ExlService (US:EXLS)2025-10-29 15:02Financial Data and Key Metrics Changes - The company reported revenue of $530 million for Q3 2025, representing a 12% year-over-year increase and an 11% growth in Adjusted EPS to $0.48 per share [4][17] - Adjusted EPS for the quarter was $0.48, reflecting a year-over-year increase of 10.8% [20][21] - Revenue for the first nine months of 2025 was $1.55 billion, up 14% year-over-year on a constant currency basis [21] Business Line Data and Key Metrics Changes - Data and AI-led revenue grew 18% year-over-year, accounting for 56% of total revenue [4][5] - Digital operations revenue increased by 6% year-over-year, with some revenue shifting to the data and AI-led category [5][41] - The insurance segment grew 9% year-over-year, contributing a third of total revenue [5][18] - Healthcare and life sciences segment reported a 22% growth, driven by demand for data and AI solutions [6][18] - Banking, capital markets, and diversified industries grew 12%, representing nearly a quarter of total revenue [7][18] Market Data and Key Metrics Changes - International growth markets segment generated revenue of $92.8 million, up 8.4% year-over-year [19] - The company noted a positive demand environment, with a growing sales pipeline for data and AI-led opportunities [7][8] Company Strategy and Development Direction - The company is focused on embedding AI into client workflows and expanding its data and AI capabilities [4][9] - The launch of EXLdata.ai aims to help clients make their enterprise data AI-ready, addressing the challenge of unstructured data [10][11] - The company is investing in next-generation data and AI capabilities to bolster its competitive position [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining double-digit growth into 2026, supported by a strong sales pipeline and high renewal rates [9][24] - The overall demand environment remains strong, with clients increasingly looking to innovate and transform their business models [8][30] - The company raised its revenue and EPS guidance for the full year, anticipating revenue between $2.07 billion to $2.08 billion for 2025 [23] Other Important Information - More than 75% of the company's revenue is recurring or annuity, providing stability and predictability [9] - The company has a net cash position of $38 million as of September 30, with cash flow from operations improving to $233 million for the first nine months of the year [21][22] Q&A Session Summary Question: Change in overall demand environment - Management noted that overall demand continues to be strong, with an expanding total addressable market for services and solutions [30] Question: Sustainability of growth rate - Management expressed confidence in sustaining double-digit growth, driven by the growth of data and AI-led revenue [31] Question: Expectations for digital operations - Digital operations growth is impacted by revenue shifting to data and AI-led categories, but overall engagement with clients is strong [40] Question: Client relationship management changes - The company is enhancing client engagement by focusing on innovation and transformation, requiring account managers to be proficient in AI and data [46][47] Question: Healthcare segment growth outlook - Management believes the healthcare business has significant growth potential, with ongoing demand for data and AI solutions [56] Question: Margin expectations for next year - Management anticipates more stable margin growth in 2026, with a focus on investments in sales and capability development [59] Question: Landscape for EXLdata.ai - The company differentiates itself by using AI to prepare data for AI readiness, offering a comprehensive end-to-end solution [63] Question: International segment growth acceleration - The company is investing in marketing and local partnerships to accelerate growth in international markets [65]