ExlService (EXLS) - 2022 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Q3 2022 revenue was $361.4 million, up 4.2% from Q2 and up 24.5% year-over-year [6][16] - Adjusted EPS for Q3 was $1.54, an increase of 18.5% year-over-year [6][19] - For the first nine months of 2022, revenue was $1.04 billion, up 26.8% year-over-year on a constant currency basis [20] Business Line Data and Key Metrics Changes - Analytics business generated $166.3 million in Q3, up 3.1% sequentially and 38% year-over-year [6][18] - Digital Operations and Solutions revenue was $195.1 million in Q3, up 14.8% year-over-year [6][17] - Insurance segment revenue grew 20.3% year-over-year to $116.2 million [17] - Emerging business reported revenue of $56.1 million, up 31.1% year-over-year [17] - Healthcare segment revenue was $22.8 million, down 16.4% year-over-year [18] Market Data and Key Metrics Changes - Non-U.S. client activity remains healthy, with strong traction in the U.K., Australia, New Zealand, and the APAC region [27] - Demand for services in Analytics and Digital Operations is strong across various industry verticals [26] Company Strategy and Development Direction - The company is focused on leveraging data to help clients streamline operations and improve customer experience [8] - There is a strong emphasis on talent acquisition, with 5,700 employees added year-to-date, primarily in analytics and digital capabilities [12][14] - The company plans to continue investing in healthcare, which is seen as a significant growth opportunity [43] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth prospects despite macroeconomic uncertainties [14][24] - The company is prepared to manage costs effectively, with a variable cost structure allowing for flexibility [39] - The demand for services is expected to remain strong, particularly in the insurance and emerging business sectors [32][33] Other Important Information - The company has a strong balance sheet with cash and investments totaling $294 million and a net cash position of $24 million [21] - Guidance for 2022 revenue is increased to a range of $1.39 billion to $1.4 billion, representing year-over-year growth of 24% to 25% [22] Q&A Session Summary Question: Update on demand and client decision-making - Demand remains strong across Digital Operations and Solutions and Analytics, with a robust pipeline and larger deals being pursued [26] Question: Thoughts on adjusted operating margin potential - Adjusted operating margin for Q3 was 18.5%, with expectations to maintain this level moving forward [29] Question: Growth drivers in the Healthcare segment - The integrated healthcare business is growing at 9.3%, with significant opportunities for leveraging data and technology [42][43] Question: Client concentration changes - Client concentration has declined sequentially, but this is due to portfolio expansion rather than issues with specific clients [45] Question: Performance of Clairvoyant acquisition - Clairvoyant is performing well, with revenue contributions aligning with expectations and strong integration into the analytics group [48][49]