ExlService Holdings, Inc. (NASDAQ: EXLS), a leading data analytics
and digital operations and solutions company, today announced its
financial results for the quarter ended March 31, 2024.
Rohit Kapoor, Chairman and Chief Executive
Officer, said, “We are pleased with our first quarter results and
solid start to the year, as we delivered revenue growth and
adjusted diluted EPS growth of 9%. Our data and AI-led strategy,
combined with our deep domain expertise, continues to resonate with
our clients and fuel our above industry average growth rates. The
consistent execution of our differentiated strategy has enabled us
to continue our momentum into 2024.”
Maurizio Nicolelli, Chief Financial Officer,
said, “While we remain cautious on the macro-economic environment,
we are raising the bottom of our range for both revenue and EPS
based on our solid momentum in the first quarter and current
visibility for the remainder of the year. We now expect revenue to
be in the range of $1.79 billion to $1.82 billion, up from our
prior guidance of $1.78 billion to $1.82 billion. This represents
10% to 12% year-over-year growth on both a reported and constant
currency basis. We now expect our adjusted diluted earnings per
share for 2024 to be in the range of $1.58 to $1.62, up from our
prior guidance of $1.56 to $1.62, representing growth of 10% to 13%
over the prior year.”
______________________________________________________________
- Prior period information has been
adjusted to reflect the 5-for-1 forward stock split of our common
stock effected in August 2023. See Note 19 – Capital Structure to
consolidated financial statements included in our Annual Report on
Form 10-K for the year ended December 31, 2023, for further
details.
- Reconciliations of adjusted
(non-GAAP) financial measures to the most directly comparable GAAP
measures, where applicable, are included at the end of this release
under “Reconciliation of Adjusted Financial Measures to GAAP
Measures.” These non-GAAP measures, including adjusted diluted EPS
and constant currency measures, are not measures of financial
performance prepared in accordance with GAAP.
Financial Highlights: First Quarter
2024
- Revenue for the
quarter ended March 31, 2024, increased to $436.5 million compared
to $400.6 million for the first quarter of 2023, an increase of
9.0% on a reported basis and 8.8% on a constant currency basis.
Revenue increased by 5.4% sequentially on a reported basis and
constant currency basis, from the fourth quarter of 2023.
|
|
Revenue |
|
Gross Margin |
|
|
Three months ended |
|
Three months ended |
Reportable Segments |
|
March 31, 2024 |
|
March 31, 2023 |
|
March 31, 2024 |
|
March 31, 2023 |
|
|
(dollars in millions) |
|
|
|
|
Insurance |
|
$ |
145.1 |
|
$ |
125.9 |
|
36.4 |
% |
|
34.6 |
% |
Healthcare |
|
|
26.3 |
|
|
26.7 |
|
34.0 |
% |
|
29.6 |
% |
Emerging Business |
|
|
74.4 |
|
|
66.2 |
|
44.9 |
% |
|
45.6 |
% |
Analytics |
|
|
190.7 |
|
|
181.8 |
|
35.6 |
% |
|
37.1 |
% |
Total Revenue,
net |
|
$ |
436.5 |
|
$ |
400.6 |
|
37.4 |
% |
|
37.2 |
% |
|
- Operating income margin for the
quarter ended March 31, 2024 was 14.1%, compared to 14.8% for the
first quarter of 2023 and 13.1% for the fourth quarter of 2023.
Adjusted operating income margin for the quarter ended March 31,
2024 was 18.9%, compared to 19.4% for the first quarter of 2023 and
17.8% for the fourth quarter of 2023.
- Diluted earnings per share for the
quarter ended March 31, 2024 was $0.29, compared to $0.30 for the
first quarter of 2023 and $0.24 for the fourth quarter of 2023.
Adjusted diluted earnings per share for the quarter ended March 31,
2024 was $0.38, compared to $0.35, both for the first quarter of
2023 and the fourth quarter of 2023.
Business Highlights: First Quarter
2024
- Won 16 new clients in the first
quarter of 2024, with 6 clients in the digital operations and
solutions business and 10 clients in analytics.
- EXL named top performer and Leader
among the 26 leading analytics and AI service providers in Everest
Group’s Analytics and Artificial Intelligence (AI) Services
Specialists PEAK Matrix® Assessment 2024.
- Held an AI in Action virtual
customer symposium attended by over 2,300 clients, prospects,
analysts, advisors and partners. The event highlighted the use of
enterprise data to bridge the gap between strategy and operations
and make AI real. A replay can be found here.
- Rohit Kapoor named chairman, Vikram
Pandit transitioned to lead director; Thomas Bartlett appointed to
EXL’s board of directors and will serve on the board’s audit
committee and nominating and governance committee.
- Vikas Bhalla and Vivek Jetley named
president of EXL in addition to their current roles of head of
insurance and head of analytics, respectively.
- EXL entered into an accelerated
share repurchase agreement to repurchase $125 million of the
company’s common stock as part of its current $500 million stock
repurchase program.
2024 Guidance
Based on current visibility, and a U.S. dollar
to Indian rupee exchange rate of 83.50, U.K. pound sterling to U.S.
dollar exchange rate of 1.27, U.S. dollar to the Philippine peso
exchange rate of 57.50 and all other currencies at current exchange
rates, we are providing the following guidance for the full year
2024:
- Revenue of $1.79 billion to $1.82
billion, representing an increase of 10% to 12% on both a reported
and constant currency basis from 2023.
- Adjusted diluted earnings per share
of $1.58 to $1.62, representing an increase of 10% to 13% from
2023.
Conference Call
ExlService Holdings, Inc. will host a conference
call on Thursday, May 2, 2024 at 10:00 A.M. ET to discuss the
Company’s quarterly operating and financial results. The conference
call will be available live via the internet by accessing the
investor relations section of EXL’s website at ir.exlservice.com,
where an accompanying investor-friendly spreadsheet of historical
operating and financial data can also be accessed. Please access
the website at least fifteen minutes prior to the call to register,
download and install any necessary audio software.
Please note that there is a new system to access
the live call-in order to ask questions. To join the live call,
please register here. A dial-in and unique PIN will be provided to
join the call. For those who cannot access the live broadcast, a
replay will be available on the EXL website ir.exlservice.com for a
period of twelve months.
About ExlService Holdings,
Inc.EXL (NASDAQ: EXLS) is a leading data analytics and
digital operations and solutions company. We partner with clients
using a data and AI-led approach to reinvent business models, drive
better business outcomes and unlock growth with speed. EXL
harnesses the power of data, analytics, AI, and deep industry
knowledge to transform operations for the world’s leading
corporations in industries including insurance, healthcare, banking
and financial services, media and retail, among others. EXL was
founded in 1999 with the core values of innovation, collaboration,
excellence, integrity and respect. We are headquartered in New York
and have more than 55,000 employees spanning six continents. For
more information, visit www.exlservice.com.
Cautionary Statement Regarding
Forward-Looking Statements This press release contains
forward-looking statements within the meaning of the United States
Private Securities Litigation Reform Act of 1995. You should not
place undue reliance on those statements because they are subject
to numerous uncertainties and factors relating to EXL's operations
and business environment, all of which are difficult to predict and
many of which are beyond EXL’s control. Forward-looking statements
include information concerning EXL’s possible or assumed future
results of operations, including descriptions of its business
strategy. These statements may include words such as “may,” “will,”
“should,” “believe,” “expect,” “anticipate,” “intend,” “plan,”
“estimate” or similar expressions. These statements are based on
assumptions that we have made in light of management's experience
in the industry as well as its perceptions of historical trends,
current conditions, expected future developments and other factors
it believes are appropriate under the circumstances. You should
understand that these statements are not guarantees of performance
or results. They involve known and unknown risks, uncertainties and
assumptions. Although EXL believes that these forward-looking
statements are based on reasonable assumptions, you should be aware
that many factors could affect EXL’s actual financial results or
results of operations and could cause actual results to differ
materially from those in the forward-looking statements. These
factors, which include our ability to maintain and grow client
demand, our ability to hire and retain sufficiently trained
employees, and our ability to accurately estimate and/or manage
costs, rising interest rates, rising inflation and recessionary
economic trends, are discussed in more detail in EXL’s filings with
the Securities and Exchange Commission, including EXL’s Annual
Report on Form 10-K. You should keep in mind that any
forward-looking statement made herein, or elsewhere, speaks only as
of the date on which it is made. New risks and uncertainties come
up from time to time, and it is impossible to predict these events
or how they may affect EXL. EXL has no obligation to update any
forward-looking statements after the date hereof, except as
required by applicable law.
|
EXLSERVICE HOLDINGS, INC.CONSOLIDATED
STATEMENTS OF INCOME (UNAUDITED)(In thousands,
except per share amount and share count) |
|
|
Three months ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
Revenues, net |
$ |
436,507 |
|
|
$ |
400,643 |
|
Cost of
revenues(1) |
|
273,424 |
|
|
|
251,469 |
|
Gross profit(1) |
|
163,083 |
|
|
|
149,174 |
|
Operating expenses: |
|
|
|
General and administrative expenses |
|
53,243 |
|
|
|
46,746 |
|
Selling and marketing expenses |
|
35,970 |
|
|
|
29,493 |
|
Depreciation and amortization expense |
|
12,346 |
|
|
|
13,487 |
|
Total
operating expenses |
|
101,559 |
|
|
|
89,726 |
|
Income from operations |
|
61,524 |
|
|
|
59,448 |
|
Foreign
exchange gain, net |
|
359 |
|
|
|
105 |
|
Interest
expense |
|
(3,291 |
) |
|
|
(3,385 |
) |
Other
income, net |
|
3,952 |
|
|
|
3,155 |
|
Income before income tax expense and earnings from equity
affiliates |
|
62,544 |
|
|
|
59,323 |
|
Income
tax expense |
|
13,753 |
|
|
|
8,058 |
|
Income before earnings from equity affiliates |
|
48,791 |
|
|
|
51,265 |
|
Gain/(loss) from equity-method investment |
|
(28 |
) |
|
|
66 |
|
Net income attributable to ExlService Holdings, Inc.
stockholders |
$ |
48,763 |
|
|
$ |
51,331 |
|
Earnings
per share attributable to ExlService Holdings, Inc.
stockholders: |
|
|
|
Basic |
$ |
0.30 |
|
|
$ |
0.31 |
|
Diluted |
$ |
0.29 |
|
|
$ |
0.30 |
|
Weighted-average number of shares used in computing earnings per
share attributable to ExlService Holdings Inc. stockholders: |
|
|
|
Basic |
|
165,082,387 |
|
|
|
167,197,820 |
|
Diluted |
|
166,726,853 |
|
|
|
169,657,400 |
|
(1) Exclusive of
depreciation and amortization expense. |
|
|
EXLSERVICE HOLDINGS, INC.CONSOLIDATED
BALANCE SHEETS (UNAUDITED)(In thousands, except
per share amount and share count) |
|
|
|
As of |
|
|
March 31, 2024 |
|
December 31, 2023 |
|
|
|
|
|
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
108,565 |
|
|
$ |
136,953 |
|
Short-term investments |
|
|
137,585 |
|
|
|
153,881 |
|
Restricted cash |
|
|
4,291 |
|
|
|
4,062 |
|
Accounts receivable, net |
|
|
335,523 |
|
|
|
308,108 |
|
Other current assets |
|
|
78,753 |
|
|
|
76,669 |
|
Total current assets |
|
|
664,717 |
|
|
|
679,673 |
|
Property
and equipment, net |
|
|
101,622 |
|
|
|
100,373 |
|
Operating lease right-of-use assets |
|
|
66,799 |
|
|
|
64,856 |
|
Restricted cash |
|
|
4,376 |
|
|
|
4,386 |
|
Deferred
tax assets, net |
|
|
91,840 |
|
|
|
82,927 |
|
Goodwill |
|
|
405,574 |
|
|
|
405,639 |
|
Other
intangible assets, net |
|
|
47,080 |
|
|
|
50,164 |
|
Long-term investments |
|
|
4,404 |
|
|
|
4,430 |
|
Other
assets |
|
|
52,979 |
|
|
|
49,524 |
|
Total assets |
|
$ |
1,439,391 |
|
|
$ |
1,441,972 |
|
Liabilities and stockholders’ equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
3,093 |
|
|
$ |
5,055 |
|
Current portion of long-term borrowings |
|
|
65,000 |
|
|
|
65,000 |
|
Deferred revenue |
|
|
16,939 |
|
|
|
12,318 |
|
Accrued employee costs |
|
|
50,970 |
|
|
|
117,137 |
|
Accrued expenses and other current liabilities |
|
|
107,059 |
|
|
|
112,900 |
|
Current portion of operating lease liabilities |
|
|
13,486 |
|
|
|
12,780 |
|
Income taxes payable, net |
|
|
4,894 |
|
|
|
1,213 |
|
Total current liabilities |
|
|
261,441 |
|
|
|
326,403 |
|
Long-term borrowings, less current portion |
|
|
280,000 |
|
|
|
135,000 |
|
Operating lease liabilities, less current portion |
|
|
59,876 |
|
|
|
58,175 |
|
Deferred
tax liabilities, net |
|
|
1,435 |
|
|
|
1,495 |
|
Other
non-current liabilities |
|
|
33,384 |
|
|
|
31,462 |
|
Total liabilities |
|
|
636,136 |
|
|
|
552,535 |
|
Commitments and contingencies |
|
|
|
|
ExlService Holdings, Inc. Stockholders’
equity: |
|
|
|
|
Preferred stock, $0.001 par value; 15,000,000 shares authorized,
none issued |
|
|
— |
|
|
|
— |
|
Common stock, $0.001 par value; 400,000,000 shares authorized,
204,734,988 shares issued and 162,425,610 shares outstanding as of
March 31, 2024 and 203,410,038 shares issued and 165,277,880 shares
outstanding as of December 31, 2023 |
|
|
204 |
|
|
|
203 |
|
Additional paid-in capital |
|
|
502,827 |
|
|
|
508,028 |
|
Retained earnings |
|
|
1,132,426 |
|
|
|
1,083,663 |
|
Accumulated other comprehensive loss |
|
|
(130,436 |
) |
|
|
(127,040 |
) |
Total including shares held in treasury |
|
|
1,505,021 |
|
|
|
1,464,854 |
|
Less:
42,309,378 shares as of March 31, 2024 and 38,132,158 shares as of
December 31, 2023, held in treasury, at cost |
|
|
(701,766 |
) |
|
|
(575,417 |
) |
Total Stockholders’ equity |
|
|
803,255 |
|
|
|
889,437 |
|
Total liabilities and
stockholders’ equity |
|
$ |
1,439,391 |
|
|
$ |
1,441,972 |
|
|
EXLSERVICE HOLDINGS, INC.Reconciliation of
Adjusted Financial Measures to GAAP Measures |
In addition to its reported operating results in
accordance with U.S. generally accepted accounting principles
(GAAP), EXL has included in this release certain financial measures
that are considered non-GAAP financial measures, including the
following:
|
(i) |
|
Adjusted
operating income and adjusted operating income margin; |
|
(ii) |
|
Adjusted EBITDA and adjusted EBITDA margin; |
|
(iii) |
|
Adjusted net income and adjusted diluted earnings per share;
and |
|
(iv) |
|
Revenue growth on constant currency basis. |
|
These non-GAAP financial measures are not based
on any comprehensive set of accounting rules or principles, should
not be considered a substitute for, or superior to, financial
measures calculated in accordance with GAAP, and may be different
from non-GAAP financial measures used by other companies.
Accordingly, the financial results calculated in accordance with
GAAP and reconciliations from those financial statements should be
carefully evaluated. EXL believes that providing these non-GAAP
financial measures may help investors better understand EXL’s
underlying financial performance. Management also believes that
these non-GAAP financial measures, when read in conjunction with
EXL’s reported results, can provide useful supplemental information
for investors analyzing period-to-period comparisons of the
Company’s results and comparisons of the Company’s results with the
results of other companies. Additionally, management considers some
of these non-GAAP financial measures to determine variable
compensation of its employees. The Company believes that it is
unreasonably difficult to provide its earnings per share financial
guidance in accordance with GAAP, or a qualitative reconciliation
thereof, for a number of reasons, including, without limitation,
the Company’s inability to predict its future stock-based
compensation expense under ASC Topic 718, the amortization of
intangibles associated with future acquisitions and the currency
fluctuations and associated tax effects. As such, the Company
presents guidance with respect to adjusted diluted earnings per
share. The Company also incurs significant non-cash charges for
depreciation that may not be indicative of the Company’s ability to
generate cash flow.
EXL non-GAAP financial measures exclude, where
applicable, stock-based compensation expense, amortization of
acquisition-related intangible assets, provision for litigation
matters, effects of termination of leases, certain defined social
security contributions, allowance for certain material expected
credit losses, other acquisition-related expenses or benefits and
effect of any non-recurring tax adjustments. Acquisition-related
expenses or benefits include, changes in the fair value of
contingent consideration, external deal costs, integration
expenses, direct and incremental travel costs and non-recurring
benefits or losses. Our adjusted net income and adjusted diluted
EPS also excludes the effects of income tax on the above pre-tax
items, as applicable. The effects of income tax of each item is
calculated by applying the statutory rate of the local tax
regulations in the jurisdiction in which the item was incurred.
A limitation of using non-GAAP financial
measures versus financial measures calculated in accordance with
GAAP is that non-GAAP financial measures do not reflect all of the
amounts associated with our operating results as determined in
accordance with GAAP and exclude costs that are recurring, namely
stock-based compensation and amortization of acquisition-related
intangible assets. EXL compensates for these limitations by
providing specific information regarding the GAAP amounts excluded
from non-GAAP financial measures to allow investors to evaluate
such non-GAAP financial measures.
EXL’s primary exchange rate exposure is with the
Indian rupee, the U.K. pound sterling and the Philippine peso. The
average exchange rate of the U.S. dollar against the Indian rupee
increased from 82.25 during the quarter ended March 31, 2023 to
83.12 during the quarter ended March 31, 2024, representing a
depreciation of 1.1% against the U.S. dollar. The average exchange
rate of the U.S. dollar against the Philippine peso increased from
54.78 during the quarter ended March 31, 2023 to 56.24 during the
quarter ended March 31, 2024, representing a depreciation of 2.7%
against the U.S. dollar. The average exchange rate of the U.K.
pound sterling against the U.S. dollar increased from 1.23 during
the quarter ended March 31, 2023 to 1.27 during the quarter ended
March 31, 2024, representing an appreciation of 3.2% against the
U.S. dollar.
The following table shows the reconciliation of
these non-GAAP financial measures for the three months ended March
31, 2024 and March 31, 2023, and the three months ended December
31, 2023:
|
Reconciliation of Adjusted Operating Income and Adjusted
EBITDA (Amounts in thousands) |
|
|
|
Three months ended |
|
|
March 31, |
|
December 31, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2023 |
|
Net Income (GAAP) |
|
$ |
48,763 |
|
|
$ |
51,331 |
|
|
$ |
40,283 |
|
add: Income tax expense |
|
|
13,753 |
|
|
|
8,058 |
|
|
|
15,763 |
|
add/(subtract): Foreign exchange gain, net, interest expense,
gain/(loss) from equity-method investment and other income/(loss),
net |
|
|
(992 |
) |
|
|
59 |
|
|
|
(1,780 |
) |
Income from operations (GAAP) |
|
$ |
61,524 |
|
|
$ |
59,448 |
|
|
$ |
54,266 |
|
add: Stock-based compensation expense |
|
|
17,852 |
|
|
|
14,407 |
|
|
|
15,452 |
|
add: Amortization of acquisition-related intangibles |
|
|
3,080 |
|
|
|
4,149 |
|
|
|
3,168 |
|
subtract: Reversal for expected credit losses (a) |
|
|
— |
|
|
|
— |
|
|
|
(264 |
) |
add/(subtract): Other expenses/(benefits) (b) |
|
|
— |
|
|
|
(89 |
) |
|
|
895 |
|
Adjusted operating income (Non-GAAP) |
|
$ |
82,456 |
|
|
$ |
77,915 |
|
|
$ |
73,517 |
|
Adjusted operating income margin as a % of Revenue (Non-GAAP) |
|
|
18.9 |
% |
|
|
19.4 |
% |
|
|
17.8 |
% |
add: Depreciation on long-lived assets |
|
|
9,266 |
|
|
|
8,589 |
|
|
|
9,130 |
|
Adjusted EBITDA (Non-GAAP) |
|
$ |
91,722 |
|
|
$ |
86,504 |
|
|
$ |
82,647 |
|
Adjusted EBITDA margin as a % of revenue (Non-GAAP) |
|
|
21.0 |
% |
|
|
21.6 |
% |
|
|
20.0 |
% |
|
(a) To exclude the effects of reversal for expected credit losses
on accounts receivable related to a customer bankruptcy event.(b)
To exclude effects of lease termination of $nil and $89 during the
three months ended March 31, 2024 and 2023 respectively, and to
exclude provision for litigation of $895 during the three months
ended December 31, 2023. |
|
|
Reconciliation of Adjusted Net Income and Adjusted Diluted
Earnings Per Share (Amounts in thousands, except per share
data) |
|
|
|
Three months ended |
|
|
March 31, |
|
December 31, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2023 |
|
Net income (GAAP) |
|
$ |
48,763 |
|
|
$ |
51,331 |
|
|
$ |
40,283 |
|
add:
Stock-based compensation expense |
|
|
17,852 |
|
|
|
14,407 |
|
|
|
15,452 |
|
add:
Amortization of acquisition-related intangibles |
|
|
3,080 |
|
|
|
4,149 |
|
|
|
3,168 |
|
subtract: Reversal for expected credit losses (a) |
|
|
— |
|
|
|
— |
|
|
|
(264 |
) |
subtract: Changes in fair value of contingent consideration |
|
|
(589 |
) |
|
|
— |
|
|
|
(600 |
) |
add/(subtract): Other expenses/(benefits) (b) |
|
|
— |
|
|
|
(89 |
) |
|
|
613 |
|
subtract: Tax impact on stock-based compensation expense (c) |
|
|
(5,358 |
) |
|
|
(9,830 |
) |
|
|
(374 |
) |
subtract: Tax impact on amortization of acquisition-related
intangibles |
|
|
(766 |
) |
|
|
(1,023 |
) |
|
|
(792 |
) |
add:
Tax impact on reversal for expected credit losses |
|
|
— |
|
|
|
— |
|
|
|
65 |
|
add:
Tax impact on changes in fair value of contingent
consideration |
|
|
151 |
|
|
|
— |
|
|
|
152 |
|
add/(subtract): Tax impact on other expenses/(benefits) |
|
|
— |
|
|
|
22 |
|
|
|
(157 |
) |
add:
Other tax expenses (d) |
|
|
— |
|
|
|
— |
|
|
|
223 |
|
Adjusted net income (Non-GAAP) |
|
$ |
63,133 |
|
|
$ |
58,967 |
|
|
$ |
57,769 |
|
Adjusted diluted earnings per share
(Non-GAAP) |
|
$ |
0.38 |
|
|
$ |
0.35 |
|
|
$ |
0.35 |
|
|
(a) To exclude the effects of reversal for expected credit losses
on accounts receivable related to a customer bankruptcy event.(b)
To exclude effects of lease termination of $nil and $89 during the
three months ended March 31, 2024 and 2023 respectively, and to
exclude provision for litigation matters of $613 during the three
months ended December 31, 2023.(c) Tax impact includes $7,523 and
$12,520 during the three months ended March 31, 2024 and 2023
respectively, and $1,883 during the three months ended December 31,
2023, related to discrete benefit recognized in income tax expense
in accordance with ASU No. 2016-09, Compensation - Stock
Compensation.(d) To exclude other tax expenses related to certain
deferred tax assets and liabilities. |
|
Contacts:
Investor RelationsJohn KristoffVice President,
Investor Relations+1 212 209 4613ir@exlservice.com
MediaKeith LittleSenior Manager, Media
Relations+1 703 598 0980 media.relations@exlservice.com
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