EXL Reports 2018 Third Quarter Results

Thursday, November 1, 2018

2018 Third Quarter Revenues of $231.1 Million, up 20.2% year over year 
Q3 Diluted EPS (GAAP) of $0.43, down from $0.60 in Q3 of 2017 
Q3 Adjusted Diluted EPS (Non-GAAP) of $0.71, up from $0.69 in Q3 of 2017

New York, NY - November 1, 2018 - ExlService Holdings, Inc. (NASDAQ: EXLS), a leading operations management and analytics company, today announced its financial results for the quarter ended September 30, 2018.

Rohit Kapoor, Vice Chairman and Chief Executive Officer, said, “EXL generated revenues of $231.1 million, up 20.2% year-over-year.  Our adjusted diluted EPS was $0.71. EXL’s revenue growth was led by a 53.9% increase in Analytics revenues driven by an 18.2% increase in organic revenue and the acquisition of SCIO Health Analytics. Our operations management businesses revenues grew by 7.1%, which was driven largely by revenues growth in Insurance and Finance & Accounting.

“Our differentiated Digital Intelligence strategy is resonating well in the marketplace and is driving a strong pipeline.  Additionally, the integration of SCIO is on track and will create a compelling offering across the Analytics and healthcare markets.”

Vishal Chhibbar, Chief Financial Officer, said, “We are narrowing our revenue guidance for 2018 to $877 million - $885 million from $878 million - $892 million. The mid-point of our guidance is now $881 million driven by foreign exchange headwind of $4 million at current exchange rates.  Our guidance represents annual revenue growth of 16% to 17% on a constant currency basis. We are narrowing the range of adjusted diluted EPS guidance for 2018 to $2.72 - $2.78 from $2.70 - $2.80, with the mid-point unchanged at $2.75. Our cash and short-term investments were $242.5 million on September 30, 2018.”

Financial Highlights: Third Quarter 2018

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

  • Revenues for the quarter ended September 30, 2018 increased to $231.1 million compared to $192.3 million for the third quarter of 2017, an increase of 20.2% on a reported basis and 21.4% on a constant currency basis from the third quarter of 2017, as well as an increase of 10.0% sequentially on a reported basis and 10.7% on a constant currency basis, from the second quarter of 2018.

  • Operating income margin for the quarter ended September 30, 2018 was 8.5% compared to 10.9% in the third quarter of 2017 and 8.1% for the second quarter of 2018. Adjusted operating income margin for the quarter ended September 30, 2018 was 14.1% compared to 15.9% in the third quarter of 2017 and 13.6% for the second quarter of 2018.
  • Diluted earnings per share for the quarter ended September 30, 2018 was $0.43 compared to $0.60 in the third quarter of 2017 and $0.41 for the second quarter of 2018.  Adjusted diluted earnings per share for the quarter ended September 30, 2018 was $0.71 compared to $0.69 for the third quarter of 2017 and $0.67 for the second quarter of 2018.

(1)(2) Refer to the notes to the Unaudited Consolidated Statements of Income for details.

Business Highlights: Third Quarter 2018

  • EXL closed the acquisition of SCIOInspire Holdings, Inc. (or SCIO Health Analytics). The aggregate merger consideration was $236.5 million, subject to certain post-closing adjustments.
  • Won 14 new clients, including eight in our operations management businesses and six in Analytics.
  • Appointed Jaynie Studenmund to EXL’s Board of Directors.
  • Recognized as a Leader in the ISG Provider Lens™ for FAO Digital Outsourcing Services 2018.
  • Positioned as a Major Contender in the Everest Group Finance and Accounting Digital Augmentation Suite Solutions PEAK Matrix™ Assessment 2018.

Post-Third Quarter Highlight

As previously announced, subsequent to the third quarter of 2018, on October 4, 2018, EXL sold $150 million in an aggregate principal amount of 3.50% Convertible Senior Notes due 2024 to Orogen Echo LLC, an affiliate of The Orogen Group LLC.  Vikram Pandit, Chairman and CEO of The Orogen Group LLC, was appointed to EXL’s Board of Directors at closing.

2018 Guidance

Based on current visibility, and a U.S. Dollar to Indian Rupee exchange rate of 74.0, British Pound to U.S. Dollar exchange rate of 1.32, U.S. Dollar to the Philippine Peso exchange rate of 54.0 and all other currencies at current exchange rates, we are providing the following guidance:

  • Revenue of $877 million to $885 million, representing an annual revenue growth rate of 16% to 17% on a constant currency basis.
  • Adjusted diluted earnings per share of $2.72 to $2.78.

Conference Call

ExlService Holdings, Inc. will host a conference call on Thursday, November 1, 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 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 28,000 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 StatementsThis 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 close and 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