Genpact Limited Stock

Good day, ladies and gentlemen, and welcome to the 2026 Second Quarter Genpact Limited Earnings Conference Call. My name is Carmen, and I will be your conference moderator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. The replay of the call will be archived and made available on the IR section of Genpact's website.

I would now like to turn the call over to Kyle Vikstrom, Head of Investor Relations at Genpact. Please proceed.

Good afternoon, everyone, and welcome to Genpact's Q2 2026 Earnings Conference Call. We hope you've had a chance to read our earnings press release posted on the Investor Relations section of our website, genpact.com.

Today, we have with us BK Kalra, President and CEO; and Mike Weiner, Chief Financial Officer. BK will start with an overview of our results, and then Mike will cover our financial performance in greater detail before we take your questions.

Please note that during this call, we will make forward-looking statements, including statements about our business outlook strategies and long-term goals. These comments are based on our plans, predictions and expectations as of today, which may change over time. Actual results could differ materially due to a number of important risks and uncertainties, including the risk factors in our 10-K and 10-Q filings with the SEC.

During this call, we will discuss certain non-GAAP financial measures. We have reconciled those to the most directly comparable GAAP financial measures in our earnings press release. These non-GAAP measures are not intended to be a substitute for our GAAP results. Supplemental investor information can also be found in our earnings press release, fact sheet and investor presentation posted to our Investor Relations website. And finally, this call in its entirety is being webcast from our website, an audio replay and transcript will be available shortly after the call.

With that, I'd like to turn it over to BK.

Thank you, Kyle. Hello, everyone, and thank you for joining us today. Q2 was another strong quarter for Genpact. We delivered $1.343 billion in total revenue, up 7.1% year-over-year. Advanced Technology Solutions revenue grew 24.1% year-over-year, demonstrating that our flywheel is firing on all cylinders. We expanded gross margin for yet another quarter, providing continued leverage for significant investments to drive future growth. Adjusted diluted EPS, again grew double digits, faster than revenue, up 13.6% year-over-year. and non-FTE revenue surpassed 50% of total revenue for the first time.

Last quarter, I spoke about something rare, a moment when a structural shift in the market, our differentiated capability set and the right strategic positioning all converge at the same time. I want to build on that today. First, at the macro level. Demand continues to remain very strong, even as AI is regrowing markets. Enterprises want autonomous workflows that do the work, not just support it. Every function now has a mandate to leverage AI with clear ROI. This is opening new buying centers with new sets of requirements and complexities.

At the same time, one universal truth has not changed. There is no artificial intelligence without process intelligence. And yes, frontier models are getting better by the week, but they are also beginning to converge on interchangeability with switching costs getting lower. But models do not know how a global enterprise actually runs. The exceptions, the controls, the handoffs and the actual flow of work, the last mile. This is where the outcome is actually won or lost. This is where the actual differentiation sits. And among enterprise clients, we continue to observe that readiness is low even if escalation remains very high.

The foundational work, the data harmonization work, the process intelligence work still has to happen first to get ROI from investments in AI. That is why AI has not scaled for most companies, and it is precisely why clients are looking to Genpact and our differentiated IP solutions. I said earlier, when such a rare structural shift is presented and a company can shop on its differentiation and has the courage and discipline to act, the resulting advantage compounds in ways that are difficult to replicate. This is our moment. We are intentionally disrupting ourselves to be the leader in agentic operations. Genpact is not the company, you knew.

We are entering a new category with expanding TAM building a higher quality, more durable and structurally more valuable business. At Investor Day last June, when we first outlined our ambition for the year, we expected to deliver revenue growth of 7% with advanced technology solutions growing mid-teens. Since then, our conviction in the opportunity ahead has only strengthened. The momentum we are seeing makes it clear that the shape of our business is changing for the better, and the strategic pivot is taking hold much faster. As a result, we are leaning in and embracing this moment to further accelerate durable long-term growth, and we are allocating our capital against this opportunity.

Most importantly, we are doubling down in areas where we see the greatest long-term opportunity and the strongest returns. We are known for running mission-critical client operations at scale. We are moving from running business operations to running agentic operations. Therefore, we are qualifying this process intelligence into a stronger moat and allocating even more capital here. We are investing behind the flywheel that is already accelerating with an even greater focus on advanced technology solutions, where we believe growth is durable, margins are attractive and client demand continues to build with expanding TAM.

This momentum also gives us the opportunity to review components in core business services that are not aligned with our agentic operations strategy. We applied a test across our book of business with 3 simple questions: One, thus combining our process intelligence with frontier models create durable value and an advantage that clients cannot easily replicate. Two, does it provide a compelling ROI for both the client and impact? And three, is it aligned with expanding TAM? Where the answers are yes, we are agentifying at speed. This is a vast majority of our book across finance, supply chain, insurance, banking and many other mission-critical workloads. And this has expanding new TAM, which we have begun to capture already.

And where the answers are now across the board, we are working with clients to transition work back and redeploying investments. These are very small parts of our business like certain areas of content management and commoditized parts of contact centers. This clarity is at heart of becoming the agentic operations company. Even with this international disruption, we still have line of sight to deliver at least 7% year-over-year revenue growth in 2026.

On a full year basis, we expect the transition away from this work, not aligned with our agentic operations strategy will have nearly 2 points of impact to total revenue growth. Despite this, core business services revenue is still expected to grow for 2026. At the same time, we now expect Advanced Technology Solutions revenue to accelerate growing at least 25% for 2026. This acceleration underscores the rapid pace of adoption and how our investments are paying off.

While timing will be effective for both 2026 and 2027, for 2027, we currently expect the dollar impact to be slightly larger, though offset by continued momentum in areas aligned with our strategy. Our deliberate focus and prioritization continued to show up in top and bottom line growth and in our demand signals. Demand for our deep domain and industry expertise is healthy and growing, as evidenced by our bookings, backlog and pipeline, all increasing across both core and Advanced Tech.

This quarter marked our largest ever quarterly bookings. We signed another 6 large deals with a large pipeline of other transformational deals, setting us up for a healthy close to the year, and our revenue retention continues to be strong. The mix of our business continues to move towards higher value advanced tech offerings as we make meaningful progress against our 2x, 2x, 70%, 70% metric frame. Advanced Technology Solutions delivered more than 2x the revenue per head count, and more than 2x the revenue growth of the total company with more than 70% annuitized revenue and more than 70% for non-FTE commercial models.

As we fundamentally change how we contract and deliver, we are creating a robust durable base to build on that is no longer tied to head count. This includes more multiyear recurring annual revenue streams and margin leverage from agentic and AI driving more meaningful scale.

Over the past few years, we have systematically expanded our advanced technology capabilities in areas of our core strength. This has effectively created a powerful flywheel that is fueling identic operations. The flywheel starts with our core expert operators, decades of client trust, clear domains, last-mile knowledge -- in a sense, process intelligence, you cannot buy off a shelf. Then the flywheel turns with the expanded capabilities in data and AI and through our partner ecosystem, that power the advanced technology solutions of today. And that enriches process intelligence further, which earns trust to deliver the agentic mandate. The mandate expands our scope, which deepens our intelligence and deeper intelligence makes the mix solution better.

This flywheel compounds, building a genic operations at scale making our success hard to replicate. We are actively moving from human processed and human validated to machine processed and human validated all wrapped in responsible AI. Driving compounding advantages from autonomous agents with the context, governance and oversight that only last mile experts like Genpact can provide.

All of this is further accelerating advanced technology solutions, and that's playing out with the significant momentum we are seeing. Advanced Technology Solutions revenue grew another 24% in quarter 2, now accounting for 27% of total revenue. This quarter, Advanced Technology Solutions represented nearly 40% of our bookings and our pipeline increased meaningfully across all capabilities quarter-over-quarter, highlighting the significant demand our flywheel is driving. We are not adding a fast line to be past. We are changing what the whole business is and moving to our new category. This is where it all comes together. Clients do not come to us to buy core or Advanced Tech. They come to us with a vision for the future and a reality of where they are today. We are enabling the journey to agentic-led autonomy that enterprises can trust -- we call it agentic operations.

Domain experts and AI agents working side by side through reimagine processes to execute transactions, model-agnostic, built for enterprise governance and clear auditability. Learning that compounds delivered through multiyear annuitized recurring revenues, and the traction and demand are real. In agentic Solutions, we are on track to book over $1 billion in total contract value just in 2026. This is not a trivial number, and it is not a genetic washing. This represents just our productized AI offerings built with Genpact IP to run mission-critical business processes at enterprise scale and it is delivered with multiyear annuitized recurring revenues through a commercial model that is not tied to headcount.

Looking at agentic booking to date, more than half has come from new clients, proving the additional TAM we are capturing at speed. And from the clients who rotate we have seen more than 3% net revenue growth and more than 300 basis points of gross margin expansion. More clients, bigger wallets, a larger market and richer margins all at months. And we are quickly building our robust road map that aligns where our clients are going with what we can uniquely deliver.

We recently announced Genpact transaction monitoring analyst, the first module of our new Genpact banking analyst suite to help banks complete routine investigations faster and more consistently with full auditability and human oversight built-in. We also recently launched the Genpact reduction recovery solution our Agentic offering designed to help consumer good companies recover millions in lost revenue by automating the identification, validation and resolution of disputed reductions with faster cycle times, MMS compliance.

Adding to our existing agentic portfolio, which includes accounts payable, record to report, source to pay and insurance, these are just 2 additional examples of how we are actively delivering the outcomes client need to reshape their operations. As clients see the compounding effects of our flywheel and expanding agentic operations, they are choosing Genpact over legacy and new competitors to work across even more workflows and the additional parts of their transformation. As a case in point, we recently embarked on a journey with Lumin a global networking and technology company to agentify their accounts payable operation. And Mondelez International, one of the world's largest snacking companies expanded our relationship to build an enterprise-wide agentic operating model across their source-to-pay processes, spanning procurement through accounts payable. These are just a couple of examples. Partners also continue to be an important part of our strategy.

In quarter 2, our partner-related revenue growth accelerated as we continue to deepen relationship with partners core to our clients' infrastructure. This quarter, we achieved the data brick builder specialization for manufacturing, transportation and energy. ISG recognized Genpact as a leader in the ServiceNow ecosystem partners for 26 and as a rising star in the Databricks ecosystem report for AI/ML and managed data optimization.

And earlier this week, Nelson Hall identified Genpact as a leader in all 6 of their F&A transformation meat market segments for 2026, including agentic AI, procure to pay, record to report, order to cash, CFO advisory and finance transformation overall. These are just a few recent examples that highlight how focus in our strategic areas is having a clear impact. In closing, this quarter is a significant proof point for Genpact, as we shape what comes next as a leader in agentic operations. We are changing our business in ways that matter, building a new Genpact in a fundamentally different category. Doubling down on our most strategic priorities to accelerate the flywheel for agentic operations, building high-quality, durable revenue that compounds and it's harder to replicate, driving structurally richer margins and ultimately opening daylight between Genpact and the market around us.

With that, let me turn the call over to Mike.

Good afternoon, everyone, and thank you for joining us today. We delivered a strong second quarter, highlighting how our focus and investments are strengthening our position in agentic operations. Total revenue grew 7.1% year-over-year to $1.343 billion as momentum and Advanced Technology Solutions continues to build. .

Advanced Technology Solutions revenue, which includes data and AI, digital technologies, Advisory and agentic reached $363 million, growing again over 24% year-over-year, with broad-based strength across our flywheel. Demand for our advanced technology solutions is scaling quickly, and our strategic investments are delivering results. Our advanced technology capabilities are compounding with genic and AI-led innovation showing up across a growing set of offerings.

We are focused on exponentially expanding our total addressable market delivering more value for clients across end-to-end workflows and driving higher value, more durable revenue for Genpact. As BK mentioned, we're doubling down on our most strategic priorities to accelerate the flywheel for Agentic Operations, and we can start seeing the payoff.

In the second quarter, our genetic bookings grew significantly quarter-over-quarter. For 2026, we are tracking to deliver over $1 billion in agentic TCV, 5x more than 2025. And as BK noted, our agentic business continues to capture a broader TAM and wallet share, with meaningful traction across both new and existing clients. To date, more than 50% of our cumulative awarded contract value is coming from new clients. For existing accounts that are rotating from traditional to agentic delivery, both net revenue growth and gross margin expansion continue to be above what we reported at Investor Day in June of last year. as we continue to drive higher volumes, increased scope or both within our existing clients.

This momentum is compounding into what we believe is a more durable revenue base with higher gross margins that continue to improve with scale. Core Business Services revenue, which includes Digital Operations, Decision Support Services and Technology Services grew 1.9% to $980 million in the second quarter. We continue to see strong demand for our deep domain and industry experience built from decades of client trust as we help clients navigate through the different stages of their transformational journeys.

Our sales team continued to execute well, with strong demand for our core and advanced technology capabilities across new and existing clients. Net revenue retention remains accretive, and we continue to feel good about our pricing as we deliver incremental value for our client base. In 2Q, our large deal momentum also continued. We signed 6 large deals compared to 3 in the same period last year. This brings us to 12 large deals year-to-date double of what we did in the same period last year.

As a reminder, large deals are $50 million or greater in total contract value. Our bookings performance in the quarter was also the largest ever with nearly 40% coming from advanced technology solutions. And we continue to have a strong pipeline of additional large deals. With the record backlog and pipeline, we are in a very strong position for the second half of the year.

This quarter, non-FTE revenues surpassed 50% of total revenue, reflecting our disciplined focus on shifting to fixed fee, consumption and outcome-based models. And we are building a meaningful recurring annual revenue base that is decoupled from FTEs. At a segment level, Consumer & Healthcare grew 9.5%, followed by high-tech and manufacturing growth of 7.6% and Financial Services growth of 3.3%.

Turning to profitability. Gross margin expanded for the 13th consecutive quarter to 36.5%, up approximately 60 basis points year-over-year. Our margin profile reflects our continued operating and pricing discipline as well as revenue contribution from our high-value advanced technology solutions. Notably, we are also seeing revenue growth decoupled from head count as we embed these solutions in our own operations and delivery.

Moving down to the P&L. SG&A expense as a percentage of revenue was 21.9%, adjusted operating income was $234 million, up 7.5% year-over-year, faster than our revenue growth. Adjusted operating income margin was 17.4% and as we continue to self-fund our strategic investments. Our effective tax rate in the second quarter was 23.7%. Net income was $146 million and diluted EPS was $0.86. The -- adjusted diluted EPS increased 13.6% to $1 per share, growing significantly faster than revenue for yet another quarter.

Shifting to cash. We generated $72 million of cash from operations, ending the second quarter with $517 million in cash and cash equivalents. This was impacted by timing of collections as well as prepayments made in 2025. Credit quality remains high. In the quarter, we returned $82 million to shareholders share repurchases and $32 million in dividends.

Turning to the outlook. As BK noted, the momentum we're seeing in advanced technology solutions is significant. As a result, we are doubling down behind the flywheel that is already accelerating, focusing resources on where we can drive durable value and demand over the long term. With a strong backlog pipeline and demand for our differentiated capabilities. We have line of sight to deliver at least 7% revenue growth on an as-reported basis in 2026. Even with nearly 2 points of impact from our transition away from work not aligned with our genic operation strategy.

Given the exceptional demand, we now expect Advanced Technology Solutions revenue growth to accelerate in the second half of the year, increasing at least 25% for the full year. In core Business Services, we still expect 2026 to grow even after roughly 2 points of impact from the transition noted earlier. From a timing perspective, the impact of the transition will be concentrated in the second half numbers.

On margins, we continue to expect full year gross margin to expand to 50 basis points to 36.5% with adjusted operating income margin expected to increase approximately 25 basis points to 17.7%, reflecting our continued commitment to self-fund investments for growth. and we now expect adjusted diluted EPS to grow at least 12%.

Turning to the third quarter on an as-reported basis. We expect to deliver total revenue between $1.369 billion and $1.382 billion or 6.5% growth at the midpoint. We expect Advanced Technology Solutions revenue growth to accelerate to at least 25% year-over-year. We expect core business services to be flat to slightly down even after about 3 points of impact from the transition away from work not aligned with our Agentic Operation strategy. We expect gross margin to expand to 36.6% and adjusted operating income margin to increase to 17.8%. And finally, we expect adjusted diluted EPS of $1.04 to $1.05 for the third quarter.

In closing, as BK made it clear, a new Genpact is taking shape. To capture this enormous opportunity, we are reshaping how businesses operate, leveraging our unique strengths rooted in domain and industry expertise with significant advancements in our advanced technology solutions. We are focused on differentiating our position in the market, expanding our TAM dramatically, accelerating high-quality revenue growth and consistently expanding margins. all of which will allow us to continue to deliver double-digit growth in adjusted diluted EPS and long-term client value.

With that said, let me turn the call back over to Kyle.

Thank you, Mike. Operator, we're ready to go ahead and take questions.

[Operator Instructions] Our first question is from Bryan Bergin with TD Cowen.

So on the strategic prioritization that you're taking here, maybe the segment dynamics, just based on this conscious disruption of the business with the 2-point DBS headwind this year and what sounds like a similar headwind next year, what does the target growth model kind of look on the other side of these changes? If I adjust for the 2% that's second half weighted, it seems like you're still somewhat in the CBS target model. But I want to confirm whether you do have a different view of the target model versus the Investor Day, kind of the 4% to 5% CBS and a 15% plus ATS. And if it is different, maybe speak to the sustainability of the very strong ATS growth?

Yes, I'll take that, Bryan. Thanks. Overall, we feel exceptionally good about how we are ramping the business, not just in Advanced Tech, but also core business services because this is how the flywheel is delivering, which starts from core and data AI Advisory Partner Solutions and lending and Agentic Operation, which we are building and delivering on a new category. .

So if I see the demand signals, demand signals are obviously exceptionally high in ad mastic, continue to be very, very strong in core -- our backlog is really building up very strongly. We mentioned the highest-ever quarterly booking just previous quarter, and the pipeline continues to be strong. So fundamentally, we are shaping the business to become a far higher growth and more durable richer business as we cycle through '26, '27. Mike?

Yes. So the only thing I'd add to that. First of all, let's level it out the discussion a little bit. Our clients don't really come to us, to buy core business services or ATS related. These are just revenue classifications of the services and the products that we offer, right? They come to us to solve problems and run critical operations. We're working aggressively to identify those operations as BK just spoke about. So when you think about it, we still continue to feel very, very good about the guide we put forward through this year. and our long-term guide, which we articulated at our Investor Day, arguably, I guess, it was in June of last year. .

Okay. Understood. And my follow-up on bookings and backlog visibility, you highlighted here record bookings, backlog growth and obviously strong pipeline still. Just at this juncture, how much visibility is that base providing you into 2027 growth?

Yes. So I'm not going to really talk about 2027 specifically. Let me just build up on how we're thinking about our guide this year and you can extrapolate that into next year. I think that will be somewhat helpful. Right. So as you correctly repeated. We had record bookings and backlog from just a tremendous first half of this year, right? .

So if you think about it because this will help perpetuate us into next year as well, we had 12 large deals in the first half. That's double what we had in the first half of last year, right? -- add on to that an incredibly strong pipeline, which we're working hard to execute on, right? So we're seeing continued strength in demand across both core and ATS.

With regard to the work that we're transitioning back to our clients, correct, that will manifest itself over the next 4 to 6 quarters with 2 points being affected full year this year, right? And I would also just continue to think through how the business continues to roll out and execute. So again, we feel very good about where we are. We have good line of sight to driving these results for this year and then through into next year.

And I think if I was to add, there is a strong momentum building up in Advanced Tech. And Advanced Tech is also annutized business. And therefore, the flywheel from core to advance Tech, which lands into Agentic operations is creating a pretty strong momentum and durable richer revenues.

Next question comes from Maggie Nolan with William Blair.

Another one maybe on the nonstrategic work. Can you help us understand where this fall in terms of margins versus other offerings within your portfolio and then maybe how that would show up this year versus next year? And then is this process sort of complete for now?

Yes. maybe I'll take it, and Mike, feel free to add. First, what you can see, Maggie consistently with 13th quarter of our gross margin expansion. And I think that trajectory is not changing. That momentum is not changing. So I think we are shaping the business, as I mentioned, with more durable and more richer revenues, and therefore, margin profile, we are expecting be gross margin or AOI continue with the trajectory that we are talking about. .

And I think just more specifically, this is, again, a very small portion of our business. That didn't stood the test of the 3 tests that we talked about, how do we create a durable value that can be easily replicated or it does it provide a strong ROI, both for Genpact and obviously, for our clients? And is it aligned with large, fast-growing market and expanding TAM? And these are, again, a very small portion of our business, as I mentioned, small portions of content management or some of the commoditized contact center play, which is what we are walking away from.

Understood. And then as we get comfortable with sort of the new Genpact with new pricing models. And I'm wondering if you can help us better understand on the genic workflows, what happens to pricing and margins as token prices increase? And how that impacts your ability to drive margin expansion?

Yes. So maybe I'll quickly take that again. identic Solutions. One, we are leveraging the scale, and these are not bespoke agents that we built. And I think that's a very, very important distinction versus what you see elsewhere. And because there's a component of a compounding learning within the solution set and the scale from an economic perspective as well. And these are annuitized recurring revenues with minimum volume committed. So there is a floor on the revenue we earn and then upside as client expand use cases or ad agenetic workflows. And obviously, very high retention, multiyear and far more secure relationship.

And again, from a margin standpoint, structurally, we expect to gain from both sides of the equation technology cost decline over time as compute advances. We own this tax, so efficiency gains flow to us. And then labor cost decrease as agents handle more of the workflow. So humans are brought only for high judgment situation and not for volume processing. As far as token economics is concerned, it is also how we are building the architecture that allows dynamic switching, model flexibility without any client disruption. And I think there is a strong I will say, token fin offs that we have, so we procure well, there isn't over or under provisioning or what have you. So feel really good about as to where we are taking the company.

Our next question is from Surinder Thind with Jefferies.

BK, when we think about the Advanced Technology Solutions segment and the acceleration that we've seen there in the work, the revenue growth. Can you maybe talk about like -- when I think about the agentic solutions that are available, how much of that is being driven by just more products that you have more services that tie into that business line item versus what I would call just accelerating demand for an existing product set of service? So I'm just trying to understand that as you build and create more agentic solutions, should we expect to see Advanced Technology Solutions continue to maybe accelerating growth rate? Or how do we characterize or understand or put context on what the current growth rate is and maybe the sustainability of it? .

Yes. Short answer, yes, you should expect it to accelerate. And I think it is the flywheel effect that we are talking about. And the flywheel build actually from the strength of our core, the deep process intelligence, domain expertise, decades of operational excellence. And then that brings in process, data, enterprise technology, all of that together in a room and then we own the driving chain management at the client end as well.

It also opens up new workloads for us. And we are moving from just running client operations to do getting to own the entire part of transformation for them, be it the foundational work or the data modernization, enterprise architecture, as I mentioned. And therefore, building the scale agentic solutions that are -- that will create the exponential effect as we go along. So yes, you should you should expect that this acceleration will continue, and it is filing across all the components.

If I can just add 1 thing to that, BK. When you talked about Advanced Technology Solutions revenue in the quarter grew 24%, right? That's about $360-ish million. Very little of that is a genetic related revenue, right? We talk a lot about the bookings. So that's going to just support the growth, particularly on a go-forward basis. We're very pleased with the agentic bookings, and we laid out, we're looking forward to that getting to about $1 billion this year.

That's helpful. And then BK over the last couple of years, the partnerships, partnership sourcing revenues have been an important part of the strategy. Can you maybe provide a bit more color there, maybe in terms of -- there was some commentary in the prepared comments. Like when you think about the bookings that you're realizing now, how -- how much of that is coming through your partners? And maybe how does that compare over the past year? And how we should think about it on a go-forward basis?

Look, partners is an integral part of the flywheel. And I constantly believe that you could be anybody, but all solutions don't exist in just any 4 walls, even if you are a coolest model company. And therefore, the tech and partner ecosystem is integral to how you bring value to clients, and we have invested heavy here. And I think I'll say we are in the early stages of the journey, and there's a significant opportunity ahead.

And if I give you a very quick example, in a recent case for our supply chain, where we partnered with ServiceNow. This is for a leading energy equipment manufacturer. And they wanted to transition heavily customized legacy platform into our new domain-specific platform that is supported by ServiceNow, and we chose Genpact to drive that transformation where we built the data model standardization, governance, workflows almost 100 fragmented workflows got integrated and a lot of customizations that we resolve and then build a future-ready platform. Now all of this was a combination of our supply chain domain expertise and a strong relationship with ServiceNow. And all of this is showing up in our results and actually hopefully in their results too.

Our next question is from Sean Kennedy with Mizuho.

Congrats on the results. I wanted to ask if you're seeing any incremental pressure from customer insourcing trends or crowding out due to AI token infrastructure spend as some of your peers are experiencing.

Thanks, Sean. Look, I think overall, all of this is rooted into the strategy as to what we are driving and how we are wanting to shape the future of this company. If I think about where our clients prioritizing their engineering resources. It is more of the harder problems that is hard to their company strategy. As an example, for a pharmaceutical company that is sitting in how do they develop a new molecule or a food or a beverage company that's kind of what is the next best strength or the next best brand that they can bring to the market.

And for running mission-critical operations, finance, each our supply chain procurement, which is core to Genpact, that's where we are taking the company. That's where we are bringing in all of these identic solutions that our clients are taking in a significant way.

That's great to hear. And then for those Agentic bookings, are you seeing particular success with any specific type of customer?

I would say it is actually across the board, including new and we are capturing the new TAM as we mentioned that we expect greater than $1 billion of bookings just in agentic and with no agentic washing sold as annuitized recurring revenues. Greater than 50% of it is from newer clients. And also, we are rotating our existing clients, and that's based on the domain and industry-specific expertise that we have that we are bringing our new and existing clients and capturing the TAM.

So core gives us this right to win, and that is the reason we have built the strategy that we talked about. And it is, therefore, building a very long runway in clear chosen areas of our domain and industry expertise. And the client trust is building further.

Our next question. It comes from Puneet Jain with JPMorgan.

I also wanted to follow up on this nonstrategic portfolio. So are these contracts typically, like do these contracts typically stem from stand-alone client relationships? Or are these the processes you service as part of larger clients. And where do you think like the work that's transitioning away will go? Will it go to any of your competitors or clients are taking them in-house?

Yes, I would say it is more one-off contracts that we have had. But I'll first step back and just ground you Puneet, and thanks for asking that. look the investments that we've been making for the last couple of years that has created this incredible opportunity to participate across more parts of clients end-to-end operations and transformation journeys. And at the center of this flywheel that we are building is applying Advanced Tech to core that drives this agent operations long term. And we are doubling down there and continuing to partner with clients more broadly, more deeply. .

Having said that, there are certain parts of where it is more one-off. I will call it a little bit undifferentiated tail, which is not connected to the transformational work we do. Commercial is only tied to maybe per hour basis. We are not wanting that. And I think that's where -- and it's a very small portion of our book and therefore, shaping the business to become far more durable, far higher quality, structurally higher margins for long term.

Got it. And can you share more details on the time lines of this transition? Like when did you engage with clients to take start this process? And when will these 2 points of advance like when does that kick in? Like has that already kicked in 2Q and continuing in second half? Or will that happen sometime in 3Q or 4Q? .

No, Puneet. So maybe I'll take the first part, Mike, you can take the timing portion of it. Now I think one you should know that we are a pretty active and intense company. So constantly are talking to the clients. And as -- as we build these strategies, they are not built in a vacuum. They are built by validating a lot of these questions with the clients, too. So it's a constant dialogue that we are having with the clients. And I think just from a timing standpoint, Mike? .

Yes. So the way I would kind of think about it is from a perspective standpoint, right, we'll be transitioning that work over the next 4 to 6 quarters. And I think we've quantified the impact from a points perspective of 2 points for the full year impact for 2026. .

Our next question comes from David Koning with Baird.

Great job. One thing that I noticed in the supplemental materials, employees were down maybe a couple of percent sequentially, I think a few percent year-over-year. And it's really impressive. You're growing revenue 7%, employees down 3%. So you're getting, I guess, 10% efficiency growth. we haven't seen anything like that in years. And just wondering maybe the dynamics of that, I assume that's driving margins, et cetera. And I saw attrition also ticked up to the highest level in a handful of years, and if any of that's forced attrition or voluntary. But just maybe that whole dynamic. .

Thanks, David. I'll take that. Look, I think we are taking a very disciplined approach to head count. But I won't say that we are at any inflection point. I'll just say we are getting started. We are making significant investments in Advanced Tech, and we'll continue to do that and really proud how the team is driving change and reskilling our workforce at scale. And as we said June last year, the longer term, we do expect revenue and head count growth to decouple. I would say we are still in the early stages of that. becoming a leaner, highly productive talent base that is powered by solution, not some linear hiring. So early signs of leverage, but pleased that we are making that progress.

Yes. Just one other thing to add on to it. So if you heard in BK's prepared remarks, when you think of our ATS revenue, right, and you talk -- think about it growing as we just said, this quarter, 24-ish%. That revenue cohort revenue per head count is double, right? So as that continues to leverage up, that's going to continue to support that decoupling when we get to whatever that inflection point might look like?

Yes. That's helpful. And then just as a follow-up, what prohibits or what type of work would never leave CBS like maybe examples or even like what percent of the pie, like you run about $4 billion or so run rate, but is $1 billion of it could never ever be moved because of a reason? Or maybe just talk through that, too.

Yes. I think maybe how I'll respond to that, David, is that whenever we are onboarding, we talked about, now we have onboarded a dozen large deals that we will be onboarding as we go along. Clients need foundational work to begin with. So while some of it might be leaving and kind of where clients want to go, a lot of foundational work first starting at the bottom of the flywheel, if you will. -- and a lot of foundational work that we need to do in the data work or the process foundational work that we need to do. And therefore, core is also a bucket that constantly fills, is also an element. Now we are building solutions where we want to take the clients more quickly to Advanced Tech. But it also depends upon what is the starting point of our client. And a lot of time, the starting point for our clients meet some of that foundational work which is core.

Yes. So if I can just add one thing, if you don't mind. So if you think about when -- again, if we think about it from a higher level strategic perspective, we're developing -- we're becoming an agentic operating company, right? So we're just not sitting still, right? We're developing products identified to continue to transition that work into more meaningful business models for us and for our customers. So that will continue to evolve in not just quarters and years, and that's really the hypothesis on everything that we're doing here on how we're pivoting this company. And again, early days, but ends are quite positive.

Our next question comes from Nate Vinson with Deutsche Bank. .

BK, I wanted to talk about the 70x70 framework you mentioned in your prepared remarks. So ATS more than annuitize revenues and more than 70% non-FTE commercial models. I guess I'm interested in maybe kind of the 30-30 portion of that book. So those projects that aren't annuitized or are still using FTE models. Could you maybe give some more color on why clients may be anchoring towards those legacy structures? Is it inertia? Are they pushing back on pricing, something else? And then maybe going forward, can you talk about if 7070 becomes 880 or 90/90, I guess, why or why not? .

Yes Directionally, Mate, we are headed to far bigger than 2x2, far bigger than 70x70, you should know that. And it is already greater than that. Now sometimes, and we say additized, sometimes there are projects which are 8 months, 9 months, 4 months, right? And they need to advise project on data strategy. So it starts with a 4-month project and the client is then thinking about, hey, what it is. But -- so there is a portion of that book also and because that enables further annuity. But directionally, are we wanting this 2x, 2x, 70%, 70% look much better in numerics? The answer is yes. .

Got it. That's helpful. And then Mike, in response to a couple of the other questions, you talked about the revenue headwinds associated from the shift lasting 4 to 6 quarters. I guess just thinking about that in light of the 3-point headwind for 3Q and 2 points for 2026. Is that 3-point per quarter headwind kind of the right level to think about for the entirety of that 4 to 6 quarters? Or are there factors that push that higher or lower in the early stages of this shift -- and then the related question, just on the offsets from kind of faster AFS growth, are there any dynamics we need to consider on ATS bookings and the timing of those that may impact the offsets? I'm thinking about things like ATS duration, how long the projects take to ramp, maybe they could be shorter or longer, faster or slower? Just trying to think about the moving pieces on the offsets as we think about overall growth for the company. .

Yes. So I'll work my way backwards, Matt. So ATS, we raised our guide to 25% for this year, right? And we'll continue to build off of that, right? So we'll continue that. And obviously, the pipeline, the bookings and all the momentum, particularly on agentic as that starts earning into revenue, we'll continue to accelerate that growth on a go-forward basis. And then going back to the last question, we just got -- we also talked about the durability and the quality of that revenue. So that's one thing.

With regard to ostensibly how do I think of the 4 to 6 quarters, what we've given you the numbers, by definition, for the remainder part of this year, we'll ultimately see how it pans out on a prospective basis. in 2027 on how it calendarizes its way out. But what I would continue just to elevate the discussion really think about our guidance in totality and to also think about where our views were when we gave our longer-term views from our Investor Day back in June of 2025. of at least 7% growth.

Our last question comes from Bryan Keane with Citigroup.

BK, just looking at that chart showing the ATS growth rates kind of your expectations going from mid-teens to high teens, at least 20. Now we're going to 25 or at least -- what surprised you there that the solution is resonating so much? What's the reason why we're seeing the growth rates accelerate like that versus your original expectations?

I think the -- what is a positive surprise, Bryan, I would say, is how it is resonating with both existing, but more importantly, new clients. And how we've been able to capture the new TAM in a number of instances, we picked it up from a few of our peers because we now have this agentic solution, which is more machine processed and human validated rapid responsible AI. So I think the traction that it is taking hold not only with our existing clients, but more importantly, with new clients is clearly helping. And then I think how the flywheel is shaping is another. We've been making these investments, and I think we'll continue to. But the shape of the flywheel and how the fly wheel and investments in Data and AI investments in last year, we bought maybe did the transaction of exponential that has gone exceptionally well, investments in partners that I spoke about. So I think a combination of all of those things, everything is coming together, and that's why we are taking a little bit more bolder step ahead to move in the direction we need to go in any case.

2 Yes. And then just a follow-on to that. Is there a way to think about win rates versus peers in the ATS book of business? Like is it much higher than Genpact historically? And just trying to figure out, are you just taking share from some of the legacy providers for the ATS business?

Look, I think our moat is which is shaping further as process intelligence with rich context. And most of our -- and that has come from running mission-critical operations. where we are bringing operations, data, technology, architecture, people, our people, our clients, people all of that together in a room, and that is showing up as a differentiator. That is showing up as a big differentiator. This is what our clients are telling us. And then a little bit -- one of the proof points is 6 large deals in the first half of last year, 12 large deals first off of this year. And then continued progress on gross margin is telling us the direction we are taking the company to.

And this will conclude our Q&A session, and I will pass it back to management for final comments.

Thank you all for joining today, and I want to extend my sincere gratitude to our employees around the world whose discipline and innovation keeps our flywheel turning. And most importantly to our clients who are trusting the impact as their partner on the journey on this identical transformation and yes, to our shareholders for their continued confidence. This is our moment, and we have so much more to come. Thank you.

This concludes our conference. Thank you for participating, and you may now disconnect.

All right. Good morning. My name is Puneet. I'm from JPMorgan's Payment Processing and IT Services team. Glad to have here with us BK. You all know him well, CEO of Genpact, and Kyle, who heads Investor Relations. So the format of this presentation is going to be fireside chat. I'll start with a few questions, and then we'll open the floor for questions from audience. So BK, welcome. Thanks for doing this.

So for benefit of investors, like who may not be as close to the story, why don't you start with talking about like a little bit about Genpact, like about your journey. And if you can touch upon, like, talk about Genpact Next strategy that you unveiled last year.

Sure. Sure, Puneet, and thanks for having me here. I appreciate that. So look, I think we started as nearly 30 years ago. For the first 10 years, we were 100% subsidiary of General Electric Company, got spun off about 2 decades ago, 20 years ago. And what we were known for were running mission-critical operations for our clients, be it in finance, procurement, supply chain, many critical workloads for our customers. And that gave us the advantage in this new world where I often talk about that there is no artificial intelligence without process intelligence. And process intelligence is what we have worked over the last 3 decades, and that is what has begun to shine of late in our new strategy, which we call as Genpact Next.

And Genpact Next is bringing advanced technologies to the work -- the critical work that we do for our clients, be it in finance, procurement or the various workloads that we have chosen to agentify. And Genpact Next has 3 Cs as a framework, capabilities, catalyst that enables client value and Genpact value at scale. So when I talk about capabilities, it is pivoting to advanced technology solutions, most importantly, Agentic, but data and AI, and we can chat more about that. It's taking shape in a very significant way. We mentioned that last quarter, it grew better than our expectation at 24% and Advanced Tech now represents 27% of the revenue.

Catalyst, one of -- there are many, many catalysts, but one catalyst that we constantly talk about is how partnership is -- and partnership ecosystem is shaping the journey at Genpact for our clients and for us. And then clearly, clients -- existing clients as well as new clients in our chosen spaces is what we are accelerating with. So overall, Genpact Next is taking shape in a very, very significant fashion. And what it is doing is we are building new Genpact. We are building a new company. And the results of that have come to be shown in the -- in our books. We shared that Advanced Tech grew nearly 24%. We have now guided the Street that will grow greater than 20% for all of this year.

It is also the characteristics of Advanced Tech is what we call as 2x, 2x 70-70. So it is greater than 2x revenue by headcount of the company. It is growing at greater than 2x the rate of the company, greater than 70% of the revenue is annuitized and greater than 70% is on non-FTE models, commercial models. So more accretion of margin happens to Genpact. And that is, again, point #2, shown in the gross margin. For 12th quarter in a row, we grew the gross margins. And we are just getting started. So really pleased as to how we are building the new Genpact.

No, that's great. You covered like everything that I wanted to discuss.

Okay. Wonderful. I appreciate that.

No, but seriously. So advanced technology, like you talked about like last quarter, like it grew 20% plus, I think, 24% year-on-year, which is faster than what you shared with us, like the high teens growth at your Investor Day. So talk to us like what's driving this higher growth? And is it sustainable at these levels? Or should we expect like the medium-term growth to still return to high teens level?

Look, I think we have already guided the Street to greater than 20% for this year. And you all know our guidance philosophy. We are prudent and cautious always in guiding. So we feel really good that for the entire balance year, it will grow greater than 20%. And the reason it is growing faster is because our differentiation is showing up in a significant fashion. And the differentiation sits in context-rich process intelligence. We are adding these advanced technologies to it and bringing those solutions to our clients, existing clients, new clients. And the most differentiating solution in there is Agentic solutions which are -- which we mentioned that we booked nearly equal to whatever we booked in all of last year, we booked nearly equal to that in the first quarter. And all of this booking is in annuitized recurring revenues with minimum volume commits. So it is long-term annuitized revenue, which is more IP-based. And that is creating the differentiation that is creating the momentum, and we believe we are just getting started.

So on that, like the Agentic solutions. So what's driving this growth? Is it like the models like by Anthropic, OpenAI, like they are more capable, like all the news flow or hype around, like, all those evolution of model? Or is it that the clients are more comfortable with governance and all those risk factors? Or is it just like this is new year, new budgets, and clients just feel ready to embrace AI. So what's driving the shift towards more agentic this year compared to, let's say, all of last year -- and if we can size, like, order of magnitude of how large that pipeline or the bookings of agentic solution is with an overall company?

Yes. So what is driving is clearly overall, we know that advanced technologies or AI is a conversation in every boardroom, every company. And given we have been running these mission-critical workloads or operations for our clients, and we know the overall outcome that we deliver for our clients, what is the total cost of ownership and how we are reducing the total cost of ownership while creating more high-value revenue for Genpact. So it is not the models. Models are available. And yes, as reasoning improves, it is part of the architecture in which we are delivering to our clients.

But it is more driven by how we stay accountable to driving those business outcomes that we have driven for decades, but now in a far superior fashion and bringing technology at that last mile intersect with operations. And it is not just with existing clients. We mentioned we signed 6 large deals in the first quarter. It hasn't happened. As just a comparison point, we only signed a couple of large deals in the previous first quarter last year, 2025. So overall, momentum is building up and momentum is building up not only in Advanced Tech and core business services because clients buy not a particular -- oh, I want to buy Advanced Tech or core. They are buying a solution. It is how we are architecting the solution and how we are making that difference come to life.

And can you talk about like the unit economics on some of these Agentic deals? And just like the contract structure, like do you own the IP of the solution that you offer? And what are like the unit economics, margin profile, incremental margin profile on some of those deals?

Let me address that. So yes, we own the IP, and this is in a pretty straightforward SaaS kind of models in which we are selling all of these Agentic contracts. Agentic contracts, as I mentioned, were nearly equal to what we sold all of last year. What we sold all of last year was over $200 million. In Q1, we nearly sold that, a little bit over around that. And momentum is continuing as we are progressing even in this quarter. And on unit economics, this is how maybe I'll pick up our existing client and give you a shape of the unit economics.

So if our existing client for a particular workload, we know their total cost of ownership, sometimes actually better than clients because clients a lot of times see their own budgets, and they don't see across the upstream, downstream, what are the other costs or what are the other systems that they have for fulfilling a particular transaction. Sometimes fulfilling a transaction takes 15 systems, 20 systems. And we have -- we at that last mile can see and observe all of those systems and where the cost is sitting. So we provide that window of truth of, hey, this is what your total cost of ownership is. Obviously, we validate it with them. And we are reducing that total cost of ownership first from a client perspective because that's how the engagement happens.

Now on the Genpact side, what we have also shared during our last Investor Day on finite number of contracts, we said that we are seeing as we rotate this to Agentic revenue, we saw $103, 300 bps. So what was $103, we are -- if $100 is the revenue we are earning from the client, we are earning $103, so 3% higher at 300 bps higher gross margin. So how is it that client is getting total cost of ownership down, you are earning more revenue, more margin. How is it happening? And the method is pretty simple. The higher gross margin, one, the higher gross margin -- higher revenue is coming from either the volume or the scope -- and I'll give you use cases as an example, a particular client is -- these are large global clients, Fortune 50, Fortune 100 customers. Sometimes they are running the same workload in Europe or in different parts of the geography in-house or with another provider. If now we have a better mousetrap, that volume is coming to us.

Or two, they were using another system that is -- or our software that is not used now, that is not needed now because we have baked it in our solution as our software is how the revenue is increasing. And for gross margin, obviously, we are reducing the total cost of ownership, but our costs are going down faster is how gross margin accretion is happening.

Last point I'll make that we said $103, 300 bps at the end of June. That was on finite number of contracts. We have also subsequently reported that these numbers are better on more number of aggregated contracts. So it was very few contracts at that point in time. Now these contracts are running into many, many, many contracts, and our numbers are better than $103, 300 bps.

So on some of these contracts, so when you offer like an Agentic solution like so you combine like the human labor tokens, like offer to clients. So -- in future, hypothetically, like, if token cost increases like, do you take that risk? Or will you be able to pass it on to clients?

So look, I think the bill of material is -- we are keeping the bill of material with ourselves, be it the cost of technology or the architecture or the servicing cost. Fundamentally, we do believe -- take an example, servicing cost over a period of time, if the models continue to improve, the servicing cost or the labor cost in that component will go down. Overall cost of intelligence, in my view, over a period of time will actually go down. So I think we have structured the contracts in a way which are annuitized recurring revenues with minimum volume commit. So as transactions or any of those, those are add-ons. And there are certain provisions that we have carved out in these pricing contracts, where we feel really good about how we are managing this transition of commercial models.

Got it. Got it. And going back to like what you talked about earlier about like how you are seeing clients sending more workflow your way. So talk to us about your core business services. Like that is like obviously more than 70% of revenue. You expect it to grow this year. What will drive that growth? I imagine like a part of -- a large part of core over the next few years will transition into Advanced Technology solutions as you bring some of those Agentic solutions, help clients do that. So talk to us like what drives that growth within core? Like do you expect that segment to grow for the next 2 or 3 years?

So core continues to be, Puneet, an integral part of our growth equation, integral part of our growth model. Core is the reason advanced technology is accelerating. Core is the reason why we see exceptional product market fit with all the agentic solutions that we are bringing to bear. And core is the reason we know the total cost of ownership for our clients. So core is an integral part of our equation. And for foreseeable future, we do see core continue to grow because a lot of foundational work, a lot of process intelligence work happens in core. And if you want to or if our clients want a ton of returns on artificial intelligence investments, it will not happen without foundational work happening in core.

And I must also say that while we are rotating and we are wanting to rotate core as fast as possible to Advanced Tech because it is stickier, it is high-value revenue. It is still not -- as we are saying, we grew 24%. Rotation is not the reason it became 24% or rotation is not the reason that it will be greater than 20%. It is de minimis in -- at least as we see it for this year. So -- and clients don't, as I mentioned, come to us, I want to buy a core or I want to buy Advanced Tech. But increasingly, we are building newer mousetraps. We are wanting to get the clients where they want to be, which is more advanced solutions as fast as possible. And we do see core as an integral part of our ecosystem and core as a reason of continued growth.

Last point I'll make, Puneet, on core. I often use this phrase intentional disruption. And we are also agentifying the workloads where our domain is strongest in core, finance, supply chain, HR, procurement, this is where our domain shines. Now there are parts of core that will not agentify, and we'll continue to run it for our clients. But core is the reason why agentification and product market fit is happening in a very, very strong fashion. And we see that as a core part of our model.

Yes. No, absolutely. I totally agree, like, the core is the reason like that you have right to win in Agentic or in Advanced Technology solutions. So totally agree with that. So let's talk about like how your competition is changing. Like you talked about that you're winning some work from clients' in-house operations. So let's focus on that because there is still like a lot of market that's with clients' in-house operations. So how should we think about, one, penetration rate of outsourcing versus in-sourcing and core work as well as, like, the Genpact's pros and cons like in being able to bring some of those Agentic solutions to customers that clients can do themselves.

So even before this wave of technology, we always shared and maintained that we are still in early journeys of outsourcing penetration. It increasingly is true even today. And now as we are bringing all of this innovation at scale, we are getting more and more TAM unlocked for us. And we are also seeing new competition, as an example, various software providers that we never used to see or even in case of data and AI, as we have strengthened that franchise in a pretty strong fashion, we are again into newer buying centers of data or AI, where we are building custom agents for our clients. So all of these are newer TAMs that we have unlocked. And all of the Advanced Tech solutions are firing. Obviously, Data and AI and Agentic. Agentic is our own proprietary solutions. But there are many solutions where we are enabling it for clients in our Data and AI segment or other segments. So I think -- so we are seeing newer type of competition that we didn't encounter earlier.

I imagine like agentification of business processes, that's the holy grail, like everyone is going after. So talk to us like, let's say, versus like a software company, I'm going to name, like, they might be here at the conference, but like any...

You can name them.

Software company or LLM, like they created their services businesses compared to those names, like what are pros and cons for clients to go with Genpact or IT services companies, like they all are like talk about like as a horizon 3, this is the area that they want to focus on, right? So talk to us.

So look, I think maybe I'll pick up 2 or 3 genres of competition or, I would say, partners and everybody's frenemies, and I always believe in an ecosystem play. Look, first off, if what is the core advantage in which -- core differentiation because of which we are accelerating. It is because of understanding the context at the last mile because we've been running operations. Now many of our IT peers have not been running operations. They've been running various different workloads, IT workloads, not operations workload. We've been running operations workload, and that's what we have carved our identity and our brand and all of our assets around that.

That is shining up now because you think about actually any company, any company is process, people, technology. Any company is, including yours, process people technology. And people is what make process and technology happen. What became simpler? What became more ubiquitous? What became more available. Technology became more ubiquitous. Technology became more available. Technology is becoming more cheaper. Operations and the process part, which is the upstream and downstream, how data and where data sits, that didn't become simpler. Technology or tool will go only that far as much as the process allows.

Our differentiation sat in the process. And we are bringing that technology is why it is accelerating at a pace. And as far as model companies go, we are leveraging all of the model companies in our technology architecture, but also swapping out wherever deterministic models are needed or probabilistic models are needed and/or where certain things can be done by open source models. So -- because we do believe that cost of intelligence overall will go down and a lot of powering is happening even with open source models. So how do you find and build the architecture in a secure environment in a responsible fashion, where you use all these capabilities to drive most value for clients and take a share of that value for Genpact.

Got it. At this time, like are there any questions from audience? Just wait until you get the mic.

BK, thanks so much for being here. On that cost of intelligence thesis, you seem pretty convicted in your idea that the cost of intelligence will go down. We're trying to do some work on token pricing and how that's going to shake out for all the foundational labs. They need to charge more for inference costs and kind of cover all the amortization of all the capital investments they've outlaid. So some of the leading models, it feels like there's big price increases potentially in front of us, but also obviously some democratization or competition. Could you just share your thoughts, state of the market as you see it for compute inference cost of intelligence?

Yes. So Brendan, look, I think there are many competing forces, including the ones you enunciated where these model companies will have to charge more. And then there are other competing forces where democratization of intelligence, open source models, models from different parts of the world becoming available. And then I think everything doesn't need probabilistic high-end models. A lot can be delivered through deterministic models, which are far more cheaper. And it is also the nature of problem you are wanting to solve. The nature of problem that you are wanting to solve is a very acute hard problem or nature of problem if we are wanting to build a scalable finance solution. Is it really the most intense problem where lots of token will be used? I doubt it. So it is dependent upon also the spaces we are choosing, how -- what we are going after and how we see building a sustainable revenue-generating, more margin-accretive model for Genpact.

It might take some time, like everyone is just trying to token max right now. But totally agree, like not every workflow needs frontier models. So no, that's a fair point. So any other questions? Okay. I'll keep going. So let's talk about near-term for this year. So talk to us, like, the trends you are seeing in near-term demand environment of guidance that you issued last week or...

A couple of weeks ago.

A couple of weeks ago. Sorry, it's all. So the guidance that you issued indicates like the growth will accelerate in second half of this year. So you talked about earlier like the large deals that you signed 6 large deals in Q1. I think there was a similar number in Q4 last year. So talk to us like what drives the confidence that the growth acceleration is doable like in second half? Like talk to us about the near-term trends that you're seeing.

Sure. So overall, let me first just give the guidance out, if that's okay, Puneet. And it is a simple structured process and a pretty simple philosophy that we have of a prudent cautious approach. And it is -- the first half, second half is a simple mathematics. Some of that you enunciated also in 6 large deals that we signed, continued momentum from end of last year. So we will see a little bit of acceleration both in Advanced Tech as well as we go into the second half for core business services.

And so we feel good about the guidance that we have given. And it is also aided by the pipeline, by the booking, by the backlog we have and the number of conversations and the demand that we see across the board, across all cohorts, be it geos, be it Advanced Tech, core business services, be it the various vertical segments that we report. So if we see any cohort, our demand is off the charts. If I take an example of Advanced Tech solutions, the pipeline is up 30% just over the last 90 days. Agentic pipeline or inflow is up greater than 3x. So we feel really good about as to where we sit, and we see strong demand of the solutions that we are building and the pivot we are making.

Yes. Any impact from like the geopolitical tensions that we've been seeing for the last 3 months, more than 3 months, not just, let's say, in form of energy prices, but let the disruption in supply chain. You do a lot of work in supply chain areas. So are you seeing any impact at all?

Yes. Look, there is an uncertain environment, but we are not seeing impact in our demand pipeline. Actually, some of our demand pipeline is up because of these uncertain environments as our solutions play right into it, like you mentioned supply chain or a few other solutions, they -- even in risk play right into it. And so we haven't seen the impact of the geopolitical uncertainty that is all around us.

Let me ask like, again, going back to like the new type of delivery model and structure. So talk to us like how it impacts Genpact in 2 ways. One, like the contracts that you are signing, like are you signing more outcome-based contracts? Why -- what is in it? Like what is different now that clients are ready to sign outcome-based compared to any time before?

And #2, talk to us change management in terms of your people, like so there are so many employees, like how do you motivate your employees, convince them that this is not -- this shift towards AI is not bad for their jobs and whatnot, get them to align with your mission.

So let me talk about our people first because all the time we talk about clients and contracts and so on and so forth, but I'll address that, too. Really thrilled and that is one thing that I must say surprised me as to how our people are absorbing the change and are leaning in hard to become more AI native and AI immigrants, if you will. And we have enabled all of our people with the latest tools and technologies, and we track it, and we shared at the end of last year that we had north of 10 million hours, I think it was 12 million hours of learning, which was relative to our size, a disproportionate number if you look at any of our peer sets. And bulk of that learning was in AI and Agentic because we have enabled many of frontier courses and courses from Harvard or MIT through our Genome platform, and it is really working well.

And then we talked about at the Investor Day, AI Builders and AI Practitioners. That progression is again continuing exceptionally well. So really, really thrilled as to how our talent is getting remade. And we are also hiring a lot of new talent, too, while maintaining the headcount. We have started showing a little bit of how revenue is decoupling from the headcount. We're really pleased and thrilled as to how our employee base is absorbing all of this AI change.

On commercial contracts, Puneet, again, I would say we want to nudge more and hard and faster. Very pleased as to how we are signing all of the Agentic contracts because that's all is -- none of that is any time or material or FTE based or anything like that. All of that is more annuitized recurring revenues, also more in data and AI or Advanced Tech. But overall, as a franchise, I would want us to nudge more to become non-FTE models. We are already at 48%, nearly half of the company is there, but our aspiration is much bigger.

Got it. Got it. With 2 minutes left, let me ask one last question. So last year, like you launched Genpact Next, which included like 7% plus revenue growth, and you define like the operating model, like where do you expect Genpact to be. So in last 1 year, -- what have you learned? Like how is that strategy evolved versus your plans 1 year ago? Like what surprised you? And also from your perspective, what do you think like folks like us, like investors, analysts, like we don't appreciate enough.

Okay. It will take more than 2 minutes, but I'll quickly go. So really thrilled with the progress that we have made on Genpact Next and the strategy we announced. Strategy is playing right because we said Advanced Tech will grow high teens. We are growing greater than 20% very quickly. And it is because of the product market fit because of the flywheel effect, because of the flywheel effect from core business services to Advanced Tech and all parts within that be data and AI, consulting, digital solutions, partners and so on and so forth, decision support services.

All of this flywheel effect and creating the differentiation more through Agentic solutions. Look, I think what is less understood, I think I'll characterize it by 2 or 3 points. First point is, it is less understood that we have exponential power of big and small. This is what my clients tell us. Our clients tell us that, that we are big enough for them to consider us as a Fortune 500 partner, and we are small enough to care for every client. We are big enough to make massive investments, and we are small and agile enough to change and dance on dime and move with speed, and we are demonstrating the speed. What is also less understood is that our context-rich process intelligence is shaping up as differentiation in a significant way because we are bringing technology there.

What is also less appreciated is the leadership team. The leadership team in our sector that we have brought is the most differentiating factor. It is leadership team that existed for 25, 30 years, people like me and many others and leadership team that we have brought net new, who are tech natives, and we are with one singular purpose of making us the most premier Agentic solutions company in our chosen spaces. And we are moving with speed that we are demonstrating. And I think we will show better and better results.

Absolutely. Appreciate it. Thank you so much.

Thank you.

Good day, ladies and gentlemen, and welcome to the 2026 First Quarter Genpact Limited Earnings Conference Call. My name is Carmen, and I will be your conference moderator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. The replay of the call will be archived and made available on the IR section of Genpact's website. I would now like to turn the call over to Kyle Vikström, Head of Investor Relations at Genpact. Please proceed.

Good afternoon, everyone, and welcome to Genpact's Q1 2026 Earnings Conference Call. We hope you've had a chance to read our earnings press release posted on the Investor Relations section of our website, genpact.com.

Today, we have with us BK Kalra, President and CEO; and Mike Weiner, Chief Financial Officer. BK will start with an overview of our results, and then Mike will cover our financial performance in greater detail before we take your questions.

Please note that during this call, we will make forward-looking statements, including statements about our business outlook, strategies and long-term goals. These comments are based on our plans, predictions and expectations as of today, which may change over time. Actual results could differ materially due to a number of important risks and uncertainties, including the risk factors in our 10-K and 10-Q filings with the SEC.

During this call, we will discuss certain non-GAAP financial measures. We have reconciled those to the most directly comparable GAAP financial measures in our earnings press release. These non-GAAP measures are not intended to be a substitute for our GAAP results. More details on constant currency growth rates can also be found in our earnings press release and fact sheet posted to our Investor Relations website. And finally, this call in its entirety is being webcast from our website, and an audio replay and transcript will be available on our website in a few hours.

With that, I'd like to turn it over to BK.

Thank you, Kyle. Hello, everyone, and thank you for joining us today. Q1 was a record start to the fiscal year, and I want to be unequivocal. I believe we are in the early innings of something that will fundamentally reshape this company's trajectory. It is rare to see the convergence of a structural shift in the market, a differentiated capability set and the right strategic positioning, all happening at the same time. When they do and when the company has the discipline and courage to act on it, the resulting advantage compounds in ways that are difficult to replicate. That convergence is what we are experiencing right now, not as a moment, but as a sustained momentum we see reinforced in our pipeline, our client conversations and our early results.

A new Genpact is taking shape, and our Q1 results demonstrate we are on a clear path as a leader in agentic and advanced technology solutions. Disciplined execution with healthy and increasing demand drove total revenue growth of 6.7% year-over-year to $1.296 billion. Advanced Technology Solutions revenue growth accelerated to 24% year-over-year as we continue to rapidly deliver compelling innovation across our client base. Gross margin expanded for the 12th quarter in a row, up more than 100 basis points year-over-year, further enabling significant investments for long-term growth. And adjusted diluted EPS again grew faster than revenue, up 16.7% year-over-year.

Our intentional focus and prioritization on driving high-quality, sustainable growth is showing up both in our top and bottom line results and in future indicators of growth across bookings, pipeline and inflows. Clients, including some of the world's largest corporations, are choosing Genpact as a long-term strategic partner to reshape and run their mission-critical operations. We signed 6 large deals in the quarter, and we have a healthy pipeline of other large transformational deals, setting us up for continued strength through the year.

We are contractually changing the game. We are capturing more multiyear opportunities with annual recurring revenue streams, creating a robust, durable base we can continue to build on. And we are seeing strong early signs of scale with headcount growth decoupling from revenue as we deeply leverage agentic and AI to make our delivery more productive.

Momentum in Advanced Technology Solutions is rapidly building. Over the last 90 days, our pipeline has grown more than 30% as demand for our agentic solutions and data and AI expertise continues to meaningfully increase. Advanced Technology Solutions is becoming an increasing proportion of our bookings, adding to our record backlog, and it is contributing more to total revenue. As I said, it grew 24% year-over-year and now accounts for 27% of total revenue. These solutions continue to create more value for our clients and generate high-value revenue for Genpact.

At Investor Day last June, we framed it as 2x, 2x, 70%, 70%. What this means is Advanced Technology solutions deliver more than 2x the revenue per headcount and 2x the revenue growth of the total company with 70% annuitized revenue and 70% from non-FTE commercial models. All of these metrics are tracking ahead of what we reported last year, further underscoring the high quality and sticky nature of this business.

What I continue to be most proud of is our exceptional momentum with agentic. These are not one-off projects. We are building a meaningful long-term annuitized business with our own IP that is deeply integrated in our client operations. Our agentic solutions growth is accelerating. This quarter alone, we nearly doubled the total contract value of our agentic solutions from all of 2025. We are fundamentally and rapidly transforming how businesses operate, and long-term demand for our agentic solutions is gaining significant traction.

More and more new clients are choosing Genpact for our differentiated domain-driven offerings, bringing us into their operations because of the expertise and outcomes we uniquely provide. Existing clients, having known us for running mission-critical operations, are experiencing a surge of innovation from us. And they are actively integrating our agentic offerings, expanding scope, volume or both as they move confidently towards outcome-driven non-FTE-led operations. This momentum is quickly building a meaningful recurring annual revenue base for Genpact with expanding margins that continue to improve as the business scales.

With accounts payable, record to report, source to pay, insurance and our robust future road map, we are quickly becoming the agentic transformation partner of choice to move clients from digital operations to agentic operations. We are moving clients to a collaborative model between agents and human experts. Agents can now autonomously execute tasks and reimagine processes, while our last-mile experts validate exceptions, train and advance models and reinforce learnings, all within the guardrails of our responsible AI framework. We call this Agentic Operations.

Over the past couple of years, the significant investments we have made to expand our advanced technology capabilities have effectively created a flywheel that builds to Agentic Operations and scalable autonomy. This incredible momentum would not have been possible without decades of experience running our clients' mission-critical operations.

Core Business Services is a key element of our growth model. For our clients, our process intelligence and our ability to codify it continues to be the differentiating factor that brings their artificial intelligence to life, allowing them to achieve real scale across their global organization. Core Business Services revenue increased 1.4% in Q1 as we intentionally disrupt to create exponential value for our clients. Demand is healthy and growing. Our booking and pipeline continues to demonstrate that our deep domain and industry experience is amplifying our broader portfolio. We are taking our extensive road map to our clients and seeing them rapidly rotate and also shape our future agentic solutions. This is allowing us to make deliberate decisions to double down on scaling our agentic and AI-led offerings, prioritizing higher quality, long-term growth that continues to build over time for Genpact.

Clients across the globe are now choosing Genpact for more than just our operational expertise. They are choosing us for our technology and our ability to codify and scale process context. While our U.S. client traction continues to be strong, let me share 2 global examples, and both are new.

First, from Europe. This quarter, we entered a new strategic partnership with a global leader in insurance and financial services to support their transformation into global verticals. We will be running and optimizing their mission-critical operations while building functions of the future and trusted to address the needs of all stakeholders, including their customers, employees and shareholders. We are partnering to reimagine how their key functions operate and scale at an enterprise level, embedding agentic and AI-driven capabilities at the very core of our global enterprise transformation.

We are integrating Genpact's agentic finance IT solutions like accounts payable and record to report as well as other AI-led offerings. The result is fundamental shift for these functions to become predictive business partners while reducing transaction costs and improving compliance. The combination of understanding the business context at the last mile, bringing the latest agentic innovations and strong cultural and people alignment with outcome orientation creates an incredibly strong foundation for the strategic partnership.

The next example comes from one of our new next gen clients, which represents next generation of market disruptors. Bendigo Bank, one of Australia's leading banks, is transforming its operating model to create a leaner, more resilient operating backbone, allowing investments to be redirected into customer experience, data and product innovation. Bendigo Bank entered into a strategic multiyear partnership with Genpact to drive greater productivity with stronger risk and control outcomes across core operations. Bendigo Bank selected Genpact given our ability to combine deep Australian banking operation expertise, proven innovation as demonstrated through real AI and agentic case studies and a risk-balanced mindset critical in regulated environments. Both of these examples underscore our unique positioning and a clear flywheel effect. Decades of experience translating into codified domain knowledge, combined with expanding advanced technology capabilities and agentic operations and all of these are compounding.

What we also hear from clients is that their data, infrastructure, systems and processes are complex. They need help navigating rapid technology changes, and they need partners who can connect across the broader ecosystem. We continue to deepen and expand our partner relationships with differentiated offerings, leveraging our clear domain expertise and connecting the dots for clients. In Q1, our partner-related revenues grew 35% year-over-year, now accounting for nearly 13% of total revenue. We continue to make meaningful progress against our partner strategy, and this week marks a significant milestone. We just announced a strategic alliance with Google to create agentic and AI-led solutions for the office of the CFO. This is not just a partnership announcement. It is deepening of our relationship that is already delivering real results for clients.

Just 2 weeks ago at Google Next, Google spotlighted Genpact's finance solutions, showcasing how we are enabling finance users to gain actionable insights from revenue and P&L data through natural language conversations in Gemini Enterprise. The thesis is simple. Genpact's context-rich process intelligence, combined with Google Cloud's AI infrastructure allows us to drive agentic transformation across the office of the CFO.

Let me bring that to life with a client example. Cardinal Health manufactures and distributes medical and health care products operating in 30 countries and serving 90% of U.S. hospitals. We have a long-standing relationship with Cardinal Health, working on transformation across both finance and supply chain. The company wanted to streamline manual processes further to drive meaningful quality, cost and productivity gains using AI. We collaborated with Google Cloud to launch an AI-led innovation, leveraging deep process intelligence to pinpoint the right starting point. The results, for example, from credit memo processing are clear. Our agentic solutions are driving a meaningful increase in touchless processing, faster cycle times and a significant improvement in cash flows. This is the kind of transformation change Genpact is enabling as we scale with partners across enterprise operations.

I opened today by describing something rare: A moment when structural shift in the market, a clear opportunity and our company's unique positioning all converge at the same time. Quarter 1 makes the case that 2026 is proving to be that moment, and Genpact is not just watching it unfold. We are shaping it. Our strategy is clear. Our momentum is measurable. And increasingly, the market is seeing a different Genpact.

For decades, we have been trusted for deep process intelligence and running mission-critical operations at scale. That foundation has only strengthened. What's changed is what clients are now asking us to do with that foundation. Today, they come to us to bring together processes, technology, data, organizations to deliver outcomes that simply were not possible before. And because of that, we are winning new kinds of work, engaging in new kinds of conversations and expanding the addressable market in front of us.

Agentic Operations is at the center of this. We are building, orchestrating and responsibly governing agentic systems across the most essential parts of our clients' businesses. We are combining AI with decades of domain expertise in a way that is incredibly difficult to replicate. This isn't just a concept for us. It is live, it is scaling, and it is showing up in our results.

And you can see the effect on the quality of the business. The shape of our business is changing in ways that matter. We are building revenues that are high quality, more durable and harder to displace. The margin profile is structurally richer. We are leaning in hard behind our most strategic priorities, and that is opening up a daylight between Genpact and the market around us. This quarter is not an aspiration. It is a proof point. A new Genpact is here, and we are just getting started. With that, let me turn the call over to Mike.

Good afternoon, everyone, and thank you for joining us today. We delivered another strong quarter, highlighting the tremendous momentum we've seen as we set a new standard for AI-led transformation. Total revenue grew 6.7% year-over-year to $1.296 billion, with accelerating growth in Advanced Technology Solutions. Advanced Technology Solutions, which includes data and AI, digital technologies, advisory and agentic, grew 24% year-over-year, reaching $345 million, with significant strength in data and AI and agentic. Demand for our Advanced Technology Solutions is growing rapidly, and our strategic investments are paying off. Our advanced tech capabilities continue to grow with clear innovation across agentic and AI-led offerings. We are expanding our total addressable market, delivering more value to clients across end-to-end workflows and driving high-value revenue for Genpact. As BK mentioned, we continue to make tremendous progress building a sticky, high-quality business. For Advanced Technology Solutions, 2x, 2x, 70%, 70% is just getting better.

In Agentic Operations, we are quickly becoming the partner of choice to move clients from traditional digital operations to agentic. This quarter alone, we nearly doubled the total contract value of our agentic solutions relative to 2025, with more than 50% of our cumulative awarded contract value coming from new clients. This is a clear indication of our increasing TAM and expanding wallet share. For existing accounts that are rotating from traditional to agentic delivery, net revenue growth and gross margin expansion are both notably above what we reported at our Investor Day in June. This momentum in agentic across both new and existing clients is building a stronger annual recurring revenue base for Genpact with higher gross margins that continue to improve with scale.

Core Business Services includes digital operations, decision support services and technology services grew 1.4% to $951 million in the first quarter, reflecting continued client trust and ongoing demand for our deep domain and industry experience as well as deliberate focus on driving high-quality long-term growth for Genpact. Sales execution and demand remains strong across Advanced Technology Solutions and Core Business Services as we continue to make progress with both new and existing clients.

Net revenue retention remains accretive, and we feel good about our pricing as we continue to deliver meaningful ROI to our clients through their transformational journeys. Our large deal momentum also continues. We signed 6 large deals in 1Q, and we have a strong pipeline of additional large deals, which, combined with our record backlog, puts us in a very strong position for the remainder of the year. As a reminder, large deals are $50 million or greater in total contract value.

Non-FTE revenue represented 48% of total revenue in 1Q, reflecting a strategic shift to fixed fee, consumption and outcome-based models. And with the tremendous momentum we're seeing in agentic, we're building meaningful recurring annual revenue base decoupled from FTEs. We are effectively shifting away from productivity-dependent commercial models of the past.

At a segment level, High Tech and Manufacturing grew 8%, followed by Consumer and Healthcare growth of 6.1% and Financial Services growth of 5.4%.

Turning to profitability. Gross margin expanded once again, up approximately 110 basis points to 36.4%, strengthening our ability to invest for long-term growth. Our consistent track record of margin expansion reflects our disciplined approach to operations and pricing as well as an increasing contribution from high-value Advanced Technology Solutions revenue. Importantly, we are also seeing strong early signs of revenue growth decoupling from headcount as we embed AI and agentic solutions in our own operations and delivery.

Moving on to the rest of the P&L. SG&A expense as a percentage of revenue was 20.9%. Adjusted operating income was $224 million, with adjusted operating income margin of 17.3% as we continue to self-fund our strategic investments. Our effective tax rate in the first quarter was 23.7%. Net income for the first quarter was $148 million. And diluted EPS was $0.86. Adjusted diluted EPS increased 16.7% to $0.98, growing significantly faster than revenue for yet another quarter.

Turning to cash. We utilized $24 million of cash in operations, which is in line with typical first quarter trends and ended with $578 million in cash and cash equivalents, up $16 million from a year ago. We also returned $102 million to shareholders in 1Q through $70 million in share repurchases and $32 million in dividends.

Turning to our outlook. Our backlog, pipeline and inflows are at record levels with exceptional strength in agentic and Advanced Technology Solutions, putting us in a strong position for the remainder of the year. As a result, we continue to expect to deliver at least 7% growth for 2026 on an as-reported basis. Given the accelerating momentum in agentic, our strengthening partnerships and healthy demand we're seeing for data and AI, we now expect Advanced Technology Solutions to grow at least 20%. And in Core Business Services, we expect growth to continue even as we help clients accelerate their AI-led transformation through Agentic Operations and increase our focus on driving sustainable growth through advanced technology innovations.

On margins, we continue to expect full year gross margin to expand by 50 basis points to 36.5%, with adjusted operating income margin expected to increase 25 basis points to 17.7%. This reflects our continued commitment to self-fund investments for growth. And we expect adjusted diluted EPS to grow over 10%, again, faster than revenue.

Turning to the second quarter. On an as-reported basis, we expect to deliver total revenue between $1.324 billion and $1.336 billion or 6% growth at the midpoint. We expect Advanced Technology Solutions to grow at least 20% year-over-year, and we expect continued growth in Core Business Services. We expect gross margin to expand to 36.4% and adjusted operating income margin to increase to 17.4% Finally, we expect adjusted diluted EPS of $0.96 to $0.97 for the second quarter.

In closing, as BK made clear, the shape of our business is changing. We are reshaping how businesses operate, building on the strength of our deep domain and industry experience with significant investments in Advanced Technology Solutions. We are differentiating our position in the market, expanding our TAM, accelerating high-quality revenue growth and consistently expanding margins, all of which allow us to continue to deliver double-digit growth in adjusted diluted EPS and long-term value for clients and Genpact alike. With that said, let me turn the call back over to Kyle.

Great. Thank you, Mike. Operator, we're ready to go ahead and take questions.

[Operator Instructions] One moment for our first question comes from the line of Bryan Bergin with TD Cowen.

So my first question, just really at a high-level status update on client decision-making and spending trends from a macro standpoint, given it picked up -- certainly picked up in April and May. I mean pipeline and large deals sales activity seem pretty solid, but just wanted to test any areas by impact, vertical or geography.

And then I'll ask my second question upfront here. Just as it relates to CBS to ATS kind of migration, can you dig in a little bit more on the level of change between the segments as you modernize your delivery and kind of recategorize?

Thanks, Bryan. I'll take it. This is BK. So overall demand environment across the board, be it -- if I see in cohorts of Advanced Technology or Core Business Services or new clients, existing clients or various segments that we have or geos, it continues to be very strong and continues -- our pipeline and inflows continue to be at record levels. So really pleased with that.

And maybe how I'll respond to your second question is, I think our flywheel effect has begun to show results. And the flywheel effect actually starts from Core Business Services where demand continues to be strong. But our context-rich process intelligence that we harnessed for decades -- and that is the core with which, in combination with modern data, reimagined workflows, cleaner architectures and how we are bringing all of this together to deliver superior outcomes for our clients, is beginning to show results, and it is showing in a disproportionate way in Advanced Technology Solutions. And really, I think getting engaged into newer kind of conversations and more focused now on not just meeting the clients where they are, but also getting them where they want to be at a much faster pace. So really pleased with where we are and how we are shaping the new Genpact.

It comes from Sean Kennedy with Mizuho.

Congrats on the ATS acceleration, really impressive. I was wondering on the visibility in that business and how dependent ATS is on partner-related revenue growth and the runway you see there being 13% of revenue at the moment.

Yes. Thanks, Sean. Again, I'll take it, and Mike, feel free to add. All of the components of Advanced Tech or, for that matter, Core, I'll make 3 points, Sean. Point number one, just from, as I mentioned, 2x, 2x, 70%, 70%, high proportion of all of Advanced Tech is annuitized. So we have, again, a pretty strong visibility into it. And I won't say that it is only partner solutions. Yes, partner solutions is taking shape. What is gaining more and more traction is agentic as well as data and AI. And all of these are inextricable in many ways. We leverage partner solutions, as I enumerated in my prepared remarks as well. We feel really good about Advanced Technology Solution visibility as well as Core Businesses.

The only thing I'd kind of top that off, if you don't mind, BK, is when you think about ATS, as BK alluded to the 2x, 2x, 70%, 70%, particularly of note, I just want to repeat, the 70% of that business being annuitized gives us very good ability to predict the business within how we've been able to do it. I would also say it's also supported by a really strong pipeline and inflows that are growing. So we feel great about it.

Appreciate all the color. Good luck for the rest of the year.

Thank you.

Our next question comes from Surinder Thind with Jefferies.

So BK, on the Advanced Technology Solutions and kind of the 2x revenue per headcount, is that what you're initially seeing at this point? And is that what -- like how should we expect that to evolve over the coming years?

And I guess what I'm trying to get to is to get a better understanding of when a client kind of shifts from kind of their core operations to more agentic operations, like what percentage of that technology or revenues is more IP based? And then how do we think about the human component there and the ongoing maintenance and recalibration that's often required?

So I think there are many questions in that question, Surinder. So I'll pass that and let me know in case you have any follow-on, okay?

First, overall, at a business level, we are seeing the early signs of decoupling and creating more leverage where revenue will grow faster than headcount, and it has begun to show results. I'll still say we are in the early stages of that, point number one.

Point number two, I'll say to the specific question you asked, any of the agentic is all of those revenues have no bearing on headcount. It is all IP-based revenues, annuitized with minimum volume commitments, and it's more annuitized recurring revenues. So it has 0 bearing on headcount, whatever -- obviously, there's a headcount deployed there. But as we drive more efficiency there, the revenue by headcount will only increase.

Last point I'll make on overall Advanced Technology Solutions, it is greater than 2x, and we expect it to continue to grow better than 2x to better numbers, better semantics.

Got it. That's actually helpful. I think that's a good parsing of my question there. And then when I think about just the earlier commentary on demand, it seems like things relative to 60 days ago or 90 days ago hasn't really changed. Is that the messaging here? Because when we think about all of the messaging kind of from peers or competitors or, I guess, the industry, it just seems like everybody is seeing a little bit more weakness, a bit more delays in client decisioning. And that's kind of being reflected in guides and forward numbers. But just wanted to get your take if you guys are just seeing a completely different picture because of the nature of some of the work that you have.

Yes. How I'll characterize this, Surinder, is we hear some of that commentary, too, but we have -- in our pipeline, in our inflows, we believe we have begun to demonstrate that we are separating from the pack. We see record levels of pipeline across cohorts, as I mentioned in my previous comment. And more of that flywheel effect taking shape because of potentially our context-rich process intelligence, we've been working on it for decades. And possibly, the time has come in to show as to what it means as we supplement it with technology investments and ramp in our strategic areas and really demonstrate meaningful results to world's largest companies as these agents go live in their environments.

[Operator Instructions] Our next question is from Puneet Jain with JPMorgan.

So BK, I was wondering like if you can talk about like the specific drivers for such strong traction in agentic services you are seeing this quarter? Was it in any way related to evolution in AI models, especially Claude and Anthropic, which could be driving clients to embrace some of these models? Or it's just that like with new budgets like clients have new urgency to push ahead with this?

Puneet, as we mentioned in our prepared remarks that we nearly doubled the agentic bookings, and all of these are in annuitized recurring revenues of -- relative to whatever we did all in 2025. And I would not say that it is -- yes, I'm in improved models, all of those help, even in any case, using the models. But fundamentally, what has begun to show, as I was mentioning, in our existing client base as well as the new clients, the structural advantage that we have that is driven by context-rich process intelligence. I have always said there is no artificial intelligence without process intelligence, and it is beginning to show in our results.

And if you think of, like you mentioned, models, process, people, technology, technology is becoming more and more ubiquitous. It is more available. Process is more intense. And I think that's where we live. That's where the intersection of AI needs to be. That's where we see the outcomes, and we are delivering superior outcomes, and that structural advantage has begun to show in its early days.

Got it. And if you can also talk about like the operational structure of these deals, agentic deals, do you purchase tokens, decide which models are relevant for clients and manage like the change management governance constraints that have kept adoption low in the past?

So look, I think, again, maybe there are a couple of parts of the question, if I hear you right, Puneet. One, obviously, we live in these client environments. So as I mentioned, we understand their data, we understand the friction points. We understand the process flows. We understand how upstream, downstream processes work, how the change dynamics have to work. And therefore, we handhold clients holistically to drive and embed into the agentic systems and not just hand over the software and kind of go on.

And whether -- what models -- and it is a pretty structured process in which where to use, what models and how to bring -- we don't need to expose clients to these many tokens and these many things. Those are our internal things, client care, for how we are driving outcomes and restructure the commercial models in more annuitized recurring revenues with minimum volume commits.

Thank you so much. As I see no further questions in the queue, I will conclude this session and pass it back to management for closing comments.

Thank you, Carmen. I want to extend my sincere gratitude to all of our employees around the globe whose dedication and innovation makes everything we are building possible. And yes, to our esteemed clients for continuing to choose Genpact as their partner for agentic-led transformation; and yes, to our shareholders for their ongoing support. You are seeing a new Genpact, and we look forward to showing you even more. Thank you.

This concludes our conference. Thank you for participating, and you may now disconnect.

Good day, ladies and gentlemen, and welcome to the 2025 Fourth Quarter Genpact Limited Earnings Conference Call. My name is Carmen, and I will be your conference moderator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. The replay of the call will be archived and made available on the IR section of Genpact's website.

I would now like to turn the call over to Krista Bessinger, Head of Investor Relations at Genpact. Please proceed.

Thank you, operator. Good afternoon, everyone, and welcome to Genpact's Q4 2025 earnings conference call. We hope you've had a chance to read our earnings press release posted on the Investor Relations section of our website, genpact.com. Today, we have with us BK Kalra, President and CEO; and Mike Weiner, Chief Financial Officer. BK will start with an overview of our results and then Mike will cover our financial performance in greater detail before we take your questions.

Please note that during this call, we will make forward-looking statements, including statements about our business outlook, strategies and long-term goals. These comments are based on our plans, predictions and expectations as of today, which may change over time. Actual results could differ materially due to a number of important risks and uncertainties, including the risk factors in our 10-K and 10-Q filings with the SEC.

During this call, we will discuss certain non-GAAP financial measures. We have reconciled those to the most directly comparable GAAP financial measures in our earnings press release. These non-GAAP measures are not intended to be a substitute for our GAAP results. More details on our constant currency growth rates can also be found in our earnings press release and fact sheet, which are posted to our Investor Relations website.

And finally, this call in its entirety is being webcast from our Investor Relations website, and an audio replay and transcript will be available on our website in a few hours.

And with that, I'd like to turn it over to BK.

Thank you, Krista. Hello, everyone, and thank you for joining us today. We delivered a strong close to a record year for Genpact. Focused execution, accelerating innovation and broad-based demand drove $5.08 billion in revenue, up 6.6% for 2025.

Advanced Technology Solutions revenue grew 17% to $1.2 billion, now accounting for 24% of our total revenue. We also delivered another year of healthy margin expansion. Gross margin expanded 60 basis points, and adjusted operating income margin improved 40 basis points, even with our significant investments for long-term growth.

Adjusted diluted EPS increased 11% faster than revenue for the fifth year in a row.

In 2025, we built a strong foundation to drive sustainable long-term growth with a deliberate focus on rapidly scaling data, AI and domain-driven agentic solutions to reimagine how clients operate. The shape of our business is meaningfully changing as a result. Our performance, pipeline and prospects are increasingly higher quality and strategically aligned with our prioritization of advanced technology solutions and agentic-led work.

We delivered over $5.5 billion in new bookings with healthy growth in Advanced Technology Solutions, which now account for more than 1/3 of total bookings. We won 16 large deals and continue to make progress with the next generation of market disruptors. We are in a very strong position as we enter 2026. Demand is healthy and growing.

Our inflows and pipelines are robust, and our backlog has never been higher as more clients see Genpact as a long-term strategic partner to transform their mission-critical operations.

2025 was a year of intentional disruption and tremendous achievements. As I look back, I am most proud of what we have built, launched and scaled with our agentic solutions. We are fundamentally reshaping how businesses operate, and we are doing so at speed. Last February, we launched AP Capture, the first module in our accounts payable agentic suite with AP Advance, Trace and Assist made available at the end of June. While it is still early days, we have closed over $200 million in total contract value just for our AP agentic solutions. Within that, over 40% of awarded contract value came from new clients. And for existing accounts that have rotated from FTE-led to agentic, both revenue and gross margin expansion are notably above what we reported at Investor Day in last June.

With AP Suite, we have built the playbook for delivering sustainable, expanding value for clients and for Genpact and we are just getting started. Our strong product road map of multiple domain-specific solutions, like AP, are clearly aligned to our areas of operational expertise. The insurance policy and record-to-report agentic suite that we announced late last year are just a couple of examples. We believe the most successful companies will be those that leverage AI to achieve higher levels of autonomy and redefine how they run their businesses.

Genpact is shifting the paradigm of how knowledge work gets done. We are pioneering a new operating model. We call it Agentic Operations. Agentic Operations moves beyond automation to a collaborative model between agents and human experts through 3 main pillars: one, domain-specific agents that autonomously execute tasks in reimagine processes; 2, last mile experts that validate exceptions, train and advance models and reinforce learnings; and 3, clear roles, skills and governance underpinned by responsible AI.

Agentic Operations moves from human processed, human validated to machine processed, human validated. As we enter 2026, a new Genpact is taking shape. We are setting the standard for AI-led transformation. We are uniquely positioned to help clients reimagine the most critical components of their journey from fundamentally redesigning end-to-end processes, to building data and AI capabilities, to operating at scale through agentic collaboration. The opportunity ahead is significant. AI is rapidly evolving from generating insights to executing actions and CXOs face a clear business imperative, translate AI and agentic investments into measurable financial outcomes.

In the U.S. alone, the work of more than 70 million knowledge workers will be transformed by a seamless collaboration between AI agents and human expertise and research indicates that enterprise app integration with domain-specialized agents that are built on last mile expertise will increasingly become the norm. It is clear, enterprise transformation demands a parallel focus on process reengineering, data modernization, agile-tech architecture with AI embedded at its core and the discipline to unlearn legacy ways of working. This is exactly where Genpact shines and where we continue to differentiate.

Through our GenpactNext strategy, we are expanding our capabilities, clients and catalysts to capitalize on this meaningful opportunity and moving from meeting clients where they are to getting clients where they want to be. Let me walk you through key highlights for each.

First, our capabilities. Advanced Technology Solutions grew to $1.2 billion, contributing more than half of total revenue growth in 2025. Demand for our data and AI expertise is increasing rapidly with our investments accelerating our ability to deliver. Our AI Gigafactory continues to scale. We now have more than 400 gen AI solutions in market, either deployed or going live, up nearly 3x from last year. And recently, we introduced AI Maestro, a software platform that helps AI builders and AI practitioners embed AI into last mile business processes at a much faster pace.

Innovations like these are significantly increasing our opportunity set, with our data and AI pipeline up 50% year-over-year. Agentic has grown more rapidly than any other offering in Genpact's history. Our agentic solutions are clearly resonating, demonstrated by traction with new clients as well as higher volumes and increased scope with our existing accounts.

Core Business Services continue to grow, increasing 3.7% in 2025. Clients look to us to run their mission-critical operations at scale and do the foundational work necessary for AI transformation later because they know there is no artificial intelligence without process intelligence.

Our deep domain and industry experience reinforce our competitive position and amplify demand for our Advanced Technology Solutions, especially with large strategic engagements.

Coming into 2026, we have been awarded more large deals than at the beginning of any prior fiscal year, further demonstrating how clients trust Genpact to drive real business outcomes.

Next, clients. Clients choose Genpact because of our ability to combine data, AI and agentic with nearly 3 decades of experience running core operations. Let me walk you through a couple of examples to illustrate. The first demonstrates how our Core Business Services positions us to guide clients through their broader AI-led transformation. Humana is a leading American health and well-being company, primarily focused on offering a wide range of health care services and insurance products. They are long-standing digital operation clients in finance and accounting. Recently, we expanded our partnership to support Humana's AI-enabled transformation across revenue cycle management, procurement and, of course, finance and accounting. We are leveraging our deep process intelligence and last mile knowledge to drive efficiency and consistency through process redesign and operating model improvements.

Over time, we see the opportunity to support more advanced AI-enabled operating models, including Agentic Operations. This aligns directly with Humana's enterprise transformation and AI strategies and create a pathway for Genpact to become a key partner to Humana's future workforce.

The next example is WESCO, which shows just how quickly Agentic Operations can scale and generate meaningful outcomes. WESCO, another Fortune 500 company and leading provider of business-to-business distribution, logistics, services and supply chain solutions has partnered with Genpact to reimagine their finance function, including an overhaul of their AP process. At our Investor Day in June, WESCO's CFO spoke about their comprehensive process and technology transformation. We transitioned their entire AP and procurement organization onto a unified platform and automated their end-to-end process with pretrained outcome-oriented agents. Since June, we have made even more progress to drive better accuracy, faster cycle time and an elevated supplier experience.

WESCO has improved touchless processing of their 3 million invoices from 40% to 65%. They have also now implemented AP Advance with plans to implement AP Assist soon. HFS Research highlighted our work with WESCO as evidence that accounts payable is no longer just a back-office function. Instead, it is becoming a front line for enterprise AI, providing a foundation for real-time visibility and agility across the finance enterprise. These are just a few of the success stories we have seen this past year.

And finally, catalyst. In 2025, partner-related revenue grew nearly 50% year-over-year. Partnering with companies like AWS, Microsoft, GCP, Databricks is accelerating our ability to drive AI-led transformation. We are embedding domain-led solutions into their tech stacks with joint go-to-market efforts and road maps, setting us up to rapidly scale our execution.

We also continue to invest aggressively in AI talent through both hiring technology experts and intentionally training and upskilling our teams. Now with over 7,000 AI builders and nearly 20,000 AI practitioners, we are quickly building a future-ready workforce that can innovate, collaborate and drive impact at scale.

Looking ahead, 2026 will be a pivotal year for Genpact. Building on momentum of GenpactNext, we expect to deliver another year of strong, high-quality results. Revenue growth of at least 7% year-over-year will be powered by Advanced Technology Solutions growth in at least the high teens. We will continue to aggressively invest in our Advanced Technology Solutions, expanding product development across agentic, data and AI and strengthening our sales and partnership ecosystem. Even with these significant investments, we are committed to again deliver healthy margin expansion.

Finally, we expect to drive another year of double-digit adjusted EPS growth while continuing to return a significant portion of operating cash flows to our shareholders.

In closing, let me leave you with a quote from one of our recent tech hires that perfectly captures why we are so excited about this new era. Genpact offers an incredibly unique opportunity to help customers move past the era of AI novelties and into the era of last mile agentic AI. Customers are realizing we can do what others can't. We bring technology and process into the same room, connecting deep functional and industry understanding, proprietary data, AI and agentic systems to truly integrate AI and transform their businesses.

With that, let me turn the call over to Mike.

Good afternoon, everyone, and thank you for joining us today. We delivered a strong fourth quarter that exceeded our expectations, underscoring the progress we have made throughout the fiscal year.

As we consistently execute across our businesses, momentum from GenpactNext strategy continues to build, demonstrating our strategic investments are paying off. In the fourth quarter, total revenue increased 5.6% to $1.319 billion. Advanced Technology Solutions revenue, which includes data and AI, digital technologies, advisory and agentic increased 15% to $323 million, with particular strength in data and AI. Our Advanced Technology Solutions continue to create incremental value for our clients and generating higher value revenue for Genpact, delivering more than 2x the revenue per head count compared to the company average. This revenue is also growing more than 2x faster than Genpact's overall revenue with roughly 70% annuitized revenue and 70% from non-FTE models. Advanced Technology Solutions is high quality, sticky and most importantly, strategically aligned to our future direction.

Our rapid acceleration in agentic reflects the strong foundation and client trust we have built over years as well as our leadership in advancing AI-led transformation. As BK mentioned, we closed over $200 million in agentic contracts across new and existing clients in 2025, with more than 40% of awarded contract value coming from new clients. Within existing AP clients rotating to agentic-led, we continue to see revenue and margin improvement driven by higher volumes, increased scope for both, demonstrating the expansive opportunity of our agentic investments.

Core Business Services, which includes digital operations, decision support services and technology services grew 2.9% to $996 million in the fourth quarter, reflecting continued client trust and demand for our domain and industry expertise. Growth in core was offset by softness in decision support services as we continue to work through our go-to-market approach. In the fourth quarter, data tech and AI revenue increased 7.4% to $639 million, and digital operations increased 4% to $681 million. Non-FTE revenue, which captures our strategic shift to fixed fee, consumption and outcome-based deals represented 48% of fourth quarter revenue.

At a segment level, Hi-tech and manufacturing grew 9.9% followed by financial services growth of 5% and consumer and health care revenue growth of 1.5%. Sales execution and demand remained strong as we continue to make progress with new and existing clients. Existing client relationships continue to grow, demonstrated by our improvements in our net revenue retention rate.

Our large deal momentum also continues. As noted earlier, in addition to the deals closed in the fourth quarter, we have a number of large deals awarded that we expect to close in the coming months, including some net new to Genpact. As a reminder, large deals are $50 million or more in total contract value.

And across clients and cohorts, we are seeing a growing mix of Advanced Technology Solutions pipeline and bookings.

Turning to profitability. Gross margin in the fourth quarter expanded by approximately 90 basis points to 36.6%. Over the past 2 years, our consistent track record of margin expansion reflects our disciplined approach to driving operational efficiencies as well as an increasing contribution from our high-value Advanced Technology Solutions.

SG&A expense as a percentage of revenue was 20.3%. Adjusting operating income was $232 million, with adjusted operating income margin of 17.6% as we continue to self-fund our strategic investments.

Our effective tax rate in the fourth quarter was 24.2%, an increase from our prior year rate that was favorably impacted by a nonrecurring discrete item. Our full year effective tax rate was 24.3%.

Net income for the fourth quarter was $143 million, and diluted EPS was $0.81. Adjusted diluted EPS increased 6.6% to $0.97, faster than revenue growth for yet another quarter.

We ended the fourth quarter with $854 million in cash and cash equivalents, up $207 million from a year ago. This quarter, we returned $129 million to shareholders through $100 million in share repurchases and $29 million in dividends.

Turning to the full year. We delivered $5.08 billion in revenue, up 6.6% year-over-year. Advanced Technology Solutions increased 17% to $1.204 billion and Core Business Services revenue grew 3.7% to $3.876 billion. Data Tech and AI increased 9.3% to $2.442 billion, and digital operations increased 4.1% to $2.638 billion.

In 2025, we drove another 60 basis points of gross margin expansion to 36% through rigorous operational discipline and our strategic focus on driving higher value revenue streams.

SG&A expenses as a percentage of total revenue was 20.3%, consistent with last year. We remain disciplined in managing costs by prioritizing strategic investments. Adjusted operating income grew 9.1% to $888 million, with adjusted operating income margin expanding 40 basis points year-over-year to 17.5%.

Net income grew to $552 million. Adjusted diluted EPS increased 11.3% to $3.65, reaching a record high, growing faster than revenue for the fifth consecutive year. For 2025, we generated operating cash flow of $813 million, including $170 million from a client prepayment in the third and fourth quarters. Excluding this impact, cash flow from operations increased 5% year-over-year.

Finally, we returned $401 million to shareholders through $283 million in share repurchases and $118 million in dividends.

Turning to our outlook, which assumes the operating environment will remain relatively consistent. Our strong execution, significant backlog and rapidly accelerating demand for Advanced Technology Solutions put us in a very strong position entering the year. As a result, we expect to deliver at least 7% growth for 2026 on an as-reported basis. This guide reflects committed revenue in line with historical ranges.

In Advanced Technology Solutions, we expect revenue to grow at, at least high teens for the full year, driven by ongoing demand for data and AI as well as strengthening partnerships and continued momentum in agentic.

In Core Business Services, we expect growth to continue, even as we help clients accelerate their AI-led transformations through Agentic Operations and we increase our focus on driving sustainable growth through advanced technology innovations.

Full year gross margin is expected to further expand by 50 basis points to 36.5%. Adjusted operating income margin is expected to increase 25 basis points to 17.7%, reflecting our continued commitment to self-fund investments for growth. As a result, we expect adjusted diluted EPS to grow approximately 10%, again, faster than revenue.

Regarding our capital allocation strategy, we continue to take a balanced and disciplined approach. We aim to return approximately 50% to shareholders through share repurchases and dividends while maintaining flexibility for strategic investments. As a result, our Board of Directors has approved a 10% increase in our regular quarterly dividend to $0.1875 per quarter and $0.75 on an annual basis.

Turning to the first quarter on an as-reported basis. We expect to deliver total revenue between $1.282 billion and $1.294 billion or 6% growth at the midpoint. We expect Advanced Technology Solutions to accelerate from the fourth quarter to high teens growth year-over-year, and we expect continued growth in Core Business Services. We expect gross margin to expand to 36.3% and adjusted operating income margin to increase to 17.3%.

Finally, we expect adjusted diluted EPS of $0.92 to $0.93 for the first quarter. In closing, the unique combination of our last mile expertise with advanced technology capabilities allows us to define how enterprises will operate in the future. With our GenpactNext strategy, we're innovating at scale to accelerate high-quality revenue growth and consistently expanding margins, all while further amplifying our differentiated position in the market. We remain committed to investing aggressively against the most strategic areas of our business to drive sustainable growth and improvements in our margin profile with long-term partnerships that support improved economics for both Genpact and our clients. All this allows us to continue to grow adjusted diluted EPS double digits while driving long-term value creation.

With that said, let me turn the call back over to BK.

Before turning to Q&A, I want to extend my thanks to an incredible leader. Krista Bessinger is transitioning to a new role at Genpact in 2026. Krista, you have made significant impact here at Genpact. Thank you. Thank you for your partnership, and I look forward to working with you in your new advisory role.

With that, I also want to welcome Kyle Vikström as our Head of Investor Relations, and the newest member of our Genpact Leadership Council. Kyle joined us from Microsoft last spring with over 20 years of experience in various finance roles in technology. We are very excited to have her on Board.

And now let me hand it over for Q&A.

[Operator Instructions] Our first question comes from the line of Bryan Bergin with TD Cowen.

Maybe just given the material pressure on the sector from announcements from Anthropic and others, maybe we just start off with whether anything has changed for you on the ground in contracting conversations, whether you see any instances of clients seeking to try to do more themselves? I guess I'm curious, where do you see hype in the market being just that versus where there may be some validity to the risks that some of the traditional models face?

Sure, Brian. Thanks. Let me take that. Look, I would say that we are incredibly excited with what's happening in the Silicon Valley and because it is accelerating our pivot, it is helping us drive outcomes for our clients faster. And whenever any of these tech shifts happen, it's always nuanced as to how it will apply to various different companies, and we clearly see this as a tailwind for us. We see that in our pipeline. We see that in our conversations.

And if I just step back and maybe -- this is oversimplifying, Bryan. I see this as 2 main AI focus areas. One is, let's say, research AI and the other one is task-oriented AI. What you are probably referring to is more -- what is getting more attention these days in research AI, which is helping us accelerate our work. Where we come in is more in task-oriented AI and that's where we are building this Agentic Operations where we execute specific task within a process and making sure we are bringing in AI into the entire system of work, looking at the data, looking at the context in this complex end-to-end business processes, which are unique to every industry.

So fundamentally, if I see it from the operator lens, as we speak to many Fortune 500 companies, not just the frontier AI companies, we see our relevance increase. And we are seeing that again how our Agentic Operations is taken up, how data and AI is taken up. And what I would say is we are only seeing our pivot accelerate and only excited with this.

Okay. Understood. And my follow-up will be on ATS. You had nice solid growth here again in fourth quarter, 15%. Now you're calling for an acceleration off of that level. So I want to touch just the factors driving that confidence. I heard plenty of activity in your prepared script. Can you just give us a sense of maybe ATS bookings growth? And is there an acceleration of work that's coming out of CBS and into ATS? Anything that's kind of mechanically migrating between the 2?

I'll answer it in 2 parts, and Mike, feel free to give your color. Point number one, I think we are beginning to see -- getting into a lot more conversations where we were originally not invited to. And I often have said that we are meeting where clients are. And increasingly, we see that we can take them to where they want to be in a much faster manner. So we are -- be it in large deals or mega deals, we have begun to see into the conversation where we were earlier not invited and that we see in our pipelines.

Second, I think just from a Core Business Services standpoint, we continue to see a very, very healthy demand because that's where we see last mile advantage. That's where we have done mission-critical operations at scale. And that's where we understand the complexities and bring the process and technology conversation in one go. And fundamentally, what we have seen just agentic contracts grow, including with new clients, 40% of the booking coming in from new clients or this contract value. We are really excited. And even for the rotation, we see incremental revenue growth and gross margin growth.

Yes. So you may just double-click on that for a quick second. So just if you really want to just think about it from that perspective, in the sense of how do we view ourselves in terms of ATS growth at the rate that we're projecting in the high teens for 2026, it's really driven by the 2 things BK alluded to. First, momentum we've seen in the agentic ramp-up has been notable, right? We put forth -- we had a TCV of approximately $200 million in bookings where we ended the year and that's going to accelerate more as we roll out additional agentic-related solutions. That will help pivot some of the revenue from the Core Business Services.

And a few comments on that. As we talked about in our prepared remarks, the quality and sustainability of that revenue is incredibly important to us. It's highly sticky and continues to grow at a measured pace. It's recurring annual revenue, if you want to think about it from that perspective.

Look, I think maybe what I'm really excited about is how the shape of our business is changing and the pace at which it is changing. And more than 1/3 of the booking is Advanced Technology Solutions. And majority of deals that in agentic are obviously non-FTE, but driving consistent recurring annual revenue stream. So the new commercial model is taking hold in a significant way.

Our next question comes from the line of Maggie Nolan with William Blair.

You mentioned, I think, 40% of your TCV for the AP suite was new clients. I think that number was maybe closer to 30% last quarter. Are there patterns in who is adopting this? Are they different than the typical clients that would have engaged with Genpact or BPO in general in the past? And then can you give us some data on how you're thinking about addressable market growth as you roll out these solutions?

Thanks, Maggie. Look, I think it clearly points to significantly expanding our total addressable market. And as I've said that we haven't seen take off of any solution in Genpact history at the pace that we are seeing this. And many of these new clients are obviously net new to Genpact, but a number of them are also our existing clients who are not using finance, but they have now begun to use our finance stack.

So fundamentally, it is the enterprise client. It is mid-market clients. It is our existing clients who are not using finance -- using us for finance. So combination of all of that is really enhancing. And this is also, in many ways, getting us into the core foundational work that we need to do for many of these clients.

Okay. And then have you noticed any improvements in the sales cycle or ramp times in the last 90 days or so, particularly in large deals? And I'm curious what's contemplated in the full year guidance with respect to those variables. And you sort of alluded to large deals in January being quite strong. Are those baked into the guide?

Look, I think large deals have their characters. Some move at a very accelerated pace and some take much longer. And especially as we bring more technology and process and data and all of these skills together, especially for larger awards, it doesn't move in 90-day increments. But really thrilled with a number of these conversations, the pipeline across cohorts, including large deals is at record levels.

Maybe I'll add on to that, BK. So Maggie, thanks for the question. Let me just bring this up a little. We're really confident in our guide at 7% on a full year basis, right? So we look at everything that we look at all deals. We probability weight them as we move forward in our business. But a few things I wanted to just quickly talk about when we think about the 7% number for us. We look at it in an absolute dollar perspective, right? So we grew last year a little over 6.5% and roughly the same number a year ago. So it's not a Herculean effort for us to grow at that rate for next year.

But I'd also like to just point out that our committed revenue is in line with historical averages, which is about 75-ish percent, right? And again, this is all built off of a significant backlog, which is at record levels, which takes into account 2025 bookings as well as an exceptionally strong 2023 and 2024. So we feel really good about that on a go-forward basis and specifically regarding your question on is all deals are probability weighted into how we look at the guide on a prospective basis.

Our next question comes from the line of Surinder Thind with Jefferies.

I'd like to touch base on the margins, starting with the gross margins and the expectations of 50 basis points of expansion. Can you walk me through the levers that you're using there? And then what is the potential to kind of continue that trajectory as we look further out into '27 and '28?

Maybe I'll start, and Mike, feel free to comment on it. Look, fundamentally, it is shift to Advanced Technology Solutions, which is giving higher value to our clients, and it is a higher value revenue for Genpact. And we've been talking about it for a bit. And now I think it is -- as it is picking up the momentum, we see that come through apart from the disciplined operational capabilities that we are driving, but it is more from Advanced Technology Solutions.

And I'll not like to opine on what will happen in '27, '28, but fundamentally, our trajectory is clear as we have demonstrated, Surinder, over the last couple of years and increased the margin by 90 bps or 100 bps over last 2 years. And we are very clear that it will certainly grow further in this year as we have guided The Street.

Yes. Two just quick add-ons to that, Surinder. So when -- as BK alluded to, right, the increased mix from ATS, right, particularly that we see these the non-FTE commercial models really support our margin in that business. In addition to it, if you think of our margin in totality or the AOI margin we lay out and remember that grew 40 basis points year-over-year, that is net of significant investments we've made in our organization. So we feel very good about our margin trajectory on a go-forward basis.

That's helpful. And I guess, as a point of clarification, what I was trying to tease out here is this idea that is this predominantly a mix shift benefit that you're receiving? Or is there other benefits that you can get from -- just from the delivery footprint and the AI advances that we're seeing? I was just trying to understand that component here.

Yes. So correct. So the mix shift component and the nature of the work we do in ATS, we just alluded to is one component of it. But if you're thinking about it from a Client Zero perspective, which is how we think about our organization and using AI and everything and how we're training our internal organization, yes, that's help perpetuate the growth and the efficiencies that we're seeing in our own business. Remember, we come to the term Client Zero because we're embedding technologies in everything that we do, right? I disproportionately focus on functional areas. And I've seen that technology payoff, right? And we're using some of that benefit to invest in the future of our organization. So I think it's both things. I think you're correct.

That's helpful. And then following up on the comment about this is all net of -- you're making a lot of investments. And so obviously, you're still seeing some good adjusted operating income margin expansion. You kind of use the terminology that you're investing aggressively in strategic areas. Can you elaborate on that in the sense of, can you do more? And is it -- how do you balance the level that you want here? Because when we look at other -- I'll use the extreme example is just the hyperscalers. Their CapEx spend this year is coming in much, much higher than anybody is anticipating. So it always seems like there's the ability to invest more. How are you drawing that line?

So I'll kick it off and hand it over. So remember, what we're doing, there's a tremendous amount of CapEx associated when we talk about investments in totality, right? We do run a very disciplined process in the organization, right? We look at the ROIs and the strategic implications of every one of the investments that we do, right? Is there always a greater ask that we're willing to do? We evaluate that on a quarterly basis. We do it in a very disciplined fashion, right? But what I will say is from an investment perspective and things like partnerships, which we've called out in quarters past to training, we are not pulling back from that by any stretch. We are investing quite a bit of the operating leverage of the business in the future strategic investments and a whole course of things.

And I think there are clear areas of our investments, Surinder, that we have laid out. Partnerships, we have laid out, we continue to invest more and more in that. We have laid out in building the talent. We have -- we are increasing that more and more. I talked about Agentic Ops and so on and so forth. This is all the product investments and the engineering investments that we have done, sales investments and the front-end investments we are doing. So we are changing the business. That's what I mentioned. The shape of the business is changing very fast. And may I say, we are no longer the company that we were 2 years ago and really proud as to the speed and pace at which we are moving.

One moment for our next question, please. And it comes from David Koning with Baird.

Great job. I guess my first question is really on pricing. And our clients, it seems like coming to it at an increasing pace, that's great. Are they coming with greater expectations of the ability to drive more efficiencies? Are you having to change dynamics like faster kind of efficiency gains in their contracts? Or anything changing in the dynamics and the backdrop?

Maybe I'll take first and feel free to opine overall, Mike. Look, fundamentally, how I would think about it is, yes, aspirations are high. Overall aspiration of whatever everybody is reading and, therefore, what can happen in their businesses is high. And so is true in pricing as well. But what we are able to -- so I'll say it in 2 parts. First thing is, think of it as simple as p times q. I mean p times q, yes, we are giving in more productivity to our clients, but our costs are offsetting at a much faster pace, and that's what you see in gross margin.

And as far as our top line is concerned, we are getting a bigger share or more scope that for the same body of work we are able to -- that's what we reported that in agentic, our revenue growth is much higher than what we reported in June. So I think there is -- that's why we are saying that we are creating higher value solutions for our clients and we are gaining in the process.

The second piece I'll also say is how we are working with our partners and leveraging partner ecosystem as well as embedding solutions at the last mile, and they are repeatable in nature. And therefore, I think we are gaining as a leverage point there as well. Mike?

Yes. The way I think about it is just -- I look at our gross margins, right? And I look at the gross margin expansion that we have and the gross margin expansion that we're guiding for, right? I think that's really the best measure on how we're doing this, right? So yes, as BK alluded to in the beginning of his comments, there's always productivity asks, right? We've seen nothing dramatically changed from the past. But it's always been there, and it's not going to go away. And I think our ability to navigate through that thus far and what we're projecting has been quite impressive.

Yes, consumption structures are taking hold. So that's giving us more leverage.

Yes. Okay. That's great. I guess a follow-up question. When a company -- let's say, they're brand new to outsourcing, they haven't thought of AI too much yet. They're on the forefront of thinking about it. Who do they first turn to? Is it you guys? Is it one of the bigger tech companies? Like -- are you at the kind of the tip of the spear, like Genpacts are first called to like start this all out? Or who do they go to?

Look, I think this is what I was referring in one of my earlier comments that over the last year or so, we have begun to see and sit on the table where we were usually not invited because we are bringing the process, technology, data and how to run mission-critical operations at scale, all in one dialogue, all in one conversation. And that is really accelerating our pipeline, and you see the progress thereof. And we are talking about Advanced Technology Solutions growing 17%. And we are saying for next year, our view is -- it'll grow on top of 17% this year, another 17% at least. So we see that in our pipeline. We see that in our momentum. And yes, I think we are getting invited where we were not earlier invited. So feel really thrilled about that.

Our next question comes from the line of Puneet Jain with JPMorgan.

I wanted to follow up on agentic solutions when you offer like Agentic Operations or AP solutions. Who's the decision-maker within client organizations? Is it like the business managers or the CIO office? Who's driving the charge towards embracing agentic AI within your clients?

Yes. Look, I think it is always a combination of both. When we were just talking about running mission-critical operation, obviously, the business voice is much bigger. Well, fundamentally, now as you need to intersect and need to rewin all of these agents into their complex system road map, clearly, their CIO or CDIO, they are integral part of the equation. And therefore, that's the other piece where we are getting invited when a CIO, CDIOs looks at how we are thinking about Agentic Operations, how agents combine with human expertise, how overall underpin with responsible AI governance, our all of the framework, we are getting invited in more and more dialogues.

And then on the last deals that you have closed this year, what's driving that increase or the trend? Like are these like deals typically rebadging comp -- like do these deals have rebadging components, meaning that they are coming from clients in-house operations? Are these AI-led deals? What type of work you are -- you typically see in those deals?

Look, operations and maybe you're referring to talent transfer and others, it has been integral part of our model. And there is nothing special about that. Clearly, what is special that a lot more of our clients have begun to see that bringing -- we've been running these mission-critical operations, sometimes they are running themselves. But how we are bringing Agentic Operations in those mission-critical operations. Therefore, some of those demand spigots are opening up more. And we are getting invited into even GCC conversations that, hey, why don't you take up the center and run it for us because that's not what their expertise is and they are -- that expertise has begun to shine more and more.

And our last question will come from the line of Bradley Clark with BMO Capital Markets.

Just one from me. I think it's clear that trend with your business are strong right now and in the BPO industry with really strong pipeline, expected acceleration in ATS. And I guess I want to shift focus to like long-term durability, like the demand of customers needing help implementing a lot of different solutions, including your own solutions like your AP solution into these processes that had previously been mostly manual labor. And I guess I want to understand like what's the tail of these types of projects or services for client, i.e., like once you help them implement the solution, whether it be your AP agentic solution or a third-party agentic solution? How did growth come after that?

Yes. Look, I think these are -- and what I'm talking is more from an operator lens, what we see every single day. And fundamentally, it is -- when I'm talking about AP agentic solution or for that matter, record to report or insurance, these are just very initial solutions that are taking hold. And please understand each of these solutions are building recurring annual revenues for Genpact. And that's what the commercial model is. And these are clearly as we see it shaping the business in a very significantly different ways. And like I mentioned in my previous comment, more and more of our clients, especially mega deals, they have begun to see that the benefit of Agentic Operations, especially running finance, supply chain, some mid offices, claims operation, underwriting operations, banking operations, it is how we bring in agents with human expertise in a responsible AI framework so that they get enabled at the front end, they can gain market share and they can focus where they need to focus. So we really see this as a long-term change that is building a long-term business for us in a meaningful way.

And this will end our Q&A session. I will pass it back to management for final comments.

Thank you. Thank you, Carmen. Look, I just want to take the opportunity and thank all of the employees across the globe who make what Genpact is becoming possible. So my deepest thanks to all of them and most importantly, to our clients who are choosing Genpact and also to our shareholders for their ongoing support. 2025 was an incredible year, set us up for even better credible year in '26 and beyond and look forward to showing you more and more of that. And I really do want to thank you all. Thank you.

This concludes our conference. Thank you for participating. You may now disconnect.

Good day, ladies and gentlemen. Welcome to the 2025 Third Quarter Genpact Limited Earnings Conference Call. My name is Lisa, and I will be your conference moderator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. The replay of the call will be archived and made available on the IR section of Genpact's website. I would now like to turn the call over to Krista Bessinger, Head of Investor Relations at Genpact. Please proceed.

Thank you, Lisa. Good afternoon, everyone, and welcome to Genpact's Q3 2025 Earnings Conference Call. We hope you've had a chance to read our earnings press release posted on the Investor Relations section of our website, genpact.com. Today, we have with us BK Kalra, President and CEO; and Mike Weiner, Chief Financial Officer. BK will start with a high-level overview of the quarter, and then Mike will cover our financial performance in greater detail before we take your questions.

Please note that during this call, we will make forward-looking statements, including statements about our business outlook, strategies and long-term goals. These comments are based on our plans, predictions and expectations as of today, which may change over time. Actual results could differ materially due to a number of important risks and uncertainties, including the risk factors in our 10-K and 10-Q filings with the SEC.

Also during this call, we will discuss certain non-GAAP financial measures. We have reconciled those to the most directly comparable GAAP financial measures in our earnings press release. These non-GAAP measures are not intended to be a substitute for our GAAP results.

And finally, this call in its entirety is being webcast from our Investor Relations website, and an audio replay and transcript will be available on our website in a few hours. And with that, I'd like to turn it over to BK.

Thank you, Krista. Hello, everyone, and thank you for joining us today. Q3 was another strong quarter for Genpact with revenue up 7% year-over-year, reaching $1.291 billion, exceeding the high end of our guidance range by $21 million. Growth in Advanced Technology Solutions continues to accelerate with revenue up 20% year-over-year. This is our fifth consecutive quarter of accelerating growth, reflecting strong momentum as we successfully execute on GenpactNext.

Gross margin of 36.4% and adjusted operating income margin of 17.7% also exceeded expectations as we continue to drive healthy margin expansion while making significant investments for long-term growth. And adjusted diluted EPS continues to grow significantly faster than revenue, up 14% year-over-year, reaching $0.97, $0.07 above the high end of our guidance range.

We continue to strengthen our foundation with GenpactNext. Growth in Advanced Technology Solutions is accelerating with Advanced Technology Solutions now driving more than half our revenue growth. Revenue per head count is also increasing, particularly in Advanced Technology Solutions, driving total revenue per head count higher. And incremental revenue is coming in at much higher gross margin in 2025. We expect all of these trends to continue longer term.

GenpactNext is designed to establish Genpact as a global leader in advanced technology solutions, building on strength of our core business services with accelerating revenue growth and expanding margins. Its growth model has 3 key elements: capabilities, clients and catalysts. We are executing well across each. Let me walk you through the highlights: first, our capabilities, which include advanced technology solutions and core business services. We hosted our second annual AI Day in September with nearly 200 clients and partners in attendance. Our message was clear. Genpact is defining the future of agentic operations. We believe that companies pivoting to agentic operations will redefine their industries, gaining market share and operating leverage by a factor, not a few points.

To support this vision of the future, we announced 3 major products at AI Day. The first is AI Maestro, a software platform for AI practitioners that enables faster adoption of AI into last mile business processes, driving measurable near-term ROI. We also announced 2 new agentic suites: the Genpact Insurance Policy Suite for commercial and specialty insurance designed to increase touchless clearance and deliver faster handling times; and the Genpact Record-to-Report Suite, which increases predictability and reduces enterprise risk in month and quarter end close processes. These announcements highlight the accelerating pace of innovation at Genpact and put us in an excellent position to gain further market share and momentum.

Our focus on delivering innovative results is also driving strength in data and AI more broadly. The AI Gigafactory is now supporting approximately 100 clients, up more than 2x quarter-over-quarter with a robust set of accelerators developed through GSolution.ai. We also now have more than 330 GenAI solutions in market, either deployed or going live, up more than 1.5x from the year ago period. These are full solutions deployed in live production environment, driving measurable business results for clients.

In terms of agentic adoption, our solutions for agentic operations are growing at an exponential rate, faster than any solutions in Genpact history with a strong product road map ahead. While it's still early days, agentic contract value is growing rapidly as well. Volumes are significantly higher than we spoke at our Investor Day in June with a healthy mix of contracts coming in from new and existing clients. Year-to-date, more than 30% of our awarded agentic contract value is coming in from new clients. For existing clients, both net revenue growth and gross margin expansion continue to trend in a positive direction relative to the stats we shared with you in June.

In Core Business Services, revenue grew 3% year-over-year with strength in Digital Operations and technology services, providing a solid foundation for future growth. Looking ahead, we see an opportunity to sharpen our go-to-market focus in decision support services to drive stronger execution and greater market share over time. We continue to invest in all 3 capabilities in Core Business Services to serve clients who are working towards AI readiness but who are not ready to launch agentic operations today.

Taking a step back. Advanced Technology Solutions and Core Business Services continue to amplify each other. Let me give you a couple of examples to illustrate. At AI Day, we were honored to have a number of large clients join us to share real-world examples of how Genpact's data and AI knowledge and last mile expertise are driving real business outcomes. I want to share 2 stories with you today with long-standing clients who started many years ago with us in core business services, who are now power users of advanced technology solutions in addition to remaining highly valued clients in the core.

The first is Mars, a family-owned business with more than $55 billion in annual revenue that produces some of the world's best loved brands. Our long-standing partnership has been built on operational excellence, trust, innovation and shared success. Mars started with us in 2018 as our Digital Operations client in finance and accounting and later expanded into other service lines.

Today, we have deployed a number of AI solutions that are delivering strong ROI with more slated to launch soon. As an example, we have built and deployed a team of autonomous GenAI agents that interpret, reason and act across the entire cash life cycle, delivering an increase in on-time cash collections and working capital improvements. The Mars team has been an exceptional partner for us.

The additional keys to our success have been our deep process intelligence; our industry depth working with some of the world's largest consumer goods companies; and our last mile knowledge, which, in this case, includes a detailed understanding of Mars technology, their operating environment, understanding of friction points and the years of operational experience that we have gained there. Our partnership has delivered significant value with hopefully our best years still yet to come as we work towards an agentic and increased autonomous enterprise.

The second example is Heineken, one of the world's most iconic beverage companies. We have had the privilege of partnering with Heineken for over 15 years. Over the past year, we established a data quality factory that sets new standards for delivering trusted data at scale. With agentic AI now infused through orchestrated agents on Azure and Databricks, we have taken a significant stride towards intelligence and autonomous data quality.

To deliver, Genpact brought more than just technology. We also brought process intelligence and understanding of how data flows in the Heineken ecosystem, how their markets operate and understanding of the friction points in various parts of the process. Early results show strong ROI with an improvement in automated data quality of up to 70% and 67% faster times to diagnose and fix data quality issues. The team has also reported better order fulfillment, fewer delivery failures, stronger compliance and more confident decisions. We are incredibly grateful for their partnership.

And finally, on catalysts, we continue to accelerate growth through investments in partnership and AI talent. In Q3, partner-related revenue grew 56% year-over-year. Partnerships represent an important opportunity for Genpact as demand for data and AI-led transformation requires deep process and domain expertise and integrated offerings. We are partnering with companies like AWS, GCP and Databricks to embed domain-led solutions into their tech stacks with joint go-to-market efforts and road maps.

At only 10% of revenue, we believe partnerships represent a significant growth opportunity for Genpact going forward. We also continue to invest aggressively in AI talent, rapidly accelerating the pace and quality of hiring in our Advanced Technology Solutions leadership team to support our strategic pivot. We continue to hire leaders with significant experience in data and AI, product development and technology consulting who are driving critical initiatives at Genpact, including our AI Gigafactory and agentic products. We are also developing thousands of AI builders and practitioners and remain on track to achieve the 2025 targets laid out at our Investor Day in June.

Now turning to guidance. With better-than-expected results in Q3, we are raising our full year outlook for revenue and EPS. Our expected revenue range is now 6.1% to 6.4% on as-reported basis, up from 4% to 6% previously, an increase of 120 basis points at the midpoint of the range. We are also raising our outlook for adjusted diluted EPS by $0.07 to $3.61 at the midpoint, reflecting double-digit growth.

In closing, we are incredibly excited about the future. Genpact is proving to be a clear partner of choice of AI-driven transformation with significant momentum as we leverage advanced technology solutions to strengthen our last mile advantage. I said earlier that we believe that companies that pivot to agentic will redefine their industries, gaining market share and operating leverage by a factor, not a few points. I believe that future exists for Genpact as well.

With that, let me turn the call over to Mike. Thank you.

Good afternoon, everyone, and thank you for joining us. Third quarter results exceeded expectations, driven by strong execution across our business. As BK mentioned, momentum continues to build with GenpactNext, and we are seeing our strategic investments starting to pay off.

Total revenue increased to $1.291 billion, up 6.6% year-over-year. Advanced Technology Solutions revenue, which includes data and AI, digital technologies, advisory and agentic solutions, accelerated again, up 20% to $311 million, with particular strength across data and AI solutions. Advanced Technology Solutions represents 24% of our third quarter revenue compared to 21% in 3Q 2024. Year-to-date, Advanced Technology Solutions has driven more than half of the total growth for Genpact.

Core Business Services, which includes revenue from Digital Operations, decision support services and technology services, increased 3% to $980 million, driven by strength in Digital Operations and technology services, which reflects continued demand for our deep operational and industry experience. This was partially offset by softness in decision support services, which we are actively addressing, as BK noted earlier.

Data-Tech-AI increased 9.3% year-over-year to $622 million, and Digital Operations increased 4.3% year-over-year to $669 million.

At a segment level, revenue grew 14% in high tech and manufacturing, followed by financial services at 3% and consumer and health care at 1%. Non-FTE revenue, which includes fixed fee as well as outcome deals, accounted for 47% of third quarter revenue, increasing from the prior year, benefiting from continued momentum in advanced technology solutions. Demand for our solutions continues to grow. We signed 5 large deals this quarter. As a reminder, these deals are over $50 million or greater in total contract value, and our pipeline increased from 2Q as clients look to us as partners to run and transform their businesses.

Turn to profitability. Gross margin expanded this quarter to 36.4%, up more than 70 basis points year-over-year, reflecting continued operating leverage against healthy revenue growth. Year-to-date, we have driven $242 million of incremental revenue year-over-year with $104 million of incremental gross profit over the same period.

SG&A expense as a percentage of revenue were 20.3%. Adjusted operating income for the quarter was $229 million, with adjusted operating income margin expanding more than 10 basis points to 17.7% as we continue to self-fund our strategic investments. Our effective tax rate was 23%, down from the previous year, reflecting geographic mix of earnings. Third quarter net income was $146 million, and diluted EPS was $0.83. Adjusted diluted EPS again grew faster than revenue to $0.97, up 14.1% from the same period a year ago.

Operating cash flow of $308 million includes a $45 million advanced client payment made in the quarter. Excluding this impact, operating cash flow was $228 million, up 15% year-over-year. Additionally, DSOs were 89 days. Third quarter ended with $741 million in cash and cash equivalents, down from $1 billion a year ago. As a reminder, 3Q 2024 cash included proceeds from a bond issuance, which we used to repay a bond maturity later in the year.

Even as we make significant investments to drive our pivot as an agentic and AI-led company, we continue to return significant amount of capital to our shareholders. This quarter, we returned $119 million to shareholders through $90 million in share repurchases and $29 million in dividends, bringing the year-to-date capital return to $272 million or 59% of free cash flow.

Turning to guidance. As BK mentioned, with another strong quarter of execution behind us, we are raising our full year guidance for revenue and EPS. For the fourth quarter, we expect to deliver net revenue between $1.298 billion and $1.311 billion or 4% to 5% growth, representing 4.5% at the midpoint. Advanced Technology Solutions is expected to grow mid-teens, driven by continued demand for data and AI. And we expect Core Business Services to grow in the low single digits at the midpoint. This translates into Data-Tech-AI and Digital Operations revenue of approximately 7% and 2.2%, respectively. We expect gross margin to expand to 36.4% and adjusted operating income margin to come in at 17.4%. We expect diluted EPS of $0.93 to $0.94 for the fourth quarter.

As a result, for the full year, we now expect to deliver net revenue in the range of $5.059 billion to $5.071 billion or 6.1% to 6.4% growth, with Advanced Technology Solutions in the mid- to high teens and Core Business Services in the low single digits. Data-Tech-AI and Digital Operations revenue is expected to be 9.2% to 3.6% at the midpoint, respectively.

Our full year gross margin is expected to be 36%, a 50 basis point increase from the prior year. Adjusted operating income margin is anticipated to be 17.4%, an increase of 30 basis points from the prior year. Our adjusted diluted EPS is now expected to be between $3.60 and $3.61, representing a 10.2% growth year-over-year. We continue to grow adjusted diluted EPS faster than revenue. Operating cash flow is expected to be approximately $650 million. This includes the $45 million advance payment in the third quarter from the client noted earlier.

On capital allocation, we continue to aim to return at least 50% of cash flow to investors through a combination of share repurchases and dividends while maintaining flexibility for strategic investments. More details on constant currency growth rates can be found in our earnings press release and fact sheet posted to our Investor Relations website.

Before turning the call over to Krista, I'd like to share a couple of early thoughts on 2026. First, we remain committed to the medium-term targets we laid out at our Investor Day, and we see potential for upside momentum continues to build, amplifying what sets us apart with advanced technology solutions as we define the future of agentic operations. Next, you should expect to see an increased emphasis on GenpactNext framework, particularly as we track our progress against our ambition to establish Genpact as a global leader in advanced technology solutions. And finally, we continue to execute across our businesses to drive sustainable growth, working with our clients to accelerate AI transformation that builds long-term partnerships and supports improved economics for both Genpact and our clients.

With that said, I'll turn the call over to Krista.

Thank you, Mike. Before we begin Q&A, I just wanted to quickly note that due to a family emergency, BK and Mike are taking the call from separate locations today. As a result, although we have tested to ensure a seamless connection, you may hear a lag or delay when they're speaking. If that happens, please bear with us as we do our best to get it corrected. Thank you.

Operator, we're now ready to take questions.

[Operator Instructions] Our first question today will be coming from the line of Bryan Bergin of TD Cowen.

I wanted to open up here just as it relates to demand. If you can comment on the bookings performance you saw here in the third quarter, give us a sense on that larger deal momentum, how you're feeling about that. And maybe just has it changed much as you've gone through October and into November?

Sure, Bryan. Maybe I'll pick it up, and Mike, feel free to add. So look, overall, demand signals, Bryan, continue to be strong across the board if I see various cohorts of the deal or I look at new clients, existing clients or even various segments. So demand signals continue to be pretty good be it inflows, be it pipeline.

And what I must also say that, look, sales cycles, especially for large deals, continue to be -- we are seeing a mix. Some are moving at an accelerated pace -- we closed 5 large deals this quarter -- especially given their size. And others are taking more time to close as we work through long-term transformational road maps, as our clients bake in all of the AI benefits into the deals. And by definition, as you know, large deals represent long-term strategic partnerships. And they have their own timing, own cadence and don't necessarily move with a neat 90-day increment or so. But we feel really good about the overall environment. And Mike, if you would like to comment a little bit more on the booking.

Yes. So first of all, I just want to comment a little bit more into that in total. We're seeing strong demand in both new and existing clients, and we remain committed to not just the full year guidance we laid forth earlier with 6.1% to 6.4% growth for the year, right? I just want to again reiterate our medium-term targets for '26 and '27 of growing at least 7% for those years, respectively, still remains on track, right?

With regard to bookings, again, strong pipeline, growing demand, right, will translate into what that revenue is going to be for the medium term. We'll evaluate everything else on a go-forward basis, but we feel really good, particularly about our medium-term targets for the next 2 years.

Okay. Okay. Very good. And then my follow-up, just around GenAI and agentic contracts and the result in revenue and kind of margin impact. So you mentioned contract values continue to move higher. You're obviously talking favorably about the revenue being at higher margins and ATS having higher growth in margins. Is there any framing you can help with there? At the Investor Day, you talked about kind of the aggregate 300 bps higher margin. Any context you can share around that number as far as is it still in that type of range? Is it changing in any direction?

Sure, Bryan. Overall, we feel very good with how agentic contract value is shaping up. We really see this playing in a very strong fashion with no artificial intelligence without process intelligence, as our clients lean in more with trusted partner like us, as we need to implement more complex tools, they need the office expertise, the last mile. And now specifically on the stats, stats continue to trend in the positive direction as well. And what we are really pleased is about the awarded agentic contract value, as Mike noted and I noted earlier, that 30% of that is coming in from newer clients as well, and that's a significant number. And that has improved from that particular day as well, as well as the 300 bps or the growth of -- with our existing clients. So it's all moving in the positive direction.

Yes. So if I could just quickly add on, BK, just to kind of sum it up, Bryan, for you. So BK alluded to when we talked directly about 30% of the awarded agentic contract value year-to-date is coming from new clients. That's a significant number, right? As we move continuously through the year, we're very proud of -- BK talked about the 300 basis points or 3% accretion in terms of total revenue. On a year-to-date basis, we are tracking above that number. That's something we're quite proud of.

And the next question will come from the line of Maggie Nolan of William Blair.

Can you help me understand maybe when your clients are not ready to launch agentic operations, what are the primary reasons there? And then anything you can share about how penetrated you are in your client base with the agentic operations offerings and then your expectations for the pace of adoption from here?

This is a long-term trend, Maggie, and it will take much longer to translate. However, we are taking it in a very strong fashion with all of our existing clients, new clients. And for new clients, not surprisingly, a lot of times, their data sets are not ready or the process standardization still has to happen. And it's not just about the technical debt. It's the process debt and the data debt. And you see that in our advanced technology solution because our data and AI set of solutions is really taking hold in a very, very strong fashion. And we got to meet our clients where they are, and that's certainly helping us be it from our core business services or also nudging them towards advanced technology solutions, including agentic but feel really good with all of our existing clients and new clients in taking this agentic journey and reshaping the industry as well as leading the industry from an agentic operations standpoint.

Yes. I may just add on to that, BK, Maggie. The way we think about it from our clients, right, they're looking for a trusted partner, and they found that in Genpact, right? They need our process level or domain level expertise as they move ahead on their journey, particularly that -- with agentic.

But I think it's important, what BK spoke about a minute ago. We need to meet them where they are in terms of their process. I can assure you, we are as aggressive as everybody else can be in pushing agentic solutions and enhancements in technology. But again, it has to be a comfort level that our clients need to have. So we feel very good about both the progression we're making in our core business services and our advanced technology services, and I particularly feel good about the process we've made in our agentic solutions growth.

And then in light of some consolidation in the industry as well as maybe more traditional ITO increasing their focus on things like agentic operations, can you just comment on the competitive landscape for you right now and your positioning?

Look, I think -- sure. Look, I think, again, where our differentiation lies is in the last mile expertise, understanding the domain, the process expertise of where the friction points are, and that is where we have spent just about 3 decades maybe. And then the trust that we have built with a number of these clients, a number of these are Fortune 500 clients as you know. And now we are investing heavily in the advanced technology solutions at that edge issues, and we are bringing software at those edge cases that sits on top of many of standard platforms as well as APIs that we have built with systems of records like SAP, Oracle and so on and so forth.

And I would also say that the culture matters a lot. And I think we win a lot because of our strong and distinctive culture of, obviously, client centricity but also the start-up mentality that exists and that innovation is taking shape with a ton of speed and agility. So we really feel good about our differentiation, and it's showing up in the numbers in what we are executing on from an organic basis and are really proud what teams are doing.

And our next question will be coming from the line of Surinder Thind of Jefferies.

BK, can you maybe provide some color on why maybe upwards of the 30% of agentic work or the awarded contracts are coming from new clients? Is there -- it's hard for me to reconcile given that you would have had much stronger relationships with your existing clients. So what's allowing the win? And kind of what is going on there?

Yes. So overall, Surinder, there is a strong traction building up with existing clients, too. But what I'm also super excited, that a number of our -- these agentic solutions are taking hold with new clients, too, who are net new to Genpact or are net new to that particular agentic solution. And sometimes those -- they are running these processes or working with other partners. So that is what we are serving as new clients.

And -- but I must note that it is our existing clients are also absorbing these solutions fast, not fast enough. I'm nudging -- we are nudging them more. But clearly, all of these are taking hold and therefore, tells us about the total addressable market that we have begun to attack more and therefore, really thrilled with how this AI is turning as a tailwind for us and increasing our total addressable market.

Got it. And then, I guess, when I think about just the Advanced Technology Solutions offering, can you maybe talk about the size and scope of those projects and maybe the cadence of how those work, meaning from initial interest to when they convert to revenues and then how quickly you can execute a project and then maybe what the follow-on might look like?

Yes. I think first, I would go back, Surinder, on one of the core metrics that we shared for Advanced Technology Solutions, which we called at the Investor Day 2x, 2x, 70, 70. And the 2x was it is growing -- Advanced Technology Solutions are growing 2x the rate of the total company, and they are revenue by head count greater than 2x of the total company. And 70% is annuitized. Nearly 70% is annuitized is the point I was wanting to address in that question that you asked. And 70% is non-FTE, and therefore, more value accretion happens for Genpact, too.

And these are series of -- as an example, if I think of agentic solutions, these are -- we have the launch, as we talked about agentic AP Suite. And it is one of the fastest solution in the entire history of Genpact that has taken hold, and that is with existing clients as well as new clients.

And then data and AI, which is another part of Advanced Technology Solution is growing at a very rapid pace because now a lot of our data demands or the data capabilities are getting leveraged. I mentioned in my prepared remarks about how nearly 100 clients are in our gigafactory, which delivers better ROI on all of the data program and projects. And most of these data programs -- I mentioned Heineken. Heineken data program is a longer-term program. It is not a 7-month effort or 10-month effort.

Our next question is coming from the line of Puneet Jain of JPMorgan.

Really good quarter. I want to follow up on the question that Maggie asked earlier. So first, like it was nice to hear like the case studies on agentic AI. But like are clients ready to move some of those solutions and ideas into production and overcome concerns around governance, change management, in some cases, data and like the technology around that AI solution that they intend to implement?

And Puneet, that's where the question of trust comes in. That's where the question of last mile comes in. That's where when we have built over decade-long relationships. I mentioned Heineken or Mars or many other examples that you saw even on the Investor Day. We shared about the WESCO example on the Investor Day, where we used to run accounts payable, but we know the ins and outs. We know how their entire organization is wired in, how the workflow is wired in, where the data issues are, where the friction points are, what are the change management issues in the client organization.

So as we implement more complex technologies, you see our clients certainly need trusted partners, is why we are seeing all of this take hold in production environment for our clients. And that is the exact thesis. I talk about no artificial intelligence without process intelligence, and our last mile expertise is creating the most acute differentiation.

And how are some of these contracts structured? We hear like all types of models like the subscription models that some companies are exploring. Like how are you structuring some of these contracts when you manage like a process using your own or third-party identity AI solutions?

The commercial models, that's why we -- as part of GenpactNext, we are very clear about non-FTE models. So that's a shift that we are driving in a very sharp manner towards non-FTE models. And this is our software. So wherever there is a software, there are more subscription ARR-based, early days, but they are more value and consumption-based structure and not resource-based structures.

Quickly add on to that, just to emphasize the point, Puneet, this is our software. This is our IP, right? So we're able to convert it into an ARR-type model, right, and move away from all non-FTE-related commercial models associated with it, which is just logical if you think about it from a software perspective.

Yes. No, that's great to hear. And if I can quickly follow up on that, like do you intend to disclose like how much of revenue stems from those models or specifically or purely from agentic AI-based solutions?

Yes. I mean, it's Mike again. So metrics focused on leading indicators are the best measures we have of the business health right now. So when we go through our 2026, expect to see a more focus on GenpactNext-related metrics, particularly that on our ATS, our Core Business Services, and non-FTE revenue as a percentage are really the key indicators we're going to focus on right now.

[Operator Instructions] At this time, I'm not seeing any more questions in the queue, and I would like to turn the call back to management for closing remarks. Please go ahead.

Thank you, Lisa. I do want to thank you all for joining us today. We are incredibly excited about the future at Genpact as we continue to define the future of agentic operations. And I do want to thank all of our employees for their unstinted efforts as we drive this change and take this opportunity to thank all of our clients for choosing Genpact and yes, all our shareholders for their ongoing support. We look forward to speaking with you again next quarter. Thank you.

This concludes today's conference call. Thank you all for joining. You may now disconnect.