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]

Financial Data and Key Metrics Changes - Customer lending grew 3.2% to GBP 384 billion in H1 2025, while customer deposits increased by 1% to GBP 436 billion [3] - Income rose 13.7% year on year to GBP 8 billion, and costs decreased by 1.4% to GBP 3.9 billion, resulting in an operating profit of GBP 3.6 billion and attributable profit of GBP 2.5 billion [3] - The return on tangible equity was reported at 18.1% [3] Business Line Data and Key Metrics Changes - Retail Banking and Private Banking mortgage balances grew by GBP 1.3 billion, with unsecured balances increasing by GBP 2.7 billion due to the addition of Sainsbury's Bank portfolios [11][12] - In the commercial and institutional segment, gross customer loans increased by GBP 4.6 billion, driven by project finance and sustainable financing [12] Market Data and Key Metrics Changes - The bank attracted over 100,000 new customers through organic growth and the acquisition of Sainsbury's Bank, adding approximately 1 million new customers [5] - The deposit mix remained stable, with non-interest-bearing balances at 31% and term accounts increasing from 16% to 17% [13][14] Company Strategy and Development Direction - The company aims to deliver GBP 200 billion of climate and transition finance by 2030, having already exceeded its previous target of GBP 100 billion [6] - A strategic collaboration with AWS and Accenture was announced to enhance data capabilities and customer engagement through AI [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining a loan impairment rate below 20 basis points for the full year, citing strong performance in the diversified prime loan book [16][17] - The company anticipates full-year total income, excluding notable items, to exceed GBP 16 billion, with a return on tangible equity expected to be greater than 16.5% [11][17] Other Important Information - An interim dividend of GBP 9.5 was announced along with a share buyback program of GBP 750 million [4] - The CET1 ratio stands at 13.6%, with a total capital ratio of 19.7% and a total MREL ratio of 32.4% [20][21] Q&A Session Summary Question: Will there be another small transaction before the end of the year? - The company has issued GBP 750 million and may consider a cleanup transaction later this year or early next year, depending on risk weights [32][34][35] Question: Concerns about the rating gap between S&P and other agencies? - Management acknowledged the gap and expressed a desire for S&P to align with other agencies, citing the punitive nature of S&P's rating methodology for UK banks [38][39][40] Question: Inquiry about issuance plans and CET1 buffer? - The company remains flexible regarding currency for future issuances, with current attractive options in dollars and sterling [48][50][51] - Management indicated that CET1 targets are regularly reviewed in light of regulatory changes, with no specific insights on potential changes to the countercyclical buffer [49][50][60]

Financial Data and Key Metrics Changes - Customer lending grew by 3.2% to GBP 384 billion in H1 2025, while customer deposits increased by 1% to GBP 436 billion [3] - Income rose by 13.7% year-on-year to GBP 8 billion, and costs decreased by 1.4% to GBP 3.9 billion, resulting in an operating profit of GBP 3.6 billion and an attributable profit of GBP 2.5 billion [3][4] - The return on tangible equity was reported at 18.1% [3] Business Line Data and Key Metrics Changes - Retail Banking and Private Banking mortgage balances grew by GBP 1.3 billion, with unsecured balances increasing by GBP 2.7 billion due to the addition of Sainsbury's Bank portfolios [11][12] - In Commercial and Institutional, gross customer loans increased by GBP 4.6 billion, driven by project finance and sustainable financing [12] - Overall income, excluding notable items, grew by 1.5% to GBP 4 billion in Q2 2025 [8] Market Data and Key Metrics Changes - The average liquidity coverage ratio was 150%, indicating a strong liquidity position [21] - The loan to deposit ratio stood at 86%, reflecting a well-diversified funding base [21] Company Strategy and Development Direction - The company aims to deliver GBP 200 billion of climate and transition finance by 2030, having already exceeded its previous target [6] - A strategic collaboration with AWS and Accenture was announced to enhance data capabilities and customer engagement through AI [6] - The company is focused on bank-wide simplification to improve customer and colleague experience [6] Management's Comments on Operating Environment and Future Outlook - Management expects total income for the full year to exceed GBP 16 billion, with a return on tangible equity greater than 16.5% [11][17] - The company anticipates two further base rate cuts this year, with rates expected to reach 3.75% by year-end [10] - Management expressed confidence in the credit portfolio, expecting a loan impairment rate below 20 basis points for the full year [16] Other Important Information - An interim dividend of GBP 9.5 was announced along with a share buyback program of GBP 750 million [4] - The CET1 ratio was reported at 13.6%, with a total capital ratio of 19.7% [21][22] Q&A Session Summary Question: Expected issuance before the end of the year - The company has issued GBP 750 million and may consider a cleanup transaction later this year or early next year depending on risk weights [34][36] Question: Concerns about rating gaps between agencies - Management acknowledged the gap with S&P and emphasized the strength of the balance sheet, aiming for an upgrade based on strong financial performance [39][40] Question: Economic assumptions and loan growth - Management indicated that while they have not provided specific guidance for 2026, they are currently operating closer to the lower end of the impairment range [60] - Project finance is described as lumpy but supported by strong relationships [63] Question: NSFR and ring-fencing implications - The NSFR is high due to a strong deposit franchise, and management does not expect changes in ring-fencing to impact the competitive nature of the mortgage market [69]

Financial Data and Key Metrics Changes - Customer lending grew by 3.2% to GBP 384 billion, while customer deposits increased by 1% to GBP 436 billion [4][5] - Assets under management and administration rose by 5.9% to GBP 52 billion [5] - Income increased by 13.7% to GBP 8 billion, and costs decreased by 1.4% to GBP 3.9 billion, resulting in an operating profit of GBP 3.6 billion and an attributable profit of GBP 2.5 billion [5][6] - Return on tangible equity was reported at 18.1%, with earnings per share up 28% to 31p [5][6] - An interim dividend of 9.5p was announced, reflecting a 58% increase [6] Business Line Data and Key Metrics Changes - Retail Banking saw a 3% increase in lending and a 1% rise in deposits, with a 4% increase in application share for mortgages [8][10] - Commercial and Institutional lending grew by 4% and deposits by 2%, driven by project finance and sustainable finance [10][11] - Private Banking and Wealth Management experienced a 2% increase in lending and net new inflows of GBP 1.5 billion, representing 8.1% of opening assets under management [11] Market Data and Key Metrics Changes - The bank attracted over 100,000 new customers through organic growth and the Sainsbury's transaction, which added approximately 1 million new customers [7][8] - The bank's share in credit cards increased from 9.7% to 11% due to the Sainsbury's acquisition [10] Company Strategy and Development Direction - The company is focused on disciplined growth, simplification, and enhancing customer experience through digitalization and technology upgrades [11][12][14] - A new target of delivering GBP 200 billion in climate and transition finance by 2030 was announced, building on previous commitments [11] - The bank is actively managing its balance sheet and has reduced its cost-to-income ratio from around 56% to 49% [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to continue driving lending growth despite a challenging UK economic backdrop [50][51] - The bank upgraded its 2025 guidance for income to over GBP 16 billion and return on tangible equity above 16.5% [16][30] - Management noted that the diversified prime loan book is performing well, with expectations for a loan impairment rate below 20 basis points for the full year [27][30] Other Important Information - The bank's CET1 ratio remained stable at 13.6%, with strong capital generation allowing for investments and shareholder returns [6][29] - A new share buyback program of GBP 750 million was announced, bringing total distributions to shareholders in the first half to around GBP 1.5 billion [6][29] Q&A Session Summary Question: On deposit flows and management of yields - Management acknowledged the impact of the Sainsbury's acquisition on deposit growth and confirmed that overall deposit share remained stable despite some current account losses [39][40] Question: On lending outlook and economic backdrop - Management expressed confidence in continued lending growth, supported by strong performance in both retail and commercial sectors [50][51] Question: On capital management and potential M&A - Management clarified that there is no intention to build a buffer for M&A, focusing instead on organic growth and shareholder returns [53][54] Question: On revenue guidance and drivers - Management indicated that the upgraded revenue guidance is supported by continued volume growth, the full run rate from Sainsbury's, and higher structural hedge income [78][81] Question: On mortgage spreads and market dynamics - Management noted that mortgage spreads are stabilizing and emphasized the importance of broadening the mortgage proposition to capture market opportunities [64][66]

Financial Data and Key Metrics Changes - Customer lending grew 3.2% to GBP 384 billion, while customer deposits increased by 1% to GBP 436 billion [3][4] - Income rose 13.7% to GBP 8 billion, and costs decreased by 1.4% to GBP 3.9 billion, resulting in an operating profit of GBP 3.6 billion and attributable profit of GBP 2.5 billion [4][5] - Return on tangible equity was 18.1%, and earnings per share increased by 28% to 31p [4][5] - Interim dividend announced at 9.5p, up 58%, with TNAV per share growing 16% to 351p [5] Business Line Data and Key Metrics Changes - Retail Banking saw lending growth of 3%, with deposits up 1% [7] - Commercial and Institutional lending increased by 4% and deposits by 2%, driven by project finance and sustainable finance [8] - Private Banking and Wealth Management experienced a 2% growth in lending and net new inflows of GBP 1.5 billion, representing 8.1% of opening AUM [9] Market Data and Key Metrics Changes - The bank attracted over 100,000 new customers through organic growth and the Sainsbury's transaction, which added around 1 million new customers [6][7] - The bank's share in credit cards increased from 9.7% to 11% due to the Sainsbury's acquisition [8] Company Strategy and Development Direction - The company is focused on disciplined growth, customer base expansion, and enhancing customer experience through digitization and simplification [6][10] - A new target of delivering GBP 200 billion in climate and transition finance by 2030 has been set, building on previous achievements [9][10] - The bank is modernizing its technology and operational model, including a strategic collaboration with AWS and Accenture to enhance data capabilities [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to continue delivering broad-based lending growth despite a challenging UK economic backdrop [49][50] - The bank upgraded its 2025 guidance for income to greater than GBP 16 billion and return on tangible equity above 16.5% [15][29] - Management noted that the diversified loan book is performing well, with expectations of a loan impairment rate below 20 basis points for the full year [25][29] Other Important Information - The CET1 ratio remained stable at 13.6%, with strong capital generation allowing for investments and shareholder returns [5][28] - The bank is actively managing its balance sheet, generating 101 basis points of capital in the first half [14] Q&A Session All Questions and Answers Question: On deposit flows and current accounts - Management acknowledged the growth in deposits but noted some loss in current accounts, attributing it to a disciplined pricing strategy amid competitive conditions [34][39] Question: On lending outlook and revenue guidance - Management expressed confidence in continued lending growth, supported by strong volumes and the full run rate from the Sainsbury's acquisition [46][49] Question: On capital management and potential M&A - Management clarified that they are not building a buffer for M&A but are focused on organic growth and maintaining a balanced capital allocation strategy [52][53] Question: On structural hedge and mortgage spreads - Management indicated that the structural hedge is performing well, with expectations of continued support for income, while mortgage spreads are stabilizing [57][63] Question: On FX risk management derivatives - Management explained that FX risk management activities are designed to take advantage of market volatility, contributing positively to overall income despite appearing as negative NII [98][101] Question: On lead reforms and mortgage market opportunities - Management expressed support for lead reforms, anticipating positive impacts on the mortgage market and increased borrowing capacity for first-time buyers [104][106]

Core Insights - EXL has been recognized as a Microsoft Solutions Partner for Data and AI, highlighting its capabilities in managing data and building analytics and AI solutions on Microsoft platforms [1][2][4] - The partnership with Microsoft enhances EXL's ability to deliver innovative tools and solutions, positioning the company to better serve clients' data and AI goals [2][3][4] Company Overview - EXL is a global data and AI company founded in 1999, focusing on reinventing client business models and driving growth through data and AI solutions [5][7] - The company operates across various industries, including insurance, healthcare, banking, retail, and energy, employing approximately 60,000 people worldwide [5][7] Digital Offerings - EXL has expanded its digital offerings in the Microsoft Azure Marketplace, launching three innovative solutions: - **EXL Code Harbor™**: A Generative AI-powered solution that accelerates platform migration and enhances data and code governance [6] - **EXL Value-Based Care Analytics Solution**: Focuses on improving healthcare outcomes and cost efficiency through advanced analytics [6] - **EXL Revenue Cycle Management (RCM)**: Optimizes financial stability and operational efficiency in healthcare revenue cycles [6] Strategic Collaboration - The collaboration with Microsoft aims to help organizations leverage data and AI to address real-world challenges, enabling faster operations and new growth opportunities [4] - EXL's recognition as a Microsoft Solutions Partner reinforces its commitment to innovation and strong partnerships within the Microsoft ecosystem [4]

Core Insights - EXL has been recognized as a Leader in the 2025 Gartner Magic Quadrant for Finance and Accounting Business Process Outsourcing, marking the fourth consecutive year for this recognition [1][2] - The Gartner report evaluated 16 F&A service providers, categorizing them into Leaders, Visionaries, Niche Players, and Challengers, with Leaders being defined as companies that execute well against their current vision and are well positioned for the future [2] - EXL's data and AI-led approach is helping clients address increasing demands in finance departments, particularly in meeting new accounting and compliance requirements [3] Company Performance - EXL has an overall rating of 4.7 out of 5 in the Finance and Accounting Business Process Outsourcing market, based on 68 reviews on Gartner Peer Insights [3] - The report highlights the importance of enhanced F&A BPO offerings that focus on automated transactional processing and process transformation expertise, often utilizing AI and machine learning technologies [2] Industry Context - The modern finance department faces rising demands for faster and more accurate information flow due to new accounting and compliance requirements [3] - Companies that engage in agreements for enhanced F&A BPO offerings benefit from maturing their processes and adopting technologies that minimize human intervention, leading to more competitive processing costs [2]

Core Insights - ExlService Holdings, Inc. reported a revenue of $501.0 million for Q1 2025, reflecting a year-over-year increase of 14.8% [1][3] - The diluted EPS (GAAP) for Q1 2025 was $0.40, up 38.3% from $0.29 in Q1 2024, while the adjusted diluted EPS (Non-GAAP) was $0.48, an increase of 26.9% from $0.38 in Q1 2024 [1][10] - The company has increased its revenue guidance for 2025 to a range of $2.035 billion to $2.065 billion, up from the previous guidance of $2.025 billion to $2.060 billion, indicating a growth of 11% to 12% year-over-year [2][10] Financial Performance - Revenue for Q1 2025 was $501.0 million, compared to $436.5 million in Q1 2024, marking a 14.8% increase on a reported basis and 15.1% on a constant currency basis [3][12] - The operating income margin for Q1 2025 was 15.7%, compared to 14.1% in Q1 2024, while the adjusted operating income margin was 20.1%, up from 18.9% in Q1 2024 [10][21] - Net income for Q1 2025 was $66.6 million, compared to $48.8 million in Q1 2024, representing a significant increase [12][23] Business Segments - Revenue breakdown for Q1 2025 by segment included: - Insurance: $172.0 million (36.6% gross margin) - Healthcare and Life Sciences: $125.6 million (43.9% gross margin) - Banking, Capital Markets and Diversified Industries: $117.7 million (37.3% gross margin) - International Growth Markets: $85.7 million (36.6% gross margin) [4][10] Strategic Outlook - The company is focusing on accelerating its data and AI-led strategy, which has contributed to its strong business momentum [2][10] - ExlService Holdings, Inc. won 10 new clients in Q1 2025 and received multiple industry recognitions, including being named a Leader in various categories in the ISG Provider Lens™ Insurance Services 2024 report [10][12]