Business transformation services company Genpact (NYSE: G) beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 6.6% year on year to $1.25 billion. Guidance for next quarter’s revenue was better than expected at $1.26 billion at the midpoint, 0.8% above analysts’ estimates. Its non-GAAP profit of $0.88 per share was 3.1% above analysts’ consensus estimates.

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StockStory’s Take

Genpact delivered a positive second quarter, with results surpassing Wall Street’s revenue and non-GAAP profit expectations. Management attributed this outperformance to robust growth in its Advanced Technology Solutions segment, particularly in data and AI-driven services, and a healthy pipeline of large deals. CEO Balkrishan Kalra noted, “Our data and AI pipeline has tripled over the last year, and we are innovating rapidly,” highlighting how early investments in AI-driven process transformation are translating into new client wins and deeper engagements with existing customers.

Looking ahead, Genpact’s raised annual guidance is driven by sustained demand for Advanced Technology Solutions and continued expansion of its AI capabilities. The company expects its shift toward higher-value, non-headcount-based contracts to support both growth and margin improvement. CFO Michael Weiner emphasized, “We are sharing AI productivity gains with our clients, but incremental revenue is coming from expanded scope, increased volumes, and entirely new logos,” indicating confidence in the scalability of current initiatives and a resilient demand environment despite macroeconomic caution.

Key Insights from Management’s Remarks

Management credited solid execution in Advanced Technology Solutions and strategic investments in AI as primary drivers of the quarter’s results, with healthy deal flow and expanding partnerships supporting the improved outlook.

• Advanced Technology Solutions surge: Revenue from this segment grew 17%, driven by strong demand for AI and data capabilities. Over 45 clients have been onboarded to Genpact’s AI Gigafactory in 2025, with more than 270 generative AI solutions now in production or going live, reflecting rapid client adoption.
• AI-powered client wins: Genpact highlighted two major client stories—a global healthcare company and a North American insurance broker—where integration of AI and agentic solutions resulted in faster product launches, better compliance, and operational efficiency. These cases underscore the company’s ability to generate measurable business value beyond cost savings.
• Partnership momentum: Partner-related revenues rose over 70% year-over-year and now comprise 10% of total revenue, fueled by expanded collaborations with AWS, Salesforce, and ServiceNow. These alliances have produced new joint solutions in financial services, procurement, and order management, differentiating Genpact’s offerings.
• Shift toward non-headcount models: Approximately 70% of Advanced Technology Solutions revenue is now annuitized and derived from non-FTE (non-employee-based) contracts, increasing the quality and stickiness of earnings while aligning with evolving client procurement preferences.
• Segment and geographic breadth: Growth was led by high tech and manufacturing (up 13%), followed by financial services (up 6%), while consumer and healthcare saw more modest gains. Management cited broad-based strength, but noted some macro-sensitive customers in consumer and healthcare moderating demand.

Drivers of Future Performance

Genpact’s outlook for the next quarter and year centers on accelerating AI-enabled transformation, a shift toward higher-margin services, and disciplined execution amid moderate macroeconomic headwinds.

• AI and digital adoption: Management expects further acceleration in demand for Advanced Technology Solutions, especially as more clients seek to integrate AI into operational processes. This trend is anticipated to drive both top-line growth and expanded margins, with AI-related work producing higher revenue per employee.
• Broader client engagement: The company believes that both existing and new clients are increasingly turning to Genpact for end-to-end transformation, increasing opportunities for larger, more comprehensive projects. CEO Kalra remarked that client conversations “continue to be more centered around data and AI and how all of this can actually generate ROI.”
• Macro and competitive risks: While the overall pipeline remains strong, management remains prudent in its guidance due to ongoing macroeconomic caution and the potential for variability in large deal closures. CFO Weiner noted that the company is seeing no irrational pricing behavior, but is monitoring for shifts in client spending priorities or competitive intensity.

Catalysts in Upcoming Quarters

In the upcoming quarters, the StockStory team will watch (1) whether Advanced Technology Solutions can sustain double-digit growth as generative AI use expands; (2) the pace and profitability of new partnership-driven offerings with major technology vendors; and (3) signs that client demand for non-headcount and outcome-based contracts increases. Continued progress in large deal closures and geographic market expansion will also serve as important markers for execution.

Genpact currently trades at $43.25, up from $41.72 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).

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