EXL Reports 2024 Fourth Quarter and Year-End Results; Issues 2025 Guidance

2024 Fourth Quarter Revenue of $481.4 Million, up 16.3% year-over-yearQ4 Diluted EPS (GAAP) of $0.31, up 28.4% from $0.24 in Q4 of 2023Q4 Adjusted Diluted EPS (Non-GAAP) (1) of $0.44, up 26.1% from $0.35 in Q4 of 2023 2024 Revenue of $1.84 Billion, up 12.7% year-over-year2024 Diluted EPS (GAAP) of $1.21, up 10.0% from $1.10 in 20232024 Adjusted Diluted EPS (Non-GAAP) (1) of $1.65, up 15.4% from $1.43 in 2023 NEW YORK, Feb. 25, 2025 (GLOBE NEWSWIRE) -- ExlService Holdings, Inc. (NASDAQ: EXLS), a global data and AI company, today announced its financial results for the quarter and full year ended December 31, 2024. Rohit Kapoor, chairman and chief executive officer, said, “As we executed our data and AI strategy in 2024, we achieved several key milestones, including launching an enterprise AI platform in partnership with NVIDIA, introducing our insurance-specific large language model (LLM) and expanding our data management capabilities with the acquisition of ITI Data. Our focus on innovating with speed led to industry-leading full-year revenue growth of 12.7% and adjusted EPS growth of 15.4%. As AI adoption continues to increase, EXL is well positioned to capture this opportunity and continue its strong growth momentum.” Maurizio Nicolelli, chief financial officer, said, “We finished 2024 with robust growth across our business segments, a formidable balance sheet and strong free cash flow. For the full year 2025, we expect revenue to be in the range of $2.025 billion to $2.060 billion, representing a 10% to 12% increase year-over-year on a reported basis and 11% to 13% on constant currency basis. We expect adjusted diluted EPS to be in the range of $1.83 to $1.89, representing a 11% to 14% increase over 2024.” __________________________________________________ Reconciliations of adjusted (non-GAAP) financial measures to the most directly comparable GAAP measures, where applicable, are included at the end of this release under “Reconciliation of Adjusted Financial Measures to GAAP Measures.” These non-GAAP measures, including adjusted diluted EPS and constant currency measures, are not measures of financial performance prepared in accordance with GAAP. Financial Highlights: Fourth Quarter 2024 Revenue for the quarter ended December 31, 2024 increased to $481.4 million compared to $414.1 million for the fourth quarter of 2023, an increase of 16.3% on a reported basis and constant currency basis. Revenue increased by 2.0% sequentially on a reported basis and 2.4% on a constant currency basis, from the third quarter of 2024. Revenue Gross Margin Three months ended Three months endedReportable Segments December 31, 2024 December 31, 2023 September 30, 2024 December 31, 2024 December 31, 2023 September 30, 2024 (dollars in millions) Insurance $162.0 $139.1 $157.6 36.9% 36.2% 36.3%Healthcare 31.6 26.0 30.5 31.7% 36.9% 33.6%Emerging Business 80.1 67.0 80.0 40.7% 41.0% 40.2%Analytics 207.7 182.0 204.0 39.0% 35.4% 38.5%Revenues, net $481.4 $414.1 $472.1 38.1% 36.7% 37.8% Operating income margin for the quarter ended December 31, 2024 was 14.8%, compared to 13.1% for the fourth quarter of 2023 and 14.7% for the third quarter of 2024. Adjusted operating income margin for the quarter ended December 31, 2024 was 18.8%, compared to 17.8% for the fourth quarter of 2023 and 19.9% for the third quarter of 2024.Diluted earnings per share for the quarter ended December 31, 2024 was $0.31, compared to $0.24 for the fourth quarter of 2023 and $0.33 for the third quarter of 2024. Adjusted diluted earnings per share for the quarter ended December 31, 2024 was $0.44, compared to $0.35 for the fourth quarter of 2023 and $0.44 for the third quarter of 2024. Financial Highlights: Full Year 2024 Revenue for the year ended December 31, 2024 increased to $1.84 billion compared to $1.63 billion for the year ended December 31, 2023, an increase of 12.7% on a reported basis and constant currency basis. Revenue Gross Margin Year ended Year endedReportable Segments December 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023 (dollars in millions) Insurance $614.0 $529.9 36.4% 35.5%Healthcare 116.4 106.0 33.0% 34.6%Emerging Business 311.7 265.7 41.8% 43.2%Analytics 796.3 729.1 37.5% 36.8%Revenues, net $1,838.4 $1,630.7 37.6% 37.3% Operating income margin for the year ended December 31, 2024 was 14.3%, compared to 14.6% for the year ended December 31, 2023. Adjusted operating income margin for the year ended December 31, 2024 was 19.4%, compared to 19.3% for the year ended December 31, 2023.Diluted earnings per share for the year ended December 31, 2024 was $1.21, compared to $1.10 for the year ended December 31, 2023. Adjusted diluted earnings per share for the year ended December 31, 2024 was $1.65, compared to $1.43 for the year ended December 31, 2023. Business Highlights: Fourth Quarter 2024 Won 17 new clients in the fourth quarter of 2024, with 8 clients in digital operations and solutions and 9 in analytics. For the year, we won 69 new clients, with 32 in digital operations and solutions and 37 in analytics.Launched EXLerate.AI, an agentic AI platform designed to help enterprises reimagine and build AI-native workflows that drive greater efficiency, lower costs, and increased accuracy and scalability across business operations.Named a Leader in the ISG Provider Lens™ Generative AI Services 2024 report. Analysts cited EXL’s data integration capabilities, domain-specific expertise, and robust transformational framework as key differentiators driving its leadership in this space.Recognized as a Market Leader in the HFS Research 2024 AADA Quadfecta Services for the Generative Enterprise™ 2024 study. The study evaluated 27 leading analytics, AI, data platforms, and automation service providers on their ability to unlock deep insights from data, automate complex processes, and enhance operational efficiencies. The Market Leader designation is the report’s highest distinction. 2025 Operating Model To accelerate the execution of our data and AI strategy, capture a greater share of the growing AI market and drive EXL’s long-term growth, the company is changing its operating model. The new model is comprised of Industry Market Units focused on delivering higher value to clients leveraging our full suite of capabilities; and Strategic Growth Units focused on rapidly advancing our capabilities specific to various industries and client needs. This enhances our ability to deepen client relationships, unlock new buying centers, expand our addressable markets across industries and geographies, accelerate investments in data and AI capabilities and industry-specific solutions, and create more professional development opportunities for our employees. This model enables us to deliver AI-powered integrated solutions more effectively and evolve engagements to maximize value for our clients. EXL will adopt new financial reporting segments consistent with how management will be reviewing financial information and making operating decisions beginning in the first quarter of 2025. Our data, AI and analytics capabilities are driving all our solutions and business lines. Accordingly, we will now report data and AI revenue alongside our new reporting segments beginning with the first quarter of 2025. This shift will provide a higher quality and more relevant representation of our business performance as we continue executing our data and AI growth strategy. The new reportable segments, aligned to our Industry Market Units, are as follows: InsuranceHealthcare and Life SciencesBanking, Capital Markets and Diversified IndustriesInternational Growth Markets The change in segment presentation will not have any effect on our consolidated statements of income, balance sheets or cash flows. The revised presentation will be reflected in our periodic and annual reports beginning in the first quarter of 2025. 2025 Guidance Based on current visibility, and a U.S. dollar to Indian rupee exchange rate of 87.0, U.K. pound sterling to U.S. dollar exchange rate of 1.25, U.S. dollar to the Philippine peso exchange rate of 58.0 and all other currencies at current exchange rates, we are providing the following guidance for the full year 2025: Revenue of $2.025 billion to $2.060 billion, representing an increase of 10% to 12% on a reported basis, and 11% to 13% on a constant currency basis, from 2024; andAdjusted diluted earnings per share of $1.83 to $1.89, representing an increase of 11% to 14% from 2024. Conference Call ExlService Holdings, Inc. will host a conference call on Wednesday, February 26, 2025, at 10:00 A.M. ET to discuss the Company’s fourth quarter and year-end operating and financial results. The conference call will be available live via the internet by accessing the investor relations section of EXL’s website at ir.exlservice.com, where an accompanying investor-friendly spreadsheet of historical operating and financial data can also be accessed. Please access the website at least fifteen minutes prior to the call to register, download and install any necessary audio software. To join the live call, please register here. For those who cannot access the live broadcast, a replay will be available on the EXL website ir.exlservice.com for a period of twelve months. About ExlService Holdings, Inc. EXL (NASDAQ: EXLS) is a global data and artificial intelligence ("AI") company that offers services and solutions to reinvent client business models, drive better outcomes and unlock growth with speed. EXL harnesses the power of data, AI, and deep industry knowledge to transform businesses, including the world’s leading corporations in industries including insurance, healthcare, banking and financial services, media and retail, among others. EXL was founded in 1999 with the core values of innovation, collaboration, excellence, integrity and respect. We are headquartered in New York and have more than 59,000 employees spanning six continents. For more information, visit www.exlservice.com. Cautionary Statement Regarding Forward-Looking Statements This press release contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to EXL's operations and business environment, all of which are difficult to predict and many of which are beyond EXL’s control. Forward-looking statements include information concerning EXL’s possible or assumed future results of operations, including descriptions of its business strategy. These statements may include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. These statements are based on assumptions that we have made in light of management's experience in the industry as well as its perceptions of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. You should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions. Although EXL believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect EXL’s actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors, which include our ability to maintain and grow client demand, risks related to the use of AI technology, impact on client demand by the selling cycle of our contracts, fluctuations in our earnings, our ability to hire and retain sufficiently trained employees, and our ability to accurately estimate and/or manage costs, are discussed in more detail in EXL’s filings with the Securities and Exchange Commission, including EXL’s Annual Report on Form 10-K. You should keep in mind that any forward-looking statement made herein, or elsewhere, speaks only as of the date on which it is made. New risks and uncertainties come up from time to time, and it is impossible to predict these events or how they may affect EXL. EXL has no obligation to update any forward-looking statements after the date hereof, except as required by applicable law. EXLSERVICE HOLDINGS, INC.CONSOLIDATED STATEMENTS OF INCOME(In thousands, except per share amount and share count) (Unaudited) Year ended December 31, Three months ended December 31, 2024 2023 2024 2023Revenues, net$1,838,372 $1,630,668 $481,426 $414,058 Cost of revenues(1) 1,147,359 1,022,902 298,023 262,211 Gross profit(1) 691,013 607,766 183,403 151,847 Operating expenses: General and administrative expenses 225,672 198,294 58,477 53,730 Selling and marketing expenses 146,502 120,227 37,520 31,553 Depreciation and amortization expense 55,219 50,490 16,164 12,298 Total operating expenses 427,393 369,011 112,161 97,581 Income from operations 263,620 238,755 71,242 54,266 Foreign exchange gain, net 891 1,532 218 694 Interest expense (19,256) (13,180) (5,111) (3,150)Other income/(expense), net 16,092 10,834 4,216 4,240 Income before income tax expense and earnings from equity affiliates 261,347 237,941 70,565 56,050 Income tax expense 62,936 53,536 19,850 15,763 Income before earnings from equity affiliates 198,411 184,405 50,715 40,287 Gain/(loss) from equity-method investment (114) 153 (43) (4)Net income$198,297 $184,558 $50,672 $40,283 Earnings per share: Basic$1.22 $1.11 $0.31 $0.24 Diluted$1.21 $1.10 $0.31 $0.24 Weighted average number of shares used in computing earnings per share: Basic 162,718,840 166,341,213 161,292,473 165,254,017 Diluted 164,321,656 168,161,371 163,436,793 166,880,836 (1) Exclusive of depreciation and amortization expense. EXLSERVICE HOLDINGS, INC.CONSOLIDATED BALANCE SHEETS(In thousands, except per share amount and share count) As of December 31, 2024 December 31, 2023Assets Current assets: Cash and cash equivalents $153,355 $136,953 Short-term investments 187,223 153,881 Restricted cash 9,972 4,062 Accounts receivable, net 304,322 308,108 Other current assets 140,317 76,669 Total current assets 795,189 679,673 Property and equipment, net 101,837 100,373 Operating lease right-of-use assets 68,784 64,856 Restricted cash 8,071 4,386 Deferred tax assets, net 104,747 82,927 Goodwill 420,387 405,639 Other intangible assets, net 49,331 50,164 Long-term investments 13,972 4,430 Other assets 56,085 49,524 Total assets $1,618,403 $1,441,972 Liabilities and stockholders’ equity Current liabilities: Accounts payable $5,884 $5,055 Current portion of long-term borrowings 4,886 65,000 Deferred revenue 19,264 12,318 Accrued employee costs 129,994 117,137 Accrued expenses and other current liabilities 113,597 114,113 Current portion of operating lease liabilities 16,491 12,780 Total current liabilities 290,116 326,403 Long-term borrowings, less current portion 283,598 135,000 Operating lease liabilities, less current portion 59,851 58,175 Deferred tax liabilities, net 1,403 1,495 Other non-current liabilities 53,573 31,462 Total liabilities 688,541 552,535 Commitments and contingencies Stockholders’ equity: Preferred stock, $0.001 par value; 15,000,000 shares authorized, none issued — — Common stock, $0.001 par value; 400,000,000 shares authorized, 206,510,587 shares issued and 161,801,212 shares outstanding as of December 31, 2024 and 203,410,038 shares issued and 165,277,880 shares outstanding as of December 31, 2023 206 203 Additional paid-in capital 588,583 508,028 Retained earnings 1,281,960 1,083,663 Accumulated other comprehensive loss (154,722) (127,040)Total including shares held in treasury 1,716,027 1,464,854 Less: 44,709,375 shares as of December 31, 2024 and 38,132,158 shares as of December 31, 2023, held in treasury, at cost (786,165) (575,417)Total stockholders’ equity 929,862 889,437 Total liabilities and stockholders’ equity $1,618,403 $1,441,972 EXLSERVICE HOLDINGS, INC.Reconciliation of Adjusted Financial Measures to GAAP Measures In addition to its reported operating results in accordance with U.S. generally accepted accounting principles (GAAP), EXL has included in this release certain financial measures that are considered non-GAAP financial measures, including the following: (i) Adjusted operating income and adjusted operating income margin;(ii) Adjusted EBITDA and adjusted EBITDA margin;(iii) Adjusted net income and adjusted diluted earnings per share; and(iv) Revenue growth on constant currency basis. These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles, should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. Accordingly, the financial results calculated in accordance with GAAP and reconciliations from those financial statements should be carefully evaluated. EXL believes that providing these non-GAAP financial measures may help investors better understand EXL’s underlying financial performance. Management also believes that these non-GAAP financial measures, when read in conjunction with EXL’s reported results, can provide useful supplemental information for investors analyzing period-to-period comparisons of the Company’s results and comparisons of the Company’s results with the results of other companies. Additionally, management considers some of these non-GAAP financial measures to determine variable compensation of its employees. The Company believes that it is unreasonably difficult to provide its earnings per share financial guidance in accordance with GAAP, or a qualitative reconciliation thereof, for a number of reasons, including, without limitation, the Company’s inability to predict its future stock-based compensation expense under ASC Topic 718, the amortization of intangibles associated with future acquisitions and the currency fluctuations and associated tax effects. As such, the Company presents guidance with respect to adjusted diluted earnings per share. The Company also incurs significant non-cash charges for depreciation that may not be indicative of the Company’s ability to generate cash flow. EXL non-GAAP financial measures exclude, where applicable, stock-based compensation expense, amortization of acquisition-related intangible assets, provision for restructuring and litigation settlement matters, effects of termination of leases, certain defined social security contributions, allowance for certain material expected credit losses, other acquisition-related expenses or benefits and effect of any non-recurring tax adjustments. Acquisition-related expenses or benefits include, changes in the fair value of contingent consideration, external deal costs, integration expenses, direct and incremental travel costs and non-recurring benefits or losses. Our adjusted net income and adjusted diluted EPS also excludes the effects of income tax on the above pre-tax items, as applicable. The effects of income tax of each item is calculated by applying the statutory rate of the local tax regulations in the jurisdiction in which the item was incurred. A limitation of using non-GAAP financial measures versus financial measures calculated in accordance with GAAP is that non-GAAP financial measures do not reflect all of the amounts associated with our operating results as determined in accordance with GAAP and exclude costs that are recurring, namely stock-based compensation and amortization of acquisition-related intangible assets. EXL compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP financial measures to allow investors to evaluate such non-GAAP financial measures. EXL’s primary exchange rate exposure is with the Indian rupee, the Philippine peso, the U.K. pound sterling and the South African rand. The average exchange rate of the U.S. dollar against the Indian rupee increased from 83.28 during the quarter ended December 31, 2023 to 84.72 during the quarter ended December 31, 2024, representing a depreciation of 1.7% against the U.S. dollar. The average exchange rate of the U.S. dollar against the Philippine peso increased from 55.86 during the quarter ended December 31, 2023 to 58.19 during the quarter ended December 31, 2024, representing a depreciation of 4.2% against the U.S. dollar. The average exchange rate of the U.K. pound sterling against the U.S. dollar increased from 1.25 during the quarter ended December 31, 2023 to 1.28 during the quarter ended December 31, 2024, representing an appreciation of 1.9% against the U.S. dollar. The average exchange rate of the U.S. dollar against the South African rand decreased from 18.63 during the quarter ended December 31, 2023 to 18.18 during the quarter ended December 31, 2024, representing an appreciation of 2.4% against the U.S. dollar. The following table shows the reconciliation of these non-GAAP financial measures for the year ended December 31, 2024 and 2023, the three months ended December 31, 2024 and 2023 and the three months ended September 30, 2024: Reconciliation of Adjusted Operating Income and Adjusted EBITDA(Amounts in thousands) Year ended Three months ended December 31, December 31, September 30, 2024 2023 2024 2023 2024Net income (GAAP) $198,297 $184,558 $50,672 $40,283 $53,037 add: Income tax expense 62,936 53,536 19,850 15,763 15,460 add/(subtract): Foreign exchange gain, net, interest expense, gain/(loss) from equity-method investment and other income/(loss), net 2,387 661 720 (1,780) 908 Income from operations (GAAP) $263,620 $238,755 $71,242 $54,266 $69,405 add: Stock-based compensation expense 72,658 58,437 15,479 15,452 21,232 add: Amortization of acquisition-related intangibles 13,630 14,678 4,024 3,168 3,449 add: Restructuring and litigation settlement costs (a) 6,174 613 — 613 — add/(subtract): Allowance/(reversal) for expected credit losses (b) — 1,436 — (264) — add: Other expenses (c) — 771 — 282 — Adjusted operating income (Non-GAAP) $356,082 $314,690 $90,745 $73,517 $94,086 Adjusted operating income margin as a % of Revenue (Non-GAAP) 19.4% 19.3% 18.8% 17.8% 19.9%add: Depreciation on long-lived assets 41,589 34,434 12,140 9,130 10,350 Adjusted EBITDA (Non-GAAP) $397,671 $349,124 $102,885 $82,647 $104,436 Adjusted EBITDA margin as a % of revenue (Non-GAAP) 21.6% 21.4% 21.4% 20.0% 22.1% (a) To exclude effects of employee severance costs and outplacement support costs of $4,762 and $nil and litigation settlement costs and associated legal fees of $1,412 and $613 for the year ended December 31, 2024 and 2023, respectively. To exclude effects of litigation settlement costs and associated legal fees of $nil and $613 for the three months ended December 31, 2024 and 2023, respectively. (b) To exclude the effects of material allowance/(reversal) for expected credit losses on accounts receivables related to a customer bankruptcy event. (c) To exclude effects of lease termination of $nil and $489 and other items, individually insignificant of $nil and $282 for the year ended December 31, 2024 and 2023, respectively. To exclude effects of other items, individually insignificant of $nil and $282 for the three months ended December 31, 2024 and 2023, respectively. Reconciliation of Adjusted Net Income and Adjusted Diluted Earnings Per Share(Amounts in thousands, except per share data) Year ended Three months ended December 31, December 31, September 30, 2024 2023 2024 2023 2024Net income (GAAP) $198,297 $184,558 $50,672 $40,283 $53,037 add: Stock-based compensation expense 72,658 58,437 15,479 15,452 21,232 add: Amortization of acquisition-related intangibles 13,630 14,678 4,024 3,168 3,449 add: Restructuring and litigation settlement costs (a) 6,174 613 — 613 — add/(subtract): Changes in fair value of contingent consideration (589) 1,900 — (600) — add: Other tax expenses (b) 3,817 223 3,817 223 — add/(subtract): Allowance/(reversal) for expected credit losses (c) — 1,436 — (264) — add: Other expenses (d) — 489 — — — subtract: Tax impact on stock-based compensation expense (e) (17,576) (17,333) (1,769) (374) (5,830)subtract: Tax impact on amortization of acquisition-related intangibles (3,318) (3,622) (921) (792) (866)add/(subtract): Tax impact on restructuring and litigation settlement costs (1,540) — 48 — — add/(subtract): Tax impact on changes in fair value of contingent consideration 146 152 (5) 152 — add/(subtract): Tax impact on allowance/(reversal) for expected credit losses — (364) — 65 — subtract: Tax impact on other expenses — (280) — (157) — Adjusted net income (Non-GAAP) $271,699 $240,887 $71,345 $57,769 $71,022 Adjusted diluted earnings per share (Non-GAAP) $1.65 $1.43 $0.44 $0.35 $0.44 (a) To exclude effects of employee severance costs and outplacement support costs of $4,762 and $nil and litigation settlement costs and associated legal fees of $1,412 and $613 for the year ended December 31, 2024 and 2023, respectively. To exclude effects of litigation settlement costs and associated legal fees of $nil and $613 for the three months ended December 31, 2024 and 2023, respectively. (b) To exclude other tax expenses/(benefits) related to certain deferred tax assets and liabilities. (c) To exclude the effects of material allowance/(reversal) for expected credit losses on accounts receivables related to a customer bankruptcy event. (d) To exclude effects of lease termination of $nil and $489 for the year ended December 31, 2024 and 2023, respectively. (e) Tax impact includes $9,714 and $15,055 for the year ended December 31, 2024 and 2023 respectively, $500 and $1,883 for the three months ended December 31, 2024 and 2023 respectively, and $1,673 for the three months ended September 30, 2024 related to discrete benefit recognized in income tax expense in accordance with ASU No. 2016-09, Compensation - Stock Compensation. Contacts:Investor RelationsJohn KristoffVice President, Investor Relations+1 212 209 4613ir@exlservice.com Media - USKeith LittleAssistant Vice President, Media Relations+1 703 598 0980media.relations@exlservice.com

EXL Reports 2024 Fourth Quarter and Year-End Results; Issues 2025 Guidance

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