EXL Reports 2019 First Quarter Results

2019 First Quarter Revenues of $239.6 Million, up 15.8% year-over-year
Q1 Diluted EPS (GAAP) of $0.42, down from $0.66 in Q1 of 2018
 Q1 Adjusted Diluted EPS (Non-GAAP) of $0.71, up from $0.65 in Q1 of 2018

NEW YORK, April 30, 2019 (GLOBE NEWSWIRE) - ExlService Holdings, Inc. (NASDAQ: EXLS), a leading operations management and analytics company, today announced its financial results for the quarter ended March 31, 2019.

Rohit Kapoor, Vice Chairman and Chief Executive Officer, said, “EXL generated revenues of $239.6 million during the first quarter of 2019, up 15.8% year-over-year. EXL’s revenues growth was led by a 52.3% increase in Analytics revenues, driven by an 18.8% increase in organic revenues and the acquisition of SCIOinspire Holdings, Inc. Analytics represents 36.3% of EXL’s revenues. 

“We have begun 2019 with good momentum. Our success is based upon a strong culture of adopting rapidly changing technology to deliver valuable sustainable productivity to our clients. Our growth has been propelled through a focus on being the strategic digital transformation partner for our clients, as well as our Operations Management excellence and leadership position in Analytics.  Digital Intelligence, our differentiated strategy and approach for digital transformation, represents the next step in our ability to improve revenue growth, profitability and end customer experience for our clients. We are positioned for a strong 2019 and beyond.”

On April 4, 2019, EXL announced it commenced the process of substantially winding down the operations of the Health Integrated business, which is reported within our Healthcare reportable segment. It is anticipated that the wind down process will be substantially completed by the end of 2019.

Vishal Chhibbar, Chief Financial Officer, said, “We are revising our revenue guidance for 2019 to $969 million - $996 million from $975 million - $1 billion to reflect the decrease in revenue from Health Integrated to $10 million - $14 million from our previous forecast of $16 million - $18 million.  Our guidance represents annual revenue growth of 10% to 13% on a constant currency basis. Our adjusted diluted EPS guidance for 2019 is being revised to $2.83 - $2.98 to reflect the higher operating losses of Health Integrated of $0.23 - $0.27 from $0.16 - $0.20 and does not factor any wind-down expenses. Our balance sheet remains strong with cash and short-term investments of $303 million on March 31, 2019.”
 

Financial Highlights: First Quarter 2019

We have six reportable segments: Insurance, Healthcare, Travel, Transportation & Logistics, Finance & Accounting, All Other (consisting of our Banking & Financial Services, Utilities and Consulting operating segments) 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 March 31, 2019 increased to $239.6 million compared to $207.0 million for the first quarter of 2018, an increase of 15.8% on a reported basis and 17.5% on a constant currency basis from the first quarter of 2018, as well as an increase of 2.0% sequentially on a reported basis and 1.6% on a constant currency basis, from the fourth quarter of 2018.
• Operating income margin for the quarter ended March 31, 2019 was 7.0%, compared to an operating income margin of 7.3% for the first quarter of 2018 and an operating loss margin of 0.9% for the fourth quarter of 2018. During the fourth quarter of 2018, we recorded an impairment charge(1) of $20.1 million related to our Health Integrated business, which reduced our operating income margin by 850 basis points. Adjusted operating income margin for the quarter ended March 31, 2019 was 12.8% compared to 13.0% for the first quarter of 2018 and 13.1% for the fourth quarter of 2018.
• Diluted earnings per share for the quarter ended March 31, 2019 was $0.42, compared to $0.66 for the first quarter of 2018 and diluted earnings per share of $0.11 for the fourth quarter of 2018. During the quarter ended December 31, 2018, the Health Integrated impairment charge described above reduced our GAAP diluted EPS by $0.49. Adjusted diluted earnings per share for the quarter ended March 31, 2019 was $0.71 compared to $0.65 for the first quarter of 2018 and $0.74 for the fourth quarter of 2018.

(1) Impairment charge refers to goodwill and intangible assets impairment related to our Health Integrated acquisition which we recorded during the quarter and year ended December 31, 2018. The primary factors contributing to an impairment charge were i) revenues and profitability for the Health Integrated business in 2018 were significantly lower than our budget and ii) significant changes to the Company’s estimated future cash flows and long-term growth assumptions driven by loss of customer contracts, cost pressures and the Company’s most recent views of the long-term outlook for the Health Integrated business.
 

Business Highlights: First Quarter 2019

• Won six new clients in Q1 including two in our operations management businesses and four in Analytics
• Recognized as a Leader and Star Performer in the Everest Group Property and Casualty Insurance BPO Services PEAK Matrix™ Assessment 2019
• Recognized as a leading service provider in the HFS Top 10 Healthcare Services 2018 report
• Recognized as a Major Contender in the Everest Group Banking BPO Digital Capability Platform Solutions PEAK Matrix™ Assessment 2019

2019 Guidance

Based on current visibility, and a U.S. Dollar to Indian Rupee exchange rate of 69.50, British Pound to U.S. Dollar exchange rate of 1.30, U.S. Dollar to the Philippine Peso exchange rate of 52.0 and all other currencies at current exchange rates, we are providing the following guidance:

• Revenue of $969 million to $996 million, representing an annual revenue growth rate of 10% to 13% on a constant currency basis.
• Adjusted diluted earnings per share of $2.83 to $2.98.

Conference Call

ExlService Holdings, Inc. will host a conference call on Tuesday, April 30, 2019 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 businesses enhance revenue growth and profitability. Our delivery model provides market-leading business outcomes using EXL’s proprietary Digital 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 29,000 professionals in locations throughout the United States, Europe, Asia (primarily India and Philippines), Latin America, Australiaand 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