Significant Increases in Revenue, Gross Margin and Operating Margin;
Executing on Long-Term Growth Strategy
NEW YORK, Nov. 16 /PRNewswire-FirstCall/
-- ExlService Holdings, Inc. (Nasdaq:
EXLS), a recognized provider of offshore
solutions including business process outsourcing,
research and analytics, and risk advisory
services, today announced its financial
results for the third quarter ended September
30, 2006.
The Company's third quarter highlights include:
* Revenue increased 94.0% to $35.7 million from $18.4 million in the
third quarter of 2005 comprised of 59.8% organic revenue growth and
34.2% acquisition related growth.
* Gross margin increased 200 basis points to 39.7% from 37.7% in the
third quarter of 2005.
* Operating margin for the quarter was 11.6% compared to 7.3% in the
third quarter of 2005; adjusted operating margin for the quarter,
excluding the impact of stock-based compensation expense and
amortization of intangibles, was 15.7% compared to 7.5% in the third
quarter of 2005.
* Net income to common stock holders for the quarter was $4.1 million
compared to $1.1 million in the third quarter of 2005; adjusted net
income for the quarter, excluding the impact of stock-based
compensation expense and amortization of intangibles, was $5.6 million
compared to $1.1 million in the third quarter of 2005.
Reconciliations of Adjusted financial
measures to GAAP are included at the end
of this release.
"We are pleased with our outstanding
financial performance during the quarter
and the strong start to our life as a
public company," said Vikram Talwar, CEO
and Vice-Chairman of EXL. "EXL's third
quarter results showed continued strong
revenue growth and a significant expansion
in gross margin and operating margin.
Our third quarter results were driven
by continuing ramps in multiple BPO processes,
the positive impact of our acquisition
of Inductis, as well as continued strong
demand for our risk advisory offerings.
I would note that although our business
confidence and growth outlook remains
strong, EXL benefited this quarter from
the confluence of several factors that
should not be expected to continue.
"This quarter, EXL successfully completed
several key strategic initiatives including
the acquisition of Inductis, Inc. as well
as our recent Initial Public Offering
on the NASDAQ. Our clients' receptivity
to Inductis' advanced capabilities in
analytics has been good and we are pleased
to be able to provide such a valuable
offering to meet client demands for increasingly
sophisticated offshore services. In line
with EXL's growth strategy we will continue
to position ourselves for long-term business
success and to capitalize on our current
market position. On October 25, 2006,
EXL closed its Initial Public Offering
of 5,000,000 shares priced at $13.50 per
share. The underwriters fully exercised
their option to purchase an additional
750,000 shares to cover over-allotments,
increasing the total number of shares
sold to 5,750,000. The net proceeds of
the offering were approximately $72.2
million after underwriting discounts and
commissions but prior to estimated offering
expenses payable by EXL. The EXL family
is excited about becoming a public company
and is now focused on continued execution
of our business strategy and delivering
value on behalf of our clients and stakeholders,"
concluded Mr. Talwar.
Financial Highlights - Third Quarter 2006
* Revenue for the quarter ended September 30, 2006 increased to $35.7
million up 94.0% from $18.4 million in the quarter ended September 30,
2005.
* Last twelve months revenue for the twelve months ended September 30,
2006 increased 43.4% to $102.4 million from $71.4 million in the twelve
months ended September 30, 2005.
* Revenue generated from the Company's largest client was 29.4% for the
quarter ended September 30, 2006 compared to 49.5% for the quarter
ended September 30, 2005. Revenue generated from the Company's three
largest clients was 57.2% for the quarter ended September 30, 2006
compared to 75.0% for the quarter ended September 30, 2005.
* Gross margin for the quarter ended September 30, 2006 was 39.7% and
increased 200 basis points from 37.7% in the quarter ended September
30, 2005. Gross margins expanded primarily as a result of an increased
utilization of the Company's existing infrastructure, strong seasonal
demand for services from the risk advisory services group, and
favorable exchange rate movements during the third quarter of 2006.
* Operating margin was 11.6%, compared to 7.3% in the quarter ended
September 30, 2005. Adjusted operating margin, excluding the impact of
stock-based compensation expense and amortization of intangibles, was
15.7% for the quarter ended September 30, 2006, compared to 7.5% in the
quarter ended September 30, 2005.
* Net income to common stockholders was $4.1 million for the quarter
ended September 30, 2006, compared to $1.1 million in the quarter ended
September 30, 2005. Adjusted net income to common stockholders,
excluding the impact of stock-based compensation expense and
amortization of intangibles, was $5.6 million for the quarter ended
September 30, 2006, compared to $1.1 million in the quarter ended
September 30, 2005.
* Diluted earnings per share to common stockholders was $0.19, compared
to $0.05 in the quarter ended September 30, 2005. Diluted adjusted
earnings per share to common stockholders, excluding the impact of
stock-based compensation expense and amortization of intangibles, was
$0.26, compared to $0.05 in the quarter ended September 30, 2005. The
number of shares used in computing earnings per share for the three
months ending September 30, 2006 and September 30, 2005 has been
adjusted to give effect to the two-for-one stock split and conversion
done by the Company on October 24, 2006, but does not include the
5,750,000 shares issued as part of the Initial Public Offering of the
Company.
Note: Periods 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
* Hiring of Pramode Metre as Vice President, Chief Sales & Marketing
Officer. Pramode previously served as corporate Vice President at e4e
Inc. where he led business development initiatives and strategies for
its four lines of BPO businesses and served as Senior Vice President,
Business Development at Syntel, Inc.
* Integration of Inductis, Inc. underway with initial successes in client
cross-selling and collaborative solution delivery.
* Entry into an interim agreement for the provision of services with a
leading U.S. insurance company to provide a range of BPO services.
* Entry into a Letter of Intent for a new facility in Noida to
accommodate an additional 1,150 seats of capacity.
As of September 30, 2006, EXL had total
employees of approximately 7,900, up 66%
from approximately 4,750 employees at
September 30, 2005. The Company's headcount
during the quarter increased by approximately
800 employees and attrition during the
quarter for billable employees was 39.8%.
"Our strong third quarter results reflect
the successful execution of our focus
on sustainable growth and continued profitability,"
said Rohit Kapoor, President and Chief
Financial Officer of EXL. "We will continue
to invest heavily in our sales and client
relationship management function, additional
physical infrastructure and management
development programs. These investments
will enable us to deploy the right resources
and deliver high quality solutions that
meet the business needs of our clients
today and in the future."
Mr. Kapoor continued, "We continued to
invest in our front-end during the quarter
with the hiring of Pramode Metre as Chief
Sales & Marketing Officer as well
as several other business development
professionals in the U.S. Pramode will
be charged with developing an industry-leading
sales team and we continue to invest in
our client acquisition and relationship
management infrastructure. Our current
pipeline of new clients as well as opportunities
within existing clients remains robust
and we look forward to an exciting year
ahead as we seek to solidify our leadership
position in the marketplace."
2006 Outlook - Full Year
The Company is providing the following guidance:
* Calendar year 2006 revenue of $117.5 to $118.5 million.
* Calendar year 2006 adjusted operating income, excluding the impact of
stock-based compensation expense and amortization of intangibles, of
$14.5-15.5 million, and fourth quarter adjusted operating income,
excluding the impact of stock-based compensation expense and
amortization of intangibles, of $4.0 to 5.0 million.
The Company will be providing calendar
2007 annual guidance during its fourth
quarter 2006 earnings report.
Conference Call
EXL will host a conference call on Thursday,
November 16, 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 http://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 1-800-418-7236 or 1-973-935-8757
and reference "EXL." For those who cannot
access the live broadcast, a replay will
be available by dialing 877-519-4471 or
973-341-3080 and entering "8098604" from
two hours after the end of the call until
11:59 p.m. (EST) on November 23rd, 2006.
The replay will also be available at the
EXL web site.
About ExlService Holdings, Inc.
ExlService Holdings, Inc. (Nasdaq: EXLS),
is a recognized provider of offshore solutions
including Business Process Outsourcing
(BPO), research and analytics and risk
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 Registration Statement on Form
S-1. 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)
Three months ended Nine months ended
September 30, September 30,
2006 2005 2006 2005
Revenues 35,665,045 18,368,980 82,453,287 53,974,673
Cost of revenues exclusive
of depreciation and
amortization) 21,490,479 11,440,529 51,378,118 35,104,597
Gross profit 14,174,566 6,928,451 31,075,169 18,870,076
Operating expenses:
General and
administrative expenses 5,802,239 3,665,076 13,110,619 9,706,772
Selling and marketing
expenses 1,635,644 419,924 3,083,744 1,213,363
Depreciation and
amortization 2,614,929 1,497,937 6,254,903 4,477,588
Total operating expenses 10,052,812 5,582,937 22,449,266 15,397,723
Income from operations 4,121,754 1,345,514 8,625,903 3,472,353
Other income (expense):
Foreign exchange gain/(loss) 11,681 441,513 (688,213) 1,522,203
Interest and other income 310,945 258,306 912,327 501,467
Interest expense (275,310) (93,810) (479,077) (283,698)
Interest expense-redeemable
preferred stock - (83,420) - (396,697)
Income before income taxes 4,169,070 1,868,103 8,370,940 4,815,628
Income tax provision/
(benefit) (152,084) 696,374 351,344 963,125
Net income 4,321,154 1,171,729 8,019,596 3,852,503
Dividends and accretion
on preferred stock (180,794) (80,796) (523,173) (80,796)
Net income to common
stockholders $4,140,360 $1,090,933 $7,496,423 $3,771,707
Basic earnings per share
to common stockholders $ 0.19 $ 0.05 $ 0.35 $0.18
Diluted earnings per share
to common stockholders $0.19 $0.05 $0.34 $0.17
Weighted-average number of
shares used in computing
earnings per share:
Basic(1) 21,603,812 21,108,418 21,583,084 21,164,290
Diluted(1) 21,997,319 21,556,916 21,912,253 21,674,590
(1) The number of shares and earnings per share data has been adjusted to
give effect to the Stock Split and Conversion effected by the Company
on October 24, 2006 in connection with the consummation of its
Initial Public Offering but does not include the 5,750,000 shares
issued as part of the initial public offering.
EXLSERVICE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
September 30, December 31,
2006 2005
Assets
Current assets:
Cash and cash equivalents $25,628,874 $24,240,632
Restricted cash 686,684 474,504
Accounts receivable, net of allowance
for doubtful accounts 27,632,396 14,762,331
Employee receivables 686,768 381,604
Prepaid expenses 739,630 1,037,839
Deferred income taxes 2,065,481 1,165,000
Other current assets 2,078,471 959,088
Total current assets 59,518,304 43,020,998
Fixed assets, net 14,917,242 16,206,665
Intangibles, net of amortization 2,560,000 -
Goodwill 10,878,140 -
Restricted cash 304,814 210,521
Deferred income taxes 194,279 871,327
Other assets 4,021,636 2,266,800
Total assets $92,394,415 $62,576,311
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $1,774,887 $ 1,391,775
Short Term Debts 52,925 -
Deferred revenue 5,951,416 7,608,889
Accrued employee cost 8,914,017 3,408,714
Other accrued expenses and current
liabilities 12,012,032 6,319,374
Income taxes payable 1,783,522 777,643
Current portion of capital lease obligation 184,680 215,150
Total current liabilities 30,673,479 19,721,545
Senior long-term debt 5,802,873 5,583,499
Capital lease obligations, less current portion 232,467 256,300
Total liabilities 36,708,819 25,561,344
Stockholders' equity 49,091,339 30,943,883
Total liabilities and stockholders' equity $92,394,415 $62,576,311
EXLSERVICE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
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 Adjusted
operating measures that the Securities
and Exchange Commission defines as "non-GAAP
financial measures." Management believes
that these Adjusted financial measures,
when read in conjunction with the Company's
reported results, can provide useful supplemental
information for investors analyzing period
to period comparisons of the Company's
results because the adjustments eliminate
the impact of the following two items
which are not indicative of the Company's
ongoing performance: (i) differences in
stock compensation accounting policies
between periods and (ii) significant non-
recurring expenses associated with the
amortization of Inductis Inc. acquisition-related
intangibles. The Adjusted financial measures
disclosed by the Company should not be
considered a substitute for, or superior
to, financial measures calculated in accordance
with GAAP, and the financial results calculated
in accordance with GAAP and reconciliations
to those financial statements should be
carefully evaluated. The following table
shows the reconciliation of these Adjusted
financial measures to GAAP:
(In thousands except per share data)
Three Months Ended Three Months Ended
September 30, September 30,
2006 2006 2005 2005
US GAAP Adjustments Adjusted US GAAP Adjustments Adjusted
Revenues $35,665 $ - $35,665 $18,369 $ - $18,369
Cost of
revenues
(exclusive of
depreciation
and
amorti-
zation) 21,490 (220)(a) 21,270 11,441 - 11,441
Gross profit 14,175 220 14,395 6,928 6,928
Gross
Margin % 39.7% 40.4% 37.7% 37.7%
Selling,
general and
administrative
expenses 7,438 (659)(a) 6,779 4,085 (30)(a) 4,055
Depreciation
and
amortization 2,615 (590)(b) 2,025 1,498 1,498
Income from
operations 4,122 1,469 5,591 1,346 30 1,376
Operating
Margin % 11.6% 15.7% 7.3% 7.5%
Other income
(expense):
Interest
income 311 - 311 258 - 258
Other income /
(expense), net (264) - (264) 264 - 264
Total other
income /
(expense) 47 - 47 523 - 523
Income before
provision for
income 4,169 1,469 5,638 1,868 1,898
Provision for
income taxes (152) 0 -152 696 696
Net income 4,321 1,469 5,791 1,172 30 1,202
Dividends and
accretion on
preferred
stock -181 -181 -81 -81
Net Income to
common
stock-
holders $ 4,140 1,469 $ 5,610 $ 1,091 30 $ 1,121
Basic
earnings
per share $ 0.19 $ 0.07 $ 0.26 $ 0.05 $ 0.00 $ 0.05
Diluted
earnings
per share $ 0.19 $ 0.07 $ 0.26 $ 0.05 $ 0.00 $ 0.05
Weighted
average
number of
common
shares
outstand-
ing 21,603,812 21,603,812 21,603,812 21,108,418 21,108,418 21,108,418
Weighted
average
number of
common and
dilutive
shares
outstand-
ing 21,997,319 21,997,319 21,997,319 21,556,916 21,556,916 21,556,916
Note: The number of shares and earnings
per share data has been adjusted to give
effect to the Stock Split and Conversion
effected by the Company on October 24,
2006 in connection with the consummation
of its initial public offering but does
not include the 5,750,000 shares issued
as part of the Initial Public Offering.
Note: The Income statement as of September
30, 2005 does not include results from
Inductis, Inc. operations.
(a) To exclude stock-based compensation expense under FAS 123R (in 2006)
and APB25 (in 2005) and related income tax benefits.
(b) To exclude amortization of intangibles recorded in the quarter ending
September 30, 2006.
For 2006, the weighted average number
of common and dilutive shares outstanding
were calculated taking into account the
requirements of FAS 123R.
SOURCE ExlService Holdings, Inc.
-0- 11/16/2006
/CONTACT: Jarrod Yahes, Head of Investor Relations of ExlService
Holdings, Inc., +1-212-277-7109, ir@exlservice.com; or Investors: Michael
Polyviou, or Press: Kerry Kelly-Guiliano, both of Financial Dynamics,
+1-617-747-3603, kguiliano@fd-us.com, for ExlService Holdings, Inc./
/Web site: http://www.exlservice.com /
(EXLS)
CO: ExlService Holdings, Inc.
ST: New York
IN: FIN INS
SU: ERN ERP CCA
RM
-- NYTH067 --
2930 11/16/2006 04:00 EST http://www.prnewswire.com
