year over year. It contributed 13% total revenues. GE BPO revenues improved 126% year over year to $76 million. GE IT revenues of $33 million increased 35% from the year-ago quarter’s number.
Operating Results
Adjusted income from operations totaled $122 million, up 25% year over year. Adjusted operating income margin increased to 15% from 14.1% in the year-ago quarter. Selling, general & administrative (SG&A) expenses amounted to $191.4 million, up 11.9% year over year. As a percentage of revenues, SG&A expenses were 23.7% compared with 24.8% in the prior-year quarter.
Balance Sheet and Cash Flow
Genpact exited the first quarter with cash and cash equivalents of $325.4 million compared with $368.4 million at the end of the previous quarter. Long-term debt (less current portion) totaled $966.9 million compared with $975.6 million at the end of fourth-quarter 2018. The company used $5.4 million of cash in operating activities in the quarter. Capital expenditures were $14.1 million. Genpact returned almost $16 million to shareholders through dividend payment in the quarter.