EXL Reports 2017 Fourth Quarter and Full Year Results

2017 Fourth Quarter Revenues of $197.9 Million, up 11.6% year over year

Q4 Diluted EPS (GAAP) of ($0.27)1, down from $0.45 in Q4 of 2016

Q4Adjusted Diluted EPS (Non-GAAP) of $0.67, up from $0.61 in Q4 of 2016

2017 Revenues of $762.3 Million, up 11.1% year over year

2017 Diluted EPS (GAAP) of $1.391, down from $1.79 in 2016

2017 Adjusted Diluted EPS (Non-GAAP) of $2.65, up from $2.33 in 2016

NEW YORK, Feb. 27, 2018 (GLOBE NEWSWIRE) — ExlService Holdings, Inc.(NASDAQ:EXLS), a leading operations management and analytics company, today announced its financial results for the quarter ended December 31, 2017 and the full year 2017.

Rohit Kapoor, Vice Chairman and Chief Executive Officer, said, “EXL ended the year with a strong fourth quarter generating revenue growth of 11.6% to $197.9 million and adjusted EPS of $0.67, up 9.8%. For the year 2017, EXL grew revenues by 11.1% led by our Analytics segment which grew 26.7%. Our Operations Management businesses revenues grew 6.2% for the full year.

“Our 2017 performance was strong with our top and bottom lines exhibiting double-digit growth. In addition, we increased our digital technology investments in the areas of machine learning, advanced automation and robotics. As we create more digitally architected solutions, we are positioning ourselves to take advantage of market opportunities to be the strategic digital transformation partner of choice for our clients.”

Vishal Chhibbar, Chief Financial Officer, said, “In 2017, we generated $113.1 million of cash flow from operations and ended the year with $265.3 million in cash and short term investments. For 2018, we are providing revenue guidance of $830 million to $855 million, representing annual revenue growth of 9% to 12% on constant currency basis. Our adjusted diluted earnings per share guidance is $2.70 to $2.80. There are several factors contributing to our adjusted EPS growth which include improved operating profit margins on higher revenues which is partially offset by dilution from our acquisition of Health Integrated of $0.05 to $0.07 and an increase in our estimated effective tax rate to between 29% and 31% for 2018.”

1 Includes impact of one-time provisional income tax expense of $29.2 million related to the U.S. Tax Cuts and Jobs Act (“Tax Reform Act”) which reduced our GAAP diluted EPS by $0.83 during the three months ended and year ended December 31, 2017.

Financial Highlights: Fourth Quarter 2017

We have six reportable segments: Insurance, Healthcare, Travel, Transportation & Logistics, Finance & Accounting, All Other (Banking & Financial Services, Utilities and Consulting) and Analytics. Reconciliations of adjusted (non-GAAP) financial measures, including those reflecting constant currency, to GAAP measures are included at the end of this release.

• Revenues for the quarter ended December 31, 2017 increased to $197.9 million compared to $177.3 million for the fourth quarter of 2016, an increase of 11.6% on a reported basis and 10.6% on a constant currency basis from the fourth quarter of 2016, as well as an increase of 2.9% sequentially on a reported and on a constant currency basis from the quarter ended September 30, 2017.
• Operating income margin for the quarter ended December 31, 2017 was 8.2% compared to 8.0% in the fourth quarter of 2016 and 10.8% for the quarter ended September 30, 2017. Adjusted operating income margin for the quarter ended December 31, 2017 was 13.1% compared to 12.9% in the fourth quarter of 2016 and 15.6% for the quarter ended September 30, 2017.
• On December 22, 2017, the United States enacted the U.S. Tax Cuts and Jobs Act (“Tax Reform Act”), which significantly revised the U.S. corporate income tax law by, among other provisions, reducing the U.S. federal statutory corporate income tax rate from 35.0% to 21.0% starting in 2018 and implementing a modified territorial tax system that includes a one-time transition tax on deemed repatriated earnings of foreign subsidiaries.
• Diluted earnings/(loss) per share for the quarter ended December 31, 2017 was ($0.27). During the quarter we recorded a one-time provisional income tax expense of $29.2 million related to the Tax Reform Act which reduced our GAAP diluted EPS by $0.83 for the quarter ended December 31, 2017. Diluted earnings per share for the fourth quarter of 2016 was $0.45 and $0.60 for the quarter ended September 30, 2017. Adjusted diluted earnings per share for the quarter ended December 31, 2017 was $0.67 compared to $0.61 for the fourth quarter of 2016 and $0.68 for the quarter ended September 30, 2017.

2 The Company early adopted Accounting Standards Update (ASU) 2017-12, Derivative and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. Pursuant to this adoption, effective January 1, 2017, the Company recorded settlement gain/(loss) on cash flow hedges in cost of revenues and operating expenses, as applicable, in the consolidated statements of income for each of the quarters of 2017. In prior periods, such gain/ (loss) were recorded under “Foreign exchange gain, net” in the consolidated statements of income.

Financial Highlights: Full Year 2017

• • Revenues for the year ended December 31, 2017 increased to $762.3 million compared to $686.0 million for the year ended December 31, 2016 an increase of 11.1% on a reported basis and 10.8% on a constant currency basis.
  • Operating income margin for the year ended December 31, 2017 was 9.5% compared to 9.4% for the year ended December 31, 2016. Adjusted operating income margin for the year ended December 31, 2017 was 14.3% compared to 14.0% for the year ended December 31, 2016.
  • Diluted earnings per share for the year ended December 31, 2017 was $1.39. During the year we recorded a one-time provisional income tax expense of $29.2 million related to the Tax Reform Act which reduced our GAAP diluted EPS by $0.83 for the year ended December 31, 2017. Diluted earnings per share for 2016 was $1.79. Adjusted diluted earnings per share for the year ended December 31, 2017 was $2.65 compared to $2.33 for the year ended December 31, 2016.

Business Highlights: Fourth Quarter 2017

• Acquired substantially all the assets of Health Integrated, Inc., a Florida-based care management company that provides end-to-end analytics- and behavioral IP-enabled care management services including case management, utilization management, disease management, special needs programs and multichronic care management on behalf of health plans. We estimate Health Integrated to contribute $20-$22 million of revenues in 2018 and be dilutive to adjusted EPS by $0.05-$0.07.
• Won seven new clients, including six in our operations management businesses and one in Analytics. For the full year, we won 42 new clients, 20 in operations management and 22 in Analytics.
• Opened a new delivery center in Dallas, Texas and added Tampa, Florida with the acquisition of Health Integrated.
• Positioned in the Winner’s Circle in the HfS Blueprint: Healthcare Business Operations Services 2017.
• Recognized as a Major Contender in the Everest Group Healthcare Provider BPO PEAK Matrix™ Assessment 2018.
• Expanded multiple operations management relationships, including migrating 48 new processes.

2018 Guidance

Based on current visibility, and a U.S. Dollar to Indian Rupee exchange rate of 64.50, British Pound to U.S. Dollar exchange rate of 1.40, U.S. Dollar to the Philippine Peso exchange rate of 52.0 and all other currencies at current exchange rates.

• Revenue of $830 million to $855 million, representing an annual revenue growth rate of 9% to 12% on a constant currency basis.
• Adjusted diluted earnings per share of $2.70 to $2.80.

Conference Call

ExlService Holdings, Inc. will host a conference call on Tuesday, February 27, 2018 at 8:00 A.M. ET to discuss the Company’s quarterly 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 listen to the conference call via phone, please dial 1-877-303-6384, or if dialing 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 for a period of at least twelve months.

About ExlService Holdings, Inc.

EXL (NASDAQ: EXLS) is a leading operations management and analytics company that designs and enables agile, customer-centric operating models to help clients improve their revenue growth and profitability. Our delivery model provides market-leading business outcomes using EXL’s proprietary Business EXLerator Framework®, cutting-edge analytics, digital transformation and domain expertise. At EXL, we look deeper to help companies improve global operations, enhance data-driven insights, increase customer satisfaction, and manage risk and compliance. EXL serves the insurance, healthcare, banking and financial services, utilities, travel, transportation and logistics industries. Headquartered in New York, New York, EXL has more than 27,000 professionals in locations throughout the United States, Europe, Asia (primarily India and Philippines), Colombia, Australia and South Africa. For more information, visit www.exlservice.com.

Continuing Statement Regarding Forward-Looking Statements 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 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 our ability to successfully integrate strategic acquisitions, are discussed in more detail in EXL’s filings with the Securities and Exchange Commission, including EXL’s Annual Report on Form 10-K. 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 EXL. EXL has no obligation to update any forward-looking statements after the date hereof, except as required by federal securities laws.

For a full view of EXL’s financial tables, click here