EXLS

Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St's investing ideas for FREE. ExlService Holdings has delivered a 54.3% gain over the past 5 years, yet its current checks suggest the stock is not a clear bargain and recent shorter term returns have been more mixed. With the valuation indicators leaning cautious while the business continues to attract attention, investors are weighing how much of the story is already in the price. The 54.3% return over 5 years points to meaningful long term value creation for shareholders. The new US$1b senior secured credit facility can support mergers and acquisitions that may lift earnings over time, while the greater reliance on debt can add financial risk if conditions or execution do not go as planned. With a low value score and only 2 of 6 checks screening as attractive, ExlService Holdings currently leans expensive rather than a clear value opportunity. The issue now is whether ExlService Holdings' current share price already reflects its long term prospects or still leaves room for a reasonable margin of safety. Find out why ExlService Holdings' -14.5% return over the last year is lagging behind its peers. The P/E ratio is a useful cross check for ExlService Holdings because earnings remain a key focus for how investors value the stock. ExlService Holdings currently trades on a P/E of about 22.5x, which is slightly above the Professional Services industry average of around 21.5x and also above the peer group average of roughly 14.7x. The fair P/E ratio implied by the model is about 21.7x, which is only a small step below the current market multiple. That suggests the market is pricing ExlService Holdings broadly in line with what would be expected once its growth profile, margins, size and risks are taken into account. Despite the recent US$1b credit facility that could support further acquisitions, the current P/E already reflects a full view of the company rather than a clear discount. On the P/E multiple, ExlService Holdings looks roughly fairly valued compared with both its own fundamentals and the wider Professional Services industry. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for ExlService Holdings aim to close the loop on the valuation puzzle by spelling out which future paths for growth, margins and earnings would need to hold for the stock to be worth materially more or less than today’s price. These narratives sit on Simply Wall St’s Community page, and each one links its number to a specific view on how ExlService Holdings' growth, profitability and risks could evolve, which you can revisit as new information emerges. One of the top community narratives on ExlService Holdings: 23% undervalued Read one of the top narratives on ExlService Holdings Do you think there's more to the story for ExlService Holdings? Head over to our Community to see what others are saying! For ExlService Holdings, the valuation picture now looks broadly aligned with peers on earnings, rather than clearly cheap or stretched. The low value score hints that many traditional checks are not flagging an obvious bargain, even if the P/E sits close to what the market might pay for similar quality and risk. From here, the key question is whether ExlService Holdings can deliver on its earnings ambitions without taking on more risk than investors are currently assuming, especially as it leans more on debt funded expansion. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include EXLS. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St's investing ideas for FREE. ExlService Holdings (EXLS) has drawn fresh attention after reporting its second quarter 2026 results, raising full year guidance, and announcing an AI focused acquisition that together reshaped how investors are viewing the stock. See our latest analysis for ExlService Holdings. The recent earnings beat, higher 2026 guidance and iMerit acquisition have coincided with a sharp shift in sentiment toward ExlService Holdings, with a 30 day share price return of 33.06% contrasting with a year to date share price decline of 16.50% and a 1 year total shareholder return decline of 20.77%. The 5 year total shareholder return of 48.83% shows the longer term picture has been more resilient. If this AI story has your attention, it could be a useful moment to widen the search and review the 65 profitable AI stocks that aren't just burning cash. After a 33% jump in 30 days, yet a share price that is still down sharply over 12 months, ExlService Holdings sits at an awkward crossroads. The question for investors is whether the new AI narrative and higher guidance still leave enough potential upside to justify the risk. At a last close of $34.41 versus a fair value narrative of $46.00, the most followed view suggests ExlService Holdings may be trading at a meaningful discount, with that gap linked directly to its AI and data focused business mix. Read the complete narrative. Want to see how this AI heavy revenue mix translates into future sales, margins and valuation multiples? The narrative leans on compounding growth assumptions and a richer earnings profile that are worth reading in full. Result: Fair Value of $46 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, this upbeat ExlService Holdings narrative still hinges on AI talent keeping pace with demand and on large transformation deals actually converting from today’s pipeline. Find out about the key risks to this ExlService Holdings narrative. If the mixed sentiment around ExlService Holdings has you on the fence, this is a good time to look through the numbers yourself and act quickly. To understand what investors see as the upside potential, check the 4 key rewards. If you are unsure about ExlService Holdings after this latest move, do not sit on the sidelines. Put that curiosity to work with a broader watchlist. Start hunting for underappreciated quality by scanning the 57 high quality undervalued stocks that might fit your return and risk preferences. Strengthen your focus on resilience by checking the solid balance sheet and fundamentals stocks screener (46 results) that can help anchor a more defensive core in your portfolio. Spot potential early standouts by reviewing the screener containing 20 high quality undiscovered gems before other investors start paying attention. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include EXLS. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

This article first appeared on GuruFocus. Release Date: July 29, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. ExlService Holdings Inc (NASDAQ:EXLS) reported strong second quarter results with revenues of $595 million, up 16% year over year, and adjusted earnings per share increased by 22%. The company experienced broad-based growth across all segments, with data and AI-led services and solutions representing 61% of revenue. Insurance and healthcare segments showed significant growth, with insurance growing 15% and healthcare growing 22% year over year. The acquisition of iMerit is expected to enhance EXLS's AI capabilities and expand its addressable market in high-growth AI tech sectors. EXLS raised its full-year revenue guidance to a range of $2.39 billion to $2.415 billion, representing 14% to 16% growth, and increased its adjusted diluted EPS guidance to a range of $2.25 to $2.29. Digital operations revenue declined by approximately 1.5% year over year, reflecting a shift in business mix as AI is embedded into operations. SG&A expenses increased by 170 basis points year over year, primarily due to higher investments in front-end sales and support. The macroeconomic environment remains unsettled, posing potential risks to business growth. The integration of the iMerit acquisition and building new capabilities may require significant focus and resources. Despite strong performance, the guidance implies a deceleration in growth in the second half of the year, which may concern investors. Warning! GuruFocus has detected 7 Warning Signs with MGPI. Is EXLS fairly valued? Test your thesis with our free DCF calculator. Q: Can you elaborate on the strength and durability of the data and AI-led business, which showed over 30% growth in the quarter? How much of this growth is from new AI-native programs versus traditional operations? A: Rohit Kapoor, CEO: The growth in our data and AI-led business is due to strong performance across all service lines, including payment integrity and data management. It's a mix of stable business in payment integrity and analytics, along with rapid growth in newer areas like data management and AI services. We expect this area to remain a high-growth driver, supported by our strategic client engagements. Q: How are you approaching token optimization, and is this an area where you're developing proprietary IP? A: Rohit Kapoor, CEO: Token economics is crucial for AI modernization, and we are leveraging our deep industry knowledge to help clients reduce costs associated with token consumption. We are building capabilities to provide advanced insights into token usage, which will be a significant area of spend for clients. This positions us well to deliver value in this complex and expanding area. Q: Can you discuss the dynamics in international growth markets and the potential for continued growth? A: Rohit Kapoor, CEO: International growth markets present a significant opportunity as AI adoption is keeping pace with the U.S. We are investing in talent and solutions to better serve these markets, which remain a strategic focus area. We see untapped demand and potential for significant revenue growth in these regions. Q: Are you seeing changes in client conversations regarding outsourcing due to AI complexity and ROI challenges? A: Rohit Kapoor, CEO: Clients are moving from pilot phases to production deployment of AI, focusing on building foundational AI capabilities. The effort required for AI enablement is substantial, presenting a significant opportunity for us. We are well-positioned to assist clients with our capabilities and expertise in navigating this complex transition. Q: How are you balancing margin improvements with investments in growth, particularly in data and AI capabilities? A: Maurizio Nicolelli, CFO: We aim to drive gross margin improvements by embedding more data and AI into client workflows. While we will invest in front-end sales and AI capabilities to drive top-line growth, our overall margin for 2026 is expected to be comparable to 2025. We continue to focus on long-term growth while managing short-term margin fluctuations. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in ExlService Holdings, Inc.? Here are five stocks we like better. Strong Q2 performance: ExlService reported revenue of $594.8 million, up 15.6% year over year, while adjusted diluted EPS increased 22.3% to $0.59. Data and AI-led revenue rose 30% and represented 61% of total revenue. AI expansion and iMerit acquisition: The company said clients are moving AI projects into production and highlighted opportunities in agentic AI and token optimization. Its acquisition of iMerit is expected to close July 31 and contribute $28 million to $32 million in 2026 revenue. 2026 outlook raised: ExlService increased its full-year revenue guidance to $2.39 billion-$2.415 billion and adjusted EPS guidance to $2.25-$2.29. Management plans increased investment in sales, data management and AI capabilities, which is expected to pressure second-half operating margins. ExlService (NASDAQ:EXLS) reported second-quarter 2026 revenue of $594.8 million, up 15.6% year over year on a reported basis and 15.9% on a constant-currency basis, as growth accelerated across each of its operating segments. Adjusted diluted earnings per share rose 22.3% from a year earlier to $0.59. Chairman and Chief Executive Officer Rohit Kapoor said the company entered 2026 with positive momentum that strengthened through the first half, supported by enterprise demand for data, AI engineering and AI-enabled operations. He said clients are increasingly moving from AI proof-of-concept projects toward production deployments, while also investing in the data, governance, security and infrastructure needed to support AI across their organizations. → This Tiny AI Supplier Could Be More Important Than the Chipmakers “The effort that is required to enable AI for any enterprise is massive,” Kapoor said during the earnings call. “Clients are really struggling with this change, and we are in a great position to actually help them with this.” Data and AI-led services and solutions accounted for 61% of ExlService’s revenue in the quarter and increased 30% year over year. Kapoor noted that growth in the category has accelerated for four consecutive quarters, from 18% in the third quarter of 2025 to 30% in the latest period. → Refiner Stocks Are Near Record Highs—Can Iran-Driven Margins Keep Them There? The company said its reported digital operations revenue declined about 1.5% year over year, but management characterized that decline as a planned consequence of changing revenue mix. As AI becomes embedded into operations engagements, ExlService classifies that work as data and AI-led revenue because it is more intellectual-property-led and higher value, Kapoor said. ExlService said total operations revenue, which includes both digital operations and AI-led operations, rose 10% year over year. Kapoor said the company is introducing agentic AI into client processes such as insurance claims and underwriting, combining deterministic models designed to follow policies and regulations with probabilistic models used for judgment and decision-making. → Innovative ETF Strategies That Are Paying Off This Summer The work requires substantial customization by client, business line and geography, he said, even where the company can reuse common tools and components. Kapoor said ExlService’s existing operational relationships, workflow knowledge and familiarity with clients’ data give it an advantage in deploying those solutions. The company also highlighted token optimization as an emerging opportunity. Kapoor said ExlService has reduced token consumption for certain clients by as much as 80% through workflow-specific design and engineering, helping lower the costs associated with deploying AI models at scale. Insurance: Revenue was $197.8 million, up 14.9% year over year, driven by expansion and higher volumes in existing client relationships. Healthcare and life sciences: Revenue was $158 million, up 22% year over year, supported by Payment Integrity services, client expansions and new wins. Banking, capital markets and diversified industries: Revenue was $133.9 million, up 10.7% year over year, reflecting new client wins and expanded existing relationships. International growth markets: Revenue was $105.1 million, up 16.3% year over year and 8.9% sequentially, aided by client ramp-ups, higher volumes and new wins. Kapoor said international markets represent a major long-term opportunity. During the quarter, ExlService appointed Bhupender Singh as president and head of international growth markets. Kapoor said the company has historically had a limited international presence and is investing in talent, solutions and go-to-market capabilities across EMEA and APAC. He also said cross-selling services to international operations of U.S.-based clients is an area where ExlService needs to improve. Singh is expected to focus on that opportunity, according to Kapoor. ExlService announced the acquisition of iMerit, a provider of AI model training, evaluation and reinforcement learning services, which it expects to close on July 31. Kapoor described the transaction as a “transformational pivot” that will add relationships with foundation-model companies, expand the company’s AI capabilities and extend its addressable market into AI technology sectors. Management said iMerit’s revenue is expected to be concentrated primarily in diversified industries, including work with frontier and foundational model companies, with healthcare and life sciences also representing a meaningful area. The acquisition is not expected to materially affect international growth markets. ExlService expects iMerit to contribute approximately $28 million to $32 million of revenue over the final five months of 2026. The acquisition is expected to have a marginally dilutive impact of $0.01 on adjusted EPS for the year. The company raised its full-year 2026 revenue outlook to $2.39 billion to $2.415 billion, representing reported growth of 14% to 16%. The forecast implies organic constant-currency growth of 13% to 14% and includes the anticipated iMerit contribution. At the midpoint, the updated revenue range is $88 million above ExlService’s prior guidance. ExlService also increased its adjusted diluted EPS outlook to $2.25 to $2.29, from prior guidance of $2.18 to $2.23. The new range represents projected year-over-year growth of approximately 16% to 18%. Chief Financial Officer Maurizio Nicolelli said the company plans to increase investment during the second half in front-end sales, data management, AI capabilities and solutions. As a result, adjusted operating margin is expected to be lower in the second half than in the first half, though full-year margin is expected to be comparable with 2025. For the first half, ExlService generated $1.17 billion in revenue, up 14.7% year over year, while adjusted operating margin increased 20 basis points to 20.1%. The company reported $284 million in cash and short- and long-term investments at June 30, against $381 million in revolver debt. During the first half, ExlService repurchased 5.8 million shares for $179 million at an average price of $30.90 per share. Nicolelli said the company expects to continue repurchases during the second half, though likely at a slower pace than in the first half. ExlService Holdings, Inc (NASDAQ: EXLS) is a global operations management and analytics company that partners with clients in insurance, healthcare, banking, and financial services to drive digital transformation and operational excellence. The firm delivers analytics-driven solutions and business process outsourcing services, including claims adjudication, finance and accounting, data management, and customer service support. ExlService combines domain expertise with advanced analytics, artificial intelligence, and automation technologies to help organizations optimize processes, enhance customer experiences, and manage risk. Founded in 1999 and headquartered in New York City, ExlService has grown through a mix of organic expansion and strategic acquisitions, earning recognition for its data analytics capabilities and industry-specific knowledge. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "ExlService Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

ExlService Holdings (EXLS) came out with quarterly earnings of $0.59 per share, beating the Zacks Consensus Estimate of $0.55 per share. This compares to earnings of $0.49 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +7.27%. A quarter ago, it was expected that this provider of outsourcing services would post earnings of $0.53 per share when it actually produced earnings of $0.58, delivering a surprise of +9.43%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. ExlService Holdings, which belongs to the Zacks Computers - IT Services industry, posted revenues of $594.76 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 3.59%. This compares to year-ago revenues of $514.46 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. ExlService Holdings shares have lost about 32.7% since the beginning of the year versus the S&P 500's gain of 8.3%. While ExlService Holdings has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for ExlService Holdings was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.56 on $584.61 million in revenues for the coming quarter and $2.24 on $2.32 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Computers - IT Services is currently in the top 34% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Amdocs (DOX), another stock in the same industry, has yet to report results for the quarter ended June 2026. This provider of computer systems integration is expected to post quarterly earnings of $1.84 per share in its upcoming report, which represents a year-over-year change of +7%. The consensus EPS estimate for the quarter has been revised 0.2% lower over the last 30 days to the current level. Amdocs' revenues are expected to be $1.18 billion, up 2.7% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ExlService Holdings, Inc. (EXLS) : Free Stock Analysis Report Amdocs Limited (DOX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

2026 Second Quarter Revenue of $594.8 Million, up 15.6% year-over-year Q2 Diluted EPS (GAAP) of $0.42, up 4.9% from $0.40 in Q2 of 2025 Q2 Adjusted Diluted EPS (Non-GAAP) (1) of $0.59, up 22.3% from $0.49 in Q2 of 2025 NEW YORK, July 28, 2026 (GLOBE NEWSWIRE) -- ExlService Holdings, Inc. (NASDAQ: EXLS), a global data and AI company, today announced its financial results for the quarter ended June 30, 2026. Chairman and Chief Executive Officer Rohit Kapoor said, “We entered 2026 with strong momentum that accelerated through the first half, delivering second quarter revenue growth of 16% year-on-year and adjusted diluted EPS of 22% year-on-year. Our sustained double-digit growth reflects continued execution of our data and AI strategy and our differentiated position which helps clients effectively adopt AI across the enterprise. We have very good visibility into the balance of the year and look forward to a solid finish to 2026.” Chief Financial Officer Maurizio Nicolelli said, “Our strong second quarter performance, sustained growth momentum and healthy pipeline give us the confidence to increase our organic full-year revenue growth guidance to 13% to 14%. In addition, we are also updating our guidance to include $28.0 million to $32.0 million of anticipated revenue from the iMerit acquisition, which is expected to close on July 31, 2026. We now expect full-year 2026 total revenue to be in the range of $2.390 billion to $2.415 billion, up from our prior guidance of $2.30 billion to $2.33 billion, reflecting 14% to 16% year-over-year growth on a reported basis. We now expect adjusted diluted earnings per share of $2.25 to $2.29, a 16% to 18% increase over 2025, up from our prior guidance of $2.18 to $2.23.” __________________________________________________________ Financial Highlights: Second Quarter 2026 Revenue for the quarter ended June 30, 2026, increased to $594.8 million compared to $514.5 million for the second quarter of 2025, an increase of 15.6% on a reported basis and 15.9% on a constant currency basis. Revenue increased by 4.3% sequentially on a reported basis and 4.4% on a constant currency basis, from the first quarter of 2026. Operating income margin for the quarter ended June 30, 2026 was 14.7%, compared to 15.8% for the second quarter of 2025 and 16.1% for the first quarter of 2026. Adjusted operating income margin for the quarter ended June 30, 2026 was 19.7%, compared to 19.6% for the second quarter of 2025 and 20.5% for the first quarter of 2026. Diluted earnings per share for the quarter ended June 30, 2026 was $0.42, compared to $0.40 for the second quarter of 2025 and $0.43 for the first quarter of 2026. Adjusted diluted earnings per share for the quarter ended June 30, 2026 was $0.59, compared to $0.49 for the second quarter of 2025 and $0.58 for the first quarter of 2026. Business Highlights: Second Quarter 2026 Won 17 new clients in the second quarter of 2026. EXL agreed to acquire iMerit, advancing its leadership in enterprise AI by adding foundation model expertise and technology. EXL achieved gold status with Databricks and deepened its collaboration to help enterprises build trusted data foundations for AI at scale. EXL became an OpenAI Services Partner, expanding its AI delivery capabilities through OpenAI’s enterprise capabilities. EXL joined the Claude Partner Network, further strengthening its AI ecosystem with Anthropic’s frontier AI models. EXL achieved Snowflake Premier Partner status, reinforcing its commitment to delivering strategic data and AI solutions for clients. EXL integrated with NVIDIA Transaction Foundation Model, bringing next-generation fraud detection and risk intelligence to financial institutions. EXL named a Horizon 3 - Market Leader in the HFS Horizons Data Modernization and AI, 2026 report for EXL’s ability to operationalize AI through semantic data foundations, agentic workflow orchestration, and proven enterprise-scale transformation outcomes. Appointed Bhupender Singh as president and head of international growth markets. 2026 GuidanceBased on current visibility, and a U.S. dollar to Indian rupee exchange rate of 95.0, U.K. pound sterling to U.S. dollar exchange rate of 1.33, U.S. dollar to the Philippine peso exchange rate of 61.0 and all other currencies at current exchange rates, we are providing the following guidance for the full year 2026: Revenue of $2.390 billion to $2.415 billion, representing an increase of 14% to 16% on a reported basis, which includes $28.0 million to $32.0 million of anticipated revenue from the iMerit acquisition, which is expected to close on July 31, 2026, and 13% to 14% on an organic constant currency basis from 2025. Adjusted diluted earnings per share of $2.25 to $2.29, representing an increase of 16% to 18% from 2025. Conference Call ExlService Holdings, Inc. will host a conference call on Wednesday, July 29, 2026, at 10:00 A.M. ET to discuss the Company’s second quarter 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. 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 global data and artificial intelligence ("AI") company that offers services and solutions to reinvent client business models, drive better outcomes and unlock growth with speed. EXL harnesses the power of data, AI, and deep industry knowledge to transform businesses, including the world’s leading corporations in industries including insurance, healthcare and life sciences, banking and capital markets, retail, communications and media, and energy and infrastructure, 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 over 68,000 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 the satisfaction or waiver of applicable closing conditions to the consummation of the iMerit acquisition and the expected timing thereof, our ability to successfully integrate announced or future strategic acquisitions or achieve anticipated synergies, our ability to maintain and grow client demand, risks related to the use of AI technology, impact on client demands by our selling cycles, our ability to hire and retain sufficiently trained employees, and our ability to accurately estimate and/or manage costs, and risks related to the international nature of our business and other factors 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. (1) Exclusive of depreciation and amortization expense. 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: Adjusted operating income and adjusted operating income margin; Adjusted EBITDA and adjusted EBITDA margin; Adjusted net income and adjusted diluted earnings per share; and Revenue growth on a 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, amortization of prior service cost arising from implementation of new Labor Codes in India, certain defined social security contributions, 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. EXL provides information about revenues on a constant currency basis so that the revenues may be viewed without the impact of foreign currency exchange rate fluctuations compared to prior fiscal periods, thereby facilitating period-to-period comparisons of the Company's underlying business performance. Revenue growth on a constant currency basis is calculated by restating current-period activity using the prior fiscal period's foreign currency exchange rates adjusted for hedging gains/losses in such period. Foreign currency translation impacted revenue growth, primarily driven by movements in the U.S. dollar against the Indian rupee (INR), the U.K. pound sterling (GBP), and Australian dollar (AUD). 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. The following table shows the reconciliation of these non-GAAP financial measures for the three months ended June 30, 2026 and June 30, 2025, and the three months ended March 31, 2026: (a)   To exclude acquisition-related expenses incurred for the announced acquisition of I Merit Inc. (“iMerit”) during the three months ended June 30, 2026. Contacts: Investor Relations Andrew Thut Head of Investor Relations and Capital Markets [email protected] Media Keith Little Head of Public Relations [email protected]

Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St's investing ideas for FREE. ExlService Holdings has fallen 39.7% over the past year. On the current checks the stock now screens as offering relatively good value, with the broader market multiples pointing to a price that looks roughly in line with its fundamentals rather than clearly stretched or clearly cheap. The share price decline of 39.7% over the past year raises the question of whether sentiment has moved further than the underlying value of ExlService Holdings. The agreed acquisition of iMerit Inc. for up to US$310 million may support growth in AI driven services. At the same time, the execution risk around integrating a large deal into regulated industry offerings can influence how much of that potential value ultimately reaches shareholders. With a high valuation score of 5 out of 6, the broader checks lean toward ExlService Holdings trading at an attractive level relative to its earnings, assets and cash flow profile. The issue now is whether the current price fairly reflects the risk and reward trade off after the share price reset and planned iMerit acquisition. Find out why ExlService Holdings' -39.7% return over the last year is lagging behind its peers. The P/E ratio suits ExlService Holdings because earnings are a key focus for how investors price established service businesses. ExlService Holdings trades on a P/E of about 16.6x, compared with an industry average of roughly 20.3x for Professional Services and a peer group average of about 12.9x. That puts the stock below the broader industry multiple, yet at a premium to closer peers. The fair P/E for ExlService Holdings is estimated at about 18.4x. This is the multiple you might expect given its earnings profile, sector, size and risk characteristics. With the current 16.6x level sitting only modestly below that fair mark, the stock does not screen as especially cheap or expensive on earnings, even after the planned iMerit acquisition that aims to deepen its AI offering for regulated industries. Overall, ExlService Holdings appears priced roughly in line with what its earnings profile would suggest on a P/E basis. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for ExlService Holdings bridge the gap between the current valuation puzzle and the assumptions that would need to hold on growth, margins and earnings for the stock to be worth significantly more or less than today's price. They sit on the company's Community page. Each Narrative ties a fair value estimate to a clear view of ExlService Holdings' possible catalysts and risks so you can track which version of events appears to be unfolding over time. One of the top community narratives on ExlService Holdings: 40% undervalued Read one of the top narratives on ExlService Holdings Do you think there's more to the story for ExlService Holdings? Head over to our Community to see what others are saying! For ExlService Holdings, the current market multiples suggest the stock is priced roughly in line with what its earnings profile and sector peers support, despite the sharp share price reset over the past year. The high level of comfort across broader valuation checks points to a situation where the market is not clearly mispricing the business, but is instead weighing the trade off between AI driven growth ambitions and integration risk from the iMerit deal. The key question from here is whether ExlService Holdings can translate its AI and data capabilities into durable earnings while keeping execution risk under control. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include EXLS. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Image source: The Motley Fool. Wednesday, April 29, 2026 at 10 a.m. ET Vice Chairman and Chief Executive Officer — Rohit Kapoor Executive Vice President and Chief Financial Officer — Maurizio Nicolelli Need a quote from a Motley Fool analyst? Email [email protected] Rohit Kapoor: Thank you, Andrew, and good morning, everyone. We entered 2026 with strong momentum. In the first quarter, ExlService Holdings, Inc. generated revenue of $570 million, up 14% year over year, and adjusted earnings of $0.58 per share, an increase of 20% year over year. Our sustained double-digit growth demonstrates the strength of our competitive position as well as strong execution against our data and AI strategy. ExlService Holdings, Inc.'s recognized industry expertise and leadership in helping clients adopt AI throughout their enterprise is resonating strongly with the market and fueling our growth with new and existing clients. Demand is being driven by scaled deployments of AI inside core client workflows where ExlService Holdings, Inc. delivers measurable productivity, increased effectiveness, and superior risk-based outcomes. Underpinning this growth is a combination of capabilities that has taken over two decades to build. Helping our clients adopt AI in complex regulated industries requires more than technology. It requires deep familiarity with the operational workflows, regulatory frameworks, and data ecosystems that define how our clients actually operate. This is where our unique combination of domain, data, and AI expertise differentiates ExlService Holdings, Inc. and drives superior client outcomes. ExlService Holdings, Inc.'s proprietary data assets, domain-specific AI models, and orchestration capabilities allow us to embed intelligence directly into how work gets done—not as an overlay but as an integrated part of the process. It is one of the key reasons our renewal rates remain high and we continue to grow at market-leading rates. In addition to our segments, we also provide revenue information across two categories, data and AI-led and digital operations. Data and AI-led revenues grew 28% year over year in Q1, and now represent 60% of the company total. We are seeing strong momentum across our full portfolio of data and AI-led offerings, as clients are stepping up the pace of AI adoption and need help with data for AI, design of their agentic AI systems, and reimagining business processes. Most of our clients across verticals need to improve the way that they capture, enrich, and utilize their structured and unstructured data to drive AI outcomes. We are seeing strong market interest in our EXL Data.ai platform, which helps clients preserve domain-specific semantic context as they build new AI-ready data foundations. And we are continuing to leverage AI in solutions that we manage, which is both driving greater efficiencies and creating new value for clients by increasing precision and enabling improved outcomes. We are embedding AI both in our data and AI-led solutions as well as the operations that we manage for our clients. This last point is important and worth stressing. When we successfully embed AI into an existing client workflow, the nature of that engagement changes. It becomes more intelligent, more IP-led, and more value added. The revenue associated with it moves from our digital operations category into our data and AI-led category. As I communicated to you last quarter, in order to provide greater transparency we share in our investor fact sheet a total operations view that combines digital operations and data and AI-led operations that have migrated into our data and AI-led category. In Q1, total operations grew 10% year over year and remains a growth driver for our company's revenue. The reported digital operations revenue after that migration was down 2% year over year. This is by design. We expect this deliberate and planned shift to continue going forward. We saw strong performance across each of our four operating segments to start the year. Insurance grew 13% year over year, representing over a third of our revenues. I am particularly pleased to see it return to double-digit growth. Insurers are accelerating adoption of AI to improve underwriting, claims, and customer experience. We are seeing strong deal activity across all market segments. Healthcare and Life Sciences grew 21% year over year, representing over a quarter of our revenues. Payers and providers are facing rising cost pressures, regulatory complexity, and margin strain. They are turning to ExlService Holdings, Inc. to apply AI at scale to improve productivity and outcomes. Payment integrity continues to be a significant driver of growth along with broad-based strength in analytics, AI services and solutions, and operations. Banking, capital markets and diversified industries grew 8% year over year and represented a quarter of revenue. The quarter saw very high deal activity and we remain confident in continued progress as the year unfolds. International growth markets grew 13% year over year, reflecting successful AI-led expansions in new and existing clients. International markets are an important driver of our long-term growth and global expansion strategy, and we continue to invest in talent and partnerships to expand our footprint. During the quarter, we hosted our annual AI in Action flagship event bringing together senior business and technology leaders from across our client and partner ecosystem. The focus this year was on what it takes to make agentic AI real inside enterprise operations, from building the right data foundations to orchestrating AI across complex workflows. The level of engagement and the participation reinforced what we are seeing in our pipeline. Enterprises are moving from AI curiosity to AI in production. And we are the partner that can help them execute. We are also seeing co-innovation with our technology partners continuing to resonate and earn us industry recognition. ExlService Holdings, Inc. was recently named Advanced Technology Partner of the Year by NVIDIA, Best New Partner of the Year by Genesys, and AI and Machine Learning Market Disruptor of the Year by AWS. These partnerships are not only enabling our differentiated solutions, they are becoming meaningful go-to-market and pipeline contributors. In summary, ExlService Holdings, Inc. entered 2026 with strong momentum, and we have excellent visibility for the remainder of the year. Demand for our data and AI-led services and solutions remains robust, continuing the momentum we saw at the end of 2025. We continue to strengthen our position through investments in capabilities, partnerships, and talent. Our portfolio is well balanced. Our pipeline is strong. And we have high renewal rates. More than 75% of our revenue is recurring or annuity-like, providing revenue stability and a great line of sight for the year. For full year 2026, we are increasing our revenue guidance to a range of $2.3 billion to $2.33 billion, representing 10% to 12% constant currency organic growth. We are also increasing our adjusted diluted EPS to $2.18 to $2.23, representing 12% to 14% year-over-year growth. As always, I want to thank our clients, partners, and employees for their trust and commitment and to our shareholders for their continued support. Before I hand it over to Maurizio, I would like to remind you that we will be hosting our Investor and Analyst Day on May 13 in New York. We will share our multiyear growth framework, AI monetization model, and client case studies that bring our AI strategy to life. For those of you looking to understand the ExlService Holdings, Inc. growth story, this is the event to attend. Please reach out to Andrew for details. I look forward to seeing you there. I will now turn the call over to Maurizio to provide more details on our financial performance. Maurizio Nicolelli: Thank you, Rohit, and thanks, everyone, for joining us this morning. I will provide insights into our financial performance for the first quarter and our revised outlook for 2026. We delivered a strong first quarter with revenue of $570.4 million, up 13.8% year over year on a reported basis and 13.4% on a constant currency basis. Sequentially, we grew 5.1% on a constant currency basis. Adjusted EPS was $0.58, a year-over-year increase of 20.2%. All revenue growth percentages mentioned hereafter are on a constant currency basis unless otherwise stated. Now, turning to segment revenue for the first quarter. The Insurance segment grew 12.6% year over year with revenue of $193.9 million. This growth was driven by expansion and higher volumes in existing client relationships and new wins. Sequentially, Insurance grew 4.4%. The Insurance vertical, including revenue from International Growth Markets, grew 12.2% year over year with revenue of $226.1 million. The Healthcare and Life Sciences segment reported revenue of $151.9 million, representing growth of 21% year over year and 6.8% sequentially. The year-over-year growth was driven by higher volumes in our payment services business and expansion in existing client relationships with other healthcare services we provide. The Healthcare and Life Sciences vertical, including revenue from International Growth Markets, grew 20.9% year over year with revenue of $152.1 million. In the Banking, Capital Markets and Diversified Industries segment, we reported revenue of $127.4 million, representing growth of 8.1% year over year and 4% sequentially. This growth was driven by new client wins and expansion of existing client relationships. The Banking, Capital Markets and Diversified Industries vertical, including revenue from International Growth Markets, grew 9.4% year over year with revenue of $192.2 million. In the International Growth Markets segment, we generated revenue of $97.1 million, up 10.9% year over year and 5.4% sequentially. This growth was driven by ramp-ups and higher volumes with existing clients and new wins across Banking, Capital Markets and Diversified Industries and Insurance. SG&A expenses as a percentage of revenue increased 20 basis points year over year to 20.4%, driven by investments in data and AI-led solutions. Our adjusted operating margin for the quarter was 20.5%, up 40 basis points year over year, driven primarily by improved gross margins. Our effective tax rate for the quarter was 21.9%, down 40 basis points year over year, driven by higher profits in lower-tax jurisdictions. Our adjusted EPS for the quarter was $0.58, up 20.2% year over year on a reported basis. Our balance sheet remains strong. Our cash, including short- and long-term investments, as of March 31 was $266 million, and our revolver debt was $417 million, for a net debt position of $151 million. During the quarter, we spent $13 million on capital expenditures and repurchased 4.4 million shares at an average price of $31 per share, totaling $136 million. This includes 3.35 million shares received upfront as part of the settlement of our previously announced $125 million accelerated share repurchase. We expect to receive the remaining shares in the second quarter. Now moving on to our outlook for 2026. While we remain cautious about the current macroeconomic climate and geopolitical uncertainties, we are increasing our guidance for the year based on our current growth momentum and our strong pipeline. We now anticipate 2026 revenue to be in the range of $2.3 billion to $2.33 billion. This represents year-over-year growth of 10% to 12% on a reported and constant currency basis. This also represents an increase of $20 million at the midpoint, which includes a $2 million foreign exchange headwind from our previous guidance. We anticipate increased investments in data and AI capabilities and solutions for the rest of the year to expand our competitive advantage and continue to drive top-line revenue growth. We expect a foreign exchange gain of approximately $2 million to $3 million, net interest expense of approximately $6 million to $8 million, and our full-year effective tax rate to be in the range of 21% to 22%. We expect capital expenditures to be in the range of $50 million to $55 million. We anticipate our adjusted EPS to be in the range of $2.18 to $2.23, representing year-over-year growth of 12% to 14%, up from our previous guidance of $2.14 to $2.19. To conclude, we had a strong start to the year, demonstrating unique competitive position and participation in high-growth market segments. Despite the current geopolitical uncertainty, our leading indicators remain positive, and we have a highly adaptable and resilient business model, setting us up well for a solid 2026. With that, Rohit and I would be happy to take your questions. Operator: Thank you. At this time, if you would like to ask a question, please click on the Raise Hand button, which can be found on the black bar at the bottom of your screen. When it is your turn, you will receive a message on your screen from the host allowing you to talk, and then you will hear your name called. Please accept, unmute your audio, and ask your question. As a reminder, we are allowing analysts one question and one related follow-up today. We will pause a moment to allow the queue to form. We will now open the call for questions. Our first question comes from an Analyst with TD Cowen. Please unmute your line and ask your question. Analyst: Hi. Good morning. Thank you. I wanted to ask here on the growth guide. So good to see the raise. Can you just dig in on the key assumptions for data and AI-led versus digital ops growth and maybe how your views on the industries may shape up? And then, Maurizio, just despite the strong commentary here, it does not suggest any demand impact to you. But would you still say this feels like a prudent outlook for the balance of the year? Rohit Kapoor: Hi. So, our growth outlook—you know, we have increased our guidance for the full year. As you all know, our first quarter is typically a strong quarter, and we had a great first quarter this time. What we have seen is that we have been able to outperform our own expectations in the first quarter. We continue to see good pipeline and good demand for our services, and therefore we have increased our guidance for the balance of the year. The data and AI-led part of our business is actually resonating very nicely in the marketplace. It now represents 60% of our total portfolio and it is growing very nicely. Even for digital operations, as we have shared with you, our total operations is actually growing quite nicely as well, and we continue to see demand out there. If you talk about industries, we continue to see good momentum in insurance, in banking, and in healthcare. Some of the industries where we see a little bit of softness are retail and communications. But a majority of our business is really made up of banking, financial services, insurance, and healthcare, and those are all very strong pipelines and demand for us. We do not really provide a break-up, as you know, between data and AI-led and digital operations, but it would be fair to say that our digital operations will grow slightly below the company average and our data and AI-led piece will be powering the growth of the overall company. I will pass it on to Maurizio to talk about the prudent guidance that we have given. Maurizio Nicolelli: Thank you, Rohit. And, we are seeing very good momentum coming into the calendar year. Q1 is normally a strong quarter for us to really start out the year, and we saw that again this year. We continue to see that momentum going into the rest of the year. One thing to highlight is we did raise our guidance at the midpoint by $20 million, more than our beat in the first quarter, and that does include a $2 million FX headwind from the last time we gave guidance. And then lastly, our guidance is going to be a bit prudent and take into account what is happening in the current macro environment and also the geopolitical uncertainties that are out there. We have three more quarters remaining for the rest of the year. We have very good momentum going into the second quarter and the rest of the year, and we have increased our guide. We are still early in the year, and we will continue to revisit our guide as we go forward. But the big positive here is that we have very positive momentum going into the rest of the year from Q1. Analyst: Okay. That is helpful. That is clear. Maybe on margin. So it looks like you outperformed there as well. Can you just comment on any change in the expectation on adjusted operating margin for the year? And is it investment timing—any cadence expectations—just to help? Maurizio Nicolelli: Sure. You saw our adjusted operating margin come in at 20.5% in Q1, and that is up 40 basis points from Q1 of last year. We always see Q1 being a very strong quarter both on revenue and profitability, and that sets us up very well for the rest of the year in terms of investing to continue to drive double-digit growth for the rest of the year and also going into 2027. So you will see us, as you saw last year, start to make additional investments, particularly into our data and AI capabilities during the rest of the year. And our adjusted operating margin forecast for the rest of the year will be similar to what we have talked about—in that 19% range. Analyst: Alright. Great. Thank you. Operator: Our next question comes from David Koning with Baird. Please unmute your line and ask your question. David Koning: Yeah. Hey, guys. Thanks, and great job again. I guess one question: we hear your clients—just all the companies in the environment right now—are really looking for AI savings. Do you get some of them pushing you on price a little bit, just saying, “Hey, we need to find ways to save to show our CEO, our board, etc., that we are saving money”? Do you see that as a price headwind at all or more of a demand tailwind? Rohit Kapoor: Hi, Dave. Let me provide a little bit of context around what we are seeing around the adoption of AI. Number one, we are seeing clients switching over from AI pilots and AI POCs to AI in production. That is a big change, and that started out early this year. Frankly, that is playing to our strengths and the value that we can add to these relationships. The second thing we are seeing is, as clients think about AI in production, they are quite willing to open up access to their technology systems, to their databases, and allow us to make changes to the end-to-end workflow. As you know, the application of AI has to be driven in conjunction with the transformation of the workflow, and we are in the best position to drive that. The third piece is the commercial model is also changing. What we are seeing is, as clients come to us with the adoption of AI to be implemented and enabled, the commercial model is changing much more towards a fixed-fee and milestone-based payment and an outcome-based model. That allows us to manage pricing and margins and add value to the customer relationship. The negotiations and conversations are much more about providing our clients with deterministic benefits associated with AI adoption and for us to do it in a way that allows us to earn a respectable margin. We are not really seeing clients come to us just asking for price reductions. The price reduction is alongside the transformation and alongside the value creation. David Koning: Thank you for that. And just one follow-up. In the International segment, I know you called out a little uncertainty with the conflict. At 17% of revenue, it actually accelerated pretty nicely in the quarter. Would you expect to see a little deceleration there? Maybe describe what the impacts you think would happen. Rohit Kapoor: Dave, firstly, our International Growth Markets is highly underpenetrated, so the opportunity set out there is enormous. Second, we have very little and very limited exposure to the Middle East. Most of our revenue from clients really comes from the UK, Europe, Australia, and New Zealand, and we are seeing healthy adoption of AI in these geographies. Our goal will be to continue to drive greater and faster adoption of our services in the International Growth Markets. We are not really seeing any direct impact due to the conflict as such. There may be some downstream second-degree or third-degree impacts associated with that with our clients. But frankly, it is very fertile ground for us in the International Growth Markets. We are going to continue to invest in that space by adding more talent and bringing more capabilities, and we think we should be able to grow our International Growth Markets business quite nicely, and it should grow at the same level as, if not higher than, the company average growth rate. David Koning: Great. Thank you, guys. Good job. Operator: Our next question comes from Maggie Nolan with William Blair. Please unmute your line and ask your question. Maggie Nolan: Hi. Thank you. I am curious if you can share any perspective on net revenue retention at some of your largest accounts to help us get at the question of volume versus some of this work migration between types of offerings? Rohit Kapoor: Hi, Maggie. That is a great question and something that we have been paying close attention to. As I said earlier, one of the things happening with our more mature clients is, as they ask us to help them adopt AI into their enterprise workflows, we are able to work on much larger pieces of operations for them as compared to the past, and also work on a lot of work associated with building the right kind of data foundation and new service lines which we would not have engaged with them on previously. The landscape at which we are operating—our TAM—is expanding. It is becoming a much bigger playing field for us. At the same time, we are able to deploy AI and eliminate and reduce the amount of manual effort required to do some of these processes and pass on this productivity benefit to our clients. So if you talk about net revenue retention, it still is a growth story for us because, on a net basis, we are seeing a much wider landscape to play in, and we are seeing the revenue size and the size of the operation actually increase despite providing them with a benefit associated with the manual portion of the work that was being done previously. Maggie Nolan: Thank you. And then I noticed in the prepared remarks a little bit of an emphasis on partnerships. I am wondering if there is anything you can share with us to give us a sense of how that is progressing—like what the partner-sourced pipeline looks like or co-selling metrics—and then any variance in things like the deal cycle when you have partnership involvement. Rohit Kapoor: We have been very pleased with the progression of our partner relationships. As you saw, our partners are recognizing our effort and our differentiated capabilities as compared to some of the other players they might be dealing with. The unique thing about ExlService Holdings, Inc. is that we come at the transformation and the adoption of AI from a process and workflow lens and with knowledge of our clients’ business and operations. Our partners are finding that to be a unique value proposition—the knowledge of the domain and the ability to apply contextual understanding of our clients’ business alongside the technologies that our partners are providing. That is creating a huge amount of value uplift for our clients. These partnerships are resonating. The motion is becoming a lot easier and smoother in terms of our go-to-market strategies, and our partners are recognizing us and giving us these awards as compared to other players. Go-to-market is the more exciting part because now, when we interact with clients, we are able to take our partners there, and our partners are also bringing us into deals in which they are participating. The activity and the deal flow have increased substantially, and we foresee that going into the future as well. Maggie Nolan: Thank you. Congratulations. Rohit Kapoor: Thank you. Operator: Our next question comes from Surinder Thind with Jefferies LLC. Please unmute your line and ask your question. Surinder Thind: Rohit, can you help me understand the step-down in the digital ops segment? Over the past couple of years, that was a high single-digit grower. I think the expectation is more muted. Is the idea here that correlates with the advancement in agentic model capabilities? Should we expect to maybe a year or two from now see a further step-down in that segment as the models further advance? And then ultimately, is all of that getting recaptured in the data and AI-led segment? Rohit Kapoor: Yes, Surinder. Let me try to go through this step by step. Firstly, if you take a look at total operations, that continues to grow and expand, and in the first quarter, total operations grew 10% year over year. Within total operations, you could split it into two buckets: one is digital operations, and the other is data and AI-led operations. As the adoption of AI increases, we are going to see a bigger shift towards data and AI-led operations, and frankly, that is a very good thing from our perspective because as the operations shift towards data and AI-led, we are putting in more IP, more proprietary assets of ExlService Holdings, Inc., and creating more value for our clients. That business becomes much stickier, much bigger in size, and we control the outcome end to end. Going forward for the remainder of this year, digital operations will likely continue to have the same kind of deceleration of growth that happened in the first quarter, but the shift towards data and AI-led operations is the critical piece. That is positioning the company to be a future-forward company for our clients, and that is what our clients and prospects are looking at, engaging with us in an even more determined manner. That is why we are seeing our pipeline being extremely full and the level of activity very high. We feel very confident about continuing to grow our overall business in this double-digit range going forward. Surinder Thind: And then turning to headcount. You continue to see a strong uptick there. Is that how we should expect the model to evolve over the next couple of years—where there is a spread between revenues and headcount—or should that spread expand in the coming years when we think about getting to a more revenue-per-headcount model as you build out your IP? Rohit Kapoor: If you take a look at Q1, our revenues increased by 14% and our headcount increased by about 11%. If you look at previous quarters and previous years, typically that has been the trend where headcount increase is lower than the revenue increase. We would expect that to continue. Going forward, it depends upon the type of service mix we are providing to our clients and the activities we are undertaking. As we move from digital operations to data and AI-led operations, that is definitely going to result in a lower headcount addition and a much higher revenue uptick. But if we get into newer service lines, it will depend upon the dynamics of those new service lines, and the revenue per headcount will be determined by the characteristics of that particular service line. On a steady-state basis as this transition takes place, you would expect a delta between revenue growth and headcount growth to be about 3%, which is the case right now. But as we go forward, that can shift one way or the other. Operator: Please use the Raise Hand button that can be found on the black bar at the bottom of your screen. Our next question comes from an Analyst with JPMorgan. Please unmute your audio and ask your question. Analyst: Hi. Thanks for taking my question. I was wondering if you could talk about the specific drivers on such strong traction in AI and data services you provide to operations management clients. Was it in any way related to AI model evolution or just clients embracing AI with new budgets? Rohit Kapoor: Our data and AI-led portion of our business has multiple elements: our data management business, our analytical model and services and solutions business, our payment integrity business, and our data and AI-led operations. We are seeing broad-based traction and growth across all of these different service lines. The data management part is foundational, and that is where we are seeing huge demand. The challenge for us is hiring talent quickly enough to fulfill that demand. In other areas, we are seeing a pivot—some of our analytical services are switching over to AI services, and that is a very strong pivot. We are also seeing a very sharp increase in data and AI-led operations. When those conversions move into production, that is driving a faster growth rate of our data and AI-led category. We are very pleased that we have multiple service lines in that category, each with tremendous headroom and all growing very nicely. It is very broad-based. It is not one particular service line driving that growth; it is multiple service lines. That gives us confidence in the sustainability and durability of our business growth. Analyst: Got it. Seems very broad-based. And maybe as my follow-up, our checks are showing that AI-driven automation of business processes from 50% to 80% is 10 times harder than going from zero to 50. Could you touch on what you are seeing in your clients in embracing this next milestone? And is there any progress within the quarter? Rohit Kapoor: The 50% to 80% refers to what metric? Analyst: AI-driven automation of business processes. Rohit Kapoor: When clients want to adopt AI into their operations, it is not simply taking an LLM and pasting it on top of that operation. There is a whole series of work that needs to be undertaken. Number one, the data foundation has to be correct, and the ability to use structured and unstructured data and make that readily usable is a key foundational step. Secondly, the application of the LLM or the AI model needs to be iterated upon and refined as we go forward. Third, there is a very big piece associated with knowledge and understanding of context—bringing together policies, rules, regulations, and how a particular transaction needs to be processed. That knowledge needs to be clearly defined with the use and application of the AI model. Finally, the semantic layer—which is key for creating value for any enterprise AI adoption—needs to be combined using both the probabilistic elements of an LLM and deterministic elements, particularly for regulated industries. Bringing together all of these things, and then putting together guardrails, security, and a number of elements associated with token economics—this is all very complex. We are in a fortunate position that we have done this several times over. We can deliver the business outcomes to our clients, and our clients trust our ability to execute. That is what is driving the growth there. Operator: Our next question comes from David Grossman with Stifel. Please unmute your audio and ask your question. David Grossman: Good morning. Thank you. I think, Rohit, you had mentioned in an earlier question that the NRR is above 100%. We can clearly see that in the numbers. Perhaps you could help us understand how that number has trended over the past couple of years, as well as compare and contrast that with what the IT services companies are seeing—who are struggling—and what is making you different there. As well as maybe talk about the backlog and just how far out you can see that dynamic continuing? Rohit Kapoor: Yes, David. The NRR for us is quite strong and positive. The big reason is that with the adoption of AI, clients are getting more comfortable outsourcing more work and outsourcing more end-to-end process journeys. In the past, they were comfortable outsourcing tasks and pieces of it, but now they are comfortable allowing a partner like ExlService Holdings, Inc. to manage that journey end to end. The reason is that is the only way to transform the journey, take control of the data assets, deploy AI across the workflow, and be held accountable for the outcome. Frankly, the business model change with AI is allowing a very favorable shift compared to previously. Previously, with the adoption of other technologies—whether it was bots or other automation—it was always about whether more work could be outsourced. Now it is the full end-to-end life cycle that can be outsourced. It is a lot better in this AI adoption wave. David Grossman: And how long, Rohit, does it take to go from the beginning to more of a steady state? Rohit Kapoor: A while, David. Setting up the data foundation itself takes a fair amount of time because most of our clients do not have very mature data estates, and putting that in place requires a lot of heavy lifting. Then iterating on the model and making sure that it is working along with the contextual pieces of our clients’ business also requires a fair amount of effort, complexity, and time. This is not a once-and-done piece. Once you implement AI into the workflow, you have to constantly maintain and upkeep it, and there is a managed service portion that needs to be in place because these models will drift over time. You need to apply new context to these models on an ongoing basis. It is a fairly complex piece of work to deliver the outcome and then to maintain it and keep it up. David Grossman: So can the NRR stay above one when you go into the maintenance mode? Rohit Kapoor: We will have to see how that progresses. One of the things we are seeing is, as we deploy AI into the workflow, our clients are starting to offer newer feature sets to their customers in their offerings. They are also willing to offer newer service lines. There is more being added to the existing piece of work, and if that continues, yes, I think the NRR will continue to remain above one. David Grossman: Great. Thanks. So just one quick one on margins. I know you are guiding, Maurizio, to flattish margins year over year—or at least that is what it would appear in the 19 range—and that is despite what looks like favorable mix shift. Is there some dynamic when you migrate from a person-based billing model to more of an outcomes-based model on a short-term basis where there are some transition costs? Or is there something else going on that would result in flattish margins on such strong revenue growth? Maurizio Nicolelli: We had a very good quarter overall on profitability, and you continue to see an uptick in gross margins. If you look at the second quarter of last year, we were at 37.7%. This quarter, we are at 38.9%. Each quarter since then has continued to rise. What you are seeing is us driving profitability there. The offset is continued investment. If you look at our investment line and the level of investment we are making, it is growing faster than revenue overall. We need to continue to invest, particularly in R&D, as we develop more and more AI capabilities. That leads us back to a mid-19% range overall in margins. And if you look at our overall guidance, we are still driving EPS slightly higher than overall revenue, which is one of our stated goals. David Grossman: Got it. Alright, guys. Thanks very much. Operator: Our last question comes from Vincent Colicchio with Barrington Research. Please unmute your audio and ask your question. Vincent Colicchio: Yeah. Rohit, you had mentioned the commercial model has changed, and it often incorporates outcome-based pricing on AI deals. I am curious, what portion of new AI deals involve outcome-based pricing? Rohit Kapoor: We are seeing some AI deals have outcome-based pricing models, particularly those where clients are allowing us to transform their end-to-end processes. That is where they are holding us accountable for the outcomes, and the pricing model is switching over to that. Keep in mind that the adoption of AI is gradual, and that shift is happening over time. There are portions of our business that are already outcome-based—the payment integrity work that we do is completely outcome-based. As that business continues to grow and use a lot more AI in its service line, that portion continues to increase. Anytime we are adopting more AI into the workflow, that is something which is kicking in. The biggest barrier is clients do not have good metrics associated with how to define that outcome and how to attribute responsibility for the outcome. Some of this tends to be a portion on a fixed-fee basis and, over and above that, some sharing of the gain and productivity that we can provide to our clients. That model works well for newer clients that are going into this and wanting to seek the benefit of that outcome. Vincent Colicchio: And could you update us on how robust your acquisition pipeline is and where your priorities may lie? Rohit Kapoor: In this environment, we are seeing a fairly strong pipeline of assets. We want to be very careful in terms of the choice of these assets and make sure they further our ambitions to be the AI strategic partner of choice for our enterprise clients. There are capability sets within the AI enablement workstream that we want to add to. We have consciously picked and chosen the areas where we would like to add more capability, and we are looking at acquisitions on a fairly regular basis. As you know, only when you consummate an acquisition can you really be sure about doing an acquisition. We hope that we will be able to close an acquisition soon, but we cannot comment on the timing as of now. Vincent Colicchio: Thank you, Rohit. Nice quarter. Rohit Kapoor: Thank you, Vincent. Operator: We have no further questions at this time. This concludes our call. Thank you, and have a good day. 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