EXL Reports 2015 First Quarter Results

ExlService Holdings, Inc. (Nasdaq:EXLS), a leading provider of Operations Management and Analytics and Business Transformation services, today announced its financial results for the first quarter of 2015.

Rohit Kapoor, Vice Chairman and CEO, commented: “EXL had a strong first quarter with broad-based growth across business lines and industry verticals. We believe the demand environment is improving with clients becoming increasingly decisive around strategic deals. In Operations Management, the healthcare and travel, transportation and logistics verticals experienced strong growth from existing clients and recent contract wins. Our proprietary Business EXLerator Framework™ and suite of BPaaS solutions differentiate EXL and are driving enhanced client engagements in Operations Management. In Analytics and Business Transformation, our revenue grew 51.3% year-over-year including the contribution from the Blue Slate and analytics firm RPM Direct acquisitions. Our recent acquisitions are performing well, and we are actively taking our enhanced suite of capabilities to market.”

Vishal Chhibbar, EXL’s CFO, commented: “In the first quarter, EXL had revenues of $143.5 million, up 15.5% excluding reimbursement of disentanglement costs in the first quarter 2014. Our strong revenue performance was a result of growth across our major client relationships as well as contributions from our acquisitions. For 2015, we are raising our revenue guidance to $600 million to $620 million from $570 million to $590 million, representing annual revenue growth of 14.1% to 18.0%, despite a currency headwind of approximately 1%. We are maintaining our adjusted diluted earnings per share guidance of $1.85 to $1.95 despite a one-time tax expense in the first quarter. The drivers of our guidance revision include the contribution of analytics firm RPM Direct, strong business performance in the first quarter, and a robust demand outlook for the remainder or the year.

Our business is divided into two reporting segments: Operations Management and Analytics and Business Transformation.

Reconciliations of adjusted financial measures to GAAP are included at the end of this release.

Revenues for the quarter ended March 31, 2015 were $143.5 million compared to $121.8 million for the quarter ended March 31, 2014 and $135.3 million for the quarter ended December 31, 2014. Revenues for the quarter ended March 31, 2014 were reduced by $2.5 million and $8.5 million, respectively, due to the reimbursement of disentanglement costs. Operations Management revenues for the quarter ended March 31, 2015 were $110.7 million compared to $100.1 million for the quarter ended March 31, 2014 and $103.1 million for the quarter ended December 31, 2014. Analytics and Business Transformation revenues for the quarter ended March 31, 2015 were $32.8 million compared to $21.7 million for the quarter ended March 31, 2014 and $32.2 million for the quarter ended December 31, 2014.
Gross margin for the quarter ended March 31, 2015 was 35.1% compared to 38.5% for the quarter ended March 31, 2014 and 32.5% for the quarter ended December 31, 2014. Operations Management gross margin for the quarter ended March 31, 2015was 36.3% compared to 41.2% for the quarter ended March 31, 2014 and 32.8% for the quarter ended December 31, 2014. Analytics and Business Transformation gross margin for the quarter ended March 31, 2015 was 31.0% compared to 26.2% for the quarter ended March 31, 2014 and 31.5% for the quarter ended December 31, 2014.
Operating margin for the quarter ended March 31, 2015 was 9.4% compared to 12.7% for the quarter ended March 31, 2014 and 5.2% for the quarter ended December 31, 2014. Adjusted operating margin for the quarter ended March 31, 2015 was 13.8% compared to 19.0% for the quarter ended March 31, 2014 and 14.1% for the quarter ended December 31, 2014. Adjusted EBITDA for the quarter ended March 31, 2015 was $24.8 million compared to $28.5 million for the quarter ended March, 2014 and $26.1 million for the quarter ended December 31, 2014.
Net income for the quarter ended March 31, 2015 was $9.6 million compared to $11.1 million for the quarter ended March 31, 2014 and $7.5 million for the quarter ended December 31, 2014.
Diluted earnings per share for the quarter ended March 31, 2015 were $0.28 compared to $0.33for the quarter ended March 31, 2014 and $0.22 for the quarter ended December 31, 2014. Adjusted diluted earnings per share for the quarter ended March 31, 2015 was $0.41 compared to $0.50 for the quarter ended March 31, 2014 and $0.48 for the quarter ended December 31, 2014.
Business Highlights

Closed the acquisition of analytics firm RPM Direct on March 20th.
Won 9 new clients for the first quarter including 4 in Operations Management and 5 in Analytics and Business Transformation.
Expanded multiple operations management relationships, including migrating 24 new processes in the first quarter of 2015.
Named a 2014 Partner of the Year for Technology and Innovation by Aflac for MedConnectionSM.
Positioned in the Winner’s Circle in the “HfS Blueprint: Population Health and Care Management Services”.
Positioned as a Major Player in the “IDC MarketScape: Global Professional Services Firms for Utilities Customer Operations”.
Consolidated our Analytics delivery facilities into a new world-class center in Gurgaon in order to add additional expansion capacity and create an enhanced environment to showcase our analytical capabilities.
Recorded headcount as of March 31, 2015 of 22,600 compared to 22,800 as of December 31, 2014 and 22,800 (including employees under managed services) as of March 31, 2014.
Reported employee attrition for the quarter ended March 31, 2015 of 33.6%, compared with 33.5% for the quarter endedDecember 31, 2014 and 28.8 % for the quarter ended March 31, 2014.
2015 Outlook

Based on current visibility and an Indian rupee to U.S. dollar exchange rate of 63, the Company is providing the following guidance for calendar year 2015:

Revenue of $600 million to $620 million.
Adjusted diluted earnings per share, excluding the impact of stock-based compensation expense, amortization of intangibles and associated tax impacts, of $1.85 to $1.95.
Conference Call

ExlService Holdings, Inc. will host a conference call on Thursday, April 30, 2015 at 8:00 a.m. U.S. eastern time to discuss the Company’s quarterly and annual 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 go to the website 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 1-877-303-6384 or if dialing in internationally, 1-224-357-2191 and an operator will assist you. For those who cannot access the live broadcast, a replay will be available on the EXL website ir.exlservice.com.