| |
 |
| |
|
Press Releases |
|
|
|
| |
|
|
|
NEW YORK, Aug. 8 /PRNewswire-FirstCall/
-- ExlService Holdings, Inc. (Nasdaq: EXLS),
a recognized provider of offshore solutions, including
business process outsourcing, research and analytics
and advisory services, today announced its financial
results for the quarter ended June 30, 2007.
The Company's financial highlights for the second
quarter of 2007 include:
| • |
Revenues for the quarter increased 71%
to $43.0 million from $25.2 million in the
second quarter of 2006 comprised of 56% organic
revenue growth and 15% acquisition-related
revenue growth. |
| • |
Gross margin for the quarter was 33.1%
compared to 36.8% in the second quarter of
2006. |
| • |
Operating margin for the quarter was 6.1%
compared to 12.3% in the second quarter of
2006; adjusted operating margin for the quarter,
excluding the impact of stock-based compensation
expense and amortization of intangibles, was
10.0% compared to 13.1% in the second quarter
of 2006. |
| • |
Net income to common stockholders for the
quarter was $5.6 million compared to $1.4
million in the second quarter of 2006; net
income to common stockholders for the quarter
includes stock-based compensation expense
and amortization of intangibles of $1.7 million
and $0.2 million in the second quarter of
2007 and 2006, respectively. |
Reconciliations of adjusted financial measures to
GAAP are included at the end of this release.
Vikram Talwar, CEO and Vice-Chairman of EXL, commented:
"I am enthusiastic about the continued rapid
growth in EXL's business during the quarter and
the strong interest we are seeing from new and existing
clients. EXL secured eleven new clients this quarter
including several blue-chip names in line with our
strategy of acquiring the highest quality clients
in select industry domains. We also entered a new
vertical this quarter with the addition of a Fortune
500 transportation services provider. "
Rohit Kapoor, President and COO of EXL, commented:
"EXL is executing on its plan of investing
in our front-end with the creation of our Strategic
Account Management function with the goal of strengthening
our existing client relationships. In addition,
this quarter we added significant additional talent
to the sales and marketing function. Operationally,
our track record of process excellence remains strong
and our attrition management program is beginning
to deliver the desired results."
Matt Appel, CFO of EXL, commented: "EXL's revenue
growth outperformed expectations this quarter and
was led by continued strong momentum in the BPO
business and a record quarter in advisory services.
As a result, we are revising upward our 2007 revenue
guidance to between $168 million and $172 million
from $160 million to $170 million previously. In
addition, despite the significant rupee appreciation
during the second quarter, we are reaffirming our
adjusted operating margin guidance of 12% for the
year."
Financial Highlights -- Second Quarter 2007
| • |
Revenues for the quarter ended June 30,
2007 increased 71% to $43.0 million from $25.2
million in the quarter ended June 30, 2006.
BPO revenue for the quarter of $35.3 million
reflects organic growth of 57.5% year over
year. Research and analytics revenue for the
quarter of $4.3 million is not comparable
with the second quarter of 2006 since the
size of this business line was not significant.
Advisory revenue of $3.4 million for the quarter
reflects organic growth of 54.9% year over
year. |
| • |
Gross margin for the quarter ended June
30, 2007 was 33.1% compared to 36.8% in the
quarter ended June 30, 2006. BPO gross margin
for the quarter was 35.8% reflecting the impact
of the Indian rupee and annual wage increases.
Research and analytics gross margin for the
quarter of 12.9% reflects the continued softness
in this line of business. Advisory gross margin
for the quarter was 29.8% reflecting the impact
of the Indian rupee as well as costs attributable
to staff and management additions. |
| • |
Operating margin for the quarter ended
June 30, 2007 was 6.1%, compared to 12.3%
in the quarter ended June 30, 2006. Adjusted
operating margin, excluding the impact of
stock-based compensation expense and amortization
of intangibles, for the quarter ended June
30, 2007 was 10.0% compared to 13.1% in the
quarter ended June 30, 2006. Operating margin
was negatively impacted in the second quarter
by a number of factors including the significant
appreciation of the Indian rupee,
continued softness in the research and analytics
business line, annual wage increases and the
opening of a new, 1,200 seat operating facility. |
| • |
Net income to common stockholders for the
quarter ended June 30, 2007 was $5.6 million
compared to $1.4 million in the quarter ended
June 30, 2006; net income to common stockholders
for the quarter includes stock- based compensation
expense and amortization of intangibles of
$1.7 million and $0.2 million in the second
quarter of 2007 and 2006, respectively. Net
income benefited by approximately $2.3 million
of foreign exchange gains during the quarter
as well as a significantly
lower effective tax rate. Diluted earnings
per share was $0.19 for the quarter ended
June 30, 2007. |
| • |
Revenue generated from our largest client
was 29% of total revenues for the quarter
ended June 30, 2007 compared to 41% for the
quarter ended June 30, 2006. Revenue generated
from our three largest clients was 60% of
total revenues for the quarter ended June
30, 2007 compared to 64% for the quarter ended
June 30, 2006. |
Note: Results may not be comparable due to the inclusion
of the financial results of Inductis, Inc. in our
consolidated financial statements from July 1, 2006.
Business Highlights - Second Quarter 2007
| • |
Our BPO business line continued to experience
rapid revenue growth and grew 8.0% compared
to the preceding quarter. During the quarter
EXL secured two new contracts including a
finance and accounting contract with a Fortune
500 transportation company and benefited from
growth in several existing client relationships.
The BPO business line comprised 82% of our
revenues for the second quarter and grew 57.5%
year over year. |
| • |
Our advisory business line continued its
track record of record quarterly revenue growth.
During the second quarter the advisory
business line continued to enhance the value
and diversity of its service offerings and
secured five new contracts including an
engagement to provide finance and accounting
transformation services for one of the leading
European investment banks. |
| • |
As expected, the research and analytics
business line experienced continued softness
during the second quarter. EXL continues to
focus on cross-selling to existing clients
as well as securing new client relationships.
During the second quarter, the research and
analytics business line initiated four new
relationships including a Fortune 50 U.S.
bank and a FTSE-100 U.K. bank. The research
and analytics business line continued to capitalize
on cross-sell opportunities as this business
line increasingly attracts revenues that are
recurring and contracted in nature. |
As of June 30, 2007, EXL had a headcount of approximately
9,300 individuals, an increase of 31% from approximately
7,100 at June 30, 2006. The Company's headcount
during the second quarter of 2007 increased by approximately
300 employees from the end of the preceding quarter.
The attrition rate for billable employees during
the second quarter of 2007 declined slightly to
41.9% as compared to 43.7% in the first quarter
of 2007.
2007 Outlook
Based on current visibility, the Company is providing
the following guidance:
| • |
Calendar year 2007 revenue revised upwards
to between $168 million to $172 million. |
| • |
Calendar year 2007 adjusted operating margin
guidance of 12% remains unchanged. |
| • |
Effective tax rate guidance for remainder
of 2007 of between 10% and 15%. |
| • |
Calendar year 2007 EPS of between $0.74
and $0.78 per diluted share. |
Conference Call
EXL will host a conference call on Thursday, August
9, at 8:00 a.m. (ET) to discuss the Company's quarterly
results and discuss the Company's operating performance
and financial outlook. The conference call will
be available live via the Internet by accessing
the EXL web site at www.exlservice.com, where the
accompanying presentation can also be accessed.
Please go to the web site at least fifteen minutes
prior to the call to register, download and install
any necessary audio software.
To listen to the conference call via phone, please
dial 1-866-543-6407 or 1-617-213-8898 and entering
"71509461." For those who cannot access
the live broadcast, a replay will be available by
dialing 888-286-8010 or 617-801-6888 and entering
"95054031" from two hours after the end
of the call until 11:59 p.m. (EST) on August 24th,
2007. The replay will also be available at the EXL
web site.
ExlService Holdings, Inc. (NASDAQ: EXLS), is a recognized
provider of offshore solutions including business
process outsourcing (BPO), research and analytics
and advisory services. It primarily serves the needs
of Global 1000 companies in the banking, financial
services and insurance sector. EXL is headquartered
at 350 Park Avenue, New York, NY. Find additional
information about EXL at http://www.exlservice.com.
This press release contains forward-looking
statements. You should not place undue reliance
on those statements because they are subject to
numerous uncertainties and factors relating to the
Company's operations and business environment, all
of which are difficult to predict and many of which
are beyond the Company's control. Forward-looking
statements include information concerning the Company's
possible or assumed future results of operations,
including descriptions of its business strategy.
These statements often 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 the Company believes that
these forward-looking statements are based on reasonable
assumptions, you should be aware that many factors
could affect the Company'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 are discussed in more
details in the Company's filings with the Securities
and Exchange Commission, including the Company's
Annual Report on Form 10-K for the year ended December
31, 2006. These risks could cause actual results
to differ materially from those implied by forward-looking
statements in this release.
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 the Company. The Company has no obligation
to update any forward-looking statements after the
date hereof, except as required by federal securities
laws.
EXLSERVICE HOLDINGS, INC. CONSOLIDATED STATEMENTS
OF INCOME (UNAUDITED)
To supplement the consolidated financial statements
presented in accordance with GAAP, this press release
includes the following measures defined by the Securities
and Exchange Commission as non-GAAP financial measures:
non-GAAP operating margin and non-GAAP diluted earnings
per share. These non-GAAP measures are not based
on any comprehensive set of accounting rules or
principles and should not be considered a substitute
for, or superior to, financial measures calculated
in accordance with GAAP, and may be different from
non-GAAP measures used by other companies. In addition,
these non-GAAP measures, the financial statements
prepared in accordance with GAAP and reconciliations
of EXL's GAAP financial statements to such non-GAAP
measures should be carefully evaluated.
For its internal management reporting and budgeting
purposes, EXL's management uses financial statements
that do not include stock-based compensation expense
related to employee stock options and amortization
of acquisition-related intangibles for financial
and operational decision making, to evaluate period-to-period
comparisons or for making comparisons of EXL's operating
results to that of its competitors. Moreover, because
of varying available valuation methodologies, subjective
assumptions and the variety of award types that
companies can use when adopting FAS 123(R), EXL's
management believes that providing a non-GAAP financial
measure that excludes stock-based compensation and
amortization of acquisition-related intangibles
allows investors to make additional comparisons
between EXL's operating results to those of other
companies. The Company also believes that it is
unreasonably difficult to provide its financial
outlook in accordance with GAAP for a number of
reasons including, without limitation, the Company's
inability to predict its future stock-based compensation
expense under FAS 123(R) and the amortization of
intangibles associated with further acquisitions.
Accordingly, EXL believes that the presentation
of non-GAAP operating margin and non-GAAP diluted
earnings per share, when read in conjunction with
the Company's reported results, can provide useful
supplemental information to investors and management
regarding financial and business trends relating
to its financial condition and results of operations.
A limitation of using non-GAAP operating margin
and non-GAAP diluted earnings per share versus operating
margin and diluted earnings per share calculated
in accordance with GAAP is that non-GAAP operating
margin and non- GAAP diluted earnings per share
exclude costs, namely, stock-based compensation,
that are recurring. Stock-based compensation has
been and will continue to be a significant recurring
expense in EXL's business for the foreseeable future.
Management compensates for this limitation by providing
specific information regarding the GAAP amounts
excluded from non-GAAP operating margin and non-GAAP
diluted earnings per share and evaluating such non-GAAP
financial measures with financial measures calculated
in accordance with GAAP.
The following table shows the reconciliation of
these adjusted financial measures from GAAP for
the three months ended June 30, 2007 and June 30,
2006:
|
|
| |
|
|
|
|
