Genpact (G)

Business transformation services company Genpact (NYSE:G) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 6.6% year on year to $1.29 billion. Guidance for next quarter’s revenue was better than expected at $1.30 billion at the midpoint, 1.2% above analysts’ estimates. Its non-GAAP profit of $0.97 per share was 8% above analysts’ consensus estimates.

Company Overview

Originally spun off from General Electric in 2005 to provide business process services, Genpact (NYSE:G) is a global professional services firm that helps businesses transform their operations through digital technology, AI, and data analytics solutions.

The sector stands to benefit from ongoing digital transformation, increasing corporate demand for cost efficiencies, and the growing complexity of regulatory and cybersecurity landscapes. For those that invest wisely, AI and automation capabilities could emerge as competitive advantages, enhancing process efficiencies for the companies themselves as well as their clients. On the flip side, AI could be a headwind as well as the technology could lower the barrier to entry in the space and give rise to more self-service solutions. Additional challenges in the years ahead could include wage inflation for highly skilled consultants and potential regulatory scrutiny on outsourcing practices—especially in industries like finance and healthcare where who has access to certain data matters greatly.

Genpact competes with other professional services and business process outsourcing firms including Accenture (NYSE: ACN), Cognizant (NASDAQ: CTSH), Infosys (NYSE: INFY), and Tata Consultancy Services (NSE: TCS), as well as with the consulting arms of major accounting firms like Deloitte and EY.

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $5.01 billion in revenue over the past 12 months, Genpact is one of the larger companies in the business services industry and benefits from a well-known brand that influences purchasing decisions.

As you can see below, Genpact’s sales grew at a decent 6.2% compounded annual growth rate over the last five years. This shows its offerings generated slightly more demand than the average business services company, a useful starting point for our analysis.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. Genpact’s annualized revenue growth of 6.3% over the last two years aligns with its five-year trend, suggesting its demand was stable.

This quarter, Genpact reported year-on-year revenue growth of 6.6%, and its $1.29 billion of revenue exceeded Wall Street’s estimates by 2%. Company management is currently guiding for a 4.5% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 5.2% over the next 12 months, similar to its two-year rate. Despite the slowdown, this projection is above average for the sector and implies the market is forecasting some success for its newer products and services.

Genpact’s adjusted operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 16.8% over the last five years. This profitability was top-notch for a business services business, showing it’s an well-run company with an efficient cost structure.

Looking at the trend in its profitability, Genpact’s adjusted operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Genpact generated an adjusted operating margin profit margin of 17.7%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Genpact’s EPS grew at a remarkable 10.6% compounded annual growth rate over the last five years, higher than its 6.2% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its adjusted operating margin didn’t improve.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Genpact, its two-year annual EPS growth of 12.2% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q3, Genpact reported adjusted EPS of $0.97, up from $0.85 in the same quarter last year. This print beat analysts’ estimates by 8%. Over the next 12 months, Wall Street expects Genpact’s full-year EPS of $3.60 to grow 4.7%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Genpact has shown robust cash profitability, giving it an edge over its competitors and the ability to reinvest or return capital to investors. The company’s free cash flow margin averaged 11.6% over the last five years, quite impressive for a business services business.

Taking a step back, we can see that Genpact’s margin dropped by 1.1 percentage points during that time. If its declines continue, it could signal increasing investment needs and capital intensity.

Genpact’s free cash flow clocked in at $292 million in Q3, equivalent to a 22.6% margin. This result was good as its margin was 5.4 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, leading to temporary swings. Long-term trends carry greater meaning.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Although Genpact hasn’t been the highest-quality company lately, it historically found a few growth initiatives that worked. Its five-year average ROIC was 18.2%, higher than most business services businesses.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Genpact’s ROIC has increased over the last few years. This is a good sign, and if its returns keep rising, there’s a chance it could evolve into an investable business.

Genpact reported $740.8 million of cash and $1.41 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $937 million of EBITDA over the last 12 months, we view Genpact’s 0.7× net-debt-to-EBITDA ratio as safe. We also see its $48.76 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see Genpact beat analysts’ EPS expectations this quarter. We were also glad its revenue guidance for next quarter slightly exceeded Wall Street’s estimates. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 4.8% to $40.20 immediately after reporting.

Updated: December 4, 2025 at 11:05 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Genpact.

We think Genpact is a solid business. First off, its revenue growth was good over the last five years, and analysts believe it can continue growing at these levels. Plus, Genpact’s rising returns show management's prior bets are paying off, and its strong operating margins show it’s a well-run business.

Genpact’s P/E ratio based on the next 12 months is 11.8x. When scanning the business services space, Genpact trades at a fair valuation. If you believe in the company and its growth potential, now is an opportune time to buy shares.

Wall Street analysts have a consensus one-year price target of $50.20 on the company (compared to the current share price of $46.03), implying they see 9.1% upside in buying Genpact in the short term.