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NEW YORK, March 11 -- ExlService
Holdings, Inc. (Nasdaq: EXLS), a recognized provider
of transformation and outsourcing solutions, today
announced its financial results for the fourth quarter
ended December 31, 2007. The Company's full year
and fourth quarter highlights include:
Full Year 2007
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Revenues for the year 2007 were
$179.9 million, an increase of 47.7% over
the prior year. |
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Gross margin for the year 2007
was 36.8% compared to 39.4% in 2006. |
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Operating margin for the year 2007
was 9.6% compared to 12.4% in 2006; adjusted
operating margin for the year 2007, excluding
the impact of stock-based compensation expense
and amortization of intangibles, was 12.9%
compared to 15.0% in 2006. |
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Net income to common stockholders
for the year 2007 was $27.0 million compared
to $13.4 million in 2006, an increase of 101.2%. |
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Diluted earnings per share to common
stockholders was $0.93 for the year 2007 compared
to $0.58 in 2006. |
Fourth Quarter of 2007
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Revenues for the quarter were $50.4
million, an increase of 8.1% over the preceding
quarter. |
| • |
Gross margin for the quarter increased
330 basis points to 39.3% from 36.0% in the
preceding quarter. |
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Operating margin for the quarter
was 9.9% compared to 10.0% in the preceding
quarter; adjusted operating margin for the
quarter, excluding the impact of stock-based
compensation expense and amortization of intangibles,
was 12.8% compared to 13.0% in the preceding
quarter. |
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Net income to common stockholders
for the quarter was $9.8 million compared
to $5.9 million in the quarter ended December
31, 2006, an increase of 64.5%. |
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Diluted earnings per share to common
stockholders was $0.33 for the quarter compared
to $0.21 in the preceding quarter and $0.22
in the quarter ended December 31, 2006. |
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Vikram Talwar, CEO and Vice Chairman, commented:
"EXL capped off 2007 with an exceptional quarter
completing a tremendous year of growth and expansion
for our company. EXL won 38 new clients this year
and experienced continued momentum and acceptance
from our customers across all of our business segments.
Our focus on tightly coupling transformation and
outsourcing services is providing EXL's clients
a competitive edge through enhanced efficiency and
effectiveness. The demand environment remains strong
and customers continue to look for ways to reduce
costs in the back-office. EXL is succeeding in the
marketplace, and we clearly have strong momentum
as we begin 2008."
Rohit Kapoor, President and Chief Operating Officer,
commented: "2007 was a year of continued operational
excellence for EXL. Our customer satisfaction scores,
employee satisfaction indices, operational efficiency
metrics and productivity initiatives all reflect
improvements that have resulted from the focus and
effort invested in 2007. These achievements provided
an environment for our continued growth and sustained
operating profitability. We experienced our third
consecutive quarter of reduced employee attrition
with a fourth quarter rate of 30%, down from 42%
in the same quarter last year. Furthermore, we continue
to aggressively expand our footprint with a new
operating center in the Philippines that will open
in the second quarter of 2008 and are planning further
growth-oriented investments abroad."
Matt Appel, CFO, commented: "EXL grew revenues
and net income in 2007 and significantly exceeded
our revenue, adjusted operating profit and earnings
per share guidance. We achieved our financial objectives
while simultaneously redeploying capital into critical
investments in strategic account management and
sales and marketing. Our results are even more impressive
given the significant appreciation of the Indian
rupee against the U.S. dollar during 2007."
Financial Highlights - Fourth Quarter 2007
and Year Ended December 31, 2007
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Revenues for the year ended December
31, 2007 increased 47.7% to $179.9 million
from $121.8 million in the year ended December
31, 2006. Revenues for the quarter ended December
31, 2007 increased 28.2% to $50.4 million
from $39.3 million in the quarter ended December
31, 2006. |
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Gross margin for the year ended
December 31, 2007 was 36.8% compared to 39.4%
in the year ended December 31, 2006. Gross
margin for the year decreased primarily as
a result of unfavorable exchange rate movements
and lower than expected revenue in our research
and analytics service line. Gross margin for
the quarter ended December 31, 2007 was 39.3%
compared to 42.9% in the quarter ended December
31, 2006. |
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Operating margin for the year ended
December 31, 2007 was 9.6% compared to 12.4%
in the year ended December 31, 2006. Adjusted
operating margin, excluding the impact of
stock-based compensation expense and amortization
of intangibles, for the year ended December
31, 2007 was 12.9% compared to 15.0% in the
year ended December 31, 2006. Operating margin
for the year decreased primarily as a result
of unfavorable exchange rate movements and
increased investments in sales and marketing.
Operating margin for the quarter ended December
31, 2007 was 9.9%, compared to 16.4% in the
quarter ended December 31, 2006. Adjusted
operating margin, excluding the impact of
stock-based compensation expense and amortization
of intangibles, for the quarter ended December
31, 2007 was 12.8% compared to 19.7% in the
quarter ended December 31, 2006. |
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Net income to common stockholders
for the year ended December 31, 2007 was $27.0
million compared to $13.4 million in the year
ended December 31, 2006.. Net income to common
stockholders for the quarter ended December
31, 2007 was $9.8 million compared to $5.9
million in the quarter ended December 31,
2006. Income taxes for the quarter ended December
31, 2007 include a one-time favorable adjustment
of approximately $1.7 million related to a
change in the Company's transfer pricing agreement
between the U.S. and India. |
Note: Results for the year ended December 31,
2007 are not comparable due to the inclusion of
the financial results of Inductis, Inc. in our consolidated
financial statements from July 1, 2006.
Recent Business Highlights
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Our Business Process Outsourcing
business line comprised 82.3% of our revenues
for the year ended December 31, 2007 and grew
51.4% year over year. Our BPO business line
migrated 23 processes for five existing clients
in the quarter ended December 31, 2007 and
migrated 69 processes for clients in the year
ended December 31, 2007 (including 42 different
processes in the insurance vertical) as compared
to 47 processes in the year ended December
31, 2006. |
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Our Advisory business line generated
revenues of $13.4 million for the year ended
December 31, 2007 and growth of 48.5% year
over year. Demand for governance, risk, and
compliance solutions remains strong and service
line expansion continues into complex accounting
and financial reporting services.
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Our Research and Analytics business
line signed contracts with two global banking
institutions that we believe will provide
significant revenues in 2008. |
As of December 31, 2007, EXL had a headcount of
approximately 10,000 individuals (including personnel
managed under structured client service agreements).
The attrition rate for billable employees during
the fourth quarter was 30% as compared to 39% in
the third quarter of 2007 and 42% in the fourth
quarter of 2006. The Company expects that quarterly
attrition will continue to trend downward but will
remain volatile and may increase quarter to quarter
in the future as compared to the rate experienced
in the fourth quarter.
2008 Outlook
The Company is providing the following
guidance based on current exchange rates:
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Calendar year 2008 revenue of $205
to $210 million; assuming the exercise of
the Norwich Union Pune Build-Operate-Transfer
option on May 1, 2008. |
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Calendar year 2008 adjusted operating
margin, excluding the impact of stock-based
compensation expense and amortization of intangibles,
of 12%. |
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Calendar year 2008 effective tax
rate of approximately 15%. |
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Calendar year 2008 GAAP EPS of
$0.80 to $0.85 per diluted share. |
Conference Call
EXL will host a conference call on Wednesday, March
12, 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 1-866-202-4367 or 1-617-213-8845 and entering
"68532922." For those who cannot access
the live broadcast, a replay will be available by
dialing 888-286-8010 or 617-801-6888 and entering
"10219435" from two hours after the end
of the call until 11:59 p.m. (EST) on March 19,
2008. The replay will also be available at the EXL
web site.
About ExlService Holdings, Inc.
ExlService Holdings, Inc. (NASDAQ: EXLS) is a recognized
business solutions provider. EXL's offerings provide
a competitive edge to its clients by transforming
and outsourcing business processes. Transformation
services enable continuous improvement of client
processes by bringing together EXL's capabilities
in reengineering including Six Sigma process improvement,
research & analytics, and risk advisory services.
EXL's outsourcing services include a full spectrum
of business process services from offshore delivery
centers requiring ongoing process management skills.
Headquartered in New York, EXL primarily serves
the needs of Global 1000 companies in the banking,
financial services, insurance, utilities, healthcare,
telecommunications and transportation sectors. Find
additional information about EXL at 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, 2007. 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.
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