Core Insights - EXL has been recognized as a Market Leader in the HFS Research Horizons Insurance Services 2025 report, which evaluates 24 leading insurance providers based on various criteria [1][2] - The report emphasizes the importance of operational efficiency, stakeholder experiences, and innovation for insurance carriers in a rapidly evolving market [2] - EXL's strengths include a data-first approach, deep insurance domain expertise, and AI-driven insights that enhance decision-making and operational efficiency [2][3] Company Overview - EXL is a global data and AI company that provides services to transform client business models and drive better outcomes across various industries, including insurance, healthcare, and banking [4] - Founded in 1999, EXL operates with core values of innovation, collaboration, excellence, integrity, and respect, and has approximately 61,000 employees worldwide [4]

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying strong candidates can be challenging due to inherent risks and volatility [1] Group 1: Company Overview - ExlService Holdings (EXLS) is currently highlighted as a promising growth stock, supported by a favorable Growth Score and a top Zacks Rank [2] - The company has a historical EPS growth rate of 21.2%, with projected EPS growth of 15.4% this year, surpassing the industry average of 10.2% [4] Group 2: Financial Metrics - Earnings growth is crucial for attracting investor interest, with double-digit growth being particularly favorable [3] - ExlService Holdings has a year-over-year cash flow growth of 2.1%, significantly higher than the industry average of 0.2% [5] - The company's annualized cash flow growth rate over the past 3-5 years is 10.6%, compared to the industry average of 8.6% [6] Group 3: Earnings Estimate Revisions - Positive trends in earnings estimate revisions correlate strongly with stock price movements, indicating potential for growth [7] - The current-year earnings estimates for ExlService Holdings have increased by 4% over the past month, reflecting upward revisions [8] Group 4: Investment Potential - ExlService Holdings has achieved a Zacks Rank of 2 and a Growth Score of A, suggesting it is a solid choice for growth investors [10]

Financial Data and Key Metrics Changes - The company reported revenue of $514 million for Q2 2025, representing a 15% year-over-year increase [5] - Adjusted EPS grew by 20% to $0.49 per share [6] - Revenue for the first half of 2025 was $1.015 billion, up 14.9% year-over-year on a constant currency basis [26] - Adjusted operating margin for Q2 was 19.6%, down 20 basis points year-over-year [25] Business Line Data and Key Metrics Changes - The insurance segment grew 8.6% year-over-year, generating $172.2 million in revenue [22] - Healthcare and life sciences segment reported revenue of $129.5 million, representing a 22% year-over-year growth [22] - Banking, capital markets, and diversified industries segment revenue was $121.1 million, up 15.8% year-over-year [23] - International growth markets segment revenue reached $91.7 million, a 15% year-over-year increase [24] Market Data and Key Metrics Changes - Data and AI-led revenue increased by 17% year-over-year, constituting 54% of total revenue [9] - The international growth market segment accounted for 18% of total revenue in Q2 [8] Company Strategy and Development Direction - The company focuses on embedding AI into workflows, aiming for long-term growth in data and AI services [10][12] - The business model emphasizes high-value, domain-specific workflows, avoiding low-value work vulnerable to AI disruption [10] - Continued investment in next-generation data and AI capabilities is planned to enhance client value [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining double-digit growth, supported by a strong sales pipeline [20] - The company anticipates revenue for 2025 to be in the range of $2.05 billion to $2.07 billion, reflecting a year-over-year growth of 12% to 13% [28] - Management noted that over 75% of revenue is recurring, providing stability and visibility [20] Other Important Information - The company launched new proprietary large language models for various applications, enhancing its service offerings [14][15] - A strategic partnership with Genesys was announced to improve customer engagement across multiple sectors [18] Q&A Session Summary Question: Growth in insurance and healthcare sectors - Management indicated stable growth in insurance and strong growth in healthcare, driven by data and AI solutions [34][35] Question: Impact of AI adoption on revenue and margins - Management highlighted a 94% success rate in implementing AI solutions, with expectations of margin expansion as the commercial model shifts [37][39] Question: Protection of intellectual property - Management emphasized proprietary datasets and a growing number of patents as key factors in protecting intellectual property [42][43] Question: Dynamics of employee costs and hiring - Management noted that increased employee costs are due to hiring highly skilled talent for data and AI initiatives [90][91] Question: Competitive environment and client relationships - Management observed a shift towards long-term partnerships with strategic providers, emphasizing the company's domain knowledge as a competitive advantage [66][68]

Financial Data and Key Metrics Changes - The company reported revenue of $514 million for Q2 2025, representing a 15% year-over-year increase [5] - Adjusted EPS grew by 20% to $0.49 per share [6] - Revenue for the first half of 2025 was $1.015 billion, up 14.9% year-over-year on a constant currency basis [25] - Adjusted operating margin for Q2 was 19.6%, down 20 basis points year-over-year [24] Business Line Data and Key Metrics Changes - The insurance segment grew 8.6% year-over-year, generating revenue of $172.2 million [22] - Healthcare and life sciences segment reported revenue of $129.5 million, representing a 22% year-over-year growth [22] - Banking, capital markets, and diversified industries segment revenue was $121.1 million, reflecting a 15.8% year-over-year increase [23] - International growth markets segment revenue reached $91.7 million, up 15% year-over-year [23] Market Data and Key Metrics Changes - Data and AI-led revenue increased by 17% year-over-year, constituting 54% of total revenue [8] - The international growth market segment grew to 18% of total revenue [7] Company Strategy and Development Direction - The company focuses on embedding AI into workflows and delivering measurable business outcomes, which has resulted in high renewal rates with over 75% of revenue being recurring [11] - Continued investment in next-generation data and AI capabilities is a priority to sustain long-term growth [13] - The company aims to leverage its unique combination of domain expertise, data, and AI to differentiate itself in the market [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining performance, with a strong sales pipeline and a differentiated business model [20] - The company raised its revenue guidance for 2025 to a range of $2.05 billion to $2.07 billion, indicating a year-over-year growth of 12% to 13% [28] - Management noted that AI services are expected to grow at twice the pace of overall IT, cloud, and digital services, presenting significant opportunities [13] Other Important Information - The company launched new proprietary large language model offerings for various sectors, enhancing its service capabilities [14][15] - A strategic partnership with Genesys was announced to transform customer engagement across multiple industries [18] Q&A Session Summary Question: Growth in insurance and healthcare sectors - Management indicated that the insurance sector is experiencing stable growth, with a strong pipeline, while healthcare continues to grow due to data and AI solutions [34][36] Question: Impact of Generative AI on revenue and margins - Management highlighted a 94% success rate in implementing data and AI solutions, with a shift towards usage-based metrics expected to enhance margins [38] Question: IP protection and competitive advantage - The company emphasized its access to proprietary datasets and a growing number of patents as key factors in protecting its intellectual property [44][45] Question: Trends in digital operations growth - Management acknowledged a slower growth rate in digital operations but emphasized the importance of embedding data and AI solutions to enhance value [48] Question: Client preferences for AI solutions - Clients are increasingly seeking value and are gravitating towards partners that can deliver comprehensive solutions, with EXL positioned as a preferred partner [55][56] Question: Guidance for EPS in the second half of the year - Management explained that while the first half was strong, continued investments in data and AI solutions may lead to slightly lower EPS guidance for the second half [76] Question: Employee costs and hiring trends - The increase in employee costs is attributed to hiring more highly skilled talent, particularly in data and AI [92] Question: Competitive landscape and market dynamics - Management noted that the competitive environment is evolving with new entrants, but EXL's domain knowledge and established relationships provide a competitive edge [68][70]

Financial Performance - Total revenue for Q2 FY25 reached $514.5 million, a 14.7% year-over-year (YoY) increase as reported and a 14.6% increase on a constant currency (cc) basis[3] - Adjusted operating margin was 19.6%, a decrease of 20 basis points YoY[3] - Adjusted diluted earnings per share (EPS) grew by 20.3% YoY to $0.49[3] Revenue by Segment - International Growth Markets generated $91.7 million in revenue, representing 17.8% of total revenue and a 15.0% YoY cc growth[5] - Insurance segment revenue was $172.2 million, accounting for 33.5% of total revenue with 8.6% YoY cc growth[5] - Healthcare and Life Sciences segment contributed $129.5 million, or 25.2% of total revenue, showing a 22.0% YoY cc growth[5] - Banking, Capital Markets and Diversified Industries segment reached $121.1 million, which is 23.5% of total revenue, with 15.8% YoY cc growth[5] Additional Metrics - The company added 13 new clients[10] - Employee count reached 61,100, an increase of 448 from Q1 2025, with an attrition rate of 26.5% in Q2 2025[10] - Data and AI-Led revenue was $278.8 million, representing 54.2% of total revenue and a 17.3% YoY cc growth[10] - Digital Operations revenue was $235.7 million, accounting for 45.8% of total revenue and an 11.6% YoY cc growth[10] 2025 Guidance - The company projects revenue between $2.05 billion and $2.07 billion, representing a 12-13% growth on a constant currency basis[16] - Adjusted diluted earnings per share are expected to be between $1.86 and $1.90, a 13-15% increase[16]

Core Insights - EXL and Genesys have announced a collaboration to enhance customer engagement and business operations through advanced data and AI integration [1][2] - The partnership aims to transform customer interactions into strategic advantages by leveraging real-time customer insights [2][3] Company Overview - EXL is a global data and AI company that focuses on reinventing business models and driving growth through data-driven solutions [6] - Genesys is a leader in AI-powered experience orchestration, serving over 8,000 organizations globally [7] Collaboration Details - The integration of EXL's data and AI capabilities into the Genesys orchestration engine will enable enterprises to improve customer experience and operational efficiency [2][4] - The collaboration will focus on various customer channels, enhancing services such as fraud detection, complaint resolution, and account management [2][3] Market Impact - The partnership is expected to empower industries such as insurance, banking, healthcare, and retail to achieve greater customer engagement and loyalty through intelligent personalization [4] - By combining AI-driven models with omnichannel engagement, the collaboration aims to boost conversion rates and enhance customer lifetime value [3][4]

Core Insights - ExlService Holdings (EXLS) reported revenue of $514.46 million for the quarter ended June 2025, reflecting a year-over-year increase of 14.7% and surpassing the Zacks Consensus Estimate by 1.63% [1] - The company's EPS for the quarter was $0.49, up from $0.40 in the same quarter last year, resulting in an EPS surprise of 8.89% compared to the consensus estimate of $0.45 [1] Revenue Breakdown - Insurance revenues were $172.17 million, slightly below the estimated $174.13 million, but showed a year-over-year increase of 15.3% [4] - Healthcare and Life Sciences revenues reached $129.49 million, exceeding the average estimate of $127.07 million, with a significant year-over-year change of 360.8% [4] - Revenues from International Growth Markets totaled $91.71 million, surpassing the average estimate of $87.9 million [4] - Data and AI-led revenues amounted to $278.77 million, exceeding the average estimate of $271.62 million, with a year-over-year increase of 43.8% [4] - Banking, Capital Markets and Diversified Industries revenues were $121.09 million, slightly above the average estimate of $120.18 million, reflecting a year-over-year increase of 56.9% [4] - Digital operations revenues were $235.69 million, in line with the estimated $235.04 million, but showed a decline of 7.4% compared to the previous year [4] Stock Performance - Over the past month, ExlService Holdings' shares have returned -3.6%, contrasting with the Zacks S&P 500 composite's +3.6% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. ExlService Holdings shares have lost about 4.9% since the beginning of the year versus the S&P 500's gain of 8.6%. ExlService Holdings (EXLS) came out with quarterly earnings of $0.49 per share, beating the Zacks Consensus Estimate of $0.45 per share. This compares to earnings of $0.4 per share a year ago. These ...

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) This section presents ExlService Holdings, Inc.'s unaudited consolidated financial statements and management's analysis [ITEM 1. Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20%28UNAUDITED%29) This section presents ExlService Holdings, Inc.'s unaudited consolidated financial statements and notes, detailing financial position [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20and%20December%2031%2C%202024) This section provides consolidated balance sheets, detailing assets, liabilities, and equity **Consolidated Balance Sheet Highlights (in thousands)** | Metric | Dec 31, 2024 | June 30, 2025 | Change | % Change | | :----------------------------------- | :----------- | :------------ | :----- | :------- | | Total Assets | $1,618,403 | $1,708,503 | $90,100 | 5.6% | | Total Liabilities | $688,541 | $647,553 | $(40,988) | (5.9)% | | Total Stockholders' Equity | $929,862 | $1,060,950 | $131,088 | 14.1% | | Cash and cash equivalents | $153,355 | $149,134 | $(4,221) | (2.7)% | | Accounts receivable, net | $304,322 | $345,470 | $41,148 | 13.5% | | Long-term borrowings, less current portion | $283,598 | $255,155 | $(28,443) | (10.0)% | | Retained earnings | $1,281,960 | $1,414,572 | $132,612 | 10.3% | | Accumulated other comprehensive loss | $(154,722) | $(134,434) | $20,288 | (13.1)% | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section presents consolidated statements of income, detailing revenues, expenses, and net income for the reported periods **Consolidated Statements of Income Highlights (in thousands, except per share)** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (YoY) | | :--------------------------- | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Revenues, net | $514,460 | $448,366 | 14.7% | $1,015,479 | $884,873 | 14.8% | | Gross profit | $194,188 | $166,260 | 16.8% | $387,502 | $329,343 | 17.7% | | Income from operations | $81,138 | $61,449 | 32.0% | $159,553 | $122,973 | 29.7% | | Net income | $66,051 | $45,825 | 44.1% | $132,612 | $94,588 | 40.2% | | Basic EPS | $0.41 | $0.28 | 46.4% | $0.82 | $0.58 | 41.4% | | Diluted EPS | $0.40 | $0.28 | 42.9% | $0.81 | $0.57 | 42.1% | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section presents consolidated statements of comprehensive income, including net income and other comprehensive income **Consolidated Statements of Comprehensive Income Highlights (in thousands)** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (YoY) | | :----------------------------------- | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Net income | $66,051 | $45,825 | 44.1% | $132,612 | $94,588 | 40.2% | | Total other comprehensive income/(loss) | $8,353 | $(5,672) | N/A | $20,288 | $(9,068) | N/A | | Total comprehensive income | $74,404 | $40,153 | 85.3% | $152,900 | $85,520 | 78.8% | - Other comprehensive income for the six months ended June 30, 2025, was **$20.3 million**, a significant improvement from a loss of **$9.1 million** in the prior year, primarily due to unrealized gains on cash flow hedges and positive currency translation adjustments[16](index=16&type=chunk)[108](index=108&type=chunk) [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section details changes in stockholders' equity, including common stock, retained earnings, and AOCI **Consolidated Statements of Stockholders' Equity Highlights (in thousands)** | Metric | Dec 31, 2024 | June 30, 2025 | Change (6 months) | | :----------------------------------- | :----------- | :------------ | :---------------- | | Common Stock (Amount) | $206 | $207 | $1 | | Additional Paid-in Capital | $588,583 | $625,984 | $37,401 | | Retained Earnings | $1,281,960 | $1,414,572 | $132,612 | | Accumulated Other Comprehensive Income/(Loss) | $(154,722) | $(134,434) | $20,288 | | Treasury Stock (Amount) | $(786,165) | $(845,379) | $(59,214) | | Total Stockholders' Equity | $929,862 | $1,060,950 | $131,088 | - Total stockholders' equity increased by **$131.1 million** (**14.1%**) from December 31, 2024, to June 30, 2025, primarily due to net income and other comprehensive income[10](index=10&type=chunk)[23](index=23&type=chunk) - Treasury stock acquisitions for the six months ended June 30, 2025, totaled **$59.2 million**, compared to **$134.6 million** in the prior year period[23](index=23&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section presents consolidated cash flow statements, categorizing movements from operating, investing, and financing **Consolidated Statements of Cash Flows Highlights (in thousands)** | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | % Change | | :----------------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Net cash provided by operating activities | $112,620 | $53,037 | $59,583 | 112.3% | | Net cash used for investing activities | $(36,287) | $(43,249) | $6,962 | (16.1)% | | Net cash used for financing activities | $(84,552) | $(27,305) | $(57,247) | 209.7% | | Cash, cash equivalents and restricted cash at end of period | $170,525 | $121,654 | $48,871 | 40.2% | - Net cash provided by operating activities significantly increased by **112.3%** to **$112.6 million** for the six months ended June 30, 2025, reflecting higher cash earnings and lower working capital needs[27](index=27&type=chunk)[286](index=286&type=chunk) - Net cash used for financing activities increased by **209.7%** to **$84.6 million**, primarily due to net repayments of borrowings, partially offset by lower purchases of treasury stock[27](index=27&type=chunk)[287](index=287&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanatory notes supporting consolidated financial statements and accounting policies [Note 1. Organization](index=9&type=section&id=1.%20Organization) This note describes ExlService Holdings, Inc.'s global operations as a data and AI company - ExlService Holdings, Inc. is a global data and AI company offering services and solutions to reinvent client business models, drive better outcomes, and unlock growth[29](index=29&type=chunk) - The Company serves leading corporations in industries including insurance, healthcare and life sciences, banking and capital markets, retail, communications and media, and energy and infrastructure[29](index=29&type=chunk) - Clients are located principally in the United States of America and the United Kingdom[30](index=30&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=9&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines key accounting principles and policies for the unaudited consolidated financial statements - Unaudited consolidated financial statements are prepared in conformity with U.S. GAAP for interim financial information[31](index=31&type=chunk) - Operational and structural changes implemented in Q1 2025 led to new segment reporting (Note 3), but did not affect the Company's unaudited consolidated statements of income, balance sheets, or cash flows[34](index=34&type=chunk) - The Company is evaluating the impact of new ASUs on income tax disclosures (ASU 2023-09) and expense disaggregation (ASU 2024-03), with ASU 2024-01 (Stock Compensation) early adopted in 2024 without material impact[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) [Note 3. Segment Information](index=10&type=section&id=3.%20Segment%20Information) This note details the Company's realigned reportable segments and revenue presentation by service type and geography - In Q1 2025, the Company realigned its reportable segments to Industry Market Units (IMUs) and Strategic Growth Units to enhance client value and expand global reach[34](index=34&type=chunk)[43](index=43&type=chunk) - The new reportable segments are Insurance, Healthcare and Life Sciences, Banking, Capital Markets and Diversified Industries, and International Growth Markets[44](index=44&type=chunk) - Revenues are now presented by service type (data and AI-led, digital operations) and geographical regions (North America, United Kingdom & Europe, and Rest of World)[48](index=48&type=chunk) **Revenues, net by Service Type (in thousands)** | Service Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (YoY) | | :---------------- | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Data and AI-led | $278,770 | $237,403 | 17.4% | $546,699 | $469,127 | 16.5% | | Digital operations | $235,690 | $210,963 | 11.7% | $468,780 | $415,746 | 12.7% | | Total Revenues, net | $514,460 | $448,366 | 14.7% | $1,015,479 | $884,873 | 14.8% | **Revenues, net by Geographical Region (in thousands)** | Region | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (YoY) | | :------------------ | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | North America | $422,822 | $369,148 | 14.5% | $838,171 | $731,324 | 14.6% | | United Kingdom & Europe | $77,635 | $66,494 | 16.8% | $150,019 | $129,812 | 15.6% | | Rest of World | $14,003 | $12,724 | 10.1% | $27,289 | $23,737 | 15.0% | | Total Revenues, net | $514,460 | $448,366 | 14.7% | $1,015,479 | $884,873 | 14.8% | [Note 4. Revenues, net and Accounts Receivable, net](index=14&type=section&id=4.%20Revenues%2C%20net%20and%20Accounts%20Receivable%2C%20net) This note provides details on net revenues and accounts receivable, including unbilled receivables **Accounts Receivable, net (in thousands)** | Metric | June 30, 2025 | Dec 31, 2024 | Change | % Change | | :-------------------------------- | :------------ | :----------- | :----- | :------- | | Accounts receivable, net | $345,470 | $304,322 | $41,148 | 13.5% | | Accounts receivable, including unbilled receivables | $350,197 | $307,850 | $42,347 | 13.7% | | Less: Allowance for expected credit losses | $(4,727) | $(3,528) | $(1,199) | 34.0% | - Unbilled receivables were **$145.5 million** as of June 30, 2025, and **$121.8 million** as of December 31, 2024[71](index=71&type=chunk) - No single customer accounted for more than **10%** of the Company's revenues or accounts receivable[76](index=76&type=chunk)[77](index=77&type=chunk) [Note 5. Earnings Per Share](index=16&type=section&id=5.%20Earnings%20Per%20Share) This note presents basic and diluted earnings per share calculations for the reported periods **Earnings Per Share (EPS) (in dollars)** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (YoY) | | :----------- | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Basic EPS | $0.41 | $0.28 | 46.4% | $0.82 | $0.58 | 41.4% | | Diluted EPS | $0.40 | $0.28 | 42.9% | $0.81 | $0.57 | 42.1% | - Net income for Q2 2025 was **$66.1 million**, up **44.1%** YoY, and for H1 2025 was **$132.6 million**, up **40.2%** YoY[13](index=13&type=chunk)[78](index=78&type=chunk) [Note 6. Other Income, net](index=17&type=section&id=6.%20Other%20Income%2C%20net) This note details the components of other income, net, including gains on investments and interest income **Other Income, net (in thousands)** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (YoY) | | :----------------------------------- | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Other income, net | $5,671 | $3,550 | 59.7% | $10,374 | $7,502 | 38.3% | | Gain on sale and fair value mark-to-market on investments | $2,259 | $1,162 | 94.4% | $4,207 | $2,178 | 93.2% | | Interest and dividend income | $2,682 | $2,375 | 12.9% | $5,307 | $4,659 | 13.9% | - The increase in other income, net, was primarily due to higher yield on investments and reversal of certain contingent liabilities[259](index=259&type=chunk)[281](index=281&type=chunk) [Note 7. Cash, Cash Equivalents and Restricted Cash](index=17&type=section&id=7.%20Cash%2C%20Cash%20Equivalents%20and%20Restricted%20Cash) This note provides a breakdown of cash, cash equivalents, and restricted cash balances at period end **Cash, Cash Equivalents and Restricted Cash (in thousands)** | Metric | June 30, 2025 | June 30, 2024 | Dec 31, 2024 | | :----------------------------------- | :------------ | :------------ | :----------- | | Cash and cash equivalents | $149,134 | $115,303 | $153,355 | | Restricted cash (current) | $11,503 | $6,351 | $9,972 | | Restricted cash (non-current) | $9,888 | $0 | $8,071 | | Total Cash, cash equivalents and restricted cash | $170,525 | $121,654 | $171,398 | - Restricted cash (current) primarily represents funds held on behalf of customers and collateral for irrevocable letters of credit[81](index=81&type=chunk) - Restricted cash (non-current) represents deposits with banks against bank guarantees for equipment imports and tax registrations[82](index=82&type=chunk) [Note 8. Investments](index=18&type=section&id=8.%20Investments) This note details the Company's short-term and long-term investments **Investments (in thousands)** | Metric | June 30, 2025 | Dec 31, 2024 | Change | % Change | | :-------------------- | :------------ | :----------- | :----- | :------- | | Short-term investments | $204,160 | $187,223 | $16,937 | 9.0% | | Mutual funds | $120,809 | $108,251 | $12,558 | 11.6% | | Term deposits | $83,351 | $78,972 | $4,379 | 5.5% | | Long-term investments | $7,516 | $13,972 | $(6,456) | (46.2)% | | Term deposits | $2,489 | $9,295 | $(6,806) | (73.2)% | | Investment in equity affiliate | $5,027 | $4,677 | $350 | 7.5% | [Note 9. Property and Equipment, net](index=18&type=section&id=9.%20Property%20and%20Equipment%2C%20net) This note provides details on property and equipment, net, including depreciation and software **Property and Equipment, net (in thousands)** | Metric | June 30, 2025 | Dec 31, 2024 | Change | % Change | | :----------------------------------- | :------------ | :----------- | :----- | :------- | | Property and equipment, gross | $387,987 | $356,060 | $31,927 | 9.0% | | Less: Accumulated depreciation and amortization | $(273,884) | $(254,223) | $(19,661) | 7.7% | | Property and equipment, net | $114,103 | $101,837 | $12,266 | 12.0% | | Internally developed software, net | $19,468 | $22,204 | $(2,736) | (12.3)% | **Depreciation and Amortization Expense (in thousands)** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (YoY) | | :----------------------------------- | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Depreciation and amortization expense (excluding acquisition-related intangibles) | $10,778 | $9,833 | 9.6% | $21,089 | $19,099 | 10.4% | | Amortization expense on internally developed software | $2,743 | $2,927 | (6.3)% | $5,483 | $5,447 | 0.7% | [Note 10. Goodwill and Other Intangible Assets](index=19&type=section&id=10.%20Goodwill%20and%20Other%20Intangible%20Assets) This note details goodwill and other intangible assets, including re-allocation and amortization **Goodwill and Other Intangible Assets (in thousands)** | Metric | Dec 31, 2024 | June 30, 2025 | Change | % Change | | :-------------------------- | :----------- | :------------ | :----- | :------- | | Goodwill | $420,387 | $420,573 | $186 | 0.0% | | Other intangible assets, net | $49,331 | $42,825 | $(6,506) | (13.2)% | - Goodwill was re-allocated to reporting units in Q1 2025 due to segment realignment; no impairment was found after testing[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) **Amortization Expense for Other Intangible Assets (in thousands)** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (YoY) | | :-------------------- | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Amortization expense | $3,277 | $3,077 | 6.5% | $6,523 | $6,157 | 5.9% | [Note 11. Other Current Assets](index=20&type=section&id=11.%20Other%20Current%20Assets) This note provides a breakdown of other current assets, including advance income tax and derivative instruments **Other Current Assets (in thousands)** | Metric | June 30, 2025 | Dec 31, 2024 | Change | % Change | | :-------------------------- | :------------ | :----------- | :----- | :------- | | Other current assets | $148,049 | $140,317 | $7,732 | 5.5% | | Advance income tax, net | $45,230 | $49,377 | $(4,147) | (8.4)% | | Derivative instruments | $8,195 | $1,973 | $6,222 | 315.4% | [Note 12. Other Assets](index=20&type=section&id=12.%20Other%20Assets) This note details other non-current assets, including deferred contract fulfillment costs and derivatives **Other Assets (in thousands)** | Metric | June 30, 2025 | Dec 31, 2024 | Change | % Change | | :-------------------------- | :------------ | :----------- | :----- | :------- | | Other assets | $64,991 | $56,085 | $8,906 | 15.9% | | Deferred contract fulfillment costs | $33,711 | $31,741 | $1,970 | 6.2% | | Derivative instruments | $3,615 | $852 | $2,763 | 324.3% | [Note 13. Accrued Expenses and Other Current Liabilities](index=21&type=section&id=13.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) This note provides a breakdown of accrued expenses and other current liabilities **Accrued Expenses and Other Current Liabilities (in thousands)** | Metric | June 30, 2025 | Dec 31, 2024 | Change | % Change | | :----------------------------------- | :------------ | :----------- | :----- | :------- | | Accrued expenses and other current liabilities | $121,548 | $113,597 | $7,951 | 7.0% | | Accrued capital expenditures | $6,186 | $2,059 | $4,127 | 200.4% | | Derivative instruments | $4,133 | $7,454 | $(3,321) | (44.6)% | | Contingent consideration | $0 | $1,280 | $(1,280) | (100.0)% | [Note 14. Other Non-Current Liabilities](index=21&type=section&id=14.%20Other%20Non-Current%20Liabilities) This note details other non-current liabilities, including deferred revenue and contingent consideration **Other Non-Current Liabilities (in thousands)** | Metric | June 30, 2025 | Dec 31, 2024 | Change | % Change | | :----------------------------------- | :------------ | :----------- | :----- | :------- | | Other non-current liabilities | $55,477 | $53,573 | $1,904 | 3.6% | | Deferred transition revenue | $22,762 | $18,213 | $4,549 | 25.0% | | Contingent consideration | $2,700 | $1,420 | $1,280 | 90.1% | | Derivative instruments | $772 | $4,363 | $(3,591) | (82.3)% | [Note 15. Accumulated Other Comprehensive Income/(Loss)](index=21&type=section&id=15.%20Accumulated%20Other%20Comprehensive%20Income/%28Loss%29) This note details changes in accumulated other comprehensive income/(loss), including unrealized gains **Accumulated Other Comprehensive Income/(Loss) (AOCI) (in thousands)** | Metric | Dec 31, 2024 | June 30, 2025 | Change (6 months) | | :----------------------------------- | :----------- | :------------ | :---------------- | | Balance as of period end | $(154,722) | $(134,434) | $20,288 | | Gain recognized during the period | N/A | $23,357 | N/A | | Unrealized gain on cash flow hedges | N/A | $15,424 | N/A | | Currency translation adjustments | N/A | $7,933 | N/A | - AOCI improved significantly from a loss of **$154.7 million** at December 31, 2024, to a loss of **$134.4 million** at June 30, 2025, primarily due to a **$23.4 million** gain recognized during the period[108](index=108&type=chunk) [Note 16. Fair Value Measurements](index=23&type=section&id=16.%20Fair%20Value%20Measurements) This note provides fair value measurements for assets and liabilities, categorized by valuation input levels **Assets and Liabilities Measured at Fair Value (in thousands)** | Metric | Dec 31, 2024 | June 30, 2025 | Change | % Change | | :----------------------------------- | :----------- | :------------ | :----- | :------- | | Total Assets at Fair Value | $166,001 | $183,449 | $17,448 | 10.5% | | Mutual funds (Level 1) | $108,251 | $120,809 | $12,558 | 11.6% | | Derivative financial instruments (Level 2) | $2,825 | $11,810 | $8,985 | 318.8% | | Total Liabilities at Fair Value | $14,517 | $7,605 | $(6,912) | (47.6)% | | Derivative financial instruments (Level 2) | $11,817 | $4,905 | $(6,912) | (58.5)% | | Contingent consideration (Level 3) | $2,700 | $2,700 | $0 | 0.0% | - Contingent consideration is measured using Level 3 inputs based on the Company's assessment of performance goal achievement, calculated using the Monte Carlo simulation model[116](index=116&type=chunk) [Note 17. Derivatives and Hedge Accounting](index=25&type=section&id=17.%20Derivatives%20and%20Hedge%20Accounting) This note explains the Company's use of derivative instruments for hedging foreign currency and interest rates - The Company uses foreign currency forward contracts and interest rate swaps to mitigate cash flow volatility from foreign currency exchange rates and interest rates[120](index=120&type=chunk) **Effect of Derivatives on AOCI and Income (in thousands)** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (YoY) | | :----------------------------------- | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Unrealized gain/(loss) recognized in OCI (cash flow hedges) | $5,955 | $(2,778) | N/A | $15,424 | $(2,840) | N/A | | Gain/(loss) recognized in income (non-hedging instruments) | $(1,766) | $(2,113) | (16.4)% | $(1,286) | $(2,073) | (38.0)% | - Approximately **$4.4 million** of derivative gains (net of tax) from cash flow hedges are expected to be reclassified into earnings within the next twelve months[121](index=121&type=chunk) [Note 18. Borrowings](index=28&type=section&id=18.%20Borrowings) This note details the Company's debt position, including revolving credit and term loan facilities **Debt Position (in thousands)** | Metric | Dec 31, 2024 | June 30, 2025 | Change | % Change | | :-------------------------- | :----------- | :------------ | :----- | :------- | | Total borrowings | $288,484 | $260,041 | $(28,443) | (9.9)% | | Revolving credit facility | $190,000 | $164,000 | $(26,000) | (13.7)% | | Term loan facility | $98,484 | $96,041 | $(2,443) | (2.5)% | - The Company was in compliance with the financial covenants under its 2024 Credit Agreement as of June 30, 2025[138](index=138&type=chunk) - The 2024 Credit Agreement increased revolving credit commitments to **$500 million** and provided a new term loan facility of **$100 million**, both maturing on April 18, 2027[136](index=136&type=chunk) [Note 19. Capital Structure](index=29&type=section&id=19.%20Capital%20Structure) This note provides information on the Company's capital structure, including common stock repurchase programs **Share Repurchases (Publicly Announced Programs)** | Period | Shares Repurchased | Total Consideration (in thousands) | Weighted Average Purchase Price Per Share | | :--------------------------- | :----------------- | :--------------------------------- | :---------------------------------------- | | 3 Months Ended June 30, 2025 | 906,150 | $41,752 | $46.08 | | 3 Months Ended June 30, 2024 | 297,353 | $8,823 | $29.67 | | 6 Months Ended June 30, 2025 | 1,081,213 | $49,811 | $46.07 | | 6 Months Ended June 30, 2024 | 4,274,171 | $128,253 | $30.01 | - The Company's board authorized a **$500 million** common stock repurchase program beginning March 1, 2024[145](index=145&type=chunk) - In March 2024, the Company entered into a **$125 million** Accelerated Share Repurchase (ASR) Agreement[146](index=146&type=chunk) [Note 20. Employee Benefit Plans](index=30&type=section&id=20.%20Employee%20Benefit%20Plans) This note describes the Company's employee benefit plans, including gratuity plans and 401(k) contributions - The Company offers Gratuity Plans in India (partially funded) and the Philippines (unfunded), and 401(k) plans in the US[149](index=149&type=chunk)[152](index=152&type=chunk)[154](index=154&type=chunk) **Net Gratuity Cost (in thousands)** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (YoY) | | :-------------------- | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Net gratuity cost | $1,455 | $1,029 | 41.4% | $2,891 | $2,058 | 40.5% | **Contributions to Defined Contribution Plans (in thousands)** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (YoY) | | :----------------------------------- | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Contributions to 401(k) Plans | $1,376 | $1,190 | 15.6% | $4,171 | $3,633 | 14.8% | | Contributions to foreign subsidiaries' plans | $8,692 | $6,891 | 26.1% | $16,477 | $13,640 | 20.8% | [Note 21. Leases](index=32&type=section&id=21.%20Leases) This note provides details on the Company's lease arrangements, including total lease cost and cash outflows **Total Lease Cost (in thousands)** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (YoY) | | :-------------------- | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Total lease cost | $7,853 | $6,976 | 12.6% | $15,196 | $13,413 | 13.3% | **Lease Information (6 Months Ended June 30)** | Metric | 2025 | 2024 | | :----------------------------------- | :--- | :--- | | Operating cash outflows for operating leases | $12,250K | $9,645K | | Weighted average remaining lease term (Operating lease) | 4.7 years | 5.1 years | | Weighted average discount rate (Operating lease) | 8.0% | 7.9% | [Note 22. Income Taxes](index=33&type=section&id=22.%20Income%20Taxes) This note details income tax expense and the effective tax rate, explaining factors influencing changes **Income Tax Expense and Effective Tax Rate** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (YoY) | | :-------------------- | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Income tax expense (in thousands) | $18,546 | $13,873 | 33.7% | $32,042 | $27,626 | 16.0% | | Effective tax rate | 21.9% | 23.2% | (1.3) pp | 19.5% | 22.6% | (3.1) pp | - The increase in income tax expense was primarily driven by higher profit, partially offset by lower state taxes and higher excess tax benefits[166](index=166&type=chunk)[167](index=167&type=chunk) [Note 23. Stock-Based Compensation](index=34&type=section&id=23.%20Stock-Based%20Compensation) This note details stock-based compensation expense, including stock options and restricted stock units **Stock-Based Compensation Expense (in thousands)** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (YoY) | | :----------------------------------- | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Total stock-based compensation expense | $16,392 | $18,095 | (9.4)% | $35,579 | $35,947 | (1.0)% | - Stockholders approved the 2025 Omnibus Incentive Plan, reserving **6,800,000 shares** for awards[172](index=172&type=chunk) - Unrecognized compensation cost for stock options (**$10.4 million**) is expected to be expensed over **2.0 years**, and for restricted stock units (**$91.1 million**) over **2.8 years**[173](index=173&type=chunk)[178](index=178&type=chunk) [Note 24. Related Party Disclosures](index=36&type=section&id=24.%20Related%20Party%20Disclosures) This note provides details on revenues generated from transactions with related parties **Revenues from Related Parties (in thousands)** | Related Party | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Corridor Platforms, Inc. | $42 | $151 | $84 | $302 | | PharmaCord LLC | $105 | $0 | $224 | $0 | [Note 25. Commitments and Contingencies](index=36&type=section&id=25.%20Commitments%20and%20Contingencies) This note outlines capital commitments, legal proceedings, and tax disputes - Capital commitments include **$5.0 million** for property and equipment and **$2.2 million** for investments in a partnership[190](index=190&type=chunk) - The Company faces transfer pricing and related income tax disputes with Indian tax authorities, with an aggregate demanded amount of **$50.2 million** as of June 30, 2025[195](index=195&type=chunk) - Indian tax authorities raised aggregate VAT demands of **$5.3 million** and rejected GST refund claims of **$5.7 million** as of June 30, 2025[196](index=196&type=chunk)[197](index=197&type=chunk) - Management believes its positions in tax disputes and other legal matters will more likely than not be sustained and does not expect a material adverse effect on its financial condition, results of operations, or cash flows[195](index=195&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk)[203](index=203&type=chunk) [Note 26. Subsequent Events](index=39&type=section&id=26.%20Subsequent%20Events) This note discloses significant events occurring after the reporting period, including new legislation - On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA), and the Company is evaluating its impact on consolidated financial statements[204](index=204&type=chunk) - On July 29, 2025, the Company entered into a **$125 million** Accelerated Share Repurchase (ASR) Agreement as part of its 2024 Repurchase Program[205](index=205&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, operational results, strategic shifts, and future outlook [Cautionary Note Regarding Forward-Looking Statements](index=40&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This note advises that the report contains forward-looking statements subject to various risks - The report contains forward-looking statements subject to numerous uncertainties and factors difficult to predict and beyond the Company's control[208](index=208&type=chunk) - Key factors include client demand for AI services, successful transition to new organizational structure, earnings fluctuations, employee retention, cybersecurity incidents, and global economic conditions[208](index=208&type=chunk)[214](index=214&type=chunk) - The Company has no obligation to update any forward-looking statements after the report date, except as required by federal securities laws[210](index=210&type=chunk) [Executive Overview](index=41&type=section&id=Executive%20Overview) This overview highlights ExlService Holdings' role as a global data and AI company - ExlService Holdings is a global data and AI company focused on reinventing client business models and driving growth[211](index=211&type=chunk) - In Q1 2025, the Company implemented operational and structural changes, realigning into Industry Market Units (IMUs) and Strategic Growth Units to deliver higher client value and advance capabilities[213](index=213&type=chunk) - New reportable segments include Insurance, Healthcare and Life Sciences, Banking, Capital Markets and Diversified Industries, and International Growth Markets[215](index=215&type=chunk)[216](index=216&type=chunk) - Revenues by service type are now presented as data and AI-led and digital operations services[217](index=217&type=chunk) [Revenues](index=42&type=section&id=Revenues) This section analyzes revenue performance, growth drivers, and geographical contributions **Total Revenues, net (in millions)** | Period | 2025 | 2024 | Change | % Change | | :--------------------------- | :----- | :----- | :----- | :------- | | 3 Months Ended June 30 | $514.5 | $448.4 | $66.1 | 14.7% | | 6 Months Ended June 30 | $1,015.5 | $884.9 | $130.6 | 14.8% | - Revenue growth was primarily driven by new and existing clients across all reportable segments[242](index=242&type=chunk)[265](index=265&type=chunk) - North America and the United Kingdom & Europe generated **82.2%** and **15.1%** of total revenues for Q2 2025, respectively[219](index=219&type=chunk) - Total revenues from the top ten clients accounted for **33.5%** for Q2 2025 and **33.6%** for H1 2025[220](index=220&type=chunk) [Our Business](index=42&type=section&id=Our%20Business) This section describes the Company's service offerings, including data and AI-led and digital operations - The Company provides data and AI-led and digital operations services, leveraging domain knowledge, analytics, data management, and digital engineering expertise[221](index=221&type=chunk)[222](index=222&type=chunk) - Data and AI-led services embed AI into client workflows to accelerate growth, improve customer experience, and enhance efficiency[222](index=222&type=chunk) - Digital operations services help clients run essential business functions and form the foundation for future AI transformation opportunities[223](index=223&type=chunk) - The Company observes a shift towards transaction-based, outcome-based, and other alternative pricing models in the industry[234](index=234&type=chunk) [Income Taxes](index=44&type=section&id=Income%20Taxes) This section discusses the Company's income tax considerations, including Pillar II global minimum tax rules - The Company is monitoring the evolving Pillar II global minimum tax rules, effective January 1, 2024[235](index=235&type=chunk) - The Pillar II impacts for operations in the Republic of Ireland and the Philippines, where safe harbor rules are not met, are not significant and have been properly reflected in financial statements[235](index=235&type=chunk) [Critical Accounting Policies and Estimates](index=44&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section reviews critical accounting policies and estimates, noting changes related to segment realignment - In Q1 2025, the Company implemented operational and structural changes, resulting in the realignment of reporting segments and re-allocation of goodwill[236](index=236&type=chunk) - Goodwill was tested for impairment prior to and immediately after the segment realignment, with no impairment found[237](index=237&type=chunk) - There have been no other significant changes in critical accounting policies and estimates during the six months ended June 30, 2025[238](index=238&type=chunk) [Results of Operations](index=45&type=section&id=Results%20of%20Operations) This section analyzes the Company's financial performance for the reported periods - The Company experienced strong financial performance for both the three and six months ended June 30, 2025, with significant increases in revenues, gross profit, income from operations, and net income compared to the prior year periods[240](index=240&type=chunk)[263](index=263&type=chunk) [Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=46&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202024) This section compares the Company's financial performance for Q2 2025 against the prior year **Q2 2025 vs Q2 2024 Financial Performance (in millions)** | Metric | Q2 2025 | Q2 2024 | Dollar Change | % Change | | :--------------------------- | :------ | :------ | :------------ | :------- | | Revenues, net | $514.5 | $448.4 | $66.1 | 14.7% | | Gross profit | $194.2 | $166.3 | $27.9 | 16.8% | | Income from operations | $81.2 | $61.5 | $19.7 | 32.0% | | Net income | $66.1 | $45.8 | $20.3 | 44.1% | - Gross margin improved by **60 basis points** to **37.7%** for Q2 2025, driven by higher revenues and operational efficiencies[247](index=247&type=chunk) - SG&A expenses increased by **$7.0 million** (**7.7%**) due to higher employee-related costs, investments in digital and generative AI capabilities, and increased sales and marketing costs[253](index=253&type=chunk) - Foreign exchange gain, net, was **$2.2 million** for Q2 2025, compared to a negligible gain in Q2 2024[257](index=257&type=chunk) [Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024](index=50&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202024) This section compares the Company's financial performance for H1 2025 against the prior year **H1 2025 vs H1 2024 Financial Performance (in millions)** | Metric | H1 2025 | H1 2024 | Dollar Change | % Change | | :--------------------------- | :------ | :------ | :------------ | :------- | | Revenues, net | $1,015.5 | $884.9 | $130.6 | 14.8% | | Gross profit | $387.5 | $329.4 | $58.1 | 17.7% | | Income from operations | $159.5 | $123.0 | $36.5 | 29.7% | | Net income | $132.6 | $94.6 | $38.0 | 40.2% | - Gross margin improved by **100 basis points** to **38.2%** for H1 2025, driven by higher revenues and operational efficiencies[271](index=271&type=chunk) - SG&A expenses increased by **$19.3 million** (**10.6%**) due to higher employee-related costs, investments in digital and generative AI capabilities, and other operating costs[276](index=276&type=chunk) - Foreign exchange gain, net, was **$3.4 million** for H1 2025, compared to **$0.4 million** in H1 2024[280](index=280&type=chunk) [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the Company's liquidity position, cash flow generation, and capital expenditure plans **Cash Flow Summary (in millions)** | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Dollar Change | % Change | | :----------------------------------- | :--------------------------- | :--------------------------- | :------------ | :------- | | Net cash provided by operating activities | $112.6 | $53.0 | $59.6 | 112.3% | | Net cash used for investing activities | $(36.3) | $(43.2) | $6.9 | (16.1)% | | Net cash used for financing activities | $(84.6) | $(27.3) | $(57.3) | 209.7% | | Closing cash, cash equivalents and restricted cash | $170.5 | $121.7 | $48.8 | 40.2% | - Net cash provided by operating activities increased significantly due to **higher cash earnings** and **lower working capital needs**[286](index=286&type=chunk) - Net cash used for financing activities increased primarily due to **net repayments of borrowings**, partially offset by **lower purchases of treasury stock**[287](index=287&type=chunk) - The Company expects to incur total capital expenditures of **$50.0 million** to **$55.0 million** in fiscal 2025, primarily for growth requirements and investments in technology[290](index=290&type=chunk) - Existing cash, cash equivalents, and short-term investments are expected to be sufficient to satisfy cash requirements over the next **12 months**[292](index=292&type=chunk) [Financing Arrangements](index=56&type=section&id=Financing%20Arrangements) This section details the Company's borrowing facilities and compliance with financial covenants **Total Borrowings (in millions)** | Metric | Dec 31, 2024 | June 30, 2025 | Change | % Change | | :-------------------------- | :----------- | :------------ | :----- | :------- | | Total borrowings | $288.5 | $260.1 | $(28.4) | (9.9)% | | Revolving credit facility | $190.0 | $164.0 | $(26.0) | (13.7)% | | Term loan facility | $98.5 | $96.1 | $(2.4) | (2.5)% | - The Company was in compliance with the financial covenants under its credit agreement as of June 30, 2025[297](index=297&type=chunk) [Recent Accounting Pronouncements](index=57&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 2 for details on recent accounting pronouncements - For a description of recent accounting pronouncements, refer to Note 2 - Summary of Significant Accounting Policies[298](index=298&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section confirms no material changes in market risk exposure and references the Annual Report - No material changes in market risk exposure occurred during the six months ended June 30, 2025[299](index=299&type=chunk) - Discussions on exchange rate risk and interest rate risk are available in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[299](index=299&type=chunk) [ITEM 4. Controls and Procedures](index=58&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures [Evaluation of Disclosure Controls and Procedures](index=58&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the Company's disclosure controls and procedures - The Company's disclosure controls and procedures were effective as of June 30, 2025[300](index=300&type=chunk) - The evaluation was carried out under the supervision and with the participation of the CEO and CFO[300](index=300&type=chunk) [Changes in Internal Control over Financial Reporting](index=58&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports no material changes in internal control over financial reporting during Q2 2025 - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting during the three months ended June 30, 2025[301](index=301&type=chunk) [Part II. Other Information](index=57&type=section&id=Part%20II.%20Other%20Information) This section covers legal proceedings, risk factors, equity sales, defaults, and other disclosures [ITEM 1. Legal Proceedings](index=57&type=section&id=ITEM%201.%20Legal%20Proceedings) This section addresses the Company's involvement in various lawsuits and claims - The Company is involved in various lawsuits, claims, and proceedings in the normal course of business[302](index=302&type=chunk) - Management believes the disposition of these matters will not have a material adverse effect on the Company's consolidated financial position, results of operations, or cash flows[302](index=302&type=chunk) - Details regarding tax proceedings are provided in Note 25 - Commitments and Contingencies[302](index=302&type=chunk) [ITEM 1A. Risk Factors](index=58&type=section&id=ITEM%201A.%20Risk%20Factors) This section directs readers to the Annual Report on Form 10-K for a discussion of business risks - Readers should refer to the 'Risk Factors' section in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, for a discussion of risks[303](index=303&type=chunk) - The Company acknowledges that the listed risk factors may not describe every risk, and additional unknown risks may materially adversely affect its business[303](index=303&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on unregistered equity sales and details common stock repurchase activities [Unregistered Sales of Equity Securities](index=58&type=section&id=Unregistered%20Sales%20of%20Equity%20Securities) This section confirms no unregistered sales of equity securities were reported during the period - No unregistered sales of equity securities were reported[304](index=304&type=chunk) [Use of Proceeds](index=58&type=section&id=Use%20of%20Proceeds) This section confirms no use of proceeds from unregistered equity sales was reported - No use of proceeds was reported[305](index=305&type=chunk) [Purchases of Equity Securities by the Issuer](index=59&type=section&id=Purchases%20of%20Equity%20Securities%20by%20the%20Issuer) This section details the Company's common stock repurchases under its publicly announced programs **Purchases of Equity Securities by the Issuer (Q2 2025)** | Period | Number of Shares Purchased | Average Price Paid per Share | | :--------------------------- | :------------------------- | :--------------------------- | | April 1, 2025 through April 30, 2025 | — | $— | | May 1, 2025 through May 31, 2025 | 426,500 | $46.18 | | June 1, 2025 through June 30, 2025 | 479,650 | $45.98 | | Total | 906,150 | $46.08 | - The Company's board of directors authorized a **$500 million** common stock repurchase program beginning March 1, 2024[307](index=307&type=chunk) - As of June 30, 2025, the approximate dollar value of shares that may yet be purchased under the program was **$273,095,473**[306](index=306&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=59&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) This section reports that the Company had no defaults upon senior securities during the period - No defaults upon senior securities were reported[308](index=308&type=chunk) [ITEM 4. Mine Safety Disclosures](index=59&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This section states that the item regarding mine safety disclosures is not applicable - This item is not applicable[309](index=309&type=chunk) [ITEM 5. Other Information](index=59&type=section&id=ITEM%205.%20Other%20Information) This section reports on Rule 10b5-1 trading arrangements by directors and officers [Rule 10b5-1 Trading Plans](index=59&type=section&id=Rule%2010b5-1%20Trading%20Plans) This section confirms no Rule 10b5-1 trading arrangements were adopted or terminated - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[310](index=310&type=chunk) [ITEM 6. Exhibits](index=60&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed with the report, including corporate governance documents - Exhibits include the Fourth Amended and Restated Certificate of Incorporation, Sixth Amended and Restated By-laws, and the 2025 Omnibus Incentive Plan[313](index=313&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer are included pursuant to Rule 13a-14(a) and 13a-14(b) of the Exchange Act[313](index=313&type=chunk) - Inline XBRL documents for the instance, schema, calculation, definition, label, and presentation linkbases are filed[313](index=313&type=chunk) [Signatures](index=61&type=section&id=Signatures) This section contains the official signatures, confirming the due authorization and filing of the report [Signatures](index=61&type=section&id=Signatures) This section contains the official signatures, confirming the due authorization and filing of the report - The report was signed on behalf of ExlService Holdings, Inc. by Maurizio Nicolelli, Chief Financial Officer[316](index=316&type=chunk) - The signing date of the report was July 29, 2025[316](index=316&type=chunk)

Chairman and Chief Executive Officer Rohit Kapoor said, "I am pleased to report another strong quarter as we delivered revenue growth of 15% and increased our adjusted diluted EPS by 20%. Our sustained double-digit growth demonstrates the strength of our competitive position as a global data and AI company. EXL's recognized leadership in embedding AI in the workflow is resonating strongly with our clients and fueling our growth." Chief Financial Officer Maurizio Nicolelli said, "While we remain prudent in o ...