Q4 2024 Genpact Ltd Earnings Call
Trends moderator for today at this time all participants are in a listen only mode. We will conduct a question and answer session towards the end of this conference call.
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 <unk> website, I would now like to turn the call over to Krista Bessinger head of Investor Relations at Genpact. Please proceed.
Speaker Change: Thank you Carmen and good afternoon, everyone and welcome to Genpact as Q4 2024 earnings Conference call.
Speaker Change: We hope you had a chance to read our earnings press release, which was posted on the Investor Relations section of our website Genpact Dot com.
Today, we have with us BK, Kalra, President and CEO, and Mike Wiener Chief Financial Officer.
Speaker Change: BK will start with a high level overview of the quarter and year.
Speaker Change: And then Mike will cover our financial performance in greater detail before we take your questions.
Speaker Change: Please note that during this call we will make forward looking statements, including statements about our business outlook strategies and long term goals.
Speaker Change: These comments are based on our plans predictions and expectations as of today, which may change over time.
Speaker Change: Actual results could differ materially due to a number of important risks and uncertainties, including the risk factors in our 10-K.
Speaker Change: And 10-Q filings with the SEC.
Speaker Change: Also during this call we will discuss certain non-GAAP financial measures.
Speaker Change: We have reconciled those.
Speaker Change: To the most directly comparable GAAP financial measures in our earnings press release.
Speaker Change: These non-GAAP measures are not intended to be a substitute for our GAAP results.
Speaker Change: And finally this call in its entirety is being webcast from our Investor Relations website.
Speaker Change: And an audio replay and transcript will be available on our website in a few hours.
BK: And with that I'd like to turn it over to BK.
BK: Thank you Christa.
BK: Hello, everyone.
BK: Thank you for joining us today.
BK: Im pleased to report another strong quarter.
BK: Expected performance.
BK: Revenue in Q4 reached one <unk> billion up 9% year over year.
BK: Importantly, downtick.
BK: It's beginning to show its potential.
BK: 12% year over year with accelerating.
BK: Accelerating revenue growth for the fourth quarter.
BK: Digital operation growth also accelerated up 6% year over year.
BK: Gross margin and adjusted operating income margin also exceeded expectations in Q4.
BK: We continue to deliver operating efficiency.
BK: Even while investing for growth.
BK: Taking a broader view I am proud of what we accomplished in Cape is going before we go.
BK: With a strong foundation significantly strengthening our execution and innovation muscle.
BK: We closed 14 large deals.
BK: In line with last year.
BK: 10% higher booking in aggregate across this cohort.
BK: Revenue for the.
BK: Six 5%.
BK: Approximately 400 basis points above the midpoint of our initial guidance range.
BK: Operating cash flow grew 25% year over year.
BK: Adjusted diluted EPS grew 10% year over year.
BK: Foster than revenue for the <unk> level.
BK: And we ended 2020 forward with renewable kings of $5 7 billion up 15% year over year after exceptionally strong performance in 2023.
BK: As we enter 2025 innovation is front and center at Genpact.
BK: It's clear that businesses need to move beyond genetic AI.
BK: Domain specific intelligence tailor to their industry need.
BK: To meet this need.
BK: Leah.
BK: We are excited to announce the general availability of our first <unk> solution for accounts payable.
BK: This is the first in a series of identity solutions that we will bring to market in our digital operations business.
BK: Powered by our proprietary LLM, our solution Leverages, Jim AI and machine learning models to automate envoy six section driving superior value through this innovative approach.
BK: <unk> solutions are built on a foundation of Genpact deep industry expertise.
BK: With highly detailed domain specific knowledge.
BK: Embedded in each of our agents to deliver value at scale.
BK: We are also accelerating in data deck NII with the launch of our AI value studio and the Genpact Giga factory.
BK: The AI value studio heads businesses identify high impact use cases, and create custom roadmaps with seasoned genpact EIA architects blending process industry and technology expertise.
BK: And the Genpact Giga factory is a first of its kind AI accelerator designed to help enterprises rapidly scale AI solutions from pilot to full scale production.
BK: It includes thousands of prebuilt AI engine related models that combine deep industry knowledge with cutting edge data engineering tools.
BK: All leveraging our unique.
BK: Our delivery model with cross functional teams that bring together domain specific knowledge data engineering and integration expertise all in one team to accelerate time to value with responsible AI by design.
BK: The tablets with one of our first partners as we scale this giga factory.
BK: This faster pace of innovation is built on the strong foundation of three plus one execution framework that we introduced in 2024, which is now firmly embedded in our DNA.
BK: It covers partnerships.
BK: The petechiae.
BK: Simplification.
BK: And the plus one in our three plus one framework, which is establishing genpact as our own best credential for AI led transformation.
BK: To close out the year I will walk you through the final key highlight on each.
BK: First we made meaningful progress on partnerships in 2024.
BK: With partner related revenue was up 50% year over year.
BK: Reaching high single digits as a percentage of revenue by year end.
BK: With line of sight to generating significantly more in future periods.
BK: Growth was driven by investing in World class leadership team.
BK: Giving awareness improving our go to market and scaling delivery capabilities with a number of hyperscale and other large technology partners.
BK: We believe this represents a significant ongoing opportunity for genpact and return to quantify and beyond.
BK: Looking ahead, we are also expanding our footprint in the startup ecosystem.
BK: With a particular focus on next generation AI orchestration and other system, specifically designed to optimize business processes and workflows.
BK: Hi.
BK: We expect these partnerships with emerging technology leaders.
BK: We will further accelerate our technology capability.
BK: And go to market efforts in <unk>.
BK: Second our focus on delivering comprehensive solutions through accelerating growth in <unk> in Q4 with revenue up 12% year over year.
BK: I'll give you a couple examples that speak to the kind of work we are doing and the value it is driving for clients.
BK: We are forming a strategic relationship with Fortis.
BK: The worlds, leading company for elevator and escalator manufacturing installation and service to accelerate their transformation.
BK: As part of this we would implement strong data architecture, and new AI powered technologies to make a number of core high volume transactional and repeatable activities more efficient.
BK: With advanced automation, we would help standardize all of this critical business processes, making it easier for customers to do business with them and allowing for this two continued focus on serving its customers with best in class service and innovative products that will propel them forward.
BK: We are also working with NTT data, a global technology leader, providing network solutions cloud infrastructure and data Center services.
BK: To transform their technology solutions finance operations with the help of <unk>.
BK: As part of this transformation Genpact is deploying multiple AI powered solutions.
BK: Designed to improve many finance and accounting processes, including time to Bill credit pre bill leading to improved accuracy.
BK: Charter parties order lead times, and better overall vendor and customer experience.
BK: We see ongoing evidence that Jimmy I as significantly expanding our total addressable market.
BK: We now have more than 145 Gen AI solutions in production environment with clients even deployed are going live.
BK: With January bookings accelerating to $100 million just in Q4.
BK: Coming back to the third element in our three plus one framework, which is simplification, we continue to streamline our operations to scale more efficiently.
BK: As an example, ongoing simplification to our cash collection process.
BK: Contributed to the significant increase in operating cash flows we delivered in 2024.
BK: And finally on leaving with Genpact as our own best credential for AI led transformation.
BK: <unk> to make meaningful progress.
BK: I'll give you two examples.
BK: We introduced chat with data.
BK: And that feature is live with HR finance fields integrating advanced analytics machine learning.
BK: <unk> AI to increase forecast accuracy and leveraged intelligent sourcing.
BK: We also adopted AI powered network operations deploying AI across 120000 endpoints in our network implementing zero touch provisioning and significantly reducing tickets during the year.
BK: Now turning to our outlook.
BK: Got it quantify really a year of accelerated innovation for Genpact and we feel good about our momentum as we enter the year.
BK: As a result, we are setting full year revenue guidance at six 5% at the midpoint of the range.
BK: As reported basis.
BK: Which equates to approximately seven 2% at the midpoint in constant currency terms.
BK: We expect to deliver gross margin in NOI margins of 36% and 17, 3% respectively.
BK: Presenting healthy expansion over 20% before.
BK: With EPS growth of 9% at the midpoint.
BK: Consistent with our approach in 2024, our plan will be to reinvest any revenue upside we are able to generate over the course of the year back into the business to drive future revenue growth.
BK: Finally, as we lean into the innovation in 2025, we are excited to share more details at our upcoming analyst day, which will be held on June 26th in New York City. Please.
BK: Please save the date.
BK: This release with additional details will be coming out soon.
BK: In closing we are incredibly excited about the future.
BK: We accelerated the pace of innovation and change at Genpact.
BK: Commitment to scaling data AI.
BK: And domain driven <unk> solutions is positioning us as a clear leader in AI, driven transformation and driving superior value for our clients.
BK: Want to thank the entire genpact team for their incredible dedication.
BK: And I am excited to see what we can deliver together in 2025.
Mike: Let me turn the call over to Mike.
Mike: Good afternoon, everyone and thank you for joining us today.
Speaker Change: I'll start with our fourth quarter results before moving on to full year results and guidance.
Speaker Change: Results for the fourth quarter exceeded our expectations, we're particularly pleased with our strong revenue growth, which was broad based across all segments with particular strength in data Tech NII.
Speaker Change: Turning to our fourth quarter income statement on an as reported basis net revenue reached $1 25, billion% to 9% year over year increase data Tech and AI achieved revenue of $595 million, a 12% increase fueled by strong demand for data and technology solution.
Speaker Change: Data Tech and AI contributed 48% of total quarterly revenue.
Digital operations, which represented 52% of total revenue grew 6% to 654 million supported by the successful ramp ups of large scale deals.
Speaker Change: Revenue from priority accounts grew approximately 9% year over year.
Speaker Change: Representing 64% of fourth quarter revenue, we delivered healthy growth in the fourth quarter across all three vertical segments consumer and health care revenue increased 11% high Tech and manufacturing increased 9% and financial services increased 6%.
Speaker Change: Outcome and consumption based deals excluding fixed fee contracts accounted for 21% of fourth quarter revenue, our strategic shift to these deals positions us well to capture higher margin opportunities, while delivering even greater value to our clients.
Speaker Change: Turning to profitability, we expanded gross margin by 10 basis points year over year in the fourth quarter to 35, 7% due to operating leverage SG&A expenses were 20% of revenue compared to 27% of revenue in the prior year, reflecting our continued investments in strategic growth areas.
Speaker Change: As well as streamline operations and enhance productivity.
Speaker Change: Adjusted operating income was $221 million and adjusted operating income margin was 17, 7% our effective tax rate for the fourth quarter was 22, 3% compared to our prior year rate that was favorably impacted by a nonrecurring tax benefit from an intercompany transfer of.
Speaker Change: Intellectual property.
Speaker Change: Net income for the quarter was 142 million diluted EPS was <unk> 79.
Speaker Change: And adjusted diluted EPS reached a record of 91, representing 11, 1% annual increase.
Speaker Change: Now turning to the full year.
Speaker Change: Annual bookings increased 15% to $5 7 billion, reflecting healthy growth across all deal sizes. We won 14 large deals in line with last year, but with 10% higher bookings in aggregate across that cohort.
Speaker Change: We also added 101, new logos 10 more than prior year with the original win rate of 50% with sole sourced deals accounting for 42% of total annual bookings.
Speaker Change: Our income for the full year is as follows on an as reported basis net revenue grew six 5% to $4 77 billion data Tech and AI delivered revenue of 2.23 billion, increasing six 9% and making up 47% of total revenue.
Speaker Change: Digital operations, which accounted for the remaining 53% of revenue expanded by six 1% year over year to 253 billion driven by large deal wins and client expansions.
Speaker Change: Across our industry segments, we achieved balanced growth during the year with consumer and health care revenue up 8%, while high Tech and manufacturing and financial services grew 6% and 5% respectively.
Speaker Change: Annual revenue from outcome and consumption based deals excluding fixed fee contracts comprised 20% of total revenue for the year, while revenue from priority accounts grew approximately 6% year over year contributing to 63% of total revenue gross margin for the year improved 40 basis points to 30.
Speaker Change: Five 5% as we drove operational leverage SG&A expense as a percentage of total revenue was 23% compared to 24% in the prior year, reflecting continued strategic investments net of our disciplined G&A cost management.
Speaker Change: Adjusted operating income grew six 7% to $814 million margin increased 10 basis points from the prior year to 17, 1% its highest annual level.
Speaker Change: Our effective tax rate for the year was 24, 1%, which brought in net income of $514 million adjusted diluted EPS was $3 28.
Speaker Change: A 10% increase significantly outpacing revenue growth for the fourth consecutive year, we generated strong cash flow from operations delivering $615 million, a 25% increase to prior year.
Speaker Change: Turning to our balance sheet and capital allocation.
Speaker Change: We ended 2024 with a solid balance sheet highlighted by $648 million of cash and cash equivalents up from $584 million in the year ago period. Additionally.
Speaker Change: Additionally, Dsos were 86 days two days lower than 2023.
Speaker Change: We returned $112 million to shareholders in the fourth quarter $385 million in share repurchases at an average share price of $45 41.
Speaker Change: And $27 million in dividends.
Speaker Change: For the full year, we returned $361 million made up of $253 million in share repurchases at an average price of $38 31.
Speaker Change: And $108 million in dividends.
Speaker Change: Let me pause now and review our guidance for 2025.
Speaker Change: Our approach remains consistent with last year and reflects our expectations at the macro environment will be similar to that in 2024.
Speaker Change: For the full year on an as reported basis, we expect to deliver net revenue in the range of $5.0 billion to $9 billion to $5 <unk> 5 billion growth of five 5% to seven 7%, representing a six 5% growth at the midpoint.
Speaker Change: At that midpoint data tech and AI and digital operations revenue growth is expected to be approximately six 2% and six 8% respectively.
Speaker Change: Given that estimated range our adjusted diluted EPS is expected to be between $3 52, and $3 59, representing 9% growth year over year at the midpoint again projected to grow faster than revenue and.
Speaker Change: In constant currency terms net revenue grew in the range of six 2% to eight 2% representing seven 2% at the midpoint, which translates into data tech and AI and digital operations revenue growth of approximately six 4% and seven 9% respectively.
Speaker Change: Moving on full year gross margin is expected to expand to 36% an increase of 50 basis points year over year supported by operating leverage operating cash flow is expected to be approximately $590 million.
Speaker Change: On capital allocation as in the past, we 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 Accordingly, our board of directors approved a 11% increase in our regular quarterly dividend to <unk> 17.
Speaker Change: <unk> per quarter and 68 on an annual basis. In addition, our board also approved a $500 million increase to our existing share repurchase authorization.
Speaker Change: Looking at the first quarter now.
Speaker Change: On an as reported basis, we expect to deliver net revenue between $1 two zero to 2 billion and $1 to one 3 billion growing at six 2% to seven 2% representing six 7% at the midpoint. This translates into data and tech AI as well as digital operations revenue of approximately.
Speaker Change: <unk> nine, 8% and four 1% respectively.
Speaker Change: In constant currency terms net revenue growth is in the range of seven 1% to eight 1% representing seven 6% at the midpoint, which translates into data Tech AI and digital operations revenue growth of approximately 10% and five 4% respectively.
Speaker Change: We anticipate gross margin of 35% and adjusted operating income margin of 16, 5% Lastly, we are projecting.
Speaker Change: Our adjusted diluted EPS of <unk> 79.
Speaker Change: To 80, an increase of approximately 9% at the midpoint compared to last year.
Speaker Change: With that let me turn the call over to Krista.
Krista Bessinger: Thank you Mike Carmen, we're ready to take questions. Thank you. Thank you so much and as a reminder to our audience to ask a question simply press Star one one on your telephone and wait for your name to be announced to remove yourself with star one again, one moment for our first question.
Speaker Change: Kim.
Speaker Change: And he is from the line of Puneet Jain with Jpmorgan. Please proceed.
Puneet Jain: Well, thanks for taking my question.
Puneet Jain: Quarter I wanted to ask on the guidance specifically as it relates to data AI and on digital operations. It seems like contact guidance.
Puneet Jain: I do expect it to slow down beyond Q1 part of it could be tough comps.
Puneet Jain: Like to ask if there is anything else going down on the same question on digital operations, but like.
Puneet Jain: Growth is expected to.
Puneet Jain: Our Colgate for onetime type acquisitions rest of the year.
Speaker Change: Yes, let me kick this off and hand over to you became apparent for some additional comments.
Speaker Change: So putting as you know approximately 75% of our business we call it <unk> <unk>.
Speaker Change: Business that we have that's converting to bookings that were its convert to revenue that we have very good line of sight too and confidence and the other 25% of revenue we have to convert that pipeline to bookings into revenue in the immediate quarter. So obviously as you go out later in the year you.
Speaker Change: You have less less visibility into it so I would say that when we came up with our guide for the full year on a quarterly basis.
Speaker Change: The first quarter already is it reflects a prudent approach takes into account that <unk> book of the business as well as the non <unk> book of the business, which is disproportionately affected our results in data tech and add.
Speaker Change: In addition to it as you alluded to it's a little bit tougher comps in the second half of the year. So we're committed to providing guidance on a quarterly basis and see how it goes from there.
Speaker Change: Understood understood.
Speaker Change:
Speaker Change: Hi.
Speaker Change: You talked about like implemented some solutions.
Speaker Change: Hi, Kurt.
Speaker Change: <unk>.
Speaker Change: Pardon me like among key.
Speaker Change: Some of those contracts.
Speaker Change: <unk> store revenue you can generate from.
Speaker Change: Chromebooks.
Speaker Change: Our engagement.
Speaker Change: So what we are seeing puneet.
Speaker Change: Ben.
Speaker Change: As we implement W. Jamie I'd solutions.
Speaker Change: There are many follow on.
Speaker Change: Conversations and contracts that we are getting beat with our existing customers or new customers.
Speaker Change: Because we are seeing the benefit and the value.
Speaker Change: That we are able to drive and that has been also the genesis of the Giga factory that we recently launched.
Speaker Change: It is helping clients to move from <unk>.
Speaker Change: Proof of concept pilots, who are getting too large scale production enterprise wide.
Speaker Change: At a faster pace. So short answer is we always see beam, saying it actually all through last year that we see Jamie.
Speaker Change: Total addressable market enhancer for us and we continue to see that play out.
Speaker Change: Our pipeline in our conversations and in our revenues.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Maggie Nolan with William Blair. Please proceed.
Maggie Nolan: Hi, Thank you.
Speaker Change: That.
Speaker Change: The topic of a Gentex solutions as we think about the guidance that you just gave revenue guidance for 2025, what pace of hiring should we expect to be associated with that revenue guidance given the rollout of these types of solutions.
Puneet Jain: Thanks, Maggie I'll take it.
Speaker Change: But question look I think.
Speaker Change: First fill would be in <unk>.
Speaker Change: <unk> posture.
That is taking hold in the market.
Speaker Change: And.
Speaker Change: Little bit of the first mover advantage that we are in the early days early stages beginning to hardness.
Speaker Change: And long term.
Speaker Change: Medium to long term, we will see.
Speaker Change: Cadence of revenue higher than.
Speaker Change: Can be typical hiring that has happened over the last.
Speaker Change: Four or five years.
Speaker Change: In short term, we are meeting more of D var technology AI.
Speaker Change: Kind of skills that we are ramping to higher so I don't think.
Speaker Change: Each quarter on quarter, you will see a massive shift but there is a massive shift that is getting driven inside the company.
Speaker Change: Okay.
Speaker Change: Higher skewed.
Speaker Change: Well as we are <unk>.
Speaker Change: And re architect our current skill base through internal build programs through genome programs.
Speaker Change: Two.
Speaker Change: To the world.
Speaker Change: For the Skus that you didn't see coming world.
Speaker Change: Yes, I mean, I would say the cost structure associated with all that we're doing is represented in the plan that we laid out in ERCOT.
Speaker Change: Yes.
Speaker Change: Got it and then as we think about your business overall, and how you might apply these new technologies going forward.
Speaker Change: Just kind of the balance between maybe more horizontal type solutions like.
Speaker Change: Accounts payable salute.
Speaker Change: Solution.
Speaker Change: Or just to kind of sample type work horizontal work that you're doing versus.
Speaker Change: Domain specific work that you're doing it how do you view applicability of the emerging technology across the two buckets.
Maggie Nolan: So I think as we look at our business Maggie It is combination of horizontal.
Maggie Nolan: And what we call domain specific solutions.
Maggie Nolan: So it would be example that youre thinking of an accounts payable yes. It is more horizontal or certain pieces from a supply chain standpoint are more horizontal.
Maggie Nolan: But similar posture, we are increasing in insurance business, which is more around claims or underwriting.
Maggie Nolan: And our banking operation All for example trade promotion in CPG.
Maggie Nolan: So the posture is similar and I think we are.
Maggie Nolan: It has bought into the industry verticals that we play in as well as intersection of the Horizontals, all finance, our supply chain or procurement or others.
Scott: Thank you Scott.
Maggie Nolan: Scott.
Maggie Nolan: Thank you one moment for our next question.
Maggie Nolan: Concern Sean Kennedy with Mizuho. Please proceed.
Sean Kennedy: Good evening. Thank you for taking my question congrats on the results.
Speaker Change: So I was wondering how Jimmy I is affecting companies trust and safety business, specifically content moderation in terms of potential opportunities and challenges.
Speaker Change: And also policy changes like the ones.
Speaker Change: <unk> recently made happen to stack on it thank you.
Sean Kennedy: So I'll take that Sean thanks.
Sean Kennedy: So just as a reminder, content moderation or similar.
Sean Kennedy: Processes.
Sean Kennedy: Represent less than 10% off for Genpact revenue. So it is not a significant portion of Genpact revenue point number one point number two.
Sean Kennedy: <unk>.
Sean Kennedy: To the specifics that you're asking.
Sean Kennedy: Sure.
Sean Kennedy: Many other such initiative.
Sean Kennedy: Staying in constant touch with our claims and we are only seeing increased intimacy with our clients.
Sean Kennedy: And the specific is enough fact tick.
Sean Kennedy: The other kind of work that we do not do so we don't see that impact.
Sean Kennedy: But more importantly, we see a very active touch.
Sean Kennedy: All of our clients.
Sean Kennedy: And can we see a continued progression.
Speaker Change: Two words.
Speaker Change: Our goals are and what our clients goes up but we don't see any any trends that you are.
Speaker Change: If you are alluding to them.
Speaker Change: Is there an opportunity to use AI to kind of combat some of that.
Speaker Change: And malicious content.
Speaker Change: AI is kind of a threat in terms of content moderation is there opportunity there as well.
Speaker Change: So there is the short answer is yes, however, as you are.
Speaker Change: Dealing with large technology players.
Speaker Change: They obviously have their solution sets as well Sean.
Speaker Change: We are actively engaging and integra.
Integral part of the solution and we bring all of those innovations to their doorstep as well so it's a combination of factors there.
Speaker Change: <unk> large technology companies deploy their tool set on in certain cases, we deploy the tool sets for them.
Speaker Change: Great I appreciate the color congrats again on the quarter.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Next question comes from the line of Brian banking with TD Cowen. Please proceed.
Brian: Hey, guys good afternoon, and thank you.
Brian: BK one year in the role now as you kind of look back on 24, where would you say you've made the most progress and where now are you going to be most focused in 25 I'm curious is it about just merely scaling and executing upon the initiatives that have been installed over the past year or are there additional actions you're aiming to lean into.
Brian: <unk>.
Brian: So thanks, Brian look I think <unk> been I would say b malls.
Brian: Impact has been in the execution agility and execution framework that I spoke off for <unk>.
Brian: 24, <unk> T plus one or other elements.
Brian: And what I'm really thrilled about is how innovation is also taking hold so it is not just scaling up what we did.
Brian: Going forward that as table Stakes and Youll see some reflections of innovation already taking hold in terms of Giga factory in terms of AI value studio in terms of a.
Brian: Service is identical solution view on all new postures of Genpact and I think those are truly exciting as to how it is getting embraced beating our all of the global employee base, but more importantly, also with our clients. So coolly.
Brian: Innovation is where we are our focuses and execution agility is table stakes for that if I may just add on one thing BK has done and we've seen it quarter after quarter and that's really going to be a big focus of ours 25 is speed right. So we are.
We absolutely understand that.
Brian: How fast the outside World is moving and we are committed to keeping up if not exceeding that speed in terms of our own execution and changes in the organization I think that's a key focus for us in 2025.
Speaker Change: Okay. Okay. That's helpful. My follow up is on bookings so 15% growth here is solid off of already so I'll begin with the prior year.
Speaker Change: There is some definitional change it looks like its duration basically can you just clarify on that and then can you can you give any sense on how ACD has trended here over the last year.
Speaker Change: Yes, So let me quickly take that so yes, we have changed some of the definition of our bookings. So previously we had kept our bookings in aggregate to five years and again it didn't really make that much of a difference, but we have seen over the last couple of years are greater.
Speaker Change: Five year aggregated bookings.
Speaker Change: To be in line with the industry, we've moved to an uncapped level of bookings. So again previously if we did I'm, making this up a seven year booking we would reflect five of those seven years right sort of moving to more of an industry standard also if you think about it really wasn't a material number for us, but again over the last couple of years we.
Speaker Change: You've seen the durations of those things expanding.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: I think what you're alluding to an ACB is when you think about our DLC is a mixture of our deals continues to change right. So if you think about when we had a little over 26% bookings in the prior year those deals tended to be on the larger side longer tenure deals right. So you would reflect less.
Speaker Change: <unk> in the next year, obviously this year, it's a little bit more even keeled.
Speaker Change: What represents a 15% number so it's not really comparable when you think about it from that perspective in terms of the duration of the deals.
Speaker Change: Okay understood. Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of assuming there with Jefferies. Please proceed.
Speaker Change: Thank you.
I'd like to start with a big picture question around just the.
Speaker Change: The talent.
Speaker Change: The need for what I would call more technical talent at this point.
Speaker Change: How are you thinking about that in terms of it seems like as you accelerate innovation youre looking for more software type skills.
Speaker Change: Is that a fair characterization that the build out as more of those and then ultimately.
Speaker Change: How do you answer it.
Speaker Change: Someone was to say well you guys are it services firms, whereas youre not a software development firm and so.
Speaker Change: Is AI partly.
Speaker Change: Our software solution that maybe should be the expertise of those outside or is it more of a domain specific solutions.
Speaker Change: Because theres a lot of money being thrown.
Speaker Change: At software companies trying to build.
Speaker Change: Or better business processes.
Speaker Change: So let me take a possibly a second question first and then in the amount of data would be your first question. If that's okay.
Speaker Change: So look.
Speaker Change: We are a solutions.
Speaker Change: You see we added solutions firm that brings in not.
Speaker Change: Not just services, but also software or other elements of accelerator together to solve.
Speaker Change: Business problems at scale for our clients.
Speaker Change: And.
Speaker Change: What I would see that.
Speaker Change: Fundamentally many of these softwares BB erp's more recently SaaS all of those existed.
Speaker Change: SaaS came in.
Speaker Change: For the last almost EMEA is.
Speaker Change: Yet at the key stroke level.
Speaker Change: There is a lot that needs to happen at scale.
Speaker Change: What we are doing is that intersection of domain in detection of <unk>.
Speaker Change: <unk> function.
Speaker Change: The industry expertise building solutions, including software.
Speaker Change: Best solve the problem and the keystroke level at scale.
Speaker Change: And.
Speaker Change: What I would say that they are you can throw a lot of money at it but you need to have a body of experience.
Speaker Change: That is documented add scale over a period of time to understand the exceptions across industries to truly build that knowledge and build into software.
Speaker Change: And to service that is how we are hiring.
Speaker Change: Question number one.
Speaker Change: Talent around data technology AI at scale and one of the key <unk>.
Speaker Change: New proposition for this talent is seeing in action.
Speaker Change: <unk> box that doesn't exist.
Speaker Change: <unk> generally available.
Speaker Change: Software companies.
Speaker Change: I think we are that last mile that enable a lot of these genetic AI.
Speaker Change: Also be foundation models, our tools are SaaS.
Speaker Change: And truly convert.
Speaker Change: Business value and creation of business value for our clients and I think our progress on the island has been terrific.
Speaker Change: We continue to fuel that more and it is.
Speaker Change: We are.
Speaker Change: Seeing various channels.
Speaker Change: Our two excellent technology dialing journey and really filled as to where we are at the end of <unk> going forward and continue to make progress as we enter in 'twenty five.
Speaker Change: That's helpful and then as a follow up related to that.
Speaker Change: How do you think about M&A at this point.
Speaker Change: Is that something that can be used to.
Speaker Change: Bring in additional capabilities accelerate development ore.
Speaker Change: Does the innovation because of it is so domain specific has to be done much more organically.
Speaker Change: Yes.
Speaker Change: So our capital allocation methodology and principal stay of a theme we constantly are evaluating.
The M&A opportunities and two already disciplined.
Speaker Change: Financial approach and strategic pieces.
But we cannot bring organic capabilities at the speed that we need.
Speaker Change: We will.
Speaker Change: And deploy via M&A.
Speaker Change: Posturing there.
Speaker Change: And it is also integral to building B technology talent as well.
Speaker Change: But again with some really really disciplined approach.
Speaker Change: And if something selective hires obviously, you will always get to know.
Speaker Change: But it is an integral part of Saturday Boston.
Speaker Change: Thank you.
Speaker Change: Thank you and as a reminder to ask a question simply press Star one line to get in the queue.
Speaker Change: We have a question from the line of Bradley Clark with BMO capital markets. Please proceed.
Bradley Clark: Hi, Thanks for taking my question and nicely.
Bradley Clark: I want to go back to kind of AI and consistent and expressing that.
Bradley Clark: A tam expander.
Bradley Clark: And Genpact and I want to understand.
Bradley Clark: And the projects that Youre working on in Florida.
Bradley Clark: Guidance in conversation with.
Bradley Clark: Customers in 2025.
Bradley Clark: Generative AI.
Bradley Clark: Being funded.
Bradley Clark: Products net new dollars or is it in part coming at the expense of.
Bradley Clark: Somewhat of a legacy product trying to understand.
Bradley Clark: The spend in degenerative AI solution that you'll be the client net new spend.
Bradley Clark: Can I understand it could be net new to the market, but I'm trying to understand.
Bradley Clark: Where that spend is coming from thank you.
Sure Brian.
Speaker Change: I think what we observed in 2024.
That would be it was more shift off the dollar's been met new incremental dollars.
Speaker Change: And it couldnt be combination effective as I speak to clients all the time.
From here.
Speaker Change: Including experimenting because I do not know of a client I into north Norfolk client.
Speaker Change: Who did not experiment.
Speaker Change: Into AI in <unk>.
Speaker Change: I'm going to 24.
Speaker Change: And whether with us or with other.
Speaker Change: Partners.
Speaker Change: And therefore.
Speaker Change: What we saw in our work with our clients a lot of those successful journeys gave them confidence to continue to build that momentum but to your specific question. It was more of a shift of dollars now we will see how can literally five band bands out.
Speaker Change: But.
Speaker Change: At a broad macro level, what we saw was more shift off the dollar's been incremental dollars Brent.
Speaker Change: I appreciate you and Kevin Congrats again.
Speaker Change: Thank you.
Speaker Change: Thank you and this concludes the Q&A and I will pass it back to management for closing comments.
Speaker Change: Thank you.
Speaker Change: Before we go I just want to say, thanks to all of our clients for choosing genpact and to all of our shareholders for their ongoing support.
Speaker Change: We are excited to keep innovating and we look forward to talking to you again next quarter and hosting many of you at our analyst day in June. Thank you.
Speaker Change: And that concludes today's conference call. Thank you all for participating and you may now disconnect.