ExlService (US:EXLS)2026-02-25 16:00Financial Data and Key Metrics Changes - For the full year 2025, revenue increased by 14% to nearly $2.1 billion, and adjusted EPS grew by 18% year-over-year to $1.95 per share [4][22] - In Q4, revenue reached $543 million, representing 13% year-over-year organic growth [4][17] - Adjusted EPS for Q4 was $0.50, a year-over-year increase of 15% [17][21] Business Line Data and Key Metrics Changes - Data and AI-led revenue grew by 21% year-over-year and now represents 57% of total revenue, while digital operations, which represents 43% of the business, grew by 4% year-over-year [5][15] - The Insurance segment grew by 7% year-over-year, while the healthcare and life sciences segment reported a growth of 26% year-over-year [6][18] - The banking, capital markets, and diversified industries segment grew by 11% year-over-year, and the international growth markets segment grew by 8% year-over-year [9][20] Market Data and Key Metrics Changes - The healthcare and life sciences segment was the fastest-growing, driven by strong demand for data and AI solutions [7][19] - International markets are seen as important drivers of long-term growth, with several new deals won across various sectors [9][20] Company Strategy and Development Direction - The company is focused on embedding AI into workflows and expanding its partner ecosystem, with a strong emphasis on developing AI talent at scale [10][13] - The strategy includes deepening data and AI capabilities and modernizing operations using an integrated approach [10][12] - The company anticipates revenue for 2026 to be in the range of $2.275 billion to $2.315 billion, representing 9%-11% organic growth [15][23] Management's Comments on Operating Environment and Future Outlook - Management noted that there is a greater propensity from enterprise clients to adopt and leverage AI, indicating a shift from cost-cutting to growth initiatives [29][32] - The company expects strong momentum entering 2026, with high renewal rates and over 75% of revenue being recurring or annuity-like [15][25] Other Important Information - The company has a strong balance sheet with cash and investments totaling $331 million and a net cash position of $32 million [22] - A $500 million common stock repurchase program was authorized, reflecting confidence in the company's growth trajectory [24][25] Q&A Session Summary Question: About accelerated decision-making at clients - Management observed that accelerated decision-making is due to a greater propensity from enterprise clients to adopt AI, aligning with EXL's capabilities [28][29] Question: Revenue impact when clients implement AI - Management highlighted that the penetration rate of outsourcing operations remains low, indicating significant growth opportunities as clients adopt AI [31][32] Question: 2026 growth guidance reconciliation - Management clarified that the 2026 guidance is on an organic basis, similar to the previous year, and noted stronger visibility and backlog compared to last year [36][38] Question: Growth cadence throughout 2026 - Management indicated better visibility for the first half of 2026 compared to the second half, expecting a strong start to the year [45][46] Question: Competitive landscape in AI - Management acknowledged new competitors entering the AI space but emphasized EXL's integrated approach and domain expertise as key differentiators [80][82] Question: Update on acquisition priorities - Management expressed interest in pursuing acquisitions to enhance capabilities around data and AI, with a focus on geographic diversification [84][85]